print version




July 5, 2012

This is Utah SHRM Legal-mail no. 2012-15 prepared for Salt Lake SHRM, the Human Resources Association of Central Utah (HRACU), the Northern Utah Human Resources Association (NUHRA), the Color Country Human Resources Association (CCHRA), the Bridgerland Society for Human Resource Management and Utah at-large members of the national Society for Human Resource Management (SHRM).  This update is best viewed in an HTML format.  Please reply with your name and “UNSUBSCRIBE” in the subject field if you no longer wish to receive this message.







 SUPREME COURT SUSTAINS MOST OF HEALTHCARE REFORM ACT:  The United States Supreme Court recently ruled that the vast majority of the 2010 health care reform law passed by Congress, including the individual mandate to purchase insurance, is constitutional. Republicans in Congress continue to threaten to try to repeal the law, but commentators believe that will be a challenge even if President Obama is not re-elected in 2012. Thus, businesses and HR must continue to plan for the full implementation of the law. Here (below) are some resources to help you remember what the new law requires.

HERE IS MY 2010 SUMMARY OF THE HEALTHCARE LAW, REPRISED:  With all the dust clearing, just how, exactly, does the new health care reform law Congress recently passed impact employers?  I have seen several good summaries on the internet (see links below to a couple of them). The new law attempts to provide coverage for uninsured Americans without drastically impacting Americans who already have coverage through their employers. But there are some impacts to employers highlighted here briefly because the new law: (1) provides reimbursements for certain retiree health benefits through 2014; (2) allows tax credits to small employers (with fewer than 25 employees) who provide employees with insurance; (3) effective six months after passage, mandates various kinds of coverage (e.g. coverage of dependents up to age 26) and prohibits pre-existing condition exclusions and lifetime dollar limits of coverage; (4) like existing rules on pension and retirement funds, prohibits discrimination in favor of highly-compensated employees; (5) beginning in 2014, mandates that larger employers (with 50 or more full time employees) provide coverage to employees or pay a penalty of about $2,000 per year for each full time employee (excluding the first 30 full time employees); (6) mandates that waiting periods to join plans be limited to no more than 90 days; (7) by about 2013 mandates that employers with 200 or more employees automatically enroll employees in the company health plan and allowing opt-outs only if a penalty is paid or other coverage obtained; and (8) beginning in 2018 imposes taxes on certain high value or “Cadillac” health plans; (9) the new law does not require employers to provide health coverage to part-time employees but part-timers will impact the extent to which small businesses will be eligible for government subsidies to provide health coverage and whether certain provisions of the new law will apply to employers; (10) beginning in 2011 requires W-2 reporting (for informational purposes only) of the value of benefits provided; and (11) beginning in 2013, limits employee contributions to health flexible spending accounts to $2,500; (12) imposes many specific coverage and related requirements that will impact how insurers and self-funded plans deliver and administer their plans and benefits. For more information, check out the following links:

(Thanks to Jones Waldo employment benefits and tax attorney Bruce Babcock for contributing to this analysis.)

HEALTHCARE REFORM- WHAT DOES IT MEAN FOR EMPLOYERS IN 2012? I asked Bruce Babcock, my law partner working in the area of benefits and tax law, to again help remind us what the health care reform law all means now that it is the year 2012.  Here is his summary (Thanks again Bruce!)-

“The U.S. Supreme Court’s decision upholding the majority of the health care reform law means that provisions that already went into effect will remain in force, including dependent coverage up to age 26, prohibition of pre-existing conditions and lifetime dollar limitations on coverage and a tax credit for small employers (fewer than 25 full-time employees) who provide insurance to their employees.  It also means that employers will need to gear up to comply with the additional provisions as they become effective.  The additional provisions include:

  • Group health plans must provide a 4 page summary of benefits and coverage (for open enrollments beginning on or after September 23, 2012)
  • Report on W-2s (for informational purposes only) the value of health coverage provided (beginning with W-2s issued in January of 2013)
  • Limit employee contributions to health flexible spending accounts (FSAs) to $2,500 for plan years beginning in 2013
  • Implement 0.9% Medicare payroll tax increase in 2013 for high income individuals
  • Limit waiting periods to join a plan to no more than 90 days beginning in 2014
  • Employers with more than 50 employees must, beginning in 2014, provide coverage to employees or pay penalties
  • Employers with more than 200 employees must automatically enroll employees in their group health plan and allow opt-outs only if a penalty is paid or other coverage obtained (beginning sometime after 2014)
  • Beginning in 2018, a “Cadillac tax” (i.e., 40% excise tax) will be imposed on employers offering certain high value health plans 
  • Insured plans are subject to non-discrimination rules similar to rules that previously applied only to self-funded plans (rules are not being enforced pending IRS guidance)”

