The Supreme Court decision in support of President Obama’s healthcare reform has raised many questions. It seems as if most believed the Supreme Court would find The Patient Protection and Affordable Care Act unconstitutional. Therefore, few paid any attention to what this means for employers with 50 or more full-time employees or full-time equivalents.
The new law sets minimum requirements for employers in addition to the imposition of the individual mandate. Employers must offer minimum essential health benefits. Currently ‘minimum essential’ as defined by Larson Allen, CPA’s is “coverage that is affordable, offers the minimum required essential benefits and pays at least 60 percent of the total allowed costs of the plan benefits”.
What qualifies for subsidy? Per HR 3590 to qualify for subsidies, an employee must meet two criteria. First, household income must be less than 400 percent of the federal poverty level ($89,400 for a family of four in 2011). Second, the employee’s share of the insurance premium must exceed 9.5 percent of household income.
If a business does not provide insurance and if at least one employee receives federal insurance subsidies in the exchange, the business will pay $2,000 per employee beyond the first 30, which are automatically excluded.
If a business does provide insurance, and if at least one employee receives insurance subsidies, the business will pay $3,000 per subsidized employee OR $2,000 per employee (minus the first 30) whichever is less. The employer must pay a penalty for failing to offer that worker acceptable insurance on the job. Workers that are offered qualified coverage by an employer are ineligible for the new insurance subsidies provided in the exchange.
It’s not all bad news. Companies with fewer than 50 full-time employees are exempt from the rules and penalties discussed above. In addition, many small businesses (fewer than 25 employees) may be eligible for certain tax incentives and credits if they provide health insurance coverage.
Those on the right are moaning and groaning acting as if the world has come to an end. Yes, the employer mandate may be cumbersome and costly, but what those on the right always forget is that all of us are paying for health care for everyone anyway. Those on the far left are pleased with the court decision, but are hoping for universal coverage. The legislation needs refined and is far from perfect; but it is a start. The fact is this is one step. One step, possibly, in the right direction toward reform and reigning in the cost of health care.