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Supreme Court Upholds Obamacare, Small Businesses Face Tough Healthcare Benefit Choices

The Supreme Court upheld the Affordable Healthcare Act and thus paved the way for many changes in the way America's healthcare is delivered.

The decision by 5-4 with Chief Justice Roberts joining the liberal minority, means small businesses will face many new changes starting as early as 2013.

In particular, smaller companies will need to either provide healthcare insurance to employees or pay a per-staffer penalty.

State helathcare insurance exchanges and other parts of the law will move forward unless the laws are changed.

Justice Roberts in his opinion said the law was a tax rather than a mandate, despite the Obama administration's assertion throughout the debate that it was not a tax.

The ramifications of the decision will be felt across the US in coming months and in the Presidential election campaign.

It is expected to galvanize opponents and play a significant role in the campaign.

For smaller businesses it will mean they will most likely drop coverage and pay the penalty, which is cheaper than any healthcare insurance available.

The court’s validation of the individual mandate removes one of the major uncertainties plaguing the legislation, which still faces a contentious political outlook. But employers should stay on track in their efforts to comply with the law as enacted or face penalties, advises Mercer, a global human resources consultancy.

“The Supreme Court’s ruling removes a major source of uncertainty surrounding this important national issue. With all of the law’s provisions still in place, employers will need to redouble their compliance efforts, especially regarding such immediate requirements as providing summaries of benefits and coverage to their employees,” said Julio A. Portalatin, President and CEO of Mercer.

The individual mandate, which has sparked fierce political and legal debate, requires most Americans to have adequate health coverage starting in 2014 or pay a penalty. Also in 2014, employers that fail to offer full-time employees and their dependents affordable coverage with a minimum value likewise will face penalties.

“Employers can expect a spike in plan enrollment for 2014 as a result of the individual mandate,” said David Rahill, President of Mercer’s Health and Benefits business. “But they may see enrollment level off once the state exchanges become operational.”

By 2014, health insurance exchanges will be operating in every state, offering community-rated insurance to certain small employers and individuals, with federal premium tax credits available to help some people buy that coverage.

In the near term, employers also must report the value of employer coverage on IRS Form W-2, cap dollar limits on health care flexible spending arrangements, and increase Medicare withholding for high earners (those earning more than $200,000 per year). They must also comply with the reforms already in effect, such as coverage of dependents up to age 26.

“But first and foremost, employers must estimate how the law will affect their business,” said Sharon Cunninghis, Senior Partner and leader of Mercer’s US Health and Benefits business. “Any employers who have not yet conducted a ‘health care reform check-up’ should make that their first order of business. Employers also should continue to monitor actions of Congress and Administration, especially in light of the November elections.”

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