In a 5-4 decision, the United States Supreme Court (“the Court”) upheld much of President Obama’s health care overhaul act (“the Act”), saying its requirement that most Americans obtain insurance or pay a penalty is protected by Congress’s power to levy taxes. This Act will have a major impact on some employers.
The Act involves an employer-responsibility assessment which incentivizes employers with at least 50 full-time employees to provide their employees with quality and affordable health insurance options that meet the minimum standards. The companies must also report the total cost of coverage on W-2 forms, increase Medicare withholdings for those earning more than $200,000 per year, and provide insurance for dependants up to age 26. If a business does not comply with this mandate, the employer must pay a $2,000 per employee penalty beyond the first 30 employees. It also requires employers to make a payment to the federal government if they do not offer insurance to employees and if insurance is bought on an exchange by an employee who qualifies for the exchange’s federal subsidies.
In dissent, Justices Scalia, Kennedy, Thomas, and Alito held that this passage of the Act violates congressional intent by placing significant and disproportionate responsibility on employers. While numerous parties were alleviated from financial burdens, employer’s responsibility increased; a violation of the Act’s proposed “shared responsibility.” The dissent concludes it leaves employers as the only parties bearing any significant responsibility.
The ultimate impact on employers will not truly be determined until the law is implemented in 2014 and the application depends on a variety of factors, but it will predominately affect employers with more than 50 full-time employees.
For more information on this decision, please click here.