Health Care Watch: What the Supreme Court ruling means for you

Health Care Watch: What the Supreme Court ruling means for you

More than a week after the Supreme Court has upheld the 2010 health care law’s individual mandate, restaurateurs look to industry insiders to help them navigate through the changes to come.

The court called the mandate a tax under Congress’ tax-and-spend authority as cited in the U.S. Constitution. It also ruled that states can choose whether or not to participate in the Medicaid expansion under the law, and the federal government cannot coerce them to participate by threatening to pull the funding for their current Medicaid program if they refuse.

So what does this mean for the foodservice industry? Following is a brief synopsis:

All of the employer requirements stand. Beginning in 2014, employers with 50 or more full-time equivalent employees must offer affordable health-care coverage that is of minimum value to their full-time workers and their dependents or face potential penalties. Called applicable large employers, they must also provide specific information to the Internal Revenue Service regarding the kinds of plans they offer and to whom they offered coverage. Furthermore, the employees must receive the same information the IRS does.

For employers with 200 or more full-time employees, they must automatically enroll those full-time employees into least-cost coverage no more than 90 days after hire. Rules for this, however, also aren’t expected until 2014.

In addition, the law will require employers to become a resource for employees, especially where it concerns the state exchanges. Notice requirements on the exchanges will begin in March 2013.

Also, new taxes were passed and existing ones increased to “pay for” the law. A new health insurance tax on insurers will be passed down to small businesses and individuals in the form of higher premiums. Another increase, in payroll tax, will impact many small business owners and now will include net investment income, including capital gains.

Americans must purchase minimum essential coverage for themselves and their dependents. Because the individual mandate was upheld, employees will be responsible for purchasing coverage or pay a tax on their tax returns for not doing so. There are some exceptions for those who don’t earn enough to file their taxes, and other allowances, but for the most part, all Americans will be required to have “minimum essential coverage.” They could obtain that coverage through their employer, through the state exchange, Medicaid, Medicare or certain other state and federal programs. Also, those individuals who are under the age of 30 can purchase catastrophic coverage to satisfy this requirement. Still, that type of coverage does not satisfy the employer mandate.

The impact of the ruling on the Medicaid Expansion is still to be determined. This will depend on whether a state chooses to participate in the expansion program or not. Medicaid is a joint federal-state program that originally was designed to help certain people, such as poor youth and the disabled. The health care law greatly expanded that eligibility to anyone with income below 133 percent of the federal poverty level. Many states are concerned about their ability to fund such an expansion and the impact this would have on their budgets.

Some restaurant employees could be impacted as to where they obtain their minimum essential coverage — Medicaid, exchange or employer — depending on whether or not they qualify for Medicaid under the new eligibility requirements.
If a state chooses not to participate in the expansion program, an employer’s plan could be impacted as more full-time employees trigger penalties if the plan is “unaffordable” for those employees under the law.

Exchanges – another decision for states. Will each state set up its own exchange, engage in a partnership to run it jointly with the federal government, or will the Department of Health and Human Services run the federal exchange in the state? Under the law, states are required to establish and operate an exchange — a marketplace for the individual and small group insurance markets. Exchanges may be a place where restaurant operators could purchase small group plans for their businesses or where individuals find coverage. The idea is that exchanges would pool people together to reduce the cost of coverage for everyone. At first only those with 50 or fewer people to insure can purchase coverage on the state exchanges, but each state may choose to allow large group plans — 51+ or 100+ lives insured — in future years.

If a state does not choose to set up an exchange or partner up with HHS, the federal government will operate one for them. If they do choose to set up their own or partner with HHS, states will be given flexibility in how the exchanges operate. Furthermore, each state may be different. While only a few have passed legislation or issued executive orders establishing exchanges, most states have accepted federal planning grants to develop an exchange. And several key deadlines are fast approaching. By mid-November, states that want to partner up with HHS will have to submit a blueprint for their plans and will have to prove to HHS by Jan. 1, 2013, that they will be ready to operate their exchanges by Jan. 1, 2014.

You can determine your responsibility and find out more about what employers must do to comply.