4 Ways the Upcoming Supreme Court Obamacare Decision Will Affect Your Business
(This post originally appeared on Inc.)
Do you support Obamacare? Oppose it? This doesn’t matter. You’ve got a business to run. And the smart business owners I know put their emotions aside and deal with the facts.
You’ve got some thinking to do. That’s because by the end of June the Supreme Court will be making a decision about Obamacare in King v. Burwell that could have an enormous impact on your business…or not. Let’s first set the stage.
A huge part of the Affordable Care Act (ACA) is subsidies. In 2014 it became law that all Americans must have adequate health care coverage or face penalties–the individual mandate. Many Americans cannot afford even the most basic plans. So the government is providing subsidies to those who need the financial help (generally those that fall under 400 times the poverty limit, or earning $46,680 individual or $95,400 for a family of four). The law states that the subsidies would be paid by the individual’s state exchange.
But someone noticed a problem. 34 states elected not to have an exchange, instead opting for their residents to use the federal exchange, otherwise known as Healthcare.gov. So, in effect, these 7.5 million Americans are illegally receiving subsidies from the federal government, instead of through a state exchange. According to this report, nearly 87 percent of all Obamacare enrollees qualify for a subsidy, depending on their annual household income. And this is what King vs. Burwell is all about.
If the Supreme Court, which heard arguments in this case back in March, sides with the plaintiff, then there’s a big problem. What do to with all those people who are required by law to have health insurance, but can’t afford it because they would no longer be eligible for subsidies? What will Congress, now controlled by the very Republicans who oppose Obamacare and want to repeal it, do? How will the individual states who don’t have exchanges respond? (, the governor of my home state of Pennsylvania, for example, has already publicly stated that he will build an exchange.) And how does this affect your business?
1. The Affordable Care Act is still law. Subsidies aside, the main provisions of the law are not affected by this ruling. Congressional Republicans are meeting frequently and say they have a contingency plan. But most agree there is zero chance that the president will sign any bill that repeals the individual or employer mandate. Which means that unless something really dramatic happens, you must still plan on providing affordable health care coverage for your full-time employees if you have more than 100 full time equivalent workers(full-timers and part-timers) as of January 1, 2015 and 50 full-time equivalent people as of January 1, 2016. Or you’ll face a penalty.
2. Your health care policies still stay the same. Insurance companies are still required to provide coverage for the minimum level of essential health benefits, such as not discriminating for pre-existing conditions, reimbursement for contraception, coverage for dependents, maternity care, etc. You will still see the same Bronze, Silver, Gold and Platinum plans. However, your costs could be significantly going up. And the following two points explain why.
3. More of your employees will want coverage under your plan. Some of your employees may be opting to get their insurance from a health care exchange because, with subsidies, it’s less expensive than what you’re offering. This is good for you, the employer, because you’re not incurring that cost. But this is also bad for you, the taxpayer, because it’s the taxpayer subsidies that are paying for this (but let’s not go there). However, if those subsidies are taken away because you’re in a state that doesn’t have its own exchange then the employee will need to turn to your plan to stay in compliance with the individual mandate. Your company will then be incurring the cost of paying for his health care coverage, where previously you weren’t.
4. And you’ll be paying even more because it has to be affordable. The ACA requires that employees cannot be paying more than 9.5 percent of their household income for health care costs. The lower earners that were previously receiving subsidies will hit that threshold sooner than everyone else. You will need to jump in and contribute more to their cost in order to keep it affordable for them.
The bottom line? Check this map to see if you’re in a state affected by this ruling. If you’re in a state with its own exchange, then you’re not affected–yet. That’s because no one knows yet what changes could be made to the law or the potential effects on premiums and other costs to the insurance industry if exchange enrollment drops. If you’re in a state that relies on a federal exchange then you have to focus on your lower-paid people, the ones who may be receiving their subsidized insurance from an exchange. You’ll need to help them decide what their options are and you’ll need to budget for the additional cost if they choose to come on board with your plan (which is more than likely).
Yes, I agree that sometimes running a business can be maddening, particularly when the government is involved. But when it comes to big issues like employee health care, we need to put our emotions aside and make our plans based on the facts. And hey–that’s why we make the BIG bucks, right?