Supreme Court Upholds Affordable Care Act Tax Credits (June 25, 2015)
The Supreme Court’s 6-3 decision to uphold tax credits for consumers in 34 states with federal health insurance exchanges as part of the Affordable Care Act (ACA) may not have huge implications for the benefit card industry. But, as the second high court decision supporting the ACA, the certainty that comes with today’s King v. Burwell decision could ultimately be positive for the industry.
“I’m somewhat encouraged,” says Dennis L. Triplett, CEO of UMB Healthcare Services, a health care payment solutions provider. “By being upheld, we know what the playing field is and can continue doing what we’ve been doing,” he tells Paybefore. With the atmosphere of uncertainty lifted—at least until the presidential election—Triplett is hopeful that Congress may have a greater appetite for reforming aspects of the law that could have unintended consequences for middle-income workers.
Triplett says adoption of benefit cards of various kinds continues to rise, and some of the ACA has encouraged adoption of high-deductible health plans, many of which are offered through exchanges. One area of concern, however, is the “Cadillac Tax.” As of Jan., 1, 2018, employers will be required to pay a 40 percent nondeductible excise tax on the value of applicable health coverage above the applicable threshold. For 2018, the limits are $10,200 for self-only and $27,500 for family coverage. Although this provision was put in place to ensure that employers weren’t putting funds into rich plans to avoid paying taxes, the actual effects could be felt by millions of union workers and others, Triplett notes.
“The decision does remove a barrier to Congress moving on some important initiatives that would improve the ACA,” adds Chris Byrd, president and COO of Evolution1, a provider of health care payments and software. “On balance we don’t see this decision affecting our market much one way or another and expect continued strong growth in account-based consumer-directed plans.”
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