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Insights: Health Care Reform

By May 1, 2010December 6th, 2017Employee Benefits

Group Benefits Insurance Solutions

Health Care Reform – What does it mean to me now?

The following is a summary of the key components of the healthcare reform legislation and how it may impact you and your business. Given the number of years that it will take to fully rollout these reforms, there will continue to be changes to many elements of the legislation. However, for the first time in over a year, we have a much clearer view of the changes that will potentially take place. This bill will:

  • Mandate that everyone must have insurance.
  • Result in more than 30 million additional people becoming insured.
  • Provide for subsidized coverage for people that can’t afford it and increase the number of people that will qualify for Medicaid.
  • Make cuts to Medicare Advantage Plans and change their payment formula.
  • Increase taxes and fees to many individual Americans and Corporations.
  • Make many changes to the way Insurance Companies do business from not allowing them to use pre existing conditions to limiting their rates based on medical loss ratios.

Many of these elements do not phase in for many years. Those that are most immediate and are expected to occur in 2010 are:

  • Tax credits for certain small businesses.
  • Elimination of pre-existing conditions and an increase in dependant coverage to age 26.
  • Creation of a temporary reinsurance program to provide coverage for retirees over 55 who are not eligible for Medicare.
  • The further creation of a temporary national high risk insurance pool.
  • The prohibition of lifetime limits on benefit payments.
  • Closing the so called “doughnut hole” by providing immediate tax credits for Medicare patients who face a gap in prescription drug coverage.

The real impact in the health insurance system won’t occur until the year 2014. During the interim, there will be the phase-in of additional new taxes that will provide added government revenue to pay for these changes. The four most significant changes occurring in 2014 are:

  • Insurers will be required to take all applicants.
  • Insurance will be mandated for all Americans.
  • Tax credits to help pay premiums will start flowing to middle-class working families. The most aid – including help with copayments and deductibles – will be made available for those individuals and families on the lower end of the income scale.
  • Insurance exchanges will be created to help administer subsidies for those individuals that require them.

When fully implemented, we believe that the majority of working-age Americans and their families will continue to have employer-sponsored coverage as they do today. In addition, through mandates and other subsidies, the number of people insured can grow by more than 30 million. Please be assured that we will work to help you navigate through the various changes of this legislation to ensure that you and your employees are always offered the most choice and greatest value of benefits available in the marketplace. This will be a long road and we pledge to be with you every step of the way.

We remain focused and committed to provide you with information and solutions for all your group benefit needs.

Group Benefits Insurance Solutions

Legislative Alert – Short-term COBRA Subsidy Extension.

President Obama has approved a short-term extension of COBRA health insurance premium subsidies for involuntarily terminated employees.

Now, employees terminated from April 1 through May 31, 2010, will receive the 15-month, 65% federal premium subsidy. Prior to this extension, March 31, 2010 was the cut-off date.

President Obama is urging lawmakers to extend the COBRA premium subsidy through the end of the year. The Senate is currently working on this new extension.

Group Benefits Insurance Solutions

Tax Credits from Health Reform – IRS offers short term guidance for Business Owners.

The Internal Revenue Service recently launched a new web page that provides guidance on tax credits in the new health reform law for small employers and tax exempt organizations that provide health insurance coverage. Under the new law, the maximum credit is 35% of premiums paid in 2010 by eligible small businesses and 25% of premiums paid by eligible employers that are tax-exempt organizations.

In 2014, this maximum credit jumps to 50% of premiums paid by eligible small employers and 35% of premiums paid by eligible employers that are tax-exempt organizations. The online portal helps small business owners determine if they are eligible for the tax credit and outlines the financial rewards earned by taking advantage of the credit. In addition, users can review a Frequently Asked Questions section that discusses, in part, the calculation of the credit and how to claim the credit.

The Web page also includes a section that illustrates scenarios on how the credit applies to employers indifferent circumstances.

All insurance policies are different. Be sure to review your insurance policy for specific information about coverages available to you. Nothing in this post is meant to suggest a guarantee of coverage.