While many provisions won’t kick in until as late as 2014, some take effect this year (see box below).
Most of those immediate changes affect health insurers and the coverage they must offer. But if your organization provides health benefits, you need to understand this short-term timetable.
Advice: Work with your insurance carrier to learn about how it plans to roll out these new mandates. Your health coverage will be different, and it’s up to insurance companies to communicate those changes to you. But it’s up to you to inform employees about them. Ask your carrier to help develop benefits communications materials you can pass along to employees.
The law means new obligations for insurance companies, plus new responsibilities for employers. Specifics:
The entire reform law rests on the idea that when more people have health insurance—young, healthy people in addition to older, sicker people—risk will be spread out and costs will come down.
The law requires everyone to have health insurance by 2014. Those who choose not to have insurance would pay a $95 penalty in the first year. But the price tag will go up to $695 or 2% of income (whichever is higher) in 2016.
The law is expected to bring insurance to more than 32 million Americans who currently aren’t covered. Within a decade, health reform advocates say, about 95% of Americans will have health insurance, up from the current 83%.
Effects on employers
Technically speaking, the law doesn’t require employers to provide health insurance benefits. However, it does establish strong incentives to do so.
• “Large employers”—those with 50 or more employees—that don’t offer insurance will have to pay an annual tax of $2,000 per full-time worker. The first 30 uncovered workers would not count toward the tax penalty. Small employers (those with fewer than 50 employees) will be exempt from the tax.
Businesses with more than 200 employees must automatically enroll workers into their health plans. Employees would then be able to opt out. These provisions go into effect in 2014.
• Small-business tax credits of up to 35% will take effect this year to help organizations with 25 or fewer employees pay for affordable employer-provided insurance. The IRS will publish these new rules.
Advice: Stay in contact with your insurance broker or carrier. They’ll have this information as soon as it’s available.
• Qualified small businesses will be able to purchase insurance for employees through state-based exchanges known as Small Business Health Options Programs (SHOPs). They will be designed to allow small employers to pool risk together, ideally lowering coverage costs. SHOPs must be in place by 2014.
Note: If you’re a small business and even one of your employees opts out of employer-provided coverage in favor of insurance available through the state-based exchanges, you could be required to provide a voucher worth the value of the per-employee premiums you pay.
This generally applies to lower-income workers who would pay more than 8% of their income for employer-provided coverage.
The law also caps employee contributions to health-related flexible spending accounts (FSAs) at $2,500 per year in 2011 and beyond. Employees will no longer be able to use FSA funds to pay for over-the-counter medications.
Tip: Ask your FSA provider about plans to implement this change. Employees will want details before they commit to FSA contributions next year.
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