The new health reform law, also known as the Patient Protection and Affordable Care Act (PPACA), will make big changes to how millions of U.S. residents receive their health benefits.
“One change that has received a lot of attention is a new requirement for health insurers and group health plans to allow dependents up to age 26 to remain on their parents’ health plans,” says David Crosby, regional president of HealthAmerica. “Under the PPACA, this new requirement takes effect for plan benefit years that start on or after Sept. 23, 2010.”
Smart Business spoke with Crosby about several aspects of health care reform, including the decision by many health insurers to begin coverage of dependents up to age 26 in advance of the law’s requirement.
How can a company determine if its insurer will offer dependent coverage immediately?
If your insurer hasn’t contacted you, call your account manager or broker to find out what its plans are regarding this coverage. Also, while many insurers have already begun dependent coverage for fully insured plans, self-funded plans may be handled differently.
Self-insured employers can decide if they want to wait until the provision becomes effective on Sept. 23. If you haven’t already, now is the time to create a direct line to your insurer for information about the new health care provisions because there are many more changes ahead.
Do employees have to do anything regarding the changes in the law?
To get specific information about their coverage, they should watch for updates and communication funneled through you, as most of the information will come from the insurer through their employer.
Some consumers are interested in educating themselves as the regulations unfold, and there are plenty of news sources and government Web sites that have more information available. Many insurers are also providing information on their Web sites that employees can access.
Why are some insurers offering this coverage earlier than required to do so by law?
Many insurers know the importance of maintaining continuous affordable health coverage for young adults and people of all ages. Moving up the timetable makes good sense for everyone. It is also a way for a health plan to provide assurance to parents that their children will continue to receive high-quality health care at an affordable cost.
What else is new under PPACA?
A new, small-group tax credit can help some employers save up to 35 percent on health, dental and vision insurance premiums if:
- The employer has fewer than 25 full-time employees.
- Employees have average annual wages of less than $50,000.
- The employer pays at least 50 percent of the employee-only premium.
There’s a special calculation for part-time employees used to determine if the employer meets the group size requirement. Because the eligibility rules are based on the number of full-time equivalent employees (FTEs), not the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals.
Employers with 10 or fewer FTE employees that pay annual average wages of $25,000 or less can qualify for the maximum credit. Employers with 10 to 25 FTE employees that pay annual wages of $50,000 or less can qualify for a smaller tax credit. An expert can help you get the calculations right.
How can an employer know if the company is eligible for the tax credit?
First, all employers should explore whether they are eligible. Because of the potential for savings, it’s worth talking to your accountant or other tax professional. There are some special rules for family members who work for the business, seasonal workers and others. That’s why it’s key to get an expert involved.
Where can an employer get more information about the credit?
The best source of information is the Internal Revenue Service. In mid-May, the IRS released guidelines for small commercial and nonprofit employers that want to take advantage of a new health insurance tax break.
The small employer health insurance tax credit guidelines, given in IRS Notice 2010-44, include examples that can help employers and tax professionals determine whether the employers are eligible for the tax break and exactly how much of the new federal health insurance tax credit they can claim.
What are the next steps in health care reform?
In the coming months, the U.S. Department of Health and Human Services will issue many new rules and regulations that clarify how the new health reform law will work and its new requirements. This is an unprecedented time of change in health care, and keeping the lines of communication open is crucial.
You’ll want to work with your insurer to stay on top of updates to business policies, benefit administration and other critical news.
David Crosby is regional president of HealthAmerica. Reach him at firstname.lastname@example.org.