How Will Employers Be Affected By The New Health Care Reform Laws?

By 2014 Employers Will Need to Provide Health Insurance or Pay a Penalty

Medical Insurance Claims Form

On Tuesday, March 23, 2010, President Barack Obama signed a health care reform bill ("Obamacare") into law. Here are highlights of new health insurance reform laws that impact businesses and will be completely enacted by 2014:

Summary of Health Care Reforms Beginning in 2014

  • Insurance Will Be Required: Almost all United States residents will be required to have a minimum amount of health insurance coverage specified by the government or pay a penalty. Some exceptions will apply for low-income people.

  • Employers To Provide Coverage or Face Penalty: Employers will not be required to offer health insurance coverage to employees, but many businesses that do not provide coverage will have to pay a penalty.

  • Insurance Pools: Small businesses will be able to pool with other small businesses to get cheaper premiums.

  • Tax Credits: Beginning in 2010, small businesses that choose to offer coverage will begin to receive tax credits of up to 35 percent of premiums to help make employee coverage more affordable. By 2014, this tax credit will be as high as 50 percent of premiums.

  • Reinsurance Help for Early Retirees: Workers age 55-64 who took an early retirement will benefit from a temporary reinsurance program. A new insurance exchange will eventually be set up to help people who don't have affordable insurance through their jobs. Until the exchange is set up, employers offering health care benefits for early retirees ages 55 to 64 will be entitled to federal aid through a temporary reinsurance program.

    No Employer Mandate, But Penalties Will Be Imposed

    According to the White House:

    "The President's proposal does not require that small businesses provide coverage to their employees. Instead, the President's proposal provides tens of billions of dollars in new tax-credits to small businesses to make it easier for them to provide coverage if they choose to do so.

    Today, small businesses pay up to 18 percent more than large firms for the same health insurance policy. The independent and non-partisan Congressional Budget Office found that with health insurance reform, premiums for small businesses will go down.

    In addition, you will be protected from sudden, arbitrary rate hikes because a worker get sick; because insurance companies will no longer be permitted to base the cost of coverage on health status."

    It is important to note that although the law will not require businesses to provide insurance coverage for their employees, most will be penalized if they do not. Technically, there is no employer mandate that will require any employer to provide health insurance to employers; however, employers with more than 50 employees that do not provide health insurance will have to pay a fine of $2000 per worker each year if any worker receives federal subsidies to purchase health insurance. Also, employees will not be obligated to obtain insurance through their employer and may opt for a cheaper plan through another source.

    In 2014, almost everyone must purchase health insurance or face a $695 annual fine. There are some exceptions for low-income people, but if you do not offer your employees health insurance, they will still be required to purchase it on their own. Additionally, illegal immigrants will not be allowed to purchase health insurance through any means.