Plan Sponsors Should Take Action Following PPACA Ruling

June 28, 2012 ( – Although guidance is still needed following the Supreme Court’s decision to uphold the Patient Protection and Affordable Care act (PPACA), plan sponsors should take action now.  

“For plan sponsors, the ruling today means it’s full speed ahead on implementing the provisions of the Affordable Care Act,” Jeff Munn, vice president of benefit policy development at Fidelity Investments, told PLANSPONSOR.

The individual mandate in the PPACA that was upheld (see “Supreme Court Finds PPACA Individual Mandate Constitutional”) requires most Americans to have adequate health coverage by 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 will face penalties.

“The good news is that this ruling adds some stability to the system,” said James Napoli, Washington, D.C.-based senior counsel and head of Proskauer’s Health Care Reform Task Force. “The bad news is there’s a lot of work that needs to be done in a very compressed time period.”

Although employers need guidance from regulatory agencies about several components of the ruling, including what defines a full-time employee, they can still formulate an action plan. For example, employers should take normal steps in preparing Form W-2 health plan reports at year-end and finalizing health care spending account limits. Other implementation tasks such as patient-centered outcomes trust fund fee calculations and “Cadillac tax” accounting should stay on track to reduce the risk of non-compliance, Fidelity said in a report called “Anticipating the Supreme Court Decision: What Employers Can Do Now.”

In the interim, Napoli said employers can still act in good faith in their interpretation of the existing rules. The can make their cost projections now and do headcounts of full-time employees, he added.

“We just learn to adapt, go into it with an open mind,” Napoli said. “Take reasonable steps toward implementation. Take reasonable steps toward projections.”

Munn recommends a two-part action plan: For one, employers should implement a communication strategy to ensure employees understand the law and the employer’s plan for benefit offerings. Employers should also create a compliance calendar and use outside vendors, if needed, to ensure deadlines are met.