This time, it was in the federal appeals court for the District of Columbia hearing the case Susan Seven-Sky v. Eric Holder, Jr. The court heard arguments from opponents of the act who said the federal government had no right to mandate that individuals purchase health insurance.

The ruling: Senior Judge Laurence Silberman — a Republican appointee — said, in fact, the federal government does have such a right under the Commerce Clause of the Constitution. In Silberman’s words, Congress is empowered to pass such laws because “The right to be free from federal regulation is not absolute, and yields to the imperative that Congress be free to forge national solutions to national problems, no matter how local – or seemingly passive – their individual origins.”

That makes the judicial score 3-1 in favor of the individual mandate of the Affordable Care Act.

Previously, the 6th Circuit ruled that the individual mandate was valid, while the 11th Circuit came to the opposite conclusion, finding that Congress exceeded its authority in enacting that provision. The 4th Circuit dismissed two lawsuits challenging the Affordable Care Act’s constitutionality on technical grounds.

Next stop: the U.S. Supreme Court.

When most of the elements of the Affordable Care Act are in place in 2014, how will employers — and their employees — react? A thorough study provides some answers.

The study, done by McKinsey Co., notes that the Congressional Budget Office has estimated that only about 7% of employees currently covered by employer-sponsored health insurance will have to switch to subsidized-exchange policies in 2014. But the research responses from 1,300 employers covering a range of industries, locations and sizes suggest that effects of the law will be more profound. For example:

• 30% of employers will definitely or probably stop offering coverage after 2014
• Among employers with a high awareness of reform, this proportion increases to more than 50%, and as many as 60% will pursue some alternative to traditional employer plan
• At least 30% of employers say they would gain economically from dropping health coverage, even if they made up for it by paying employees more or offering  other benefits, and
• More than 85% of employees would remain at their jobs even if their employers stopped offering coverage, although about 60% said they’d expect a salary boost to make up for the dropped coverage. That’s counter to the popular belief that employees who don’t get employer-sponsored coverage will jump ship.

To read more on the full study, go here (registration required).

It doesn’t happen often, but the IRS is letting up on some reporting requirements.

The Internal Revenue Service just issued new guidance to employers on reporting the value of employee health benefits, and gave small business an extended exemption on reporting.

IRS issued interim guidance to employers on informational reporting on each employee’s annual Form W-2 of the cost of the health insurance coverage they sponsor for employees. The new reporting is for information only, to inform employees of the cost of their health coverage, and does not cause “excludable” employer-provided health coverage to become taxable.

The Affordable Care Act originally provided that employers were required to report the cost of employer-provided health care coverage on the Form W-2. Notice 2010-69, issued last fall, made this requirement optional for all employers for the 2011 Forms W-2, generally furnished to employees in January 2012. Under the new guidance, the IRS extended the optional reporting to small employers — those filing fewer than 250 W-2 forms — through at least 2012 and until further notice.

IRS Notice 2011-28 also provides guidance for employers that are subject to the reporting requirement for the 2012 Forms W-2 and those that choose to voluntarily comply with it for either 2011 or 2012. The notice includes information on how to report, what coverage to include and how to determine the cost of the coverage.

Your company could be among those eligible for a break from your state and the federal government.

Some 20 states offer tax credits or subsidies to small companies that offer health insurance to their employees. And now the IRS has ruled that if you receive such a credit or subsidy, and you meet all other qualifications, it’s OK take the federal credit, too.

The federal credit is offered on a sliding scale; the bigger your firm, the less of the credit you receive. The federal credit phases out completely for companies with 25 or more employees receiving an average annual wage of $50,000 or more.

Here are the stipulations for qualifying for the full double credit:

• You employ 10 or fewer full-time workers, or the equivalent of 10 full-timers.
• Their average annual wages are less than $25,000.

According to the IRS, the credit also applies to dental, vision and other limited forms of coverage.

For details, see IRS Notice 2010-44.

Amid the publicity of a revived public option, the U.S. Senate quietly added another wrinkle to the health-reform bill. It significantly changes how businesses would be penalized for employees who need subsidies for health coverage.

Sen. Chuck Schumer (D-NY) announced that the Senate is looking at how businesses will pay for employee health insurance, as well as the more publicized possibility of giving states the chance to “opt-out” of the so-called public option, which would be the government-run health-insurance arm.

Regarding the costs to businesses, the Senate is kicking around a plan that would not require businesses to provide health insurance to workers. However, firms with more than 50 employees would be hit with big financial penalties if any of their workers needed government subsidies to buy coverage on their own.

The penalties could be as high as $750 per employee, even if only a few workers needed the subsidy.

That’s tougher than the stipulation in the bill OK’d by the Senate Finance Committee. That proposal set penalties of $400 but only for each employee receiving a subsidy.

‘Opt-in’ proposal
The proposal to allow the opt-in public option — pushed by Senate Majority Leader Harry Reid (D-NV) –  for states is the one that has the best chance for approval by Republicans and moderate Democrats who have opposed the public option until now.

Under the opt-in proposal, each state would be empowered to pass legislation granting or denying access to a public option for residents of that state.