July 14, 2010

Whether you’re excited or upset about the sweeping health-care legislation that the President signed into law in March (the Patient Protection and Affordable Care Act, and the Health Care & Education Reconciliation Act), you need to know what it will mean to your business.  

Here’s a brief “cheat sheet” on what the healthcare reform means for your business:

Immediate Changes

Although many features of the plan won’t take effect until 2014, here are some immediate changes that may affect you:

• The law will establish a temporary national high-risk pool to provide health coverage to individuals with pre-existing medical conditions. States can also set up their own high-risk pools.
• Effective immediately, insurers can no longer put lifetime limits on insurance coverage or cancel policies (“rescission”) unless they can prove fraud.
• Tanning salons will face an additional tax of 10 percent on the amount paid for indoor tanning services.

You do not have to begin offering your employees insurance if you don’t currently do so. However, if you choose to offer insurance, there’s an immediate tax benefit for small businesses with fewer than 25 employees.

• If your business has 10 or fewer full-time employees who make less than $25,000 a year on average, you can get a tax credit of 35 percent of the cost of health coverage.
• If you have 11 to 25 workers with an average wage of up to $50,000, you can receive partial tax credits.

You can continue getting this tax credit (increasing to 50 percent) for the first two years after 2014 if you use SHOP Exchanges (more on those below) to buy insurance. The SBA has estimated that about 4 million small businesses will benefit from the tax credits. (You can find out more about health-insurance related tax credits on the IRS website.)

Future Changes

By 2014, states must set up Small Business Health Options Programs, or “SHOP Exchanges,” where small businesses can pool to buy health insurance. (Currently, small businesses are defined as 100 or fewer employees, but states can redefine them as having 50 or fewer employees.) States will be eligible to get federal aid to set up SHOP exchanges as early as 2011. The Congressional Budget Office estimates purchasing through SHOP would decrease businesses’ costs by 1 percent to 3 percent. By 2017, businesses with over 100 employees will be able to buy insurance through SHOP Exchanges.

Other changes taking effect in 2014:

• If you have more than 50 employees, you must either provide health-insurance coverage or pay fines.
• Insurers will be prohibited from setting rates based on pre-existing conditions.

How to Stay Informed

The health reform legislation is complex, and many details are still being worked out. There are also legal challenges being made to some provisions of the legislation (we’ll report more on this later). I consider it likely that some things will change before all is said and done.  So, continue to follow developments as they unfold.

Meanwhile, talk to your insurance provider and accountant to assess how the changes will affect your business now and going forward.
 

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Join the conversation ( 6 )

• Anita Campbell 1 year 9 months and 19 days ago

  

  Martin, I don't agree with all aspects of the healthcare reform, especially how the costs will impact us. The costs have been seriously underestimated, I believe, especially the tax burdens it mean for many of us. Heaven knows, I'm no fan of increased taxes -- I never met a tax I liked. Someone has to pay for these programs, and it usually falls on people like small business owners.That said, we desperately needed something done. The healthcare situation in this country has been broken for a long time and getting worse each year -- it is just untenable for many people. If we're supposed to be an advanced country, we couldn't leave things the way they were. Sometimes even a flawed solution is better than the status quo. I just hope that some of the most egregious parts of the healthcare bill (that impose new burdens on us) will get tempered before they go into effect, and what we'll be left with is a net improvement over the current situation. - Anita

• Anita Campbell 1 year 9 months and 19 days ago

  

  Michael, that's an interesting concept about using the healthcare tax credit to fund a high -deductible plan. I'll bring that up with my CPA to discuss....- Anita

• Anita Campbell 1 year 9 months and 19 days ago

  

  Medforma, That's a great point about emphasis on wellness. So many things are preventable or the severity can be controlled, if we just manage our health better. Thanks for bringing that up.- Anita

• Martin Lindeskog 1 year 9 months and 20 days ago

  

  The health care reform needs an antidote of better ideas according to my view. I hope organizations like Americans for Free Choice in Medicine - www.afcm.org - and Freedom and Individual Rights in Medicine - www.westandfirm.org - will be able to reach out in the public debate, so we could see a real change in the future. I see how socialized medicine has destroyed European countries like Sweden.Michael Webster: It is interesting to see new alternatives presented like the small business tax credit. My question is: How will you cut all the red tape and simply the system and let the doctors doing their job without bureaucrats intervening all the time?Best Premises,Martin Lindeskog - American in spirit.Gothenburg, Sweden.

• Michael Webster 1 year 9 months and 21 days ago

  

  Anita, good article. One thing your readers should be aware of is there are different ways to access the health tax credit, especially if you are working.I would like to point out an additional way to access the health tax credit: combining a limited medical benefits program with a high deductible HMO. Ordinarily, the limited medical benefits program would not qualify for the credit, but wrapped with a HMO it very well might.The example is here: http://www.franchise-info.ca/supply_chain/2010/07/Small-business-tax-credits.htmlIt is a pretty neat idea: using the health tax credit to essentially fund a high deductible.

• BARBARA REINDL PJEVACH 1 year 9 months and 27 days ago

  

  Anita, thanks for the summary and the link to the printed summary timeline! I think the new law also really emphasizes increasing efforts to increase wellness. And employers have a captive audience in their employee base to create this focus AND help reduce health care costs. 80% of health care costs are due to preventable diseases....so there is much return to reap if employers focus on low-cost and effective wellness assistance that is available.