posted 09/13/10 | Enterprise University
By: Beth Grellner, Employee Benefits Practice Leader, WFL
Burton D. Garland, Shareholder, Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
March 23, 2010 the Patient Protection and Affordable Care Act became law. Almost immediately the far reaching implications of this legislation began to impact businesses. Large corporations began by taking charges against their financials for benefits that would no longer be an allowed expense; main street businesses took more of a wait and see approach. But as the regulations unfold, all business owners need to pay close attention.
By 2014, all individuals will be required to have “qualified” health insurance and some employers will be required to provide insurance to their employees or face a fine. The following timeline highlights the major changes and requirements for businesses and individuals:
2010
Employers: Small businesses can receive tax credits if purchasing insurance for employees.
Insurers: Cannot impose pre-existing condition exclusions on coverage for children. Must cover preventive services without copays. Cannot remove coverage when a person becomes ill. Cannot impose lifetime coverage limits.
Uninsured: Individuals with pre-existing conditions receive immediate access to coverage through a high-risk pool. Dependent children can remain on parents’ plans until age 26.
Early retirees: Employers will be able to participate in a reinsurance program to help provide coverage for retirees and their spouses, surviving spouses and dependents over age 55 and not eligible for Medicare.
Medicare Part D enrollees: A $250 rebate check received for those entering the “doughnut hole” gap in coverage in 2010. Rebate payable by April 1, 2011.
2011
Insurers: Required to spend at least 80 percent of premiums on medical services.
Medicare Part D enrollees: Receive a 50 percent discount on brand-name prescription drugs when in doughnut hole coverage gap. Those with health care savings accounts: Federal tax on those who spend health care savings account money on ineligible medical expenses increases to 20 percent.
Over-the-counter drugs: Except for insulin OTC drugs without a prescription are not reimbursable from an FSA or HRA, and are not a tax-free reimbursement from an HSA.
W-2: The value of your health coverage must be disclosed on your W-2 form.
2012-2013
Taxpayers: Medicare payroll taxes increase to 2.35 percent for individuals earning more than $200,000 and families earning more than $250,000. Those with flexible savings accounts: A federal limit of $2,500 for individual pretax contributions per year.
2014
Employers: Companies with 50 or more full time equivalent employees must provide affordable coverage or pay a penalty.
Insurers: Prohibited from refusing to sell or renew policies. Cannot deny coverage for adults with pre-existing conditions. Limits ability to set prices on the basis of sex, health status or other factors. Prohibited from imposing annual limits.
Uninsured: Most Americans required to buy health insurance or pay fines of $95 per individual and up to $285 per family. Families will pay half the amount for children. Families can receive subsidies to buy insurance if they earn no greater than four times the federal poverty level (about $88,000 per year for a family of four). Individuals and small businesses can buy packages through state exchanges.
2015
Uninsured: Penalties for not carrying insurance increase to $325 per individual and up to $975 per family. Families will pay half the amount for children.
2016
Uninsured: Penalties for not carrying insurance increase to $695 per individual and up to $2,250 per family or 2.5 percent of taxable family income – whichever is greater. Families will pay half the amount for children.
2018
Taxpayers: A 40 percent excise tax imposed on high-cost employer-provided policies ($10,200 for individual coverage or $27,500 for family coverage).
2020
Medicare Part D Enrollees: Prescription drug coverage gap eliminated.
Almost daily, new regulations are being formed around this legislation of which all business owners should be aware. So what should you do to help manage and mitigate the impact of this law on your business?
1) Align with professional consultants that can provide accurate and consistent information regarding the developments with this legislation.
2) Have a strategic plan that addresses the timeline of the requirements from the legislation on your business up to and through 2014.
3) Determine whether you should remain a “grandfathered” plan and what that means to the cost of your current health insurance coverage.
4) If fully insured, carefully review the “discrimination” testing that you may be subject to.
5) Update your payroll system to prepare for the additional W2 reporting requirements.
6) Design a communication plan for informing employees about the requirements they will face and how employer sponsored coverage may be changing.
7) Understand the cost associated with “paying” or “playing” in the health insurance market.
It may seem overwhelming to think about all the provisions around Healthcare Reform. Understanding the impact of how this may affect your business will provide you with an opportunity to make strategic decisions now that may influence the performance of your company in the future.
Interested in learning more? Beth and Burt are offering an Enterprise University Class in St. Louis entitled, “Healthcare Reform 101: In Plain English” on Thursday, September 30th. For more information or to register, please click here.
Beth Grellner is professionally focused on long-term strategic management of client employee benefits plans and programs, along with operational execution and the identification and communication of emerging industry trends, issues and market intelligence to client with a focus on current healthcare reform activities.
Burt Garland practices all facets of labor and employment law. In addition to representing clients in federal and state court and before federal and state agencies, Mr. Garland’s practice includes advising clients on employment-related matters and drafting personnel policies, employment contracts, severance agreements, and employee handbooks.