Health Care Reform Becomes Law – What Does it Mean for Your Company?

On March 23 2010 President Obama signed into law the Patient Protection and Affordable Care Act (H.R. 3590) and shortly thereafter the Health Care and Education Reconciliation Act of 2010 (H.R. 4872) which changes health care as we know it. In the coming years there are many adjustments that construction companies need to be aware of in order to comply with the new law.

On March 21 2010 the House voted to pass the health care reform bill that was previously passed by the Senate in December 2009 which made the bill available for the president to sign into law. After passing the Senate bill as is the House then passed a “reconciliation” bill that made several changes to the law. It was then sent to the Senate modified and passed again by the House.

While there is a lot of information and commentary about state lawsuits and other efforts to repeal portions of the law the fact of the matter is that on March 23 2010 health care reform became “the law” and employers will have to begin complying. Now that the dust has settled on the bill AGC will continue to seek regulatory guidance and compliance assistance tools for its members as information becomes available.

Available small business pooling options and tax incentives designed to entice those small businesses to offer health coverage may do just that. For example by 2014 a Travelocity-like health care exchange system will be created for businesses with fewer than 100 employees to pool together and shop for affordable healthcare plans. Until then companies with 10 or fewer employees earning less than an average of $25000 will be eligible for a tax credit of 35 percent of health insurance costs. Companies with 11-25 employees with an average wage up to $50000 are eligible for partial tax credits. Once the exchange is created the tax credit will increase to 50 percent for the first two years coverage is purchased through the exchange and then the credit would end. While these tax credits are retroactive to January 1 2010 it has not been determined how the credit will be claimed.

In addition to the tax credits grant programs will also be created to help small and mid-sized companies develop and strengthen workplace wellness programs.

If your company already provides health insurance coverage for employees there are still a few things to consider and anticipate. For example beginning in 2014 employers who offer health benefits but have at least one employee who applies for a federal subsidy to purchase insurance on their own would be subject to a an annualized penalty of $3000 for each employee who has qualified for subsidized coverage. Employees are eligible for the federal subsidy if the employer provided plan does not have an actuarial value of at least 60 percent or if the employee share of the premium exceeds 9.5 percent of their income. In addition employers may still be required to help low and middle-wage earners who opt out to buy coverage on their own. Specifically an employee who earns less than four times the federal poverty level $88200 for a family of four will have the option to purchase coverage through the exchange. In turn the company would have to provide a “free-choice voucher” which must be equal to the amount paid to provide coverage to all other participating employees. Furthermore companies with more than 200 employees will be required to automatically enroll new hires into the health plan but the new hire can voluntarily opt-out after enrollment if they choose. There is no penalty for workers in a waiting period but employers must limit the period to 90 days beginning in 2014.

So what should be done now?

Note: While this article focuses mainly on the requirements for employers for companies that self-insure both the insurer and employer requirements are applicable.