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Brokers and Employers - Health Care Reform and You - What's Ahead?

The Patient Protection and Affordable Care Act is now the law and with it will come changes to health insurance coverage for businesses and individuals. This year, very little will change for businesses. This article explains what changes this year and what changes are ahead in the future.


What changes right away?
In New York, Vermont and New Hampshire, most of the major market reforms like community rating, guaranteed issue and prohibitions on rescinding coverage due to illness that are included in the new law are already in place under existing state laws. For employers in these states this means less change than for employers whose businesses are located in other parts of the country.

 

Here’s a timeline of the major changes that will affect your business:

 

 

 

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For plan years on or after September 23, 2010:

  • Health insurers will have to remove lifetime dollar limits on coverage and allow children to stay on their parents’ policies until age 26.
  • Insurers must also lift limitations based on pre-existing conditions for children to age 19.
  • The Act lifts restrictions on pre-existing conditions for adults beginning in 2014.

Starting in 2011:

  • Flexible spending accounts, which allow users to pay for many medical expenses with pre-tax income will be limited and accountholders will no longer be able to use the accounts for over-the-counter medicines, except for insulin, without a doctor’s prescription.
  • The small employer tax credit begins.

Starting in 2013:

  • High-income earners — families making more than $250,000 – will begin paying several thousand dollars more in Medicare payroll taxes. Their investment income, now exempt from the payroll tax, will also be subject to a 3.8 percent tax.
  • States will establish exchanges through which individuals and small businesses can purchase health insurance with effective dates in 2014.

Starting in 2014:

  • Insurers will have to pay excise taxes on premiums. MVP has estimated this tax will add 7 to 8 percent to the total premium.
  • Most Americans will be required to buy health insurance or pay a penalty and large employers will be required to offer insurance or pay a penalty.
  • Employers may also be required to offer their employees with income of 400% of federal poverty or less and whose coverage costs between 8-9.8% of their household income, a voucher to be used to purchase health insurance through the state exchanges.

 

The materials on this site have been provided for informational purposes only and should not be construed as legal or tax advice or as a recommendation of any kind regarding health care reform.  Users of this site should seek professional advice from their own legal counsel or tax adviser with respect to their specific circumstances.