health reform: what it means for small business?
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Health Reform: What Does it Mean for Startup Businesses?
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Agenda:• Who We Are?
• Health Insurance in U. S. Today and Brief History
• Health Reform:
– What Exactly Happened?
– What Happens Now?
– Impact to Employers/Employees?
• What Should I Do Now?
• What Are My Options and What Do They Cost?
• What Else Should I Know?
• Questions and Answers
2001 Year founded.
68 Number of group clients.
6,745 Total employees of group clients
99 Average number of employees for each group client
4 Number of employees.
Hartwig Moss Benefits: By the Numbers
Health Insurance in U.S. Today
150M
35M
47M
45M
40M
Group Insurance Individual Insurance Medicare Medicaid Uninsured
Brief History of U.S. Health Insurance:• Pre World War II:
– Limited Employer Involvement– Catastrophic Health Coverage– Individual/Family Focused
• Post World War II: – Group and Individual Policies mostly Guarantee Issue– Wage and Price Controls– Employer Healthcare exempted from taxes and price controls– Group Insurance flourished and transformed
• 10% - Access to providers offering discounted fees for services• 50% - Access to pre-paid services• 40% - Insurance against financial devastation from serious illness/injury
– 1970 – today - Individual Policies subject to medical underwriting – except NY, NJ, MA, RI, ME
– 2009 Tax parity given to Individual Policies
Health Reform: What Exactly Happened?
Within the first year:
• Young adults will be able stay on their parents' insurance until their 26th birthday.• Seniors will get a $250 rebate to help fill the "doughnut hole" in Medicare prescription drug coverage, which falls between the $2,700 initial limit and when catastrophic coverage kicks in at $6,154.• Insurers will be barred from imposing exclusions on children with pre-existing conditions. Pools will cover those with pre-existing health conditions until health care coverage exchanges are operational.• Insurers will not be able to rescind policies to avoid paying medical bills when a person becomes ill.• Lifetime limits on benefits and restrictive annual limits will be prohibited. • New plans must provide coverage for preventive services without co-pays. All plans must comply by 2018.• A temporary reinsurance program will help offset costs of coverage for companies that provide early retiree health benefits for those ages 55 to 64.• New plans will be required to implement an appeals process for coverage determinations and claims.• Adoption tax credit and assistance exclusion will increase by $1,000. The bill makes the credit refundable and extends it through 2011.• A 10 percent tax will be imposed on amounts paid for indoor tanning services on or after July 1. • Businesses with fewer than 25 employees will get tax credits covering 35 percent of their health care premiums, increasing to 50 percent by 2014.
Health Reform: What Happens Now?
In 2011
• Medicare will provide free annual wellness visits and personalized prevention plans. New plans will be required to cover preventive services with no co-pay. • States can offer home- and community-based services to the disabled through Medicaid rather than institutional care beginning October 1. • A 50 percent discount will be provided on brand-name drugs for Prescription Drug Plan or Medicare Advantage enrollees. Additional discounts on brand-name and generic drugs will be phased in to completely close the "doughnut hole" by 2020. • Additional tax for health savings account withdrawals before age 65 for nonqualified medical expenses will increase from 10 percent to 20 percent. Additional tax for Archer medical savings account withdrawals not used for qualified medical expenses will increase from 15 percent to 20 percent. • A plan to provide a vehicle for small businesses to offer tax-free benefits will be created. This would ease the small employer's administrative burden of sponsoring a cafeteria plan. • The Medicare payroll tax will increase from 1.45 percent to 2.35 percent for individuals earning more than $200,000 and married filing jointly above $250,000.
Health Reform: What Happens Now?
In 2013
• Health plans must implement uniform standards for electronic exchange of health information to reduce paperwork and administrative costs. • Contributions to flexible savings accounts will be limited to $2,500 per year, indexed by the Consumer Price Index in subsequent years. • The Employer Medicare Part D subsidy deduction will be eliminated. Employers will lose the tax deduction for subsidizing prescription drug plans for Medicare Part D-eligible retirees. • There will be increases to the income threshold from 7.5 percent to 10 percent of adjusted gross income. Those older than 65 can claim the 7.5 percent deduction through 2016.• The hospital insurance tax will increase 0.9 percentage points for those earning more than $200,000 ($250,000 for married filing jointly), and it includes net investment income. • A 2.9 percent excise tax on the first sale of medical devices will be established. Excepted are eyeglasses, contact lenses, hearing aids or other items for individual use.
Health Reform: What Happens Now?
