Health Care Reform – How Will It Affect You and Your Business?
On Sunday, the House of Representatives passed H.R 3590. H.R. 3590 is the Senate version of health care reform, which was passed without changes and is supposed to be signed by the President March 23rd. The debate is over for now except for the modifications the Democrats are seeking through reconciliation in the Senate. The following are elements of the legislation that we have culled from briefings on the Senate bill. To view summaries of the bill’s provisions by subject or timeline go to http://dpc.senate.gov/dpcdoc-sen_health_care_bill.cfm
Implementing health insurance reform will take some time. However, many immediate reforms will take effect in 2010. The Patient Protection and Affordable Care Act will:
- Eliminate lifetime and annual limits on benefits, with annual limits prohibited in 2014
- Prohibit rescissions of health insurance policies when someone becomes ill
- Provide assistance for those who are uninsured because of a pre-existing condition
- Prohibit pre-existing condition exclusions for children
- Require coverage of preventive services and immunizations
- Extend dependant coverage up to age 26, which allows inclusion in parents group policies
- Develop uniform coverage documents so consumers can make comparisons when shopping for health insurance
- Cap insurance company non-medical, administrative expenditures
- Ensure consumers have access to an effective appeals process and provide consumers a place to turn for assistance navigating the appeals process and accessing their coverage
- Create a temporary re-insurance program to support coverage for early retirees
- Establish an internet portal to assist Americans in identifying coverage options
- Facilitate administrative simplification to lower health system costs
Below are some of the changes that might interest you or your employees. Where possible, we have included the date these changes take effect.
- The Patient Protection and Affordable Care Act will offer tax credits to small businesses beginning in 2010 to make providing employee coverage more affordable. Tax credits of up to 35 percent of premiums will be immediately available to firms that choose to offer coverage; later, when Exchanges are operational, tax credits will be up to 50 percent of premiums. The full credit will be available to firms with 10 or fewer employees with average annual wages of $25,000, while firms with up to 25 or fewer employees and average annual wages of up to $50,000 will also be eligible for the credit.
- Employers with more than 200 employees will be required to automatically enroll all employees in their health insurance plans, allowing individual workers to opt-out. (2014)
- Penalties for not providing coverage. Employers with more than 200 employees must automatically enroll new full-time employees in coverage. Any employer with more than 50 full-time employees that does not offer coverage and has at least one full-time employee receiving the premium assistance tax credit will make a payment of $750 per full-time employee. An employer with more than 50 employees that offers coverage that is deemed unaffordable or does not meet the standard for minimum essential coverage and but has at least one full-time employee receiving the premium assistance tax credit because the coverage is either unaffordable or does not cover 60 percent of total costs, will pay the lesser of $3,000 for each of those employees receiving a credit or $750 for each of their full-time employees total. (2014)
- Employers will be required to provide notice to their employees of their health insurance options, including coverage through the Exchange, which will be created by 2014.
- Cafeteria Plan Changes. In 2011 the bill creates a Simple Cafeteria Plan to provide a vehicle through which small businesses can provide tax-free benefits to their employees. Increase penalties for paying unqualified expenses through cafeteria plans
- Require employers to report the value of health insurance benefits on the employees W-2 (2011).
- Requirement to buy insurance. Individuals who can afford to purchase health insurance coverage but do not do so will face a penalty of the greater of $95 in 2014, $495 in 2015 and $750 in 2016, or up to two percent of income by 2016, up to a cap of the national average bronze plan premium. Families will pay half the amount for children up to a cap of $2,250 for the entire family. After 2016, dollar amounts will increase by the annual cost of living adjustment. (2014)
- Immediately eliminates exclusions for pre-existing conditions for children (until insurance exchanges are created) and prohibits medical underwriting and exclusions for pre-existing conditions in 2014.
- New tax credits will subsidize premiums for those earning up to 400 percent of the federal poverty level (up to $88,200 for a family of four in 2010).
- Premium tax credits to limit the amount an individual spends on their health care premium from two percent of income at 100 percent of the Federal Poverty Level (FPL) to 9.8 percent of income from 300-400 percent of the FPL.
- Eliminates Lifetime Limits. Prohibits insurers from imposing lifetime limits on the amount of coverage an individual may receive. (2010)
- Health Insurance Regulations. Prohibit insurance companies from refusing to sell or renew policies due to an individual’s health status. Insurers can no longer exclude coverage for treatments based on pre-existing health conditions. It also limits the ability of insurance companies to charge higher rates due to heath status, gender, or other factors. Premiums can vary only on age (no more than 3:1), geography, family size, and tobacco use. (2014)
To Meet the Needs of Young Adults
- The Patient Protection and Affordable Care Act will create a Health Insurance Exchange (including a catastrophic-only coverage option) so young adults can decide how much coverage they want. The Exchange will provide a wide variety of choices – including private options and a public option to ensure more choices and increased competition.
- The Patient Protection and Affordable Care Act will allow young adults to stay on their parents’ health care plan until age 26. This will help to cover many of the one in three young adults who are uninsured
- A qualified health plan, to be offered through the new American Health Benefit Exchange, must provide essential health benefits which include cost sharing limits. No out-of-pocket requirements can exceed those in Health Savings Accounts, and deductibles in the small group market cannot exceed $2,000 for an individual and $4,000 for a family. Coverage will be offered at four levels with actuarial values defining how much the insurer pays: Platinum – 90 percent; Gold – 80 percent; Silver – 70 percent; and Bronze – 60 percent. A less costly catastrophic-only plan will be offered to individuals under age 30 and to others who are exempt from the individual responsibility requirement.
This report is compiled from the Senate site that reviews the provisions of the 2,700 page legislation that was passed by the House of Representative on March 21st. This is not a complete review of a very complex legislative initiative that includes many other provisions, regulatory requirements and tax provisions. For example, the IRS will enforce the provisions in the legislation to require consumer and employer compliance. Do not rely on this summary as tax advice. Consult a qualified tax professional before making decisions about the matters covered in this article.
Colorado Governor and Lobbyists Send Colorado Right to Float Bill Into Legislative Black Hole
Last minute lobbying by Colorado’s Governor and more than 19 lobbyists from various organizations, according to one account, sunk efforts to ensure the right to float on streams in Colorado. The bill, which had passed the Colorado House of Representatives, was sent away by the Senate for study until October 31st ending any chances that the bill will be passed in 2010. Previously, the Senate Judiciary committee has limited the bill to streams that had been rafted commercially since 2000 and eliminated the right to portage around obstacles. Before its defeat, the bill had also been modified to apply floating rights to private boaters.
Outfitters have not given up the fight and are looking at other options.