Politicians have been fighting over health care reform for years, but the switch from a Democratic to a Republican majority in the House of Representatives has cast doubt on the future of the Patient Protection and Affordable Care Act.
“Employers should know the health care landscape is going to be fluid during this time,” says Jeffrey Porter, director with Kegler, Brown, Hill & Ritter. “They are going to have to try to meet some of the obligations contained within the bill now, but, over time, things may change.”
Smart Business spoke with Porter about how the reforms will affect businesses and how the new Congress will affect the reforms.
How will the new Congress affect health care reform?
It is going to be a fluid situation over the coming years. There are a lot of extended deadlines within the bill, and there are a lot of things that can happen between now and then, especially now that we have had a changeover in the House of Representatives.
Many candidates were using the mantra ‘repeal and replace’ when speaking about the health care reforms. But I don’t think we’re going to see a full-scale repeal and replace of this bill. At most we’re going to see a group of lawmakers trying to tatter it around the edges.
They may try to address certain things with funding. Given the fact that the Senate is still controlled by the Democrats albeit a very small majority and the president’s there, I don’t think we’ll see the ability to overcome a presidential veto.
However, a lot of the things that happen within the bill require funding. I think we will see the House of Representatives making moves to try to hold back funding as much as they can so it will be difficult to implement certain aspects of the bill.
What do all these changes mean for business owners?
There are many dates to remember spread out over 2011, 2012 and all the way to 2014 and beyond. Businesses are obviously concerned about meeting the goals the bill sets for them. Although the Department of Health and Human Services is working diligently on trying to implement the bill, if there is no funding available, some goals might not be able to be accomplished.
For instance, the creation of health insurance exchanges, which will provide the ability for people to go out and purchase health insurance on an exchange comprised of private companies offering coverage to individuals, that doesn’t take effect until 2014. It’s feasible that there may be changes to that plan along the way.
What exactly will be changing as a result of the health care reforms?
Some changes have gone into effect already. There are a whole host of reforms that are effective for plan years on or after Sept. 23, 2010 (Jan. 1, 2010 for calendar year plans). Some of the changes include:
- Protection from insurers rescinding existing coverage.
- Eliminating lifetime limits.
- Eliminate pre-existing conditions for children under age 19, eventually extended to all.
- Extend dependent coverage to age 26, in Ohio to 28.
- A group health plan can only impose annual limits on the coverage for essential health benefits that exceed a ‘restricted annual limit’ that is to be determined by the Secretary of Health and Human Services.
- Establishment of high-risk pools for individuals unable to obtain coverage due to their health status.
Also, starting Jan. 1, 2010, expenses incurred for over-the-counter (OTC) medications will no longer be eligible for payment/reimbursement through an FSA, HRA or Archer MSA.
What reforms should businesses look for in the future?
Effective Jan. 1, 2012, there is a change to Form 1099 reporting. Form 1099 must be provided to service providers that receive more than $600 for services to a plan for a calendar year. The Medicare Payroll Tax Increase, a new tax that helps pay for Medicare, will become effective Jan. 1, 2013.
Also, beginning in 2014, employers with more than 50 employees will be mandated to provide health insurance. Health insurance exchanges will be created at some point probably also in 2014.
How will those exchanges change the way businesses buy health insurance?
Quite honestly, what’s going to happen is that you’ll see some smaller businesses drop insurance altogether. They will stop providing it and move toward allowing their people to purchase insurance on these exchanges.
In a recent Virginia state case, a judge found the mandate to purchase insurance unconstitutional. That is just one decision out of many, but is still something to keep an eye on.
What can businesses do to make sure they are in line with these changes?
This bill is very comprehensive; it’s also very cumbersome. Employers are going to find that they will need a lot of help, not only from their human resources and benefits departments in disseminating the information to employees, but also in getting information from their attorneys or whomever else they can have advising them about the reforms.
If employers want to keep their current plan, they could try and maintain ‘grandfathered’ status. However, I think people are going to find that it is next to impossible over time to maintain that status because, if you have to make certain changes to your plan, like modifying the amount people pay, your plan will lose its grandfathered status. The ability is there on paper, but it will be tough to do in practice.
Jeffrey Porter is a director with Kegler, Brown, Hill & Ritter. Reach him at (614) 462-5418 or firstname.lastname@example.org.