CCH has issued a special Briefing on the employer and Medicare- and Medicaid-related provisions in the House version of health care reform, detailing provisions of the legislation approved on November 7. To access the new Briefing, visit http://hr.cch.com/pdf/SpecialReport_HealthcareReform_11-09.pdf.
The Affordable Health Care for America Act made its way through the House of Representatives with significant changes to the way employers provide health benefits to their employees and major changes for Medicare and Medicaid intact, according to CCH, a part of Wolters Kluwer Law & Business and a leading provider of information and solutions for health care, legal and human resources professionals (hr.cch.com).
The House passed the bill by a vote of 220 to 215. The Senate has yet to vote on health care reform, but if a bill does pass in the Senate, a Conference Committee will be necessary to reconcile differences between House and Senate versions.
Under the House bill, employers with annual payrolls over $750,000 would be required to offer minimum coverage, and contribute at least 72.5 percent of premium costs for individuals and 65 percent of premium costs for families, or else have to pay an additional payroll tax of up to 6 percent of employees' average salary. Employers with annual payrolls under $500,000 would be exempt from the additional tax; those with payrolls between $500,000 and $750,000 would pay a graduated amount. Very small employers would be eligible for a tax credit for offering coverage.
Although a final Senate bill has yet to be merged from versions passed by different committees, it too will have some sort of employer requirement, some sort of financial penalty for employers not offering coverage and some sort of relief and tax credits for small employers.
"If health care reform passes, it seems certain that all but the smallest employers will be assessed some sort of tax or penalty if they do not offer coverage to their employees," said Stephen Huth, managing editor of Spencer's Benefits Reports by Wolters Kluwer Law & Business. Huth is a regular contributor to the blog Health Reform Talk. He tracks the employer-provided health coverage business on a daily basis and regularly answers questions on health benefits issues.
Employers currently offering coverage to their employees would see little change, at least for the first five years of the new rules under health care reform. After that, though, their plans would have to meet the same basic standards as the minimum plans offered in the new Health Insurance Exchange that would be established.
Employers might also see measures aimed at increased taxes for their highest paid employees and limitations on health savings accounts, reimbursement of health expenses under flexible spending arrangements and health reimbursement accounts.
The House bill would prohibit taxpayers from using health flexible spending arrangement (FSA) dollars to pay for over-the-counter medications (unless prescribed by a health professional) and also cap annual contributions to a health FSA offered under an employer-sponsored cafeteria plan at $2,500, indexed for inflation.
Health Insurance Exchange, Public Option
The House bill requires that, like businesses, individuals either provide insurance for themselves or face a financial penalty. Those covered by an employer would meet this requirement.
For individuals who are not currently covered by their employer, and some small businesses, the House bill establishes a new Health Insurance Exchange in which consumers can comparison shop from among health care options that will include private plans, health co-ops, and a new public health insurance option. It also provides "affordability credits" for low-income individuals to help pay for the cost of coverage purchased through the Exchange, available on a sliding scale linked to the federal poverty limit.
The public option would be administered by the Secretary of Health and Human Services, who would negotiate rates for participating providers. The public health insurance option would have startup administrative funding, but would be required to amortize these costs into future premiums to ensure operation on a level playing field with private insurers.
"The public option is one of the more controversial parts of the House version of health care reform, and likely will be modified as the measure moves through the Senate and then the Conference Committee," Huth said.