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Happy Holidays!

As we enter 2010 we want to include some timely information on year end health reform and its possible impacts.

Right before Christmas, The Senate has passed 60-39 its version of a health care reform bill that, if enacted, will impact your business benefits plan more than any federal law in the past half century.  The Senate’s bill must still be merged with legislation passed by the House before President Obama could sign a final bill in the new year.

Most measures are expected to take place in 2014.  As for the impact on small businesses, The Senate would exempt companies with fewer than 50 workers from having to offer insurance. The House excuses companies with annual payrolls of less than $500,000; firms that are bigger would pay a fee equivalent to a portion of their payroll costs if they don’t offer insurance. That payment would rise to 8 percent of payroll for the largest firms.

Brief Comparison of Senate and House Health Reform Bills

The 10-year, $871 billion health reform bill is designed to extend insurance coverage to 31 million uninsured Americans.

Barring any major changes, the final health care reform bill is expected to:

  • Require most employers to contribute to the cost of employee coverage or pay into a health fund, while small businesses would be exempt or receive tax credits.
  • Require everyone to carry insurance, with discounts for people who cannot afford it and penalties for people who refuse to buy coverage.
  • Create a new marketplace or “Exchange” for individuals and small businesses to comparison-shop for insurance.
  • Levy a new excise tax on high-value health plans.
  • Provide insurance discounts for those earning less than 400 percent of the federal poverty level (about $73,000 for a family of three).
  • Impose new restrictions on insurance practices, such as prohibiting the denial of coverage because of pre-existing conditions, and increase the Medicare payroll tax on high-income people.

Most of these changes will likely be phased in beginning of 2013 and continue up until 2016, although changes to health care Flexible Spending Accounts could occur in 2011. The legislation would place an annual limit of $2,500 on the amount of funds employees can contribute to FSAs.

For more on specifics and timing of the pending legislation, please see Health Care Reform Frequently Asked Questions for employers by clicking here.

It’s important to remember that any dramatic changes would not be immediate. However, there are some things employers can do right now in preparation for the passage of a bill. The most important of these are to stay informed, follow developments and involve your benefits staff and partners.

Employers may also want to begin evaluating their employee demographics and assessing their current health plan design.

  • Do you have a balanced health care plan?
  • Will you be subjected to the 40% “Cadillac Tax”?
  • Will you be subject to pay or play penalties?
  • Can you take advantage of Exchange options if low-income employees would receive greater subsidies?
  • What would be the overall impact to your budget?

Health care reform is estimated to cost between $890 billion and $1 trillion over 10 years. It would be paid for by a combination of savings to Medicare and Medicaid, along with new sources of revenue from tax changes.

Once a bill is signed into law, we will help our clients with the practical implications of the legislation and its potential impact to organizations.

Our agency has strived to be ahead of the curve and keep our clients within budget regardless. We realize your organization – now more than ever – needs up-to-date information, industry-leading expertise and the assurance a reliable benefits partner can bring to your business.   We thank you all for reading our material, referring us business and most of all believing in us!

Once again thank you and we wish you and your family a wonderful Holiday Season!

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