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Obamacare 2012 and Beyond

2012

  • Part D cost sharing for full-benefit dual eligible beneficiaries receiving home and community-based care services will become equal to the cost for those who receive institutional care.
  • Medicare payments will be reduced to hospitals by specified percentages to account for excess (preventable) hospital readmissions.
  • Rebates for Medicare Advantage plans will be reduced but high-quality Medical Advantage plans will receive bonuses.
  • Collection and reporting of data on race, ethnicity, sex, primary language, disability status and for underserved rural and frontier populations will be required.

2014

  • US citizens and legal residents will be mandated to have qualifying health coverage (phase-in tax penalty for those without coverage).
  • Employers with 50 or more employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit will be assessed a fee pf $2,000 per full-time employees, excluding the first 30 employees.

Additional Obamacare Reforms Taking Place in 2010

  • States that require insurance companies to explain premium increases will be eligible for $250 million in new grants. Companies with unreasonable rate hikes will be retracted from the 2015 new health insurance exchanges
  • Funding will be made available to help expand the primary card work force – including money for scholarships, for loan repayments and for those professionals working in underserved locations.
  • A $15 billion Prevention and Public Health Fund – to prevent disease and illness – will be established.
  • Funding will be made available to support the construction and expansion of community health centers in order to serve 20 million new patients nationwide.
  • Funding will be made available to provide increase payment to help health cared providers who work in rural communities. (Currently, 68 percent of underserved communities are rural.)

Obamacare Provisions starting September 23 2010

  • Coverage will be extended so that young adults, up to age 26, can remain on their parents’ plans when alternative insurance coverage is not available.
  • All new plans must provide free, preventive health care services without charging a deductible, co-pay or coinsurance.
  • Insurance companies will be restricted from denying coverage due to an error or technical mistake on the customer’s application.
  • External review process will be established for consumers to be able to appeal coverage or claim determinations.
  • Lifetime and annual dollar limits on essential benefits like hospital stays will be prohibited.
  • For new and existing group plans, denying children under 19 coverage due to a preexisting condition will be illegal.

COULD SMALL BUSINESSES COPE WITH MANDATORY HEALTH INSURANCE?

What would they have to do if health care reforms pass?

provided by Bradford G. Lee, RIS

Provide employee health insurance, or pay a penalty? Small business owners worry about having to face that choice. That possibility moved a step closer to reality in mid-July, as three of five Congressional committees approved new legislation to remake American health care – legislation that could expand health insurance coverage to 46 million uninsured Americans, with potentially harsh consequences for business owners.2,3

Two variations of pay-or-play. The House version of the bill would levy a fine on employers that don’t offer health coverage – a fine as large as 8% of a company’s annual payroll. However, some businesses could qualify for tax credits and some very small firms wouldn’t have to pay such penalties.2

The Senate alternative would spare small companies (25 workers or less) from annual penalties. It would require a business with 25 or more employees to fork over $375-750 per worker annually if that business refused to offer health coverage or paid less than 60% of employees’ monthly health plan premiums.2,3

Could businesses handle this? After all, some companies have considered dropping health plans altogether. Health insurance premiums paid by businesses have increased more than 200% in the last ten years, according to a Kaiser Family Foundation report; in 2008, single coverage averaged $4,704 and family coverage $12,680. The report found that less than half of businesses with three to nine employees offered health plans at all last year. 2

The House version of the bill would require a small business with a payroll of $250,000 or more to provide coverage or be penalized. The penalty would actually be a sliding-scale payroll tax: it would be 2% of payroll at $250,000 and climb to 8% of payroll for companies with $400,000 payroll or greater.3

What if you’re self-employed? No break for you. In the Senate version of the bill, any self-employed individual would have to buy health insurance or pay a $750 penalty annually. However, insurers could not use past claims history or pre-existing medical conditions to deny you coverage. Individuals whose income

is within four times the poverty level (i.e., $88,000 or lower for a family of four) could qualify for subsidies. 3

As for the House version, it asks self-employed individuals to buy coverage or pay a tax equivalent to 2.5% of the difference between their adjusted gross income and the tax filing threshold (which was about $9,000 in 2008). Sliding­scale subsidies would be offered to self-employed Americans so that they would not have to spend more than 11% of their income on health coverage. As in the Senate bill, insurers could not wiggle out of providing coverage by citing pre-existing medical conditions.3

What would the long-term impact be? In the bleakest scenario, businesses would be hard pressed to offer workers decent wages or decent health coverage. Nationally, fewer and fewer companies are offering health benefits in the first place. A 2008 National Small Business Association poll found that just 38% of small companies could afford health plans at all, compared to 67% of small businesses in 1995.4

A sunnier outlook comes from the Small Business Majority, a nonprofit advocacy group founded by small business executives. Its report examined three scenarios using different levels of employer tax credits and employer

payments. It concluded that the proposed health care reforms could save small businesses as much as $855 billion, and preserve as many as 128,000 jobs that would have been lost because of runaway health insurance costs.4

Stay tuned. Will Congress give business owners more of a break? Could penalties be reduced, or requirements eased? Will fewer businesses offer health plans, assuming that their employees could qualify for federal subsidies toward individual health insurance? At this point, there are more questions than answers – but with the median health insurance cost for U.S. businesses already at about 11% of payroll, any increase would be unkind.2

Bradford G. Lee, RIS is a Financial Advisor with SagePoint Financial, Inc. and may be reached at 426-73750

These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment adviceAll information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.

Citations.

1 nytimes.com/2009/07 /18/health/policy/18health.html?hp [7/17/09] 2 dallasnews.com /sharedcontentl dws/bus/stories/DNlocalhealth_16bus.ART.5tate.Edition2.4bde27c. html [7/16/09] 3 businessweek.com/smallbiz/contentljuI2009/sb20090716_683119.htm [7/16/09] 4 cbsnews.com/stories/2009/06/16/politics/main5092451.shtml [6/16/09]

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