How Health Reform Will Affect Your Business

Although the reform package has yet to be finalized, major changes are looming. These are some of the ways employers will be effected in the short and long-term:

Health Care Costs The legislation addresses primarily health insurance reform and does little to address the actual cost increases of health care. Businesses and individuals will most likely see increases, not reductions, in their premiums beginning in 2010.

Employer Mandates Effective in 2014, most employers with 50 or more employees must offer coverage to employees. Employers who do not do so may be subject to hefty penalties. The benefit plans offers will also have to meet certain requirements.

Coverage Subsidies Beginning in 2010, some employers who provide health insurance for employees will be eligible for subsidies to off-set the cost of health insurance premiums.

• Small businesses with no more than 20 full-time equivalent employees who pay average annual wages of less than $50,000 can receive a credit of up to 35% of employee premiums. 
• A credit amount of up to 50% of medical premiums will be available to employers with 10 or fewer employees and average annual wages of less than $25,000.
• Employers that provide insurance to retirees over age 55, who are not eligible for Medicare, are eligible for a temporary reinsurance program.

Health Benefit Exchanges In 2014, state exchanges will be established for small businesses and individuals to shop for health insurance. Larger businesses will be able to purchase coverage in the exchanges in the future.

• A temporary national high risk pool will go into effect within 90 days of enactment. (July 1, 2010)
• Restrictions on insurers regarding lifetime limits, excessive waiting periods (over 90 days), rescissions, and pre-existing condition exclusions for children.
• Limitations on insurers' ability to impose annual limits on the dollar value of coverage as determined by the Secretary of Health and Human Services.
• New insurance must pay the full cost of specified preventive care.
• Children can stay on their parents' insurance policies until they are 26.
• Rebates on Medicaid prescription drugs are increased effective January 1, 2010.
• Starting in 2011, health insurers must make rebates to enrollees if medical loss ratios are lower than specified levels.
• Effective January 1, 2011, the elimination of the ability of employers to exclude from taxation (Medicare Part D) the subsidies they receive for maintaining retiree drug coverage for their Medicare eligible retirees.
• Effective January 1, 2011, contributions to employee flexible spending accounts will be limited to $2,500 per year, indexed to CPI, and reimbursements for non-prescription drugs will no longer be allowed.