The New HealthCare Law and Small Business

If you own a small business you may have heard that the new Health Care Law that was passed last year will directly affect you. What you may not have heard is exactly how that is going to happen. Especially since it has been over 6 months since the passage of the law and if you are like most small business owners you probably haven't seen or had to implement any changes in your small business Health Plan model. It has been pretty much business as usual. However, there are changes that you should be aware of you just haven't felt the effects of them yet because most do not take effect till 2014. Here is a quick bare bones list of those changes:

*While not exclusive to small businesses, starting in 2014 Insurers will not be able to exclude coverage or set their rates based on pre-existing conditions. Premiums will be allowed only to vary based on geographic location, age, and tobacco use. Some restrictions already in effect include a ban on lifetime limits and a ban on "rescission" (or the canceling of policies already in effect).

*By 2014 each state will have to create what is called Small Business Health Options Programs or "SHOP Exchanges." The purpose of theses SHOP Exchanges is that they will allow small business (defined as businesses with less than 100 employees) to pool together to buy insurance. According to The Congressional Beget Office this is estimated to save small businesses about 2%-5% on insurance costs and increase coverage by 3-4%.

*During the remaining three years while the SHOP Exchanges are being created, small businesses that have 10 or less full-time employees that earn less than $25,000 are eligible for a tax credit that is equal to 35% of their health insurance costs. This measure will remain in effect for two years from when a business first buys insurance through its state Shop Exchange.

*Also starting in 2014 small businesses with 50 or more full-time employees are going to be required to offer healthcare coverage or face an annual $750 per worker fine. Coverage that is offered has to meet a list of minimum benefits and services and cover up to at least 60% of the cost to employees.

Some other measures to be aware of include the following:

*Part-time employees may be counted toward the 50-employee limit that requires businesses to provide healthcare coverage. Part-time employees will be counted on a pro-rated basis depending on hours worked. This will effectively include more businesses in the group that must provide coverage.

*The fine for not providing insurance may increase from $750 to $2,000.

So while most of these changes do not take effect till 2014 some of them are fairly significant and for most small businesses while it may feel like business as usual some big changes are coming. This is especially true if you fall in the group that will have to start providing coverage and you aren't already. That is a big cost and something that may take 3 years to effectively plan for.

Sources:

The Congressional Budget Office

http://www.cbo.gov/