Small Businesses (2-50 employees)
Ninety-six percent — or 30 million — businesses in America are small businesses. They employ just over half of the working population. Knowing how the health care law affects small businesses will help you comply with the law, take advantage of potential tax benefits, and choose the best options for you and your employees.
Here are some of the key provisions of the health care law that may affect your small business:
- Small businesses that have fewer than 50 full-time equivalent employees are not required to offer health insurance.
- Small business with fewer than 25 employees with average wages of less than $50,000 may be eligible for sliding-scale tax credits if they provide their employees health insurance.
- If your health plan was already in effect on March 23, 2010, you may be eligible for grandfathered status. The plan you offer would not have to meet some of the law's provisions. For example, your plan may not be required to:
- Cover 100 percent of certain preventive services
- Cover the 10 new essential health benefits
- Allow female employees to see an OB/GYN without a referral
- Implement an internal and external appeals process
What should I do?
Visit the Internal Revenue Service website to see if you're eligible for a tax credit.
Fewer than 25 full-time employees and average annual wages of less than $50,000.
The prescription drug coverage program offered under Medicare.
A Medicare program to help people with limited income and resources pay Medicare prescription drug program costs, such as premiums, deductibles, and coinsurance.
A method of cost-sharing in a health insurance policy that requires a group member to pay a stated percentage of all remaining eligible medical expenses after the deductible amount has been paid.
These services are covered under reform at 100 percent meaning without copayment, and they are valued as helping to improve overall health and reduce health care expenses. They include child immunizations, breast/prostate/cervical/colon cancer screening, bone mass measurement, and routine physical exams.
A retroactive cancellation that treats the coverage as void from the time of enrollment or a cancellation that voids benefits previously paid before the cancellation.
Any condition, illness, or injury for which medical advice or treatment was recommended or received before a person obtains health insurance. Examples include diabetes, heart disease, and cancer. Most health plans, even grandfathered ones, already may not deny coverage of or benefits to children under age 19 who have a pre-existing health condition; this extends to adults in 2014. Certain enrollment period limitations apply.
Part of traditional Medicare but offered through private insurance companies. MA plans can include a variety of health plans such as HMO or PPO, prescription drug plans, as well as wellness and prevention benefits. Approximately 10 million, or 25 percent of Medicare-eligible seniors are enrolled in Medicare Advantage plans.
A set of health care service categories that must be covered by certain plans, starting in 2014, including doctor office visits, hospitalizations, and prescriptions. Insurance policies must cover these benefits to be certified and offered in exchanges, and all Medicaid plans must cover these services by 2014.
An account that withholds pre-taxed income in reserve for health-related expenses. Expenses for over-the-counter medications and drugs (excluding insulin and doctor-prescribed medications) will no longer be a distribution used for qualified medical expenses, eligible for tax-free payment or reimbursement, effective January 2011.
An account that withholds pre-taxed income in reserve for health-related expenses. A tax penalty on distributions from HSAs that are not used for qualified medical expenses increases from 10 percent to 20 percent in 2011. Expenses for over-the-counter medications and drugs (excluding insulin and doctor-prescribed medications) will no longer be a distribution used for qualified medical expenses, eligible for tax-free payment or reimbursement.
An account that withholds pre-taxed income in reserve for health-related expenses. Expenses for over-the-counter medications and drugs (excluding insulin and doctor-prescribed medications) will no longer be a distribution used for qualified medical expenses, eligible for tax-free payment or reimbursement from any of these accounts, effective January 2011. A tax penalty on distributions from MSAs that are not used for qualified medical expenses increases from 15 to 20 percent of the amount includable in gross income.
An employee health spending account funded and owned by the employer. HRAs can be used to reimburse employees for certain qualified health services and expenses not covered by the company's health plan, including copayment, coinsurance, and deductibles. Funds remaining in the account at year-end go back to the employer. . Expenses for over-the-counter medications and drugs (excluding insulin and doctor-prescribed medications) will no longer be a distribution used for qualified medical expenses, eligible for tax-free payment or reimbursement.
A health plan under which an employer or group sponsor is financially responsible for paying plan expenses, including claims made by group plan members.
A gap in Medicare Part D prescription drug coverage that, under reform, provides recipients not already receiving Medicare Extra Help who reach the gap, with a one-time rebate for biologic drug expenses at varying rates: $250 in 2010, 50 percent of gap expense coverage in 2011, and additional discounts in successive years, until the gap coverage phases down to 25% in 2020.
The reform law establishes financial assistance, on a sliding scale for individuals and families with incomes from 133 to 400 percent of the federal poverty level, to help people buy coverage through the exchanges.
A national or state-by-state marketplace where consumers and small businesses can shop simply and quickly for health insurance, comparing products and prices. Exchanges would work with state insurance departments to set and enforce insurance reforms and protections. If a public plan is offered, it would be included in the health exchange, along with private insurance plans.
Individual and group health plans issued on or before March 23, 2010 are “grandfathered” and do not have to comply with some of the provisions of the new law. If an existing health plan changes, however, it my lose its grandfathered status.
Generally determined by the Internal Revenue Service as one of 5 highest paid officers, a 10 percent stakeholders in a business, or among the top 25 percent of employees ranked by compensation within a business. Fully insured group plans are prohibited from establishing eligibility rules for coverage that favor highly compensated individuals. The benefits under such plans may not discriminate in favor of this group either. Grandfathered plans are exempt.
A substance made from a living organism or its products and is used in the prevention, diagnosis, or treatment of disease. Biological drugs include antibodies, interleukins, and vaccines.
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