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How DOES HEALTH CARE REFORM AFFECT SMALL BUSINESS?

TAX CREDITS

SMALL BUSINESS TAX CREDITS: Offers tax credits to small businesses to make employee coverage more affordable. Tax credits of up to 35 percent of the employer contribution will be available to small businesses with 25 full time employee equivalents or less for tax years 2010-2013, as long as the employer contributes at least 50% of a benchmark premium and the employees average annual wages are less than $50,000. Beginning in 2014, these tax credits will increase to cover 50 percent of premiums for up to 2 years. Small businesses with 10 or fewer employees who have annual wages of less than $25,000 will be eligible for full credit.

SMALL BUSINESS EXCHANGES

STATES WILL ESTABLISH STATE-BASED HEALTH INSURANCE EXCHANGES FOR SMALL BUSINESSES AND INDIVIDUALS ONE YEAR AFTER THE BILL BECOMES LAW. By no later than 2014, states will have to set up Small Business Health Options Programs, or “SHOP Exchanges,” where small businesses (up to 100 employees) will be able to purchase qualified coverage. The exchanges will be administered by a governmental agency or non-profit organization within their state. States have the option to allow businesses with more than 100 employees to purchase coverage from the shop exchanges as well.

INSURANCE MANDATE FOR SMALL BUSINESSES

EFFECTIVE 2014, A FEDERAL HEALTH INSURANCE MANDATE WILL GO INTO EFFECT FOR INDIVIDUALS & SMALL BUSINESSES. Businesses with more than 50 employees will be required to either offer healthcare coverage or pay a penalty of $2,000 per year per each full-time employee above 30 employees if one or more employees receive a premium assistance tax credit. Businesses with more than 50 employees that do offer coverage but have at least one full-time employee receive a premium assistance tax credit will pay the lesser of $3,000 for each employee receiving the tax credit or $2,000 for each full-time employee. The coverage offered will have to meet minimum benefits — covering both a specific set of services and at least 60% of the actuarial equivalent of the plan costs.

NEW REGULATIONS ON INSURANCE COMPANIES

LEGISLATION INCLUDES SEVERAL NEW REGULATIONS ON INSURANCE COMPANIES. Six months from the passage of the bill, there will be a ban on lifetime limits on coverage, and on the practice of “recission” (cancelling policies that have already been issued), except in cases of fraud. Effective 2014, insurers will no longer be able to set rates or exclude coverage based on pre-existing conditions, and can vary premiums only by geographic location, family tier, age, and tobacco use.

TYPES OF PLANS UNDER HEALTH CARE REFORM

THE LAW PROVIDES FOR FOUR TYPES OF NEW HEALTH CARE PLANS TO BE OFFERED VIA THE SMALL BUSINESS AND INDIVIDUAL EXCHANGES.
Bronze plan: Covers 60% of the benefit costs of the plan with an out-of-pocket limit equal to the Health Savings Account (HSA) current law limit of $5,950 for individuals and $11,900 for families.

Silver plan: Covers 70% of the benefit costs of the plan with the HSA out-of-pocket limits.

Gold plan: Covers 80% of the benefit costs of the plan with the HSA out-of-pocket limits.

Platinum plan: Covers 90% of the benefit costs of the plan with the HSA out-of-pocket limits.


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