Health Care Reform and Small Businesses

Well it finally happened … A Health Care Reform bill was passed. Regardless of your politics and thoughts regarding what is right or wrong regarding the process or final product, the Patient Protection and Affordable Care Act is now the latest law regarding national health care.

OK, we know there will be changes that will affect all of us, either in increased access to purchasing a health care policy or to the ultimate cost of health care. And yes, there is little doubt that when you add 32 million people who were previously uninsured, you have affected supply and demand and ultimately cost.

On the demand side, we will now have up to 32 million seeking access to the primary care health care delivery system. I don’t know about you but I think I should expect to have to wait a little longer for elective services and routine appointments. However, the emergency rooms should be less crowded. You and your family just might want to plan ahead a little better!

But what about how the new law affects employers with less than 25 full time equivalent (fte) employees? The new HC Reform law effective January 2011 offers small employers a tax credit to assist them in purchasing health insurance for their employees.

The tax credit is partially available to employers with fewer than 25 FTE (full-time equivalent) employees whose average wage does not exceed $50,000 per employee. Indeed, the full credit is only available to employers with 10 or fewer FTEs with an average annual wage of $25,000 or less and phases out as you get closet to 25 fte’s. It is not available to the self-employed and only covers employees, not owners or their families.

The credit currently covers 35% of the employer’s contribution for employee insurance premiums up to 35% of the average cost of an insurance plan in the small group market in the rating area. For tax exempt organizations, the credit is 25%. Once the new health insurance exchanges go online in 2014, the credit will be increased to 50% for businesses and 35% for exempt organizations, but the credit will only apply for insurance purchased through an exchange and will expire after an employer has received the credit for two years.

The employer must pay directly (and not through a salary-reduction agreement) at least 50% of the premium for employee coverage and must pay a uniform percentage of the premium cost for all workers. A business can set off the credit against income tax owed (including the AMT), and can carry the credit forward for 20 years or backwards for one year (after 2010). Tax exempt organizations can set off the credit against withholding and Medicare taxes that they owe for their employees.

The immediate changes for 2010 are:
1. Tax Credits for small business
2. Help for Seniors with the cost of Drugs in the Doughnut Hole
3. Elimination of Pre-existing conditions exclusions for children
4. A High Risk pool for anyone turned down due to Pre-Existing Conditions
5. Re-Insurance for early retirees (55 to 64)
6. Prohibition on Rescission of insurance policies if you get really sick
7. No More Lifetime Limits on insurance policies
8. Unmarried Children can stay on their parent plan (up to 26th birthday)

As of 2011, in addition to the claims to premium rations described above, there are many changes designed hopefully to affect growing the number of primary care health care providers (doctors and nurses) and improving the quality of care being delivered. As with everything else, only time will tell.

And finally, as of 2014, we will have a health care exchange in every state and possibly some new plans called Coops.

The exchanges will be made available initially only to the uninsured individuals and small groups (less than 100 employees). The carriers will offer Qualified Benefit Plans and the plans will be required to meet certain standards regarding the insurance products they offer and the services they provide.

Is there more to this bill? With over 2000 pages, there are sure to be more changes. Only time will tell how the law will finally be unraveled.

Written by Chuck Kiskaden. Learn more about business-to-consumer insurance agency GroupHealthBid HERE