Industry Trends

Affordability Health Care Act Upheld

Last week, the US Supreme Court upheld President Obama’s Health Care Affordability Act. The court essentially ruled its penalty provisions were akin to a tax. So what does this mean for insurance brokers and their clients?

Here are a few of my quick thoughts:


  1. If you have avoided learning the mandate hoping it would somehow be overturned, it’s time get reading. The best place to start is The United States Department of Labor’s website, which houses the whole breakdown of the new affordability act. While it is important to know the law as an agent or broker, it is equally as important for your family’s protection. Knowledge is power, so read it.
  2. Revisit the thinking behind benefits in the first place. Why do we even have them? To attract employees, to retain those employees, and to motive each of them by showing that we care. And, of course, to do those things better than our competitors. Remember that while pay is an economic contract, benefits have been traditionally viewed as a social contract. When it comes to the best “bang for the buck,” a dollar spent on a social contract offering is worth more than spending on an economic one. Currently, employees view their benefits as more important than their base pay. Even if it eventually flips back the other way it’s a 50/50 deal. If we choose to offer benefits, the more an employee pays, the less it becomes a social contract. We must also constantly market the benefit to get the value in hiring, retaining and motivating employees.  As in the words of Barber’s Book of 1000 Proverbs, “The greatest benefit is the one last remembered.”
  3. The main point is this: don’t underestimate the value of benefits and make sure to squeeze every ounce of value from providing them!
  4. Of course, the ultimate  solution is healthier lifestyle choices. For starters, obesity has become  a major epidemic in the US. Employers would be wise to invest in wellness programs and healthy food offerings. Provide free, healthy food, and easy access to filtered water, etc. no matter the size or make-up of your company.  The payback in productivity will more than offset the cost. Think of it      this way: would you rather have your employee go for fast food 5 days a week or eat the free salad in the lunchroom? Who do you think performs better in the afternoon?
  5. I will be conducting a Webinar on this decision and what it means for you in the next few days. Please find my contact information below to get in touch to receive more information!

Below is a brief summary of the decision. You can read it in its entirety by going to the Supreme Court‘s website.

National Federation of Independent Businesses v. Sebelius(US 11–393 6/28/12) Patient Protection and Affordable CareActIn 2010, Congress enacted the Patient Protection and Affordable Care Act in order to increase the number of Americans covered by health insurance and decrease the cost of health care. One key provision is the individual mandate, which requires most Americans to maintain “minimum essential” health insurance coverage. 26 U. S. C. §5000A.For individuals who are not exempt, and who do not receive health insurance through an employer or government program, the means of satisfying the requirement is to purchase insurance from a private company. Beginning in 2014, those who do not comply with the mandate must make a “[s]hared responsibility payment” to the Fed­eral Government. §5000A(b)(1). The Act provides that this “penalty ”will be paid to the Internal Revenue Service with an individual’s tax­es, and “shall be assessed and collected in the same manner” as tax penalties. §§5000A(c), (g)(1).Another key provision of the Act is the Medicaid expansion. The current Medicaid program offers federal funding to States to assist pregnant women, children, needy families, the blind, the elderly, and the disabled in obtaining medical care. 42 U. S. C. §1396d(a). The Affordable Care Act expands the scope of the Medicaid program and increases the number of individuals the States must cover. For ex­ample, the Act requires state programs to provide Medicaid coverage by 2014 to adults with incomes up to 133 percent of the federal pov­erty level, whereas many States now cover adults with children only if their income is considerably lower, and do not cover childless adults at all. §1396a(a)(10)(A)(i)(VIII). The Act increases federal funding tocover the States’ costs in expanding Medicaid coverage. §1396d(y)(1).But if a State does not comply with the Act’s new coverage require­ments, it may lose not only the federal funding for those require­ments, but all of its federal Medicaid funds. §1396c.Twenty-six States, several individuals, and the National Federa­tion of Independent Business brought suit in Federal District Court, challenging the constitutionality of the individual mandate and the Medicaid expansion. The Court of Appeals for the Eleventh Circuit upheld the Medicaid expansion as a valid exercise of Congress’s spending power, but concluded that Congress lacked authority to en­act the individual mandate. Finding the mandate severable from theAct’s other provisions, the Eleventh Circuit left the rest of the Act in­tact.

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