Health care reform bill 101: Who must buy insurance?

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Health care reform bill 101: What will it mean for business?

Critics have alleged that the health care reform bill set to be voted on by the House Sunday is a job killer. What's the reality? It could affect some businesses heavily but many others not at all.

Maybe you own a dry cleaning shop. Or a restaurant. Or a small factory that makes, oh, bearings for wind turbines.

Maybe you’re the CEO of a larger firm – a utility, or a toolmaker, or even Google.

What would the health care reform bill mean for your business?

Quite a bit. It could affect business decisions on health coverage for employees at tens of thousands of firms.

Let’s start with a caveat: that dry cleaner, and probably the restaurant, might be too small to be affected by some of the most important business-related elements in the bill. Employers with 50 or fewer workers would be exempt from coverage provisions.

But for top executives at firms with 50 workers or more, the most important question may be this: would the health care reform bill require us to offer health insurance to our employees?

The answer to that is “no,” strictly speaking. But if you don’t, you might have to pay fairly large fees to Uncle Sam.

How does the bill work for businesses?
Here’s how that works: If you are a firm with more than 50 employees, and do not offer health insurance as a benefit, and at least one of your full-time employees gets a subsidy from the federal government to purchase health insurance on his or her own, you would have to pay Washington a fee of $2,000 for every one of your full-time workers. (Company accountants take note: you could subtract the first 30 of your employees from that assessment.)

Got that?

Also, even if you do offer coverage, you might have to take some extra action to help any of your low- or middle-income workers who want to buy insurance on their own.

Take an employee who makes less than 400 percent of the federal poverty level, which today is about $10,800 for an individual, or $22,000 for a family of four.

Perhaps that employee is finding firm-offered insurance expensive. If their share of health premiums is more than 8 percent of their income (but less than 9.8 percent), they would have the option of going out and buying insurance on their own through the new-fangled “exchange” marketplaces the health care reform bill would establish.

And you, as an employer, would have to help them. You’d have to provide them a “free choice voucher” equal to what the firm would have kicked in to provide coverage in the company plan.

When do the changes take effect?
All of the above changes would take effect beginning on Jan. 1, 2014.

One final item: if you’re a firm with more than 200 employees, and you do offer health insurance, you would have to automatically enroll your workers in the plan.

They could opt out of the coverage. But they are the ones that would have to make that decision.