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Supreme Smoke

Soon, we will be hearing from the U.S. Supreme Court on its’ interpretation of the health care reform law. Will it stay intact or will key features, such as the individual mandate and the expansion of Medicaid, be axed out as being unconstitutional? Or maybe the whole law will be axed?

Needless to say, watching for the Court’s upcoming decision is much like waiting for the black smoke signal to come from the Sistine Chapel at the Vatican (which means that a new pope has been elected). If we see white smoke, that means no decision has been made by the Court…causing even greater uncertainty. OK, maybe I am taking this analogy a bit too far, but hopefully you get my point.  This is a BIG decision – FOR ALL OF US!

Whatever the ruling, there will be great confusion for all employers. If the entire law is overturned, some interesting issues will most likely cause immediate alarm for employers and their employees.

One example is the $5 billion program under this law that partially reimbursed employers for the claims incurred by their early retirees (pre-Medicare eligible). This money has been distributed to employers who qualified for this reimbursement. If the law is thrown out, will those employers have to pay this money back? Don’t know. If so, this would be a very messy process.

The reform law also extended health coverage to employees’ adult children up to age 26 – generally effective on January 1, 2011. With this coverage, employees could add these newly-eligible dependents without being taxed for this additional coverage. However, if the law is overturned, this coverage may be considered taxable income to the employee – possibly requiring employers to send revised W-2 wage and income statements for 2011 to affected employees. Another messy process.

The above two examples portray a potential ugly retraction of provisions that have already been implemented since this law became effective in March of 2010. At this point, employers can only wait for the black (or white) smoke to appear.