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What healthcare reform means for dealers

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What Healthcare Reform Means For Dealers June 3, 2010

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What healthcare reform means for dealers

  1. 1. – KPA CONFIDENTIAL – What Healthcare Reform Means For Dealers June 3, 2010
  2. 2. Questions • If you have questions during the presentation, please submit them using the “Questions” feature • Questions will be answered at the end of the webinar
  3. 3. HealthCare Reform • What does Healthcare Reform really mean? • 5 things you must do now • Thinking ahead to 2012 and beyond • Tax breaks for small businesses 3– KPA CONFIDENTIAL –
  4. 4. What does Healthcare Reform Mean Health Care Reform refers to the Patient Protection and Affordable Care Act of 2010, the bill as the Senate, 60-39 on Dec. 24, 2009, and by the House, 219-212 on March 21, 2010 . It was signed into law by President Obama on March 23. Congressional Budge Office estimated that the legislation would have a relatively small effect on premiums for employer-based healthcare insurance. For employers with more than 50 employees, premiums could be as much as 3 percent lower under the legislation than they would be under current law in 2016, according to the CBO’s projections. 4– KPA CONFIDENTIAL – Good News Possible lower cost Tax Breaks Bad News More Complex Less Choice for Employers
  5. 5. Five Things You Must Do Now  Set up appointments with your tax advisor, attorney and insurance broker by end of June to update your benefit plans and understand tax implications  If you have a calendar year benefit plan you will need to redesign your healthcare plan to extend coverage to adult children up to age 26, eliminate lifetime dollar limits and remove pre-existing condition exclusions, if any, for children up to age 19. The deadline for compliance is January 1, 2011. There will be additional regulations related to this provision so make sure your broker or agent is keeping you up to date  If you provide an FSA (Flexible Spending Account) you will have to narrow allowed spending from flexible spending accounts to bar reimbursement for nonprescription, over- the-counter drugs, an FSA feature that the Internal Revenue Service sanctioned in 2003. If you don’t have an FSA, consider adding this to your benefit program. 5– KPA CONFIDENTIAL –
  6. 6. Five Things You Must Do Now  If you provide health care plans covering retirees age 55 to 64, you have to determine how to assemble claims information to take advantage of a one-time, soon-to-start $5 billion federal reinsurance program set up by the legislation that will reimburse employers for 80 percent of each claim between $15,000 and $90,000  If you provide prescription drug coverage that is at least equal to Medicare Part D to Medicare-eligible retirees. be aware that that you are about to lose the associated tax break, effective in 2013. While the government-provided subsidies, which can run more than $500 per retiree, will continue to be tax-free, employers collecting the cash no longer will be able to take a tax deduction for retiree prescription drug costs equal to the subsidy. Talk to your accountant as these changes must be reported immediately 6– KPA CONFIDENTIAL –
  7. 7. Employer Responsibilities 2010 → • Make sure your plan does not have a ban on lifetime limits. Effective six months from enactment, the law prohibits insurers from imposing lifetime limits on benefits • No bans on discrimination based on pay. Beginning six months after enactment, the law prohibits new group health plans from establishing any eligibility rules for healthcare coverage that have the effect of discriminating in favor of higher wage employees • Breaks for Breastfeeding- The legislation will amend the Fair Labor Standards Act to require that employers provide unpaid breaks for employees to express breast milk. The legislation will also require that employers provide a private location for employees to have these breaks. 7– KPA CONFIDENTIAL –
  8. 8. Employer Responsibilities 2010 → • Ban on Lifetime Limits. Effective six months from enactment, the law prohibits insurers from imposing lifetime limits on benefits • Ban on Discrimination Based on Pay. Beginning six months after enactment, the law prohibits new group health plans from establishing any eligibility rules for healthcare coverage that have the effect of discriminating in favor of higher wage employees. • Breaks for Breastfeeding. The legislation will amend the Fair Labor Standards Act to require that employers provide unpaid breaks for employees to express breast milk. The legislation will also require that employers provide a private location for employees to have these breaks. 8– KPA CONFIDENTIAL –
  9. 9. Employer Responsibilities 2012 → • There is a new requirement mandating employers to report on W-2 income statements distributed in 2012 the cost of employer-provided health care coverage • FSA (Flexible Spending Accounts) are capped at $2500 effective 2013 • The Medicare wage tax increases 0.9 percent and a new 3.8 percent tax for those earning over $200,000 ($250,000 for married couples filing jointly on passive business income) effective 2013 • Beginning in 2014, the legislation will require an employer with more than 50 full-time employees to pay $2,000 per employee if the employer fails to offer health coverage and has at least one full-time employee receiving a premium assistance tax credit or cost-sharing reduction created by the legislation. The first 30 employees of the employer will be excluded from the calculation of the penalty 9– KPA CONFIDENTIAL –
