Now that the Supreme Court has spoken, employers must resume their Affordable Care Act compliance efforts.  This Alert contains two checklists to help with that process.

On June 28, 2012, the Supreme Court issued its decision in National Federation of Independent Business v. Sebelius. The decision upheld the constitutionality of the “individual mandate” in the Patient Protection and Affordable Care Act, as amended (commonly referred to as the “Affordable Care Act,” or the “ACA”), which will require most individuals to have health insurance beginning in 2014, on the basis that violating the mandate would result in a tax that was within Congress’ power to impose.  

If The Court had found the individual mandate to be unconstitutional, it could have extended that finding to the entire ACA. This caused some employers and other parties affected by the ACA to slow or suspend their ACA compliance activities. Now that the Court has issued its decision, many employers are ramping up their compliance efforts. We have attached two checklists in order to assist you with these efforts. Together they cover the most significant ACA provisions affecting employers. The first checklist covers the insurance market reform requirements of the ACA. The second checklist covers other requirements (including the individual and employer mandates) and tax rules. Each checklist includes a summary of the requirement or rule, its source, the relevant compliance date, relevant exceptions and additional commentary where that seemed helpful.

The compliance date listed for each provision reflects any guidance has been issued so far. The following rules and requirements will require employers to take action relatively soon:

  • The minimum requirements for plan appeals procedures. Many plans, and the regulatory agencies themselves, are still figuring out how to implement the outside review requirement.
  • The minimum medical loss ratio requirement, which might result in rebates later this summer that will have to be distributed among plan participants.
  • The requirement to provide uniform, simplified plan summaries (SBCs), which will involve more effort than merely editing the plan’s existing SPD.
  • The requirement to report the cost of health coverage on Form W-2, which will necessitate payroll system changes and decisions regarding how to value the relevant coverage.
  • The requirement to limit elective contributions to health FSAs to US$2,500, which will involve changes to enrollment materials and payroll systems as well as plan amendments.
  • The nondiscrimination requirement for insured health plans. Guidance has not been issued and is not imminent, but advance planning is likely to help.
  • The new Social Security and Medicare taxes on high-income individuals, which will necessitate payroll system changes and could be blunted with proper tax planning.  

A number of other requirements, including the employer mandate, will not go into effect until 2014 but might require very significant plan design changes and will be easier to implement with proper advance planning.

Click here for the two checklists.

Under applicable Treasury Regulations we are required to inform you that any advice contained in this newsletter is not intended or written to be used, and cannot be used, either (i) to avoid penalties imposed under the Internal Revenue Code, or (ii) for promoting, marketing, or recommending to another party any tax-related matter addressed herein.