Imminent rulings may have drastic changes to benefits industry

Imminent rulings may have drastic changes to benefits industry

BR Image (Head Shot)A slew of hot-button topics, from health care to retirement, are being discussed in Washington –both on Capitol Hill and in the halls of the Supreme Court. As a result, it is imperative employers remain focused and aware of the looming decisions that could change the benefits community.

“We’re all kind of waiting with bated breath to see what the Supreme Court does,” says Neal Schelberg, a partner with the law firm Proskauer Rose in New York City.

The two more significant cases employers should remain aware of are the questions on health exchange subsidies in the Affordable Care Act in King v. Burwell, and same-sex marriage rights in Obergefell v. Hodges.

Schelberg spoke Tuesday at the 2015 International Foundation of Employee Benefit Plans Washington Legislative Update in Washington, D.C. Along with other industry experts, he discussed some of the important upcoming changes.

At stake, he says, are four words, “established by the state,” which if reversed by the Supreme Court’s decision, could unravel the ACA. This could disqualify close to 10 million residents in 37 states for subsidies, thus making a majority of them uninsured, Schelberg explains.

Should the Supreme Court invalidate the subsidies, Diann Howland, vice president of legislative affairs at the American Benefits Council, says several scenarios could play out:

  • Some states might establish exchanges if their legislature did not prohibit one.
  • Congress could enact a subsidy “patch” until they can replace the effect of the federal exchange.
  • The White House administration could regulate the ACA more “creatively.”
  • Congress and President Barack Obama could forge a new compromise.

“I cannot underestimate the importance of this case. It’s one that could impact many of us in the employee benefits world,” Schelberg adds.

In addition to the ACA legal questions, the Supreme Court has also recently heard arguments on same-sex marriage, another summer legislative outcome that could have a major impact to industry, Schelberg says.

There are more than 1,000 different legal benefits that would be associated with marriage, he notes. And hundreds of briefs have been filed, arguing for and against same sex marriage, from U.S. companies as diverse as Apple, Johnson & Johnson and the New England Patriots. Supporters note inconsistent marriage laws impose an added economic burden on American business in excess of $1 billion a year.

And while there are no landmark retirement cases floating in the Supreme Court, it is still another hotly debated issue on the back burner in Congress, Howland points out.

She says a number of reforms could move this year including new plan designs, additional auto-enroll safe harbors and starter for 401(k) plans.

Retirement tax reform isn’t anticipated to come in the near year or so, but she says the Senate and House are in collaborative talks on a restructure.