The health care reform package that went into law on Tuesday, March 23, 2010, most clearly will have substantial effects on the health care industry. However, the legislation will also have far reaching impact on employers. Although employers are not mandated under the health care reform package to provide insurance coverage to employees, the new legislation will penalize employers that do not offer coverage at all to the employees or do not offer coverage considered “good enough.” For example, employers with 50 or more full-time employees that do not offer insurance coverage will have to pay an assessment to the government to help offset the cost of health insurance if their employees are receiving help from the federal government to purchase their own insurance. Additionally, a tax will be assessed on employer sponsored, high-end “Cadillac” coverage, which is 40% of the “excess benefit” of plans that exceed the thresholds of $8,500 for individual coverage and $23,000 for family coverage under the original Senate bill. However, when the original Senate bill is combined with the reconciliation bill, the effective date of the tax provision will be changed from 2013 to 2018, and the original threshold will be raised to $10,200 for individual coverage and $27,500 for family coverage.
There are a number of provisions that will have an immediate effect on employers. The bill will prohibit lifetime limits on coverage, bar rescissions of coverage in most circumstances, restrict annual limits placed on coverage, require certain plans to provide coverage for dependent children up to age 26, place limits on excessive waiting periods, and ban pre-existing condition exclusions for children. Certain small employers will also be eligible for tax credits to purchase health insurance coverage for their employees.
Once the entire package has become law, the above discussed effects on employers will go into effect and many significant changes will be required in the near future.
Jeremy L. Fetty is an associate at Parr Richey whose practice focuses on corporate law, utility law, municipal law, and labor and employment law. The statements contained herein are for information purposes only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have questions regarding this article, please contact an attorney.