Major Healthcare Policy Changes: What Employers Need to Know
The rising cost of healthcare continues to be a vexing problem for small business owners. A recent statewide survey of small business owners conducted by Marketing Resource Group asked what small businesses plan to do to cope with higher healthcare costs; 37 percent said they would be forced to absorb the higher costs, 14 percent said they would increase the premiums paid by their employees and 13 percent said they would decrease healthcare benefits.
There is little or no relief on the horizon. Despite what you may have heard about the cost savings promised more than a year ago by the passage of the Patient Protection and Affordable Care Act (healthcare reform), health insurance is going to be more expensive, not cheaper, under the new law.
Despite numerous court challenges and promises of congressional repeal, the Patient Protection and Affordable Care Act is still the law and is still going to go into effect. It was difficult enough for small employers to comprehend all the complexities of complying with the law, but then Congress made several changes that impact the law and your ability to comply with it. With that in mind, the Small Business Association of Michigan has gone back and reviewed the major changes to healthcare reform since the passage of the act in early 2010.
In chronological order the changes include:
November 2010 – Grandfathered status: Allows employers to change insurance providers without losing grandfathered status (as long as the change in insurer does not result in a reduction in benefits, a significant cost increase to the employee or other prohibited changes). Prior to this change, the simple act of changing insurance carriers would have resulted in a loss of grandfathered status.
December 2010 – Nondiscrimination: A delay in the requirement that nongrandfathered health plans comply with the prohibition on discriminating in favor of highly compensated employees. Had the IRS not delayed this, new nondiscrimination rules would have kicked in for plans with a plan year beginning on or after September 23, 2010. This has been delayed until after regulations or other administrative guidance are published.
March 2011 – W-2 reporting: Small businesses that will issue fewer than 250 W-2s for 2011 are not required to report the cost of group health plan coverage on the 2012 W-2s that will be distributed in January 2013. This exemption will continue to apply in all years that follow as long as the small business meets the less than 250 W-2 prior-year limits; that is, until and unless the IRS issues further guidance.
April 2011 – Free choice vouchers repealed: This provision was scheduled to take effect in 2014. It would have required that employers offering and also paying a portion of the cost of health insurance coverage to their employees provide a free choice voucher to employees whose share of the premium would be between 8 percent and 9.8 percent of household income. The free choice voucher would have been equal to the contribution that the employer would have made to its own plan. This voucher would then be used to purchase coverage through a health insurance exchange.
April 2011 – 1099 report requirement repealed: Undoubtedly the single most important change made to date is repeal of the requirement that would have resulted in businesses reporting all purchases valued at $600 or more on IRS Form 1099.
The Small Business Association of Michigan will remain vigilant in monitoring the ongoing implementation of healthcare reform and reporting to you about the impact on your small business operation. The National Small Business Association, our national affiliate, also has a helpful website that provides up-to-date information on healthcare reform and other healthcare issues: www.healthreformtoday.org.
| ||Scott Lyon is vice president small business services for the Small Business Association of Michigan. He can be contacted at firstname.lastname@example.org.|