U.S. Supreme Court ruling makes healthcare subsidies legal

On June 25, the U.S. Supreme Court ruled the federal government can continue to provide tax subsidies to eligible individuals with lower and middle who purchased their health insurance through the federal marketplace for affordable coverage. This decision was met with opposition from three Supreme Court justices, but the majority praised the decision. 

King v. Burwell
CNBC reported the government subsidies help about 6.4 million people pay for their health plans. Due to the recent decision by the Supreme Court, the legality of the federal subsidies is confirmed, avoiding a potential rise in insurance prices and the loss of coverage for millions of people in states that use Healthcare.gov as their source of providing medical insurance.

The case, King v. Burwell, dealt with federal and state insurance marketplaces, which allow for the sale of individual health plans to consumers. Almost three dozen states allowed the federal government to set up these exchanges for them, while the remaining 16 set up their own marketplaces.

Challengers to the law believed the government should not be able to give subsidies to people who purchased health insurance from a federal marketplace. Due to the language of the law, they argued subsidies were only for customers of state-controlled exchanges. 

According to The New York Times, about 85 percent of people using both the federal and state-run exchanges qualify for the government subsidies based on their annual income. Incomes eligible for federal aid range from about $12,000 to almost $128,000 yearly, depending on the number of people in one's family, according to Healthcare.gov.

The future of health care
The lack of subsidies would affect the uninsured, insured and insurance companies, the Times reported. No government aid would mean no insurance for those who couldn't afford it, including healthier customers. Instead, insurance agencies would be left with a sicker and more expensive group of people. As a result, coverage prices would increase for everyone.

As a result of this ruling, the ACA remains in place, a major victory for the president's administration, according to the LA Times.

Among the rules that remain is the employer penalty for not providing health insurance to its workers. Had the ruling been rejected, there would be no employer mandate or penalty, as well as no subsidies for employees purchasing individual health plans, according to HR Executive.

For human resources professionals (remove link) to stay within the regulations enacted by Congress, companies should be aware of which full-time employees purchaseing health coverage from the exchange and receive a federal subsidy. This action will trigger the employer penalty. Businesses now have to report that they provide minimum employee coverage to the Internal Revenue Service to avoid ACA compliance fines.

In addition, qualifying employers that do not offer health coverage to their workers and qualified workers who are uninsured face a shared responsibility penalty, according to the IRS. It vital HR teams are cognizant of which employees purchase their sponsored health insurance plan, so they can correctly report that information to the IRS.