Health Care Reform Has Arrived

“Tonight, after nearly 100 years of talk and frustration, after decades of trying, and a year of sustained effort and debate, the United States Congress finally declared that America’s workers and America's families and America's small businesses deserve the security of knowing that here, in this country, neither illness nor accident should endanger the dreams they’ve worked a lifetime to achieve,” proclaimed President Barack Obama after the House vote on health care reform.

That night of March 21st, as North Texans were getting ready to go to bed, legislators in Washington were busy making history by passing sweeping health care reform that, just two months earlier, many considered was dead on the table (for the fifth or sixth time). Subsequently, the bill was signed into law within 48 hours and almost immediately followed by the reconciliation bill that President Obama signed on March 30th to “fix” the first.

The approximately $940 billion overhaul comes along with roughly 2,500 pages of legislation that individuals and businesses have been pouring over for the past few weeks. Republicans have embarked on a fight to repeal various parts of the law, and multiple states (including Texas) are filing suit against the federal government. The reform, which started out focused on cutting costs and improving quality, in the end primarily focused on coverage and is expected to help 32 million Americans become insured.

The following paragraphs touch on certain provisions of both bills that will affect small businesses and individuals. This information will revolve purely around content of the legislation; however chamber members can contact healthcare@dallaschamber.org if they would like to discuss the process in which these bills actually came to pass.

Small business can expect numerous provisions from the reform to roll out over the coming years in order to ease the implementation process and dampen initial impact. For businesses with fewer than 25 employees and average annual wages under $50,000, newly created tax cuts have been made available. These initially go up to 35% of the employer’s health insurance premium and then in 2014 employers can apply for credit up to 50%. However, be aware that’s these tax credits are only temporary and are in place to ease in the transition to mandatory coverage.

If you are a business with more than 50 employees, you gain a “pay or play” responsibility. Meaning that if you choose to offer no coverage, then you are required to pay a $2,000 fine multiplied by the number of your full-time or “full-time equivalent” employees. If coverage is offered but at least one employee receives subsidized coverage then that employer will have to pay $3,000 per employee on subsidized coverage. Note that employers will be able to subtract the first 30 full-time employees from the calculation.

New government reporting responsibilities will go into effect. This will require companies to let the government know the number and names of employees receiving health coverage, whether or not minimum essential coverage is offered, the employer’s share of the allowed costs of benefits, and more. Employers will also have to reflect the value of coverage on employees’ W-2s beginning with the 2011 tax year.

Starting in 2014 financial incentives for a company participating in a wellness program will rise from 20% to 30% of plan costs. This has the potential to rise to as much as 50% dependent upon increases allowed by regulators. It is another great reason for companies to look into the wellness initiative that the Dallas Chamber supports, Live Healthy North Texas (www.livehealthynorthtexas.org).

Employer group plans will incur significant changes over the coming years related to new insurance restrictions and policies starting now. Also, beginning in 2014, small companies and individuals will be able to go into an insurance exchange concept which promises to create an effective means to obtain coverage and limit rate fluctuations.

Individuals can expect a number of immediate changes in what their insurance coverage entails. Children can remain on their parents’ plan until the age of 26, even if they do not qualify as a dependent. Immediately, a ban on preexisting condition exclusions by insurance companies goes into effect for children under the age of 19 and then this expands to all individuals starting in 2014. As well, an end to lifetime coverage limits and restricted annual limits will go into place. In 2014, this will expand to no annual limits being permitted as they apply to “essential coverage” items.

In 2013, based upon adjusted gross income, individuals earning above $200,000 or families above $250,000 will be subject to a 2.35% tax on wages in excess of those amounts, previously it was 1.45%. These higher income individuals will also subject to a 3.8% tax on unearned income such as dividends and interest. Medicaid eligibility will expand in 2014 to those with incomes up to 133% of the federal poverty level.

Minimum essential coverage will be required of almost all individuals beginning in 2014. As with other stipulations, if the requirement is not met, then penalties will be assessed. This penalty rises to almost $700 a year in 2016 but appears to be well under the typical amount an individual would pay for yearly insurance coverage. Subsidies will also be made available for low and middle income persons to aide in payment for coverage.

“This is what change looks like,” President Obama declared late in the night of March 21st. The Dallas Chamber plans to continue following that change and will inform the North Texas community as to how it will affect the region and our businesses. We have two upcoming opportunities for individuals in the community to come and learn about health reform. This first will occur on April 22nd and will be a panel discussion on reform where questions from the audience are strongly encouraged. The second is our first annual health care conference that will include a full briefing on what more to expect from Washington and how health care will continue to affect your business. Get more details on these events by visiting www.dallaschamber.org/events and don’t forget that you can always follow our blog, twitter, and hot topics entries found at www.dallaschamber.org.

The Chamber will also maintain active engagement of our elected officials and policy makers to advocate what we believe is best for the region and will continue to aide in development and growth of the local economy. We also encourage you to do the same and directly reach out to your local officials. We have created an easy way for you to do just that and visit our new “Take Action” section of the website. There you can find ways to easily get in contact with you elected officials and let them know how you feel and inspire your own change.