Collaboration Insights

While small business will get a few benefits under health care reform, small business will see six major areas changes that will affect their pocket books.
1. IT CREATES EXCHANGES FOR SMALL BUSINESSES WITH LESS THAN 100 EMPLOYEES: These new government regulated market places “exchange” allow individuals and small businesses to come together to buy health insurance at a discounted rate.
2. IT CREATES A SMALL BUSINESS HEALTH INSURANCE TAX CREDIT: Small businesses with no more than 25 employees and average annual wages of less than $50,000 that provide health insurance for employees will receive a 35% tax credit of the employers contribution, if the employers contribution is at least 50%. A full credit will be given to employers with 10 or fewer employees and have average annual wages of less than $25,000 (available from 2010-2013).
3. IT INCREASES SMALL BUISNESS PREMIUMS FOR HEALTH INSURANCE: Restricting insurance companies from containing health care costs by denying care for pre-existing conditions and placing life time caps on coverage will drive premiums upward. Placing limits out-of-pocket deductibles for small business policies to $2,000 for individuals and $4,000 for couples; limiting waiting periods for coverage to 90 days; and adding 32 million individuals with a higher cost experience rates will also increase premiums. Providing dependent coverage for children up to age 26 for all individual and group policies (effective six months after enactment) will lower premiums because younger people are generally healthier.
4. IT ERODES THE HEALTH INSURANCE PLAN’S QUALITY AND STANDARD OF CARE: There will be a new excise tax on employer sponsored health plans that have an aggregate value that exceed $10,200 for individuals and $27,500 for family coverage. This will include flexible health insurance spending plans effective 1/1/2018. The new bronze exchange level the minimum creditable coverage and provides the essential health benefits, cover 60% of the benefit costs of the plan, with the out-of-pocket equal to the HAS current law limit $5,950 for individuals and $11,900 for families in 2011. There will be discounted out-of-pocket maximums for individuals making less than 400% of the federal poverty rate. Simply put place lower minimum standards for creditable health insurance coverage while imposing excise taxes on the best plans will reduce future benefits and shift more the cost to employees.
5. IT DOES NOT IMPOSE A REQUIREMENT TO PROVIDE COVERAGE FOR SMALL BUSINESSES WITH LESS THAN 50 EMPLOYEES.
6. IT REDUCES TAX-FREE BENEFITS FOR CAFETERIA PLAN HEALTH-FSA, HRA, HSA, AND ARCHOR MSA HEALTH SAVINGS PLANS: Under the latest health care reform non-prescription over the counter drugs will be excluded from the pre-tax reimbursement effective 1/1/2011. Future contributions to flexible spending accounts will be limited to $2,500 per year increased annually by the cost of living adjustment effective 1/1/2013.
In conclusion, the primary means to fund this reform comes from new excise taxes and cost shifting. Basically the federal government is taxing big business and richer individuals to give better health care benefits to the less fortunate. The result is everyone gets reduced benefits with less quality and standard of care. Health care reform is slight in addressing the elephant in the room namely, cost containment and the growth of new health care advancements and technologies.

The latest health care reform requires most U.S. Citizens and Legal Residents to have health insurance or pay a penalty; requires employers with more than 200 employees to automatically enroll employees in to health insurance plans. Employees cannot opt out; and requires employers with 50 or more employees to provide coverage or contribute to its cost. These changes are sure to face Constitutional scrutiny. Insurance companies will not be able to place life time caps on policy holders and exclusions based on preexisting conditions. The Hyde Amendment restricting the Federal government from paying for elective abortions except in extreme circumstances would be preserved by Presidential Executive Orders. AARP believes the “doughnut hole” problem with prescription drug benefit for seniors will be solved. Absent from the health care reform is requiring illegal’s to have health insurance; tort reform needed to drive down the cost of health care; declining Medicare and Medicaid reimbursement rates which are adversely affecting access to care; and a way to pay for it.
Small businesses with less than 25 employees will receive a mixed blessing. There are a few advantages, but health care reform brings mostly bad news for small business.
ADVANTAGES:
• Federally Subsidized Exchanges or Insurance Pools
• Health Insurance Tax Credit
• No Federal Mandates to provide Health Insurance to their Employees
DISADVANTAGES:
• Higher Premiums for Health Insurance
• Reduced Tax-free Benefits for Health-FSA Cafeteria Plans
• Reduced Policy Limits with Higher Over-all Deductibles