New Law Eases Small Business Health Care Burden (But May Make Repealing ObamaCare Harder)

[think]

New Law Eases Small Business Health Care Burden (But May Make Repealing ObamaCare Harder)

By Robb Mandelbaum - DEC 14, 2016 @ 12:45 PM 5,516

On Tuesday, President Obama signed the 21st Century Cures Act, an omnibus health bill with something for everyone. The bill has been described variously as the last, best hope for bipartisan compromise and as a sordid corporate giveaway, and tucked at the very back of the legislation — past the billions spent on medical research, past the streamlined regulations for new drugs and medical devices, past the hoped-for improvements to mental health and substance abuse care, and past the changes in Medicare and Medicaid payments — is a gift to small business. Title 18 of the new law, originally a separate bill called the Small Business Healthcare Relief Act, allows companies to use Health Reimbursement Arrangements to compensate employees who buy their own insurance. And it may be a present as well to advocates hoping to preserve the Affordable Care Act.

Beginning on January 1st, a company with fewer than the equivalent of 50 full-time employees — that is, a business not subject to the Affordable Care Act's employer mandate to offer insurance coverage to employees — can reimburse employees' for purchasing individual health insurance as if it were directly paying the premiums on a group health policy: the employee won't have to pay taxes on the company's premium contribution, and the company won't owe payroll taxes on it, either. The law sets some conditions for this new benefit: the company cannot offer a separate group health plan, and it must make the reimbursement available on the same terms to all employees, although it can vary the amount the reimbursement based on the employee's age and family size, two main factors under the Affordable Care Act that insurers can use to determine the cost of plans. The law limits reimbursement to $4,950 for individual insurance, and $10,000 for a family plan, amounts that are indexed for inflation.

The new law is certain to encourage small and mid-sized companies that now offer group plans to replace those plans with reimbursed individual coverage, says Abir Sen, C.E.O. and founder of Gravie, which helps businesses do exactly that. "I think the macro trend for small and mid-sized companies is to say, a) we can't afford traditional group insurance for much longer, and b) we don't like the administrative complexities of administering my group plan when I'm a company of 20 people," he says. Since 2000, the share of firms with fewer than 200 workers that offer health insurance has fallen from 68 percent to 55 percent, according to the Kaiser Family Foundation. "If you talk to small business owners and C.E.O.s, they're looking for something different," says Sen. "But there are hurdles along the way, and tax, which was a big one, just got taken out."

~Snip~

The new law resolves most of these complications. (It also waives those penalties for small companies who've inadvertently gotten it wrong until now.) For one thing, because a small business can't offer employees both a group health plan and reimbursement for buying insurance individually, there should be no adverse selection. And the law requires an employee seeking a subsidy from the insurance exchanges to report any company reimbursement to the exchange. The reimbursement will reduce any exchange subsidy dollar for dollar...

Read more:
http://www.forbes.com/sites/robbmandelbaum/2016/12/14/repealing-obamacare-just-got-harder-thanks-to-small-business-relief-in-21st-century-cures-act/#25eb428c47b0

[greymattermom]

1. So now that unemployment is down

these companies need to offer health care to be competitive for the best employees. I think that means small businesses will want to keep the ACA. This is actually what the company my daughter works for in Colorado is doing now. This is interesting and important.