{"id":16684,"date":"2015-04-16T19:48:10","date_gmt":"2015-04-16T23:48:10","guid":{"rendered":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2015\/04\/business-report-employer-health-care-mandates.html"},"modified":"2015-04-16T19:48:10","modified_gmt":"2015-04-16T23:48:10","slug":"business-report-employer-health-care-mandates","status":"publish","type":"post","link":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2015\/04\/business-report-employer-health-care-mandates\/","title":{"rendered":"Business Report: Employer Health Care Mandates"},"content":{"rendered":"
\n
\n\"bond\n<\/div>\n
Amelia F. Klein, a member in the Albany office of Bond, Schoeneck & King PLLC\n<\/div>\n<\/div>\n

BY AMELIA F. KLEIN<\/p>\n

It may not be true that the Patient Protection
\nand Affordable Care Act (ACA) was created
\nby Senate Majority Leader Harry Reid
\nover a three-day weekend by cutting and pasting
\npieces from the various bills circulating in
\nCongress that had sufficient support.<\/p>\n

However, as someone who advises clients
\nevery day about how to comply with the ACA,
\nI believe this legend. The law is long – 906
\npages – and many of its provisions just don’t
\nhang together in a coherent way. As evidence
\nof this, the ACA was amended only one week
\nafter it was signed into law, by the Health Care
\nand Education Reconciliation Act of 2012.<\/p>\n

Still, it took 1\u00c2\u00bd years to discover the flaw that
\nforms the basis of the Supreme Court case in
\nKing v. Burwell:
\nInternal Revenue Code section 36B, added
\nby the ACA, authorizes federal tax-credit subsidies
\nfor health insurance coverage that is
\npurchased through an “Exchange established
\nby the State.”<\/p>\n

Section 1321 of the ACA requires the federal
\ngovernment to operate an Exchange for any
\n“state [that] is not electing to operate an Exchange
\nor that… will not have the Exchange
\noperational by Jan. 1, 2014.”<\/p>\n

The problem? Only 16 states have established
\ntheir own Exchanges (now referred to
\nas “marketplaces”). The question in King v.
\nBurwell? “[W]hether the Internal Revenue
\nService (“IRS”) may … extend tax-credit
\nsubsidies to coverage purchased through
\nExchanges established by the federal government.”<\/p>\n

In other words, should the federal subsidies
\nbe available when coverage is purchased in one
\nof the 34 states that where the health insurance
\nmarketplaces are run by the Federal government?
\nThe challengers to the law say “no”.<\/p>\n

The availability of subsidies for people who
\npurchase health coverage in a marketplace is
\na linchpin that holds many pieces of the ACA
\ntogether. For one thing, the assessment of the
\n“employer shared responsibility payments”
\nonly occurs when an employee goes to the
\nmarketplace, buys coverage, and is eligible
\nfor a federal subsidy.<\/p>\n

No subsidy means no IRS invoice for the assessment.
\nThese assessments support the bulk
\nof the costs of the ACA; according to the Brief
\nfor the Petitioner\/challenger (King), “billions
\nof dollars [are] spent each month.” What will
\nhappen to employer coverage if the linchpin
\nof federal subsidies is removed?<\/p>\n

In New York, nothing will change; at least
\nnot right away. New York, and its neighbors,
\nVermont, Massachusetts and Connecticut,
\nhave established State marketplaces, so subsidies
\nwill continue to be available to eligible
\nindividuals that purchase coverage there.<\/p>\n

Employers will be assessed penalties if
\neligible employees are not offered coverage,
\nor whose coverage is unaffordable by ACA
\nstandards or doesn’t provide a minimum
\nvalue, if those employees receive the federal
\nsubsidy. (Annual assessments equal $2,000 per
\nemployee, excluding the first 30 employees, for
\nfailure to offer coverage. For employers that
\noffer unaffordable or inadequate coverage,
\nthe assessment is $3,000 per employee that
\nbecomes eligible for a tax credit).<\/p>\n

In those states that have federally-run
\nhealth insurance marketplaces, the effect
\non health insurance costs will be immediate.<\/p>\n

Without the federal subsidy, coverage
\npurchased in the marketplaces will become
\nunaffordable. Healthy individuals will drop
\ncoverage, leaving insurers with only unhealthy
\nsubscribers.<\/p>\n

The costs to the insurers will go up, and premium
\ncosts will increase – causing the “death
\nspiral” described by Supreme Court Justice
\nSotomayor. The loss of the employer penalties
\nin those 36 states will have a devastating
\neffect on the revenues generated by the ACA
\n– revenues that have supported such things
\nas the Child Health Insurance Program and
\nMedicaid expansion (adopted by 29 states),
\ntax credits for small employers purchasing
\nhealth coverage, changes in Medicare provider
\nrates, the Medicare beneficiary drug rebate,
\nand the reinsurance plan for retiree coverage.<\/p>\n

Without the employer shared responsibility
\npenalties, employers may offer coverage to
\nfewer employees, or increase the premium cost
\nsharing to employees. However, the changes to
\nthe structure of employer-sponsored health
\ncoverage will not change markedly. Employer health plans will still have to:
\nProvide young adult coverage to age 26;
\noffer preventive care without employee cost
\nsharing; cover pre-existing conditions; not
\nimpose annual or lifetime cost limits; limit
\ncoverage waiting periods to 90 days; provide
\nan expanded appeals process; and limit the
\nability to rescind coverage.<\/p>\n

The penalty for failing these requirements
\nis $100 per day per person affected. Is there
\nany desire, by Congress or employers, to repeal
\nthese popular provisions?<\/p>\n

The Obama administration said they have
\nno “plan B” if the Supreme Court rules in favor
\nof the challengers. During oral argument,
\nJustice Scalia asked the government’s lawyer
\nif the Court were to rule for the challengers,
\ndid the government actually expect Congress
\nto “just sit there while disaster ensues?” The
\nlawyer’s response: “This Congress?”<\/p>\n

The Supreme Court’s decision is expected
\nin late June.<\/p>\n

Klein is a Member in the Albany office of
\nBond, Schoeneck & King, PLLC, where she
\nadvises employers in all types of benefit
\ncompliance issues.<\/p>\n

Photo Courtesy Bond, Schoeneck & King PLLC<\/p>\n","protected":false},"excerpt":{"rendered":"

Amelia F. Klein, a member in the Albany office of Bond, Schoeneck & King PLLC BY AMELIA F. 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