Coming to Terms with Health Care Reform

“The Patient Protection and Affordable Care Act” (“PPACA”) signed into law by President Obama on March 23, 2010 is still being hotly contested, but some changes are already in effect. Take note of the following:

Tax Credits for Qualifying Small Businesses and Nonprofits

One of the bright sides of health care reform for small businesses are the tax credits for which they may qualify and which will make it more affordable for them to provide health insurance for their employees. To qualify for the PPACA tax credit an employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible). Additionally, the employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.  And, the employer  must pay annual average wages under $50,000. Currently, the credit is up to 35% of a small business’ premium costs, and for nonprofits meeting the same criteria the tax credit would be up to 25%. In 2014, the tax credit increases to 50% for qualifying small businesses and 35% for nonprofits.  However, the credit phases out gradually for businesses with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

Guaranteed Renewals

Group plans can no longer be cancelled by insurers due to the illness of a covered member of their group. As for the overall key components of the “Patient Protection and Affordable Care Act” affecting all individuals with health insurance, following are some key points already in effect:

  • Insurers can’t drop people from coverage when they become sick.
  • Lifetime coverage limits are eliminated and annual limits restricted.
  • Children can’t be excluded from coverage due to pre-existing conditions.
  • Young adults can remain on their parents’ health plans until age 26 (versus being dropped at age 19 or after finishing college).
  • Uninsured adults with pre-existing conditions can obtain health coverage through a new program. Note: The program will expire once the insurance exchanges start operating in 2014.
  • Medicare drug beneficiaries who fall into the “donut hole” coverage gap can get a fifty percent discount when purchasing covered brand name prescription drugs.
  • New health plans are required to cover preventive services at no or little cost to patients.

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On December 16th, 2011, posted in: Help For Human Resources, Small Business Tips by
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