05 Apr 2010

Immediate effects of health care reform on small business

05 Apr 2010

On March 23, 2010, President Obama signed into law H.R. 3590, the Patient Protection and Affordable Care Act (PPACA).

This piece of legislation is 2,500 pages long, and all of its details are still being sorted out.  Allpointe will stay on top of the changes, and provide you with periodic updates.  If you have questions at any time, please contact us.

Many pieces of the legislation will not kick in until 2014; however, a number of changes will take place in 2010 and 2011, directly affecting small business health plans.  One immediate change that should be of interest to every small business owner: tax credits for the funds you currently spend on health insurance for your employees.

Yes, there are restrictions which may quickly eliminate many Bay Area employers (average employee wage must be under $50,000/year).  But it is definitely worth checking out.  The IRS has just provided details on the tax credit and eligibility guidelines.  If you think you may qualify, we can assist you with this by directing you to tax and legal professionals who are familiar with the credit.

Some other changes that will affect small employers in the next 6-12 months:

  • Dependent children must be covered up to age 26 (no requirement for full-time student status)
  • Waiting periods for new hires may not be longer than 90 days
  • Employers must enroll employees (with an opt-out provision) in the new federal Long Term Care benefit
  • Over the counter medications will no longer be a qualified expenses for HSA/FSA/MSA accounts, unless prescribed by a physician
  • The penalty for unqualified withdrawals from a Health Savings Account (HSA) will increase from 10% to 20%

For a full summary on the implementation timeline, Employee Benefit News has a two-part summary on their web site.  You can also download a good, detailed overview from the National Association of Health Underwriters.

Again, we will continue to keep you updated as additional guidelines come out, and will review these in detail with you as your small business health plan approaches its upcoming renewal.

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