Small Businesses (less than 100 employees)
Health Care Reform: What Employers Need to Know
The following are provisions of the national health care reform law that may impact
Hawaii employers (both large and small businesses). The provisions are listed under
the dates of their enactment.
- Early retiree reimbursement. The federal government will reimburse
eligible plans 80 percent of early retiree health claims between $15,000 and $90,000.
The program ends on Jan. 1, 2014, or when the $5-billion funding is exhausted, whichever
comes first. For more information on this program and how HMSA can help, contact
your HMSA account representative.
- Small business tax credit. Find out
if your business is eligible for a small business tax credit.
- Department of Health and Human Services Web portal. The federal
government will establish a website with information on affordable, comprehensive
health care coverage for consumers. The website will offer information for small
businesses about health coverage options, including coverage for early retirees,
small business tax credits, and how to choose a health plan.
- Elimination of lifetime limits. For
plan years beginning on or after Sept. 23, 2010, plans will not be able to include
lifetime limits in their policies for
essential health benefits.
- Annual limits. For plan years
beginning on or after Sept. 23, 2010, the federal government has set restricted
annual limits for essential health benefits. The rules will phase
out the use of annual dollar limits over the next three years until 2014, when the
Affordable Care Act bans them for most plans. Plans issued or renewed beginning
Sept. 23, 2010, will be allowed to set annual limits not lower than $750,000. This
minimum limit will be raised to $1.25 million beginning Sept. 23, 2011, and to $2
million beginning Sept. 23, 2012.
- New appeals process. For
plan years beginning on or after Sept. 23, 2010, plans must have a claims and
appeals process that is updated regularly with standards established by the Department
of Labor. This requirement does not apply to
- Primary care provider (PCP). For
plan years beginning on or after Sept. 23, 2010, members will be allowed to
select any available participating provider as their PCP. The same rule applies
to members when choosing a pediatrician for their children. These requirements do
not apply to grandfathered plans.
- Emergency care. For plan
years beginning on or after Sept. 23, 2010, plans must cover emergency care
without prior authorization. Copayments and coinsurance for out-of-network providers
will be no more than that for in-network providers. However, members may be required
to pay the difference between what the out-of-network provider charges and what
we are required to pay under federal regulations. This requirement does not apply
to grandfathered plans.
- No prior authorization for ob-gyn care. For
plan years beginning on or after Sept. 23, 2010, plans cannot require a referral
for a woman to see an ob-gyn. This requirement does not apply to
- Limits on pre-existing condition exclusions. For
plan years beginning on or after Sept. 23, 2010, plans will not be able impose
pre-existing condition exclusions on children under age 19. Beginning in 2014, this
requirement extends to all individuals.
- Salary nondiscrimination. For
plan years beginning on or after Sept. 23, 2010, plans cannot discriminate in
favor of highly compensated employees with respect to either eligibility to participate
or to benefits. This requirement does not apply to
- Extension of dependent coverage. Dependents will be allowed to stay on their parents’ health plan until age 26.
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- Simple cafeteria plan. Small businesses may provide tax-free benefits
to their employees through a simple cafeteria plan. A cafeteria plan is a health
plan maintained by an employer. Employees select from a range of offered benefits
and may choose among two or more benefits consisting of cash (a taxable benefit)
and qualified nontaxable benefits.
- Reporting cost on W-2. Employers must report the aggregate cost
of employer-sponsored coverage on an employee’s W-2.
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- Limits on waiting periods. For
plan years beginning on or after Jan. 1, 2014, health plans will not be able
to impose waiting periods that exceed 90 days.
- Exchange. Small businesses with up to 100 employees will have access
to the state-based small Business Health Options Program (SHOP) exchange. The exchange
will include Web portals containing standardized information to help with comparing
and purchasing health plans.
- Benefit requirements. Plans being offered to the small group market
must provide coverage for essential
health benefits. This requirement does not apply to
- Limits on cost-sharing and deductibles. Plans must meet the same
cost-sharing requirements as exchange plans, which limit deductibles to $2,000 for
individuals and $4,000 for families.
- Employer mandates. Employers with more than 50 full-time employees
must offer health care coverage to its employees. A full-time employee is defined
as an employee who works at least 30 hours per week. Employers with less than 50
employees are exempt from this requirement.
- Employers offering coverage. If an employer offers coverage and
at least one full-time employee receives a tax credit or cost-sharing subsidy through
the exchange (because the offered employer coverage is below 60 percent actuarial
value or the employee dues exceed 9.5 percent of household income), the employer
pays the lesser of $3,000 for each full-time employee receiving a tax credit or
subsidy, or $2,000 per full-time employees. This penalty is calculated monthly.
- Employers not offering coverage. If an employer does not offer
health care coverage and at least one full-time employee receives a tax credit or
cost-sharing subsidy through the exchange, the employer pays a penalty of $2,000
per full-time employee. Employers with 50 or more employees can subtract the first
30 full-time employees from the penalty calculation. The penalty is calculated monthly.
- Government reporting. Employers with more than 50 employees who
(1) offer health care coverage to employees through an eligible employer-sponsored
plan, (2) pay any portion of the costs of such plans, and (3) where the employee’s
share of the cost exceeds 8 percent of their wages, must report to the federal government
the coverage they offer, the monthly dues of the lowest cost option, and the employer’s
share of the cost.
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This information is based on HMSA’s review of the national health care reform
legislation. This overview is intended for educational purposes and should not be
used as tax, legal or compliance advice. Interpretations of the legislation vary
and some reform regulations differ for particular members enrolled in certain groups.
HMSA will continue to present and update information related to national health
care reform as additional guidance becomes available.