Eq demystifing health care reform

Demystifying Health Care Reform Act 2010
‘Complete Year by Year
Breakdown of The Provisions’

ExpertQuote Insurance Services, Inc.

Raj Singh Chief Operations Officer

Health Care Reform
As you know, the United States healthcare system has been reformed. On March 24, 2010,
President Barack Obama signed into law the Patient Protection and Affordable Care Act
(PPACA). One day later, on March 25, Congress approved the Reconciliation Act of 2010. No
matter what name you give it, PPACA, Health Care Reform, or Obama Care, the changes to the
U.S. healthcare system are meant to benefit people who may not have been able to afford
insurance in the past or were not provided an insurance plan through their employer.

Year-by-Year Breakdown
The PPACA was created to help the individual, however, when those individuals are employees
of your business, then your benefit plans must provide responses to key provisions of the Act.
Each year, from 2010 to 2018, brings changes to those key provisions. Some years, notably
2012, 2015, and 2016, your business will see no change to its benefit plans, while other years,
there may be substantial changes.

2010
 If you have 25 full-time employees1 and their annual wages do not exceed $50,000, you
can get a tax credit up to 35% of either the average premium cost or your total contribution
to a health insurance plan purchased through the state-run exchange.2 Effective January 1,
2010

 If you have 10 full-time employees or less and their average annual wages are less than
$25,000, you can get the maximum credit,2 which actually increases to 50% in 2014.
Effective January 1, 2010

 If you have an existing health plan and you only make changes to add or delete employees
or new dependents, you can grandfather in your existing plan.3 Effective January 1, 2010.

 If you offer prescription drug coverage to retirees and you receive a subsidy (usually 28%)
from the federal government, you must take an immediate charge equal to the current value
of any known hit to future profits. Effective March 23, 2010

 If you have employees retiring early (age 55-64) and your health plan offers coverage for
them, you can be reimbursed 80% of cost of benefits per enrollee > $15,000 but <
$90,000.4 Effective June 21, 2010
1
Full-time employee (FTE) works > 30 hours per week. If you only have part-time employees, then every 2
part-time employees are equivalent to 1 FTE.
2
For a simple method of determining if you qualify as a small business, see “3 Simple Steps” on page 6.
3
An exception does exist if you have scheduled plan changes because of a collective bargaining agreement.
Your plan will still have to abide by the market reform requirements relative to lifetime and annual dollar

Copyright ©2010 ExpertQuote Insurance Service, Inc. All rights reserved. For Personal use only. 1

limits, rescissions, employer plan waiting periods and coverage of dependent children to age 26 within six
months of enactment. Until 2014, the coverage of dependent children to age 26 only applies to those
dependents who do not have another source of employer-sponsored health insurance. Additionally, starting in
2014, your grandfathered plan cannot have a preexisting condition waiting period.
4
The employer health plans are required to use the funds to lower costs assumed directly by participants and
beneficiaries, and the program incentivizes plans to implement programs and procedures to better manage
chronic conditions.

2010 Additional provisions

Dependent coverage changes. Starting in September 2010, group policies must offer health
coverage for children up to age 26. Dependents with pre-existing conditions must be provided
coverage, however, insurance carriers may charge more (additional charge drops in 2014).

No discrimination in favor of higher-wage employees. Starting in September 2010, new group
health plans cannot have any eligibility rules for coverage that would discriminate in favor of
higher-wage employees.

Employees with pre-existing conditions. If an employee has a pre-existing condition and has
been uninsured for at least 6 months, they can buy into a temporary high-risk pool. They would
remain in the high-risk pool until 2014, when insurance carriers must provide coverage for
employees with pre-existing conditions.

The temporary high-risk pool will be set-up by the government by June 21, 2010. The premium
cost will be subsidized by the government to bring the cost down to 125% of cost of coverage
for a healthy person. An individual will pay an annual maximum out-of-pocket cost of $5,590,
and families will pay $11,900 maximum annually.

No lifetime limits. Insurance plans can no longer impose lifetime limits on benefits.

Preventive Care. New group-health plans and individual-health plans must offer full coverage
(i.e., no deductible) for preventive care services such as wellness checkups, certain
immunizations, certain cancer screening.

2011
 If you provide health insurance coverage to your employees, you report your share of the
employer’s health-insurance coverage on the employee’s W-2.1 Effective January 1, 2011.

 If you have averaged <100 employees over the previous two years, you can opt into a
“cafeteria plan” which allows you to provide tax-free benefits to your employees.
Effective January 1, 2011.


 If you opt into a “cafeteria plan,” you are exempt from pension-plan discrimination
requirements applicable to highly compensated and key employees. Effective January 1,
2011.
1
No additional taxes will be paid by the employee on the reported amount.


Health Savings Account (HSA) Withdrawals. Starting in January 2011, withdrawals from an
HSA prior to age 65 that are not used for qualified medical expenses will be taxed at 20
percent rather than the current 10 percent and pre-tax reimbursements for over-the-counter
medications will no longer be allowed.

2013
 If you offer prescription drug coverage to retirees and receive a subsidy (28%) from the
federal government, you can no longer deduct the subsidy on your corporate income tax.

 If you have < 25 full-time employees1 for the taxable year and the average annual wages of
those employees do not exceed $40,000, you must begin buying health insurance through a
state-run exchange and claim a credit for doing so. Effective January 1, 2013.
1
Full-time employee (FTE) works > 30 hours per week. If you only have part-time employees, then every 2 part-time
employees are equivalent to 1 FTE.


