New health care provisions will have an effect on businesses

Posted: Wednesday, September 22, 2010

A panel of health care administrators saw this year's Alaska State Chamber of Commerce's convention as an opportunity to relate what the recent health care reform means to businesses.

The panelists have studied the new law and have recognized the many new complexities surrounding several areas, such as insurance and other mandates. They said employers should become familiar with the law's areas affecting them before those particular changes take effect.

Deborah Erickson, executive director of the Alaska Health Care Commission, gave the state's perspective as a large employer with more than 20,000 employees. She said such employers are looking at several adjustments, some larger than others.

One small change was a provision that requires employers to provide nursing locations and breaks for mothers.

She said while this is a small adjustment, there are many other mandates that can become very costly.

"To the extent insurance plans have to comply with all these new rules, any business that is self-insured, and I'm leaving out lots of technical details and complexities such as the grandfathering of insurance plans, but we're looking at how those provisions will affect us an employer," she said, giving the costs and provisions of adding dependents up to 26 years old as an example.

Karen Perdue, president and chief executive officer of the Alaska State Hospital and Nursing Home Association, talked about how the reform affects smaller employers, saying the law distinguishes between individuals and small and large employers.

"With regard to the (business with) under 50 employees, there is no mandate," she said. "There are tax credits. The tax credits start coming in actually quite soon if you choose to offer coverage," she said.

She said there will be subsidies for premiums for individuals and small businesses under the bill's thresholds.

Erickson said employers have to understand "small business" is defined differently by different provisions, and those parameters must be understood when talking about things like small business tax credits or business mandates.

"For example, the threshold for qualifying for a small business subsidy is 25 employees. The threshold for being required to purchase insurance for employer mandate is 50. There are other thresholds for 100 or 200 employees," she said.

Renee Radcliff Sinclair of the U.S. Chamber of Commerce also commented about tax credits. She is the executive director of the northwest region in congressional and public affairs.

"If you are a small business employer who is providing health care benefits to your employees you may be eligible for a small business tax credit now. If you have 10 employees or less and you pay at least 50 percent of their premium you would qualify for that," Sinclair said. "If you have 11-20 employees you could possibly get a prorated amount."

"The major portion of this new law comes into play in 2014," she added. "By 2014, we'll know what the qualifying plans are going to look like. What benefits the federal government is going to mandate."

Sinclair noted an individual mandate also takes affect in 2014. This could mean fines of $695 per year for individuals who choose not to purchase plans. Sinclair said that while this amount could be lower than a health plan, the penalty could also be 2.5 percent of total income, which could be a lot more. She said the penalty would be the greater of the two.

Perdue said an exchange will be created in the marketplace under the reform, offering different levels of health plans available.

"As for big employers there is a pay-to-play mandate so there will be some costs," she said.

Erickson said the bill will lead to some "casualties" with being self-insured, such as a new "Cadillac tax" on health benefits for insurance plans over a certain threshold starting in 2018. She said costs for things like this will ultimately go to the employers. She said things like this will need to be investigated to see how it will affects Alaska as an employer.

Perdue said the "Cadillac tax" is focused on trying to enhance communications about health benefits' relation with pay.

The three agreed there are many levels to the bill that must be studied and understood, as the majority of the bill takes effect in 2014.

Erikson said a few mandates take effect Sept. 23, while new reporting and IRS requirements take affect in 2011. Employee notification requirements on health insurance exchanges take effect in 2014.

"There are a whole series of other insurance market reforms that take affect in 2014," she added.

• Contact Jonathan Grass at 523-2276 or at jonathan.grass@juneauempire.com.



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