Assessing the Impact of Health Care Reform on New Businesses

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What effect will Obamas victory have on health care reform? The short answer is that it appears the ACA is here to stay and employers should begin preparing for the important new obligations that are looming.

The health-care reform law, all 2,400-plus pages of it, will take eight years to be fully implemented. Some self-employed people and small employers will begin to feel the impact almost immediately. Others wont notice changes for a few years.

Companies with fewer than 50 employees, which make up 96% of U.S. businesses, are exempt from the mandate that requires larger enterprises to provide health benefits by 2014 or pay a $2,000 penalty per employee. Beginning in 2014, individuals and small businesses will be able to shop for coverage in new state-run health exchanges. About 25 million people are projected to use the exchanges.

The following is a list of significant provisions affecting employers that will take effect in the near future:

  • Effective for group health plans beginning on or after September 23, 2010, plans may not discriminate in favor of highly compensated employees. Enforcement of this provision has been delayed until final regulations are issued.

  • Effective for the 2012 tax year, employers must include the value of employer-sponsored health coverage on an employees Form W-2.

  • Group health plans and insurers must provide each applicant and enrollee with a Summary of Benefits and Coverage (SBC). SBCs must be provided in connection with an open enrollment period starting on or after September 23, 2012.

  • Effective for group health plan years beginning after December 31, 2012, contributions to flexible spending accounts are limited to $2,500 per year.

  • Beginning on March 1, 2013, employers must provide all employees with written notice informing them of their health care coverage options, including information about health insurance exchanges and their possible eligibility for premium tax credits.

  • Beginning January 1, 2014, all employers with at least 50-full time employees must either offer health insurance coverage to full-time employees or be subject to an annual tax equal to $2,000 for each full-time employee in excess of 30 employees (the "pay or play" mandate).

  • Beginning January 1, 2014, most individuals will be required to maintain health insurance coverage or pay a tax for each month for which they do not have minimum coverage (the "individual mandate").

  • Effective for plan years beginning on or after January 1, 2014, group health plans and health insurers are prohibited from excluding individuals on the basis of preexisting conditions.

  • An employer with more than 200 full-time employees will be required to automatically enroll full-time employees in the employers health benefit plan. The original effective date of 2014 has been delayed until the Department of Labor issues final regulations.

  • Effective for the 2018 tax year, the ACA imposes a 40% excise tax on "Cadillac Plans," or high-cost health insurance plans that exceed maximum annual coverage amounts.

TOPICS: General group health plans self-employed small businesses Benetrends Health Care Reform health insurance coverage Insurance New Businesses

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