With the passage of the Patient Protection and Affordable Care Act, there will be numerous changes and reforms to the financing of health care in the United States. It is very important to note that the legislation is over 2,000 pages and that, over time, it will be interpreted by the various agencies charged with writing regulations and rules that interpret it. As well, numerous items will have to be decided in the courts over time. 159 new agencies and commissions are created by the bill, so you can imagine that it will take many months before we have a definitive understanding of the law’s impact. I would advise that you “take a deep breath” as the various parts of the legislation become reality. That being said, I have attempted to summarize what I feel are the pertinent issues to you as an employer who provides health insurance to your employees as part of your compensation strategy.
The legislation phases in over the next decade. The items that are most immediate and are expected to occur in 2010 or 2011 are as follows:
- Tax credits for certain small businesses that purchase health insurance. Generally, it is for employers with less than 25 employees that have an average annual wage of under $50,000. The credit can be up to 50% of premiums for up to two years if the employer contributes at least 50% of the total premium cost. Certain rules apply to this credit, and it is a tax issue, not an insurance issue, so you will want to speak with your accountant regarding this item.
- Lifetime benefit caps will no longer be allowed. Although this can sound as if it were a big issue, it is relatively minor as current caps on most policies are at or above $5,000,000.
- Dependents will be able to stay on their parents’ coverage up to age 26 (currently, the State of Colorado requires that dependents may stay on their parents’ plan up to age 25).
- For employers that offer Flexible Spending Accounts (FSAs), a new limit will apply of $2,500 per year per employee starting in 2013. Over-the-counter drugs will no longer be eligible for reimbursement under FSAs or HSAs as of January 1, 2011.
- Certain preventative procedures will have to be covered by qualified health plans with no cost share by the covered individual.
- Prohibits health insurers from excluding coverage of pre-existing conditions for children under the age of 19. Effective six months after enactment, applies to all employer plans and new plans in the individual market.
- Prohibits new group health plans from establishing any eligibility rules for health care coverage that have the effect of discriminating in favor of higher wage employees. Effective six months after enactment.
- Creates a long-term care insurance program to be financed by voluntary payroll deductions to provide benefits to adults who become disabled. Effective January 1, 2011. Rules will be forthcoming on this issue as all employees are subject to being automatically enrolled in this program unless they opt out.
I cannot stress enough that any number of items and interpretations of the law are subject to change and that the above items could be amended or changed moving forward. We must all be patient as the regulations and rules evolve in the coming months and years.
Please note that your health insurance carrier will be making changes within plans to comply with the law. You will receive information from them directly as well as through our office as we move forward. We are here to assist you with questions that you have and encourage you to call us as you see fit. We appreciate your continued trust and confidence in our firm.