Health Savings Account (HSA). Starting in January 2013, employee contributions to their HSA
is capped at $2500 per year. This cap will raise healthcare costs for employees if they have
unreimbursed healthcare expenses in excess of the $2500 and may increase their taxable
income.

Employee Notice Requirement. Starting March 1, 2013, you will be required to issue a notice
to employees (including subsequent new hires), which provides information on state
exchanges, premium assistance if your business health plan’s actuarial value is <60%, and free
choice vouchers that will become available in 2014.


2014
 If you want to offer a wellness incentive to your employees, you can reward employees up to 30%
of the cost of coverage if they participate in a wellness program and meet certain health related
standards. Effective January 1, 2014

 If you have > 50 full-time employees1 and your employees use a government subsidy (i.e.,
premium tax credit or cost-sharing reduction) to buy health insurance, you pay a penalty of
$2,000 per employee.2 Effective January 1, 2014

 1
If you have < 100 full-time employees, you can opt to give a voucher to use in the individual
market or state-run exchange to your lower-income employees.3 Effective January 1, 2014

 If you have < 100 full-time employees1 and did not have a wellness program on March 23,
2010, you can receive a government grant to help implement such wellness programs. Effective
January 1, 2014

 If you have > 200 full-time employees,1 you must automatically enroll each employee in the health
insurance plans that your business offers even though employees can opt out of these plans.
1
2
Your business’ first 30 employees will be excluded for calculating the penalty, but two part-time employees will
be counted as one full-time employee. The penalty can also increase to $3,000 for a full-time employee receiving a federal
tax credit in the exchange where the employer offers health coverage, but that coverage would be deemed "unaffordable"
because the employee has to pay more than 9.8 percent of his or her income, or the employer contributes less than 60 percent
of the actuarial value of the plan. Therefore, while employers are not required to offer health coverage under the Act,
significant penalties may be imposed on those employers that do not offer it or that only offer health coverage deemed
"unaffordable." In addition, employers may still impose a waiting period for coverage without being subject to a penalty, but
this waiting period may not exceed 90 calendar days.
3
The value of the vouchers would be adjusted for age, and the vouchers would be used to buy coverage that would otherwise be
unsubsidized. States may opt to limit this coverage to businesses with 50 or fewer employees.


Pre-existing conditions. Starting in January 2014, insurance premiums for dependents with
pre-existing conditions can no longer be at a higher price. No employee, dependent, or
individual can be turned down for insurance for pre-existing conditions.

No annual limits. Insurance plans can no longer impose annual limits on benefits.

New employee notification. At the time of hiring, new employees must be notified of the
availability of the health insurance exchange and subsidies.

Minimum Benefit Standards. Starting in January 2014, requirements will be established for
the minimum benefits that must be covered by health plans provided by small businesses.


2017
 If you have < 100 full-time employees1 and your state allows it, you can purchase health
insurance coverage on state-run exchanges. Effective January 1, 2017
1

2018
 If you are a health-plan administrator (including self-insured plans) and the combined
annual employer/employee premiums exceed the threshold of $10,200 for self-only
coverage and $27,500 for family coverage, you will be imposed a nondeductible excise
tax of 40% on the amount of the premium in excess of the threshold.1 Effective January 1,
2018
1
An additional threshold amount of $1,650 for singles and $3,450 for families will be available for retired individuals over the
age of 55 and for plans that cover employees engaged in high-risk professions (e.g., law-enforcement professionals, EMTs,
construction and mining).

Collective-bargaining agreements
If you offer health coverage under a collective-bargaining agreement that was ratified prior to
March 23, 2010 (the Act’s effective date), you will not be subject to the requirements in the Act
until the current collective-bargaining agreement expires.


Small Business Health Care Tax Credit
Follow the 3 simple steps below to determine if your business qualifies for the Small Business
Health Care Tax Credit.


About Raj Singh & ExpertQuote.

Raj Singh is the Chief Operations Officer of ExpertQuote Insurance Services; a bay area firm that
provides Corporate Benefits consulting from Startups to, UnaMas Restaurants Chain and the winning
San Jose Sharks! Raj Singh has been profiled numerous times in several of the leading publications
like the San Jose Business Journal, WorkForce Magazine, etc on his insights of the California health
insurance market. Raj has focused ExpertQuote as a true fiduciary on behalf of business owners to
present optimum health insurance solutions that focus on Consumer Driven Health Care options. In the
current economic times, Raj has helped many companies to optimize their dollar and save significant
capital yet keep the level of benefits same through the strategic use of Consumer Driven Health Care
plans partial and full funded health platforms. Self funding dental.com and selffundingvision.com are the
brain child of Mr. Singh. He serves as a Trustee on the board of the “After School All Stars” and recently
ExpertQuote was the Title Sponsor of the first Women’s Tournament Polo match, at the prestigious Menlo
Polo Club, crowned the ExpertQuote Ladies’ Cup.

Copyright & Disclaimer

All of our materials are protected under federal and state copyright laws. You may not make copies
except for your own personal use. That means YOU CANNOT SELL, TRADE, COPY, ASSIGN, or
LICENSE YOUR RIGHTS IN THESE MATERIALS. We make no representations or guarantees that the
materials, and we disclaim any warranties, express, implied or for any particular purpose you may need.
You understand that all legal forms are provided for example only and that it is strongly advise that you
seek legal counsel to review the impact of this material on your business. It is also advised that you
review the potential financial and tax implications of any transaction with a qualified professional before
proceeding.


Eq demystifing health care reform

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