Small Business Challenge: What Does Health Care Reform Require?

Do you know what the heath care law requires of you, Mr. or Ms. Business owner? Do you know when these provisions and laws take effect? Your responsibilities are about to change, so you want to be on top of the new challenges to running your business. Here are some basic points about the Patient Protection and Affordable Care Act. This information comes from a quiz on the PPACA in the August issue of Employee Benefit Adviser magazine. It is a short take on a long bill, so it is not inclusive.

Employers with “Cadillac” plans must implement their plans starting in 2018 and are responsible for the excise tax calculations on these plans. Most small businesses do not offer these plans. Cadillac plans are often offered in businesses with unions. Plans that not collectively bargained would not lose their grandfather status if there is a change in third-party administration, but they would lose the status if there is a change in cost-sharing, scope of benefits or insurance carriers. Many companies with the best Cadillac plans have sought, and received, waivers from the federal government to exclude them from the provisions of this law, stating the law is too onerous for them. Good luck trying to obtain an exemption for your business, however.

Large and small employers will be allowed to offer insurance through state health exchanges, but the states will decide which employers can do so. Employers must offer health coverage for every employee working at least 30 hours per week. Beginning in 2014, employee waiting periods after enrollment can not exceed 90 days. In 2013 employee annual Flexible Spending Accounts (FSAs) will be capped at $2,500. These benefits must be used. If the money is not used it is lost to the employee. Expect to see some confusion about FSAs, Health Savings Accounts, Medical Savings Accounts, other cost-saving plans. Most of the changes in this Act will transpire in 2014, so we have a couple of years to figure out what to do.

The Small Employer Tax Credit will cover businesses with fewer than 25 full-time employees. It is unclear what that could mean right now. Any business with more than 200 full-time employees is required to automatically enroll all new employees in a health plan. When companies are enrolling their people, they have to provide an “opt-out notice” at the same time. Employees will have the opportunity to decide if they will participate through their employers. If a company has fewer than 100 employees, it can establish a Cafeteria Plan. These plans are allowed under the Internal Revenue Service code, Section 125 plans. These plans can benefit employers and employees by saving on taxes paid while offering a variety of products that can be voluntary. Please see www.IRS.gov for more information on these plans.

Some requirements of the plan state that chiropractic services need not be included as an essential service. The new rules allow families to choose a pediatrician as a primary care provider and dependent children must be covered until age 26. After January 1, 2014 no one can be excluded from coverage for a pre-existing condition. There is confusion about lifetime limits on the coverage provided. While not germaine to the problems of business owners as a group, your employees will need help to understand the rules. For instance, nonessential benefits have lifetime limits; some limits could violate the Americans with Disabilities Act (disabilities tend not to disappear over a lifetime) and state laws could prohibit certain benefits. Lifetime is a vague term, especially in legal contracts with providers and purchasers. If people start to life well into their nineties, lifetime benefits for all could become a Pandora’s box for the parties involved. The fun is just beginning in trying to decide what this means for you and your employees.

These are just a few little teasers about what is part of the PPACA and your business responsibility. About 10 days ago the 11th Circuit Court of Appeals in Atlanta ruled the Act unconstitutional. Conventional Wisdom, aka the pundits, are saying this Act will appear before the United States Supreme Court by next spring at the latest. This will prove to be an interesting fight. Meanwhile, back at the ranch, I will keep providing you with some essentials on the Act to keep you informed. You want good information to make good decisions. Stay tuned.