On Sunday, March 21, 2010, the most significant piece of health care reform legislation passed the U.S. Congress that has been passed since the Social Security Act and Medicare. There has been so much inaccurate information about what this health care reform act means that it is hard to weed out the facts from the fiction. Here is a summary of what we know so far.
Many small businesses owners are fearful of what the new health care bill is going to mean for their firm. For the most part, they should not be. There are about 30 million small businesses in the U.S. with about 58 million employees. Many small business owners don’t take a position of being for or against the bill. Instead, they simply don’t know what it means for them. One thing is for sure. The bill will eventually impact all businesses, from the largest to the smallest, though most of the impact will not be immediate.
Not all of the currently uninsured in the U.S. are the needy or the young or the elderly. Many of the uninsured work in small businesses who cannot afford, currently, to insure them. In 2008, less than half of all small businesses could afford to insure their employees, down considerably from just a decade ago.
What About Insurance Companies?
Insurance companies can vary premiums based on geographic location, tobacco use, and age only.
Insurance companies can’t discriminate on the basis of pre-existing conditions. A ban on lifetime coverage limits and on cancellation of policies already issued goes into effect almost immediately.
SHOP Health Exchanges
Beginning in 2014, small businesses will be able to participate in small business health options programs or SHOP exchanges, which are simply state-based health insurance purchasing pools. Just like with any group insurance plan, these purchasing pools will lower the costs of insurance for everyone. Small businesses will be able to purchase lower cost health insurance for their employees through these lower cost pools. Individuals will also be able to purchase health insurance through the exchanges.
Until 2014, businesses with 10 or fewer full-time equivalent employees earning $25,000 per year or less will be eligible for a tax credit of 35% of health insurance costs with businesses with 11 – 25 workers and average wages of up to $50,000 eligible for partial credits.
Mandate for Coverage
One issue that has been widely publicized is that small business owners fear the mandate that they will have to provide health insurance for their employees. Part of this fear comes from misinformation. Any business with fewer than 50 employees will be exempt from this mandate. They will not have to provide health insurance for their employees.
Even though the smallest of businesses will not have to provide health insurance for its employees, some may want to. The cost of health insurance will be cheaper because of more choices offered through the exchanges and because tax credits and incentives will be offered to businesses that do offer health insurance.
The issue of “job lock” is now gone. Individuals will not have to be afraid of leaving their job for fear they will lose their health insurance. Even if they or someone in their family has a pre-existing condition, they will be able to go to another job because pre-existing conditions are no longer an issue.
Changes in Health Insurance
Changes in health insurance for both individuals and small businesses will go into effect gradually over a period of years. Most changes will be from 2010 through 2014 with some taking as long as 2018.