How Do The Proposed Health Care Reforms Affect Small Business Owners?

If you've been paying attention to the news at all lately, the big topic of conversation is the new proposed healthcare legislation, or "America's Affordable Health Choices Act of 2009". This bill is 1018 pages long, and will completely change the healthcare system in the United States if and when it becomes law. If you haven't actually read the bill, you may be wondering how this new legislation will affect your business. I have taken the time to read through the section of the bill that covers the employer responsibilities (Title III, Subtitle B), and have summarized them below:

There are three main obligations under this proposed law that affect business owners and employers:

1. You must offer a "qualified" healthcare plan, or a grandfathered healthcare plan to all of your employees.

A "qualified" plan is defined as a plan that meets the requirements of Title 1 of the bill, which contains 57 pages of requirements. While they are too long to include here, here are some of the key requirements: no exclusion of pre-existing conditions, guaranteed issue and renewal, non-discrimination in benefits, ensuring lower premiums, standardization rules for coordination and subrogation of benefits, and whistleblower protections. The public option plan is also considered a "qualified" plan.

A grandfathered plan must meet the following requirements: no new enrollments are allowed once the new bill is passed, no change in benefits are allowed, and your plan must have the same percentage increases for everyone that is covered by the plan. If your plan doesn't meet any of the above requirements, then it is no longer grandfathered, and you must switch to a "qualified" plan. Also, after a period of 5 years, all grandfathered plans must switch to a "qualified" plan.

2. You must contribute to the plan if the employee decides to take the plan that you offer.

As an employer, if you choose to offer healthcare coverage, you must meet the following requirements:

• Provide auto-enrollment to your plan
• Pay at least 72.5% of the premiums for individuals on the plan
• Pay at least 65% of the premiums for families on the plan
• Pay for healthcare for part-time employees based on the above percentages on a pro-rated basis based on their hours worked
• Salary reductions are not considered employer contributions
• You have to provide proof to the Health Choices Commissioner that you are meeting the above requirements

3. If your employee chooses not to take your healthcare option, or you choose not to offer healthcare to your employees, then you must contribute to the Health Insurance Exchange.

The mandatory contribution rates are as follows:

• You must contribute a dollar amount equal to 8% of your total payroll to the Treasury of the United States if your payroll exceeds $400,000/year
• You must contribute a dollar amount equal to 6% of your total payroll to the Treasury of the United States if your payroll is between $350,000 - $400,000/year
• You must contribute a dollar amount equal to 4% of your total payroll to the Treasury of the United States if your payroll is between $300,000 - $350,000/year
• You must contribute a dollar amount equal to 2% of your total payroll to the Treasury of the United States if your payroll is between $250,000 - $300,000/year
• You must contribute a dollar amount equal to 0% of your total payroll to the Treasury of the United States if your payroll is under $250,000/year

In addition to the above three requirements, as an employer, you must allow the government to conduct regular audits of your group insurance program. If you do not meet the requirements as stated above, then your healthcare plan will be terminated. Going forward, you will have to pay the fees as stated in section 3 above, and move to the public option. You will also be fined a fee of $100 per employee, per day for the number of days that you were not in compliance, up to $500,000.

So, what does all of this mean to you, the business owner? First of all, you will have to provide healthcare coverage for all of your employees, both full time and part time, or pay the government the fees listed in section 3 above. This will increase the cost of doing business for almost all business owners. You will also need to comply with their audits as well, which will require additional time and paperwork. If you already have a program in place, you will be grandfathered until such point that you no longer meet the requirements of grandfathering, or 5 years passes. Then you will be forced to the "qualified" program. Also, if you noticed above, in order to be a "qualified" plan, the plan must include people with pre-existing conditions. This will increase the cost of private healthcare plans, and eventually force everyone to the public option, as private insurers won't be able to be cost competitive with a tax funded public option under these stipulations.

The good thing is there is still time! This bill has not passed through the Congress as of yet. So, whether or not you agree or disagree with the proposed bill, it's a good thing to get involved in the process by contacting your Senator or Representative and expressing your concerns, as these changes will surely affect your business going forward!

Link to find your Senator: US Senate

Link to find your Representative: US House of Representatives