  10. 10. Employer Responsibilities 2010 → • Ban on Lifetime Limits. Effective six months from enactment, the law prohibits insurers from imposing lifetime limits on benefits • Ban on Discrimination Based on Pay. Beginning six months after enactment, the law prohibits new group health plans from establishing any eligibility rules for healthcare coverage that have the effect of discriminating in favor of higher wage employees. • Breaks for Breastfeeding. The legislation will amend the Fair Labor Standards Act to require that employers provide unpaid breaks for employees to express breast milk. The legislation will also require that employers provide a private location for employees to have these breaks. 10– KPA CONFIDENTIAL –
  11. 11. Employer Responsibilities 2012 → • There will be a ban on annual limits. In 2014, the use of annual limits will be banned for new plans in the individual market and all employer plans. Before that ban goes into effect, there will be restrictions on annual limits for new plans in the individual market and all employer plans • In 2014, waiting periods exceeding 90 days for coverage will be barred, pre-existing condition exclusions no longer will be allowed for any employee Employers will face a $3,000 penalty for every employee whose premium contribution exceeds 9.5 percent of family income and the employee opts for coverage in state insurance exchanges that will begin operating that year 11– KPA CONFIDENTIAL –
  12. 12. Employer Responsibilities 2012 → • Tax on “Cadillac” Plans. Beginning in 2018, there would be an excise tax on any “excess benefit” of employer-sponsored coverage. The legislation defines “excess benefit” as one that exceeds $10,200 for individual coverage and $27,500 for family coverage. The thresholds would be indexed to inflation • Health insurance premiums in 2018 exceeding $10,200 for individual coverage and $27,500 for family coverage will face a 40 percent excise tax, with the cost threshold triggering the tax slightly higher for plans covering retirees and employees in certain high-risk industries. 12– KPA CONFIDENTIAL –
  13. 13. Special Provisions for Small Businesses Effective 2014 • States must set up health insurance pools called SHOP exchanges (Small Business Health Options Programs). These allow small business to o group together to buy health insurance. If you offer your employees health insurance: • You must cover no less than 72.5% of the cheapest health plan you offer for individuals, and no less than 65% for families. • You must automatically enroll every employee in a health plan with the lowest employee premium, unless they opt out. If you choose not to provide health coverage: • You must pay the Health Choices Commissioner (the person in charge of the SHOP exchange fund) 8% of the average wages paid during a predefined period of enrollment. They charge you a lower percentage if your annual payroll is less than $400,000. You will face fines if you: • You don’t cover your employees and don’t pay your SHOP fee. You’re fined $100 per violation day. • You try to entice a high-risk (sick) employee away from company-provided insurance and towards the SHOP to try to save yourself money. Don’t forget: • If you operate as a partnerships, each partner counts as an employee. • Small businesses designation varies by state 13– KPA CONFIDENTIAL –
  14. 14. Tax Credits For Small Business • Who gets the most tax credits? Very small companies(10 or fewer employees) with low-wage workers • Companies with more than 50 employees won’t get any tax credits specific to healthcare reform (but other credits are available) • Employers can get a 35% tax credit if they have 10 or fewer employees, and they earn less than $25,000 on average • Employers could receive a 50% tax credit if you’re a company with 10 or fewer employees who earn less than $25,000 on average • Employers qualify for a smaller tax credit if they have 25 or fewer employees with an average wage $50,000 or less • Employers don’t get a tax credit if they have more than 25 employees. Also, any employee who earns more than $80,000/year will be excluded from the credit 14– KPA CONFIDENTIAL –
  15. 15. Don’t Forget To… • Set up a benefit plan review with your attorney and insurance broker by the end of June. • Update your plans to cover dependents, narrow FSA allowed spending (and retiree coverage if applicable • Take advantage of tax credits to offset costs • Start planning for the future: – You will be penalized $750 per full-time employee if you’re a company with 50 or more employees, and you don’t provide health insurance. Employers are not charge for the first 30 workers you don’t cover. (Effective 2014) – You will not be penalized if you have fewer than 50 employees. – You face additional fines if you don’t cover 60% of overall employee health costs, as well government-defined set of services. If you pay more than $10,200 per year for your individual employee’s health insurance coverage, or more than $27,500 for family health coverage, the government will charge your insurer a 40% excise tax on the portion you pay that exceeds the amounts above. That means higher premiums for you–or your employees. Dental and vision isn’t included in the tax. • Stayed tuned, the legislation and compliance requirements continue to evolve 15– KPA CONFIDENTIAL –
  16. 16. Questions and Answers 16– KPA CONFIDENTIAL – QUESTIONS?
  17. 17. Contact Information 17– KPA CONFIDENTIAL – The recorded webinar and presentation slides will be emailed to you today including your local representative’s contact information. www.kpaonline.com kcarlson@kpaonline.com 866-288-8765

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