Obamacare – What Does it Mean for Your Business?

 

 

 

Like it or not health care reform is a reality.  President Obama has signed the Patient Protection and Affordable Care Act into law and the “fixes” in the reconciliation bill are awaiting his signature.  Even with a law of more than 2,000 pages there are more questions than answers in how the new system will work.  Undoubtedly it will take volumes of new regulations and several years before all of the questions are answered.  In the meantime, here are the areas of most significant impact on Ohio employers:

• All plans will be required to provide dependent care coverage up to age 26, beginning September 2010.
• Plans cannot place annual or lifetime limits on the value of benefits received by any participant, effective September 2010 for annual limits and January 2014 for lifetime limits.
• Requires guaranteed issue and renewability (beginning January 2014) and no pre-existing exclusions for children (effective September 2010).
• Requires all plans to cover certain preventative care without cost-sharing by the participants (effective September 2010).
• Provides tax credits to employers with no more than 25 employees and average annual wages of less than $50,000 that provide health insurance for employees.  For tax years 2010 through 2013, provides a tax credit of up to 35% of the employer’s total contribution toward the health insurance premium for an employer with 10 or fewer employees that contributes at least 50% of the premium.  The credit phases out as firm size and average wage increases.
• Provide grants for small employers that establish wellness programs, beginning 2011, and allows greater employee incentives under all wellness programs beginning 2014.
• Increases the Medicare tax rate by 0.9% on earnings over $200,000/$250,000 (individual/married) and imposes a 3.8% tax on unearned income for these same higher income taxpayers, beginning 2013.

The changes that promise to fundamentally alter the way employers purchase health insurance do not go into effect until 2014.  Beginning January 1, 2014 the following changes are implemented:

• Requires all U.S. citizens to have qualifying health coverage with a phase-in of penalties for non-compliance.  Provides tax credits for most people who earn under 400% of the federal poverty level and who do not have employer sponsored coverage.
• Creates state-based Health Benefit Exchanges, through which individuals and small businesses with up to 100 employees can purchase qualified coverage.
• Assesses employers with 50 or more employees that do not offer health insurance a fee of $2,000 per employee (excluding the first 30 employees).
• Assesses employers with 50 or more employees that do offer health insurance a fee if any of their employees opt out of the employer coverage and receive government premium tax credits to purchase insurance through the exchanges.  The fee is the lesser of $3,000 per employee who receives government tax credits or $2,000 per employee.

Obviously, these are only the broad outlines of the changes that directly effect employers.  Much more detail will emerge as regulations are developed.  Check back for periodic updates.