Posted 8/12/2013 12:00 am
Updated 8 months ago
Many businesses have viewed the 2010 Patient Protection and Affordable Care Act (PPACA) with concern, focusing on the tax penalties in the law for those that don’t provide insurance; however, the benefits far outweigh any potential penalties.
The Patient Protection and Affordable Care Act provides real safeguards that help business owners get better value for their premium dollars. Premiums can’t be increased because of employees’ health. The law requires most residents to have healthcare coverage by 2014, either through their employer or through individual coverage. Businesses with fewer than 50 employees are not required to provide insurance coverage.
When the Health Insurance Marketplace opens Oct. 1, consumers and businesses can shop for and purchase quality health plans approved by the Arkansas Insurance Department. Businesses can shop and compare plans through the Small Business Health Options Program (SHOP), which is designed to simplify the process of finding health insurance for employers and their employees.
The Affordable Care Act levels the playing field between small and large business owners. For example, if businesses have fewer than 50 employees and choose to offer insurance, they will be able to get better rates than today when small businesses are paying approximately 18 percent higher rates than large businesses.
The Small Business Health Care Tax Credit significantly helps businesses by offsetting some of the cost increases that may come with providing quality, affordable health insurance to employees.
The credit is claimed on the business’ tax return.
To be eligible for this credit, a business must:
• Have fewer than 25 full-time equivalent employees.
• Cover at least 50 percent of the premium cost of an individual plan for employees.
• Pay average wages of less than $50,000 a year.
In addition to tax credits, business owners can continue to receive tax deductions for what they pay toward premiums, offering real financial savings as well as human benefits for a small employer. Potential employees value coverage and it’s a value to employers when they offer health insurance. Businesses would have the value of healthier employees meaning less absenteeism and greater productivity.
Of some concern for some business owners was a reporting requirement in the law that called on businesses with 50 or more employees to provide detailed information regarding employees’ tax information and related health insurance benefit details. Failure to comply would have led to penalties. Earlier this month, the federal government postponed that mandate until 2015 to allow time to streamline reporting requirements.
Business owners have also been concerned about penalties set forth by the law (also delayed until 2015) and some people have feared that businesses would cut hours or numbers of employees so they would be exempt from the law and thereby avoid penalties.
However, only about 1 percent of businesses nationwide would be affected. The majority of businesses with 50 or more employees already provide insurance and, according to an analysis by CNN, Fortune and Money magazines, of the 6.5 million workplaces in the U.S., only about 71,000 should take action and provide insurance for employees by Jan. 1, 2015.
How ‘Private Option’ Helps
Arkansas is the first state to pursue what has been called the “Private Option,” an innovative and unique approach to expanding private insurance coverage for low-income Arkansans.
The Private Option (more formally known as the Arkansas Health Care Independence Act) expands Medicaid eligibility, allowing more people to access healthcare, which was a goal of the ACA.
The Private Option means growth for Arkansas business in multiple ways.
For one, it improves businesses’ standing under the ACA. If workers are eligible for private insurance plans through the Private Option, there is no obligation for businesses to offer those employees health plans through the business — and that saves businesses money.
Furthermore, this expanded market will be more lucrative for health care providers than it would have been without the Private Option. Reimbursements to providers are higher in private health insurance plans than under traditional Medicaid. Doctors, hospitals and others involved in health care will all benefit.
Health Insurance Marketplace Plans
Insurance plans will be available through the Health Insurance Marketplace on Oct. 1 and will be ranked on a tiered system similar to Olympic medals: Bronze, Silver, Gold plus Platinum. The plans must cover essential health benefits.
The plans differ in cost based on the share the patient wants to pay for health care in addition to premiums. For example, a Bronze plan on average covers 60 percent of the cost of the essential health benefits, while the patient pays 40 percent. By comparison, the Platinum plan on average covers 90 percent of the cost, leaving the patient to pay 10 percent.
The 10 Essential Health Benefits
• Preventive and wellness services and chronic disease management
• Outpatient services
• Emergency services
• Maternity services and newborn care
• Mental health and substance abuse disorder services, including behavioral health treatment
• Prescription drugs
• Rehabilitative and habilitative services
• Laboratory services
• Pediatric services, including dental and vision care.