Article No.: 10-7
Article Title: Heads Up on Health Care Reform
Author: Linda Gravett, Ph.D., SPHR, CEQC
Landmark health care reform signed into law in March of this year
will affect how all organizations provide and administer health care
benefits. One detail that may have gone unnoticed is that the
impact will be felt differently depending on the company’s size.
In its strictest sense, the new law won’t require employers to provide health care benefits to their employees. However, many companies that have 50 or more employees that don’t currently offer health care coverage will be subject to a tax penalty of $2,000 for each full-time employee. The company’s first 30 employees would not count towards the penalty.
The law will not have a huge impact on large companies that are currently providing health benefits, and companies with fewer than 50 employees will be exempt from any penalty.
These changes will become effective January 1, 2014.
A section of the law states that employers that are currently offering health benefits but have one or more employees who apply for a federal subsidy to purchase individual health care insurance would also be subject to the penalty. The penalty is $750 per employee.
Employers that offer health care coverage might still be required to provide assistance to low and middle income employees who opt out of the company’s health insurance plan so they can purchase health insurance on their own. Employees who earn less than four times the federal poverty level and pay more than 8% of their income for the employer-sponsored health insurance will have the option of purchasing health insurance through health care exchanges created by the new reform law.
The state-operated exchanges would permit self-employed workers, small businesses, and people without health care coverage to shop for insurance plans. By 2014, states will be required to set up what are called Small Business Health Options Programs (SHOP Exchanges) to allow small businesses to create buying pools for health insurance plans. Small businesses are defined as organizations with 100 employees or less.
Here’s how the exchanges will work. If an employee opts to purchase a health plan through an exchange, the company will be required to provide a free-choice voucher equal to the amount paid to provide coverage for participants in the company’s health care plan. Companies with more than 200 employees will be required to enroll their employees into the health care plan automatically. Afterwards, employees can elect to opt out of the plan.
Check back with us for updates on the health care reform measure.
If you have any questions or need more information about this article, please complete our Contact Form, or contact Dr. Gravett by telephone at 513-753-8870.