Many of our clients have expressed a need to understand better the implications of health care reform. Here are the basics:
- Employers with more than fifty employees must offer coverage or pay a penalty in 2015.
- Small businesses with fewer than fifty employees there is no mandate to cover, but such businesses may be eligible for tax credits.
Here is how the new law may be helpful to Colorado small business:
- Up to 35% tax credit for low and middle-income employees (2010-2013).
- Up to 50% tax credit for two years through the Marketplace (2014).
- To find out what tax credit you may be eligible for, please see the tax credit calculator (www.smallbusinessmajority.org).
There are a number of provisions built into the Affordable Care Act (ACA) designed to protect the interest of the consumer.
- No exclusion for pre-existing conditions.
- No lifetime or annual limits.
- Guaranteed issue and renewability.
- Dependent coverage until age 26.
- Preventive services 100% covered, with no co-pay.
There are likely to be rate increases as a result of these reforms. There are a number of factors in these increases.
The first factor is that carriers will be compressing their rates from a 6:1 ratio to a 3:1 ratio. What this means is that rates for those under 40 will increase significantly, and rates are likely to go down slightly for those over 40.
The second factor regards the discounts and surcharges for certain SIC codes (in some cases as high as 25%) will no longer be applied. It is possible that some SIC’s may experience a rate decrease, but this is exceptional. In other words, the majority of organizations will see an increase.
A third factor regards spouses and dependents. With the reforms, spouses and dependents will pay based upon their own age instead of paying a rate based upon the employee’s age. If you are older than your spouse then you may well see a slight decrease in rates. However, if you are older, this will have a rate-increasing effect.
Lastly, the lower deductible and new plan requirements may well force some employers to offer plans that offer richer benefits and consequently higher premiums.
Are you eligible for a subsidy?
Resources for further information:
Health Care Reform in Colorado (http://www.colorado.gov/healthreform)
Kaiser Family Foundation (http://kff.org/)
Connect for Health Colorado (http://www.connectforhealthco.com/)