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Department of Insurance lays out health reform changes

The Idaho Department of Insurance is trying to help Idaho businesses and consumers understand how the recently enacted federal health care reform will affect them.

The agency has created a new Web page that lays out the major changes in the Patient Protection and Affordable Care Act that President Obama signed on March 23.

The first set of changes will take effect on Sept. 23, 2010. Those reforms will make it easier for parents to cover adult children, harder for insurance companies to cancel health policies, and more economical for small employers to cover employees, the agency says. Children with pre-existing conditions will have more health plan choices and immediate coverage. Some of the changes may take effect only after plan renewals.

Other changes, such as an insurance “exchange,” won’t take effect for several years.

The department has crafted a series of FAQs. The following are some of the questions and answers anticipated for Idaho small businesses:

Q. I own a small business. Will I have to buy insurance for my employees? What help can I get now?

A. It depends on the size of your business. Companies with fewer than 50 employees won’t be penalized if they don’t offer health insurance. But effective now, businesses can get tax credits if they have 25 or fewer employees and a work force with an average wage of up to $50,000. Tax credits of 35 percent of the premium costs are available this year and will increase up to 50 percent in 2014.

In 2014, businesses with more than 50 employees that do not offer health insurance must pay a fee of up to $2,000 per full-time employee if any of their employees get government-subsidized coverage through the exchange. The first 30 employees will be excluded from the assessment.

Q. What is the small business tax credit and how do I know if I’m eligible?

A. Effective Jan. 1, 2010, tax credits are available to qualified small businesses that provide their employees with health insurance. To qualify, your business must cover 50 percent of the cost of health care coverage for your employees, pay an average annual wage below $50,000, and have less than the equivalent of 25 full-time employees. The size of the credit depends on your average wages and the number of employees you have.

Q. I have 5 employees. Will I be required to provide insurance for my employees?

A. No. The employer responsibilities under the health reform law do not apply to employers with fewer than 50 employees. However, you will be able to enroll your employees in coverage through the exchanges beginning in 2014.

Q. I have 75 employees. Will I be required to provide insurance for my employees?

A. Yes. An employer that fails to offer minimum essential coverage to its employees will be subject to a penalty of $2,000 for each of their employees beyond the first 30. In your case, this penalty would be $2,000 x (75-30) = $90,000. If an employee’s share of the premium for coverage provided by an employer exceeds 9.5 percent of his or her household income, employers that do offer minimum essential coverage will be assessed a penalty of $3,000 per employee that receives a subsidy through the exchange. This penalty may not exceed $2,000 times the number of employees beyond the first 30.

Q. I am self-employed. Will the new law impact my health insurance choices?

A. Yes. Beginning Jan. 1, 2014, self-employed individuals and their families must be included in the small group market in all states and will have the option of purchasing coverage through the exchange. This will increase plan choices and include the self-employed in a more stable pool.

Q. Will I be required to drop my current coverage?

A. No. Group health plans in effect as of March 23, 2010 are grandfathered under the law and will be considered “qualified coverage” that meets the mandate to have health insurance that begins January 2014. Employees and dependents can be added to the policy without losing grandfather status.

Q. Must I go to the exchange to purchase insurance, or can I continue to purchase coverage through my insurance agent?

A. The federal law (PPACA) specifically states that businesses are not required to purchase through the small business exchange.

Q. Can I continue to provide assistance to my employees through flexible spending accounts?

A. Yes, nothing in the PPACA would eliminate or discourage these options.

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