No matter where you turn, everyone is talking about health care reform. But what will the recently passed health care legislation mean for your business?
“The reforms that will have the greatest effect on business owners revolve around access to health care coverage,” says Kim Horn, CEO of Priority Health. “From there, the changes can be divided into two main areas: immediate changes that will take effect this year and more substantial changes that will occur in 2014 and beyond.”
Smart Business spoke with Horn about the effects of health care reform and what businesses can expect as a result.
Why do business owners need to educate themselves about the recent health care reforms?
The Patient Protection and Affordability Act, signed into law by President Barack Obama on March 23, creates national guidelines for the delivery and financing of health care. It also creates new tax mechanisms that will have an impact on individuals, businesses and insurers.
Some of the impact will be immediate, as some of the vast reforms spelled out in the act go into effect as soon as June 23. Other impacts are further out and don’t take effect until as late as 2018.
How will the health care reforms affect businesses over the long term?
This year there are two provisions to help businesses afford health care coverage for their employees. Small businesses, those with fewer than 50 employees, may be eligible for a tax credit. Also, a reinsurance mechanism is available for businesses that provide health coverage for retirees prior to age 65.
In 2014, businesses with 50 or more employees must offer health insurance to their employees or pay a penalty. Businesses with 49 or fewer employees are not required to do so.
In addition, for businesses with fewer than 100 employees, the creation of health insurance exchanges will provide another avenue to purchase health coverage. By 2014, the legislation calls for the establishment of American Health Benefit Exchanges in each state, which includes the Small Business Health Options Program.
Once these exchanges are established, however, businesses with 50 or more employees could be subject to a penalty if their employees receive premium tax credits in the insurance exchange.
Each business’s situation is different, so business owners should consult with their health insurance company or their independent insurance agent to avoid any potential penalties.
