The State of Employee Health Benefits

Defined Contribution + Wellness Strategies

As employers finalize their preparations for 2015 health reform deadlines, recent events surrounding the Patient Protection and Affordable Care Act (“PPACA”) have led many of them scratching their heads over how their plans should be implemented.

Wrenches in the Works

In the Hobby Lobby case, the US Supreme Court indicated that privately held corporations with religious convictions could avoid providing all the contraceptives that the HHS indicated were required under the preventive care mandate in PPACA.

A broader issue was raised with the conflicting cases in the DC and 4th Circuit Courts of Appeals.  The decisions in Halbig and King came to opposite conclusions about the availability of tax credits for health coverage.  The IRS determined that subsidies for individuals purchasing coverage on any public exchange, whether run by the federal government or the states, were available if the individual otherwise met the requirements for subsidies.  The court in Halbig ruled that credits were only available for coverage purchased through exchanges established by the states.

Since the majority of the exchanges are  run by the federal government, the impact on employers could be significant.  The employer penalties under the Pay-or-Play mandate are all driven by any subsidies received by individuals who purchase coverage on a public exchange.  If those individuals are full-time employees (those that work an average of 30 hours per week or more) of an applicable large employer (those with 50 or more full-time employees) the employer is potentially subject to penalties unless the employees are offered minimum essential coverage that is affordable and minimum value.  If there is no subsidy, there is potentially no penalty that the employer would be required to pay.

Meanwhile, 2015 Approaches

Those decisions keep the confusion swirling while 2015 approaches.  Willis and other advisors continue to urge employers to comply with the law as it is being enforced currently.  Employers are generally following that advice.  They are not planning to wait to hear the final outcome of the Halbig and King decisions.  Instead, they are taking the steps they need to comply right now.

And 2018 is right around the corner.

About Jay Kirschbaum

Jay spent 22 years as a tax attorney specializing in employee benefits before joining Willis in 2001. He is current…
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