In what has been termed the most consequential decision of the decade, the Supreme Court generally upheld the Patient Protection and Affordable Care Act of 2010 (PPACA). The decision has far-reaching implications, many of which will financially impact businesses and individuals.
The main provision at issue was whether it was constitutional for the act to require that, starting in 2014, most Americans have a basic level of health insurance or pay a penalty. In a 5-4 decision, the Court found that the provision was constitutional within Congress’s power under the taxing clause. Considered the lynchpin of the health care Act, there had been widespread speculation that if the mandate fell, the Court might also decide that none of the Act’s other provisions could survive.
The decision means that, generally, without congressional action, the provisions of the health care act that already have gone into effect will stand, and the provisions that are scheduled to go into effect in future years will, indeed, go into effect.
As to Medicaid expansion, the court ruled that such expansion is an option and not a requirement for the states. The Chief Justice addressed the Medicaid issue by stating that Congress can offer money to states to expand Medicaid and could attach conditions to such grants but it is “not free to … penalize states that choose not to participate in that new program by taking away their existing Medicaid funding.” The states will not be forced to expand Medicaid in order to maintain current subsidies.
We will continue to watch developments closely and keep you posted on any rulings or legislation that may impact your tax situation. The majority of the provisions of the PPACA will come into effect in 2013 and 2014. For a detailed timeline of the phase-in provisions of the Patient Protection and Affordable Care Act – CLICK HERE.
If you have any questions about the tax provisions in the health care reform laws, please contact us at 847-267-9600. We will be following developments as they ensue after the Supreme Court issues its decision.
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