In 2014
• Citizens will be required to have acceptable coverage or pay a penalty of $95 in 2014, $325 in 2015, $695 (or up to 2.5 percent of income) in 2016. Families will pay half the amount for children, up to a cap of $2,250 per family. After 2016, penalties are indexed to Consumer Price Index.• Workers who are exempt from individual responsibility for coverage but don't qualify for tax credits can take their employer contribution and join an exchange plan. • Companies with 50 or more employees must offer coverage to employees or pay a $2,000 penalty per employee after their first 30 if at least one of their employees receives a tax credit. Waiting periods before insurance takes effect is limited to 90 days. Employers who offer coverage but whose employees receive tax credits will pay $3,000 for each worker receiving a tax credit.• Insurers can no longer refuse to sell or renew policies because of an individual's health status. Health plans can no longer exclude coverage for pre-existing conditions. Insurers can't charge higher rates because of heath status, gender or other factors. • Health plans will be prohibited from imposing annual limits on coverage. • Health insurance exchanges will open in each state to individuals and small employers to comparison shop for standardized health packages. • Credits will be available through exchanges for those whose income is above Medicaid eligibility and below 400 percent of poverty level who are not eligible for or offered other acceptable coverage.• Medicaid eligibility will increase to 133 percent of poverty for all nonelderly individuals to ensure that people obtain affordable health care in the most efficient and appropriate manner. States will receive increased federal funding to cover these new populations. • An annual health insurance provider fee will be Imposed across the health insurance sector according to insurers' market share to companies whose total premiums exceed $25 million.
Health Reform: What Happens Now?
Health Reform Impact to Employers
• Mandated Benefits for All– No lifetime maximums– Preventative Care with no copays or deductibles– Federal Minimum Benefit – rich in comparison to some of the norms
• >50 Employees – Penalty for not offering “Affordable” Mandated Benefits– $3,000/employee receiving exchange subsidy, $2,000 max on all
employees
• <50 Employees – No Requirements, No Penalty
Health Reform Impact to Employees
• Mandated Benefits for All Policies– No lifetime maximums– Preventative Care with no copays or deductibles– Federal Minimum Benefit – rich in comparison to some of the norm
• Individual Mandate– Penalty paid if coverage is not in place. Up to 2.5% of earnings.
• Individual Premium Subsidy (available in 2014):Persons in family Poverty guideline 133% 150% 200% 250% 300% 400%
1 $10,830 $14,403.90 $16,245.00 $21,660.00 $27,075.00 $32,490.00 $43,320.00
2 14,570 $19,378.10 $21,855.00 $29,140.00 $36,425.00 $43,710.00 $58,280.00
3 18,310 $24,352.30 $27,465.00 $36,620.00 $45,775.00 $54,930.00 $73,240.00
4 22,050 $29,326.50 $33,075.00 $44,100.00 $55,125.00 $66,150.00 $88,200.00
Persons in family Poverty guideline 2% 4% 6.30% 8.05% 9.50% 9.50%
1 $10,830 $288.08 $649.80 $1,364.58 $2,179.54 $3,086.55 $4,115.40
2 14,570 $387.56 $874.20 $1,835.82 $2,932.21 $4,152.45 $5,536.60
3 18,310 $487.05 $1,098.60 $2,307.06 $3,684.89 $5,218.35 $6,957.80
4 22,050 $586.53 $1,323.00 $2,778.30 $4,437.56 $6,284.25 $8,379.00
In 2018
• 2018 Taxing "Cadillac" plans: An excise tax will be imposed on high-cost, employer-provided health plans beyond $27,500 for family coverage and $10,200 for single coverage; it will increase to $30,950 for families and $11,850 for individuals, retirees and employees in high-risk professions.
2010 $ 4,829.00 $ 11,074.00
2011 $ 5,215.32 $ 11,959.92
2012 $ 5,632.55 $ 12,916.71
2013 $ 6,083.15 $ 13,950.05
2014 $ 6,569.80 $ 15,066.05
2015 $ 7,095.39 $ 16,271.34
2016 $ 7,663.02 $ 17,573.05
2017 $ 8,276.06 $ 18,978.89
2018 $ 8,938.14 $ 20,497.20
For reference:
Health Reform: What Happens Now?
The Patient Protection Act establishes a SIMPLE cafeteria plan for small businesses. Under the provision, an eligible small employer (up to 100 employees) is provided with a safe harbor from the nondiscrimination requirements for cafeteria plans as well as from the nondiscrimination requirements for specified qualified benefits offered under a cafeteria plan, including group term life insurance, benefits under a self-insured medical expense reimbursement plan, and benefits under a dependent care assistance program.
The employer will be required to make matching contributions to the employee’s pre-tax elections, similar to a SIMPLE IRA, or Safe Harbor 401K. Under the safe harbor, a cafeteria plan and the specified qualified benefits are treated as meeting the specified nondiscrimination rules if the cafeteria plan satisfies minimum eligibility and participation requirements and minimum contribution requirements.SIMPLE Cafeteria Plans will provide much needed relief for small employers who have difficulty passing the Section 125 Discrimination Test Rules. The provision is effective for tax years beginning after Dec. 31, 2010.
What Else Should I Know?