AND THIS FROM NATIONAL SHRM ON HEALTHCARE REFORM:  National SHRM has this recent advice for employers regarding the law-

“[Here is] What HR Professionals Should Do Now. [The Court's] ruling is clearly not the end of the debate over health care reform, but rather only the first act. U.S. health costs are projected to be significantly higher than the rest of the developed world, while health outcomes in the U.S. trail other industrialized nations -- often badly. Providing expanded coverage, increasing the health status of our citizens, and better controlling costs are all goals that, while addressed in the PPACA, have a long way to go.The ruling today sends a clear message -- organizations need to review their plans and seize this opportunity to create better strategies around their health plans, both in design and employee communication. For human resource professionals, the message here is very clear -- move forward with implementing and complying with PPACA, since major portions of it take effect in 2014 (a mere 18 months away) and other provisions take effect later this year and in 2013. For example, many employers soon will be required to report the value of employer coverage on IRS Form W-2, and all employers must issue a summary of benefits and coverages. Employers who were waiting to begin planning on how to comply (or whether to even offer or continue to offer health coverage) need to begin performing quantitative and qualitative analyses on their plans. More importantly, they need to begin looking at their health plans as part of an overall HR strategy for their organizations. Key steps employers need to take NOW to plan for 2014:


  1. Determine the strategic implications of whether or not to offer a plan. Health benefits are just one part of an overall total rewards strategy.  How does an organization’s having (or not having) health benefits impact other talent acquisition and talent management strategies?
  2. Review the Supreme Court decision as to its impact on your organization.
  3. If a plan is offered, perform a qualitative analysis on whether it makes sense to remain a grandfathered plan or become nongrandfathered by examining the seven PPACA provisions that apply only to nongrandfathered plans.
  4. Perform a qualitative analysis to determine if existing plans meet qualifying eligibility and affordability standards.  In order for employers to avoid potential penalties, ensure that any health plans offered meet both standards.
  5. Determine the true organizational costs of either offering or not offering health coverage after 2013.  For many organizations, this is not the "no-brainer" that it may first appear.
  6. Perform a quantitative analysis to project the so-called "Cadillac tax" set to begin in the year 2018.

For the HR professional, this is a golden opportunity to reassert the strategic contribution of HR as it impacts an organization's ability to attract and retain the right talent.  Further, it is perhaps a once-in-a-lifetime chance to position and communicate the value of the organization's total rewards strategy.”

SUPREME COURT STRIKES DOWN MOST OF ARIZONA IMMIGRATION LAW: In what was a very busy week, the Supreme Court also issued a ruling striking down most of the Arizona immigration law. The ruling essentially concluded that most substantive immigration law issues must be resolved and determined by the federal government.  Thus, the following Arizona provisions were deemed inappropriate: (1) the provision making it a state crime for illegal immigrants not to possess their federal registration cards; (2) the provision making it a crime for illegal immigrants to work, apply for work or solicit work and (3) the provisions allowing police to arrest illegal immigrants without a warrant when probable cause exists that they committed any public offense that makes the person removable from the country. The Supreme Court did not strike down the provision of Arizona’s law allowing law enforcement officials to check the immigration status of persons stopped for another reason, if there is a reasonable basis to believe a person is undocumented.  However, the Supreme Court said such a provision might be reviewed in the future if there is evidence of racial or illegal profiling. Utah Attorney General Mark Shurtleff has commented that this court ruling will likely invalidate some provisions of Utah’s own immigration law, see:

Written by: Employment Attorney, Michael Patrick O'Brien
Utah State and Salt Lake SHRM legal director
Phone: 801-534-7315

Legal-mail is a legal and legislative update service sent out about twice a month to various Utah SHRM members and chapters. As a courtesy to SHRM, the Utah law firm of Jones Waldo Holbrook & McDonough P.C. underwrites the costs of the service. If you have any questions or comments, please contact Michael Patrick O'Brien.


Disclosure: These updates are merely updates and are not intended to be legal advice. Receipt of this information does not create an attorney-client relationship.