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In a landmark decision, the US Supreme Court has upheld the health care reform law’s individual coverage mandate and left virtually all other provisions of the law intact. The court’s validation of the individual mandate removes one of the major uncertainties plaguing the legislation, which still faces a contentious political outlook. But employers should stay on track in their efforts to comply with the law as enacted or face penalties, advises Mercer, a global human resources consultancy.
“The Supreme Court’s ruling removes a major source of uncertainty surrounding this important national issue. With all of the law’s provisions still in place, employers will need to redouble their compliance efforts, especially regarding such immediate requirements as providing summaries of benefits and coverage to their employees,” said Julio A. Portalatin, President and CEO of Mercer. “This decision also reinforces the continuation of such popular features as coverage of dependents up to 26 and elimination of preexisting condition exclusions.”
The individual mandate, which has sparked fierce political and legal debate, requires most Americans to have adequate health coverage starting in 2014 or pay a penalty. Also in 2014, employers that fail to offer full-time employees and their dependents affordable coverage with a minimum value likewise will face penalties.
“Employers can expect a spike in plan enrollment for 2014 as a result of the individual mandate,” said David Rahill, President of Mercer’s Health and Benefits business. “But they may see enrollment level off once the state exchanges become operational.”
By 2014, health insurance exchanges will be operating in every state, offering community-rated insurance to certain small employers and individuals, with federal premium tax credits available to help some people buy that coverage.
In the near term, employers also must report the value of employer coverage on IRS Form W-2, cap dollar limits on health care flexible spending arrangements, and increase Medicare withholding for high earners (those earning more than $200,000 per year). They must also comply with the reforms already in effect, such as coverage of dependents up to age 26.
“But first and foremost, employers must estimate how the law will affect their business,” said Sharon Cunninghis, Senior Partner and leader of Mercer’s US Health and Benefits business. “Any employers who have not yet conducted a ‘health care reform check-up’ should make that their first order of business. Employers also should continue to monitor actions of Congress and Administration, especially in light of the November elections.”
Mercer consultants will provide immediate reactions to the possible implications of the ruling for employers during client webcasts scheduled for June 29 at 2 p.m. Eastern and July 2 at 3 p.m. Eastern. In addition, another webcast will be held on July 12 at noon Eastern to provide a “deeper dive” into how the Supreme Court's decision will affect employers going forward. Click here to register for any of these webcasts: http://www.mercer.com/webcasts/1466095?idSession=.
Mercer is a global leader in human resource consulting and related services. The firm works with clients to solve their most complex human capital issues by designing and helping manage health, retirement and other benefits. Mercer’s 20,000 employees are based in more than 40 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 52,000 employees worldwide and annual revenue exceeding $10 billion, Marsh & McLennan Companies is also the parent company of Marsh, a global leader in insurance broking and risk management; Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a global leader in management consulting.
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