An Employer’s View of Health Care Reform and What’s Next
Governor Schwarzenegger calls it “a good law.” Attorneys General from several states claim it’s unconstitutional. Whatever you have to say about it, Health Care Reform legislation is changing the face of health care for employers, big and small. The following list will give you a head’s up regarding some of the big changes coming in the next two years, and what you need to know from an employer’s view of healthcare reform. As a general proposition, health care reform will eventually require most individuals to get health insurance or pay a penalty. But what is going to happen this year and the next?
The Main Points of the New Healthcare Legislation for 2010
1. Breaks for Breastfeeding Mothers. Effective immediately, employers must provide “reasonable break time” for nursing employees to express milk during the first year of a child’s life as the employee has need. Not any place will do, however. Employers must provide “a suitable place, other than a bathroom,” for an employee to express or “pump” milk. The provision does contain an exclusion for employers with less than 50 employees if the employer can show that the accommodation would “impose an undue hardship.”
2. Small Employer Tax Credit. How does proposed health care reform affect small employers? Tax-exempt organizations and small businesses (less than 25 full-time employees) can receive a tax credit for premiums paid. The tax credit maxes out at 25 percent for tax-exempt organizations and 35 percent for small businesses. Be advised, however, that the average salary for the employees of the small businesses must be less than $50,000 per employee and the business must contribute at least 50 percent of the premium cost of the coverage. Also note that the credit is on a sliding scale which means that, depending on the number of employees and average wage, your business may not receive the full 35 percent tax credit.
3. Expanded Coverage for Children. Two key provisions here: First, “children” through age 26 can still be on your health insurance plan if not covered by an employer-sponsored plan. Second, children under age 19 may not be excluded from coverage due to pre-existing conditions. This requirement expands beyond children for health care plan years beginning in 2014.
4. Hats Off to No Caps. The reform law abolishes lifetime caps on dollar value of “essential health benefits” to any participant or beneficiary. Moreover, no group plan may rescind coverage of an enrolled individual. Plans must comply with these requirements by September 23, 2010.
5. Prevention, prevention, prevention. New plans must include free or low-cost preventive services. This includes certain immunizations, screenings for infants, children, and women. Further, cost-sharing for provision of these services is prohibited.
6. Whistle-blower Protection. And the reform law also protects employees who suspect their employer is violating the Patient Protection and Affordable Care Act. This means that employees who report their reasonable belief of malfeasance to the authorities or assist in the investigation are protected shall not suffer discrimination or retaliation because of their actions.
Main Points of the New Healthcare Legislation for 2011
1. Non-Prescription OTC’s. Starting January 1, 2011, over-the-counter medications will no longer be eligible for the tax benefits from programs like the federal Health Flexible Spending Arrangements or Health Reimbursement Arrangements without a doctor’s prescription. And OTC’s purchased through a Health Savings Account will be counted as gross income.
2. W-2 Reporting. As an employer you will have to include on your employee’s W-2 forms the value of the employer-sponsored coverage.
Davis Wright Tremaine LLP
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