b'U.S. SUPREME COURT ISSUES Two Major Rulings Impacting EmployersPaul RouthT he U.S. Supreme Court issued two major rulings theCongress intent, only Congress can change the rules.In other week of June 22, 2015 that impact personnel policies andwords, it will literally take an act of Congress to modify the employer sponsored benefit plans. rules governing the premium subsidies.King v. Burwell This is a link to an article that discusses the case and The Court announced the King decision on June 25.Thisit will literally take an act of case involved the premium subsidies under health care reform.By way of background, health care reform provides governmentCongress to modify the rules subsidies to low and moderate income individuals who getgoverning the premium subsidies.their coverage through a health care exchange or marketplace.Congress envisioned that the states would establish and runexplains how the Courts decision cements health care reforms their own exchanges or marketplaces.However, as a backstop,near term future.Thetake away is that employers need to the law provides that the federal government would step in andrealize Obamacare is the law of the land and they must comply run the exchange or marketplace if the state failed to establishwith the rules as they are currently writtenit is not going its own exchange or marketplace. away.As it turned out, 36 states opted not to set up their ownhttp://healthaffairs.org/blog/2015/06/25/implementing-health-exchanges or marketplaces.Thus, the federal governmentreform-the-supreme-court-upholds-tax-credits-in-the-federal-started running the exchanges or marketplaces in those states. exchange/However, the statute clearly stated the government subsidies were only available to those who got health coverage throughObergefell v. Hodgesan exchange or marketplace established by a state.In anyThe second major Court decision was released the following event, the Internal Revenue Service issued regulations sayingday on June 26.In a 5-4 decision the Court held the U.S. the premium subsidies were available to individuals who gotConstitution requires all states to license and recognize same coverage through the exchange or marketplace even if thatsex marriages.Note that the ruling applies to the various exchange or marketplace was run by the federal government. states and their instrumentalities but not to private employers.Several lawsuits were filed saying the Internal RevenueNevertheless, the ruling will impact employers, especially Service did not have the authority to issue regulationsin those states like Ohio which did not recognize same sex saying the premium subsidies were available under all of themarriages.exchanges or marketplaces (including those operated by theEmployer sponsored health and welfare plans will be federal government).The Plaintiffs said the subsidies wereimpacted by the Courts ruling.The Courts 2013 Windsor only available if the exchange or marketplace was run by adecision required federal laws (e.g. ERISA and the Internal state as opposed to being run by the federal government.TheRevenue Code) to treat same sex and opposite sex spouses the Defendant (i.e. the government) said it really didnt mattersame.Since qualified retirement plans are governed by both if the exchange or marketplace was operated by the state orERISA and the Internal Revenue Code, the Obergefell ruling federal government.The federal government said the Internalwill have little impact on qualified retirement plans.Revenue Service has the right to issue regulations saying who is entitled to the premium subsidies. The Obergefell ruling does not require employers to offer The Court ruled that the premium subsidies are availablehealth coverage.In fact, health care reform specifically under both state and federally operated exchanges orprovides that employers need not offer health coverage to marketplaces.The ruling, however, was not based on thespouses.As a result, it is up to the employer whether or not to Internal Revenue Services regulations.Instead, the Courtoffer health coverage.However, all insured group health plans ruling is based on the Courts interpretation of the statute.have to comply with state insurance laws and, as previously That is, the Court looked at the intent of the law and decidedmentioned, all states have to recognize same sex marriages.that Congress wanted the premium subsidies to be based onTherefore, employers sponsoring fully insured group health the persons income and not whether or not the person gotplans will have to check with their insurance company to coverage through a state or federally operated exchange ordetermine if the applicable state law requires the carrier to marketplace. provide health plans that offer spousal coverage.If that is the case, then an employer with a fully insured health plan will Although the end result is the same, it is important to notehave to treat same sex and opposite sex spouses the same the basis for the Courts decision.If the Court had simplyunder the fully insured group health plan.ruled it was within the Internal Revenue Services authority toIf the employer is sponsoring a self-funded group health issue regulations saying the premium subsidies were availableplan, ERISA preempts state law so the employer has more to everyone, the laws future would have remained uncertain. flexibility when setting the plans eligibility requirements.Based on this logic, the Internal Revenue Service, under aMany self-funded health plans simply define spouse based different administration, could change its position.However,on state law.So, if the employer wants to exclude same sex since the Courts decision was based on what it perceived was 20 www.mrca.orgMidwest Roofer'