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Health Care Reform Legislation
The health care reform legislation signed into law in March 2010 will provide patient protection and health insurance for millions of Americans currently without it, but it may also provide a few benefits to local businesses. Do you know how it may affect you?
Although no one can say for certain exactly how this new law will affect local businesses in the coming years, here are a few things to keep in mind:
Coverage Subsidies
 Small employers (businesses with 25 or fewer full-time equivalents and that meet average salary requirements) that provide health insurance for employees will be eligible for a tax credit.
Also, employers who provide insurance to retirees over age 55 who are not eligible for Medicare are eligible for a temporary reinsurance program.
This in particular could be very beneficial for SLO Chamber members, as 1,274 of the Chamber’s 1,400 members have 25 or fewer full-time employees.
However, because of some key criteria – some of which is still undefined – employers should proceed with caution before taking any action based on this, according to Morris & Garritano.
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Insurance Reforms
Within 6 months from the date of enactment, all existing health insurance plans will be subject to new regulations that prohibit lifetime limits, rescissions, and excessive waiting periods.
These reforms require policies to provide dependent coverage or children up to age 26. They prohibit lifetime coverage limits, rescission of coverage except in cases of fraud, and imposing pre-existing condition exclusions on children.
Many of these provisions will take effect this year, and they may affect your benefits and how you administer your benefits, according to Morris & Garritano.
Over the coming months and years, as regulations evolve, stay engaged with your broker for compliance and strategy, advises Morris & Garritano.
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Individual Mandates
Citizens and legal residents will be required to have a certain level of health coverage, or pay a tax penalty. These rules could restrict the usage of high deductible health plans and will decrease the chance that your employees will decline coverage under your plan, according to Morris & Garritano.
Between now and 2014, when most of the legislation takes effect, there will be many additional regulations to make compliance clear, Morris and Garritano says.
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Health Benefit Exchanges
In 2014, state exchanges will be established for small businesses and individuals to shop for health insurance. Larger businesses will be able to purchase coverage in the exchanges in the future.
Vance Rodgers, president of the San Luis Obispo Medical Association, said that businesses and individuals need to be careful about the product they buy, because some plans can have very high deductibles, which can surprise consumers.
"People need to buy insurance products with their eyes wide open," Rodgers said.
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Employer Mandates
 According to Morris & Garritano Insurance, the new law requires that most employers with 50 or more employees offer coverage to employees, effective in 2014. Employers who do not do so may be subject to hefty penalties. The benefit plans offered will have to meet certain requirements.
Since the 2014 changes are more significant for larger groups than smaller ones, strategic planning, particularly as the regulations become more defined, will be important, according to Morris & Garritano.
But this mandate may not affect many employers on the Central Coast. In fact, only 56 of the Chamber’s 1,400 members have 50 or more employees.
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The information provided by the San Luis Obispo Chamber of Commerce and Morris & Garritano is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal council for legal advice.
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