The new health care reform law will have different implications for employers depending upon their size and whether they currently offer health insurance to their workers. No new requirements are imposed on small employers (50 workers or less) but new health insurance alternatives will be available to them. Slightly larger employers may face some new requirements related to their workers' health insurance coverage but will also have access to new insurance options. Larger firms are unlikely to experience significant changes in the coverage they provide but may face higher costs associated with increased take-up of the policies that they offer.
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The Patient Protection and Affordable Care Act (PPACA) will have different implications for employers, depending upon their size and whether they currently offer health insurance coverage to their workers. The new law does not impose new requirements on small employers (fewer than 50 workers), but will provide new health insurance alternatives to them through state-based Small Business Health Options Program (SHOP) exchanges. As a result, they will tend to be unaffected or experience savings under reform. Slightly larger employers (50 to 100 workers) may face some new requirements related to their workers' health insurance coverage, but will also have access to SHOP exchange options. Employers with more than 100 workers may face new requirements related to their workers' coverage and will not have access to SHOP exchanges before 2017. While larger firms are unlikely to experience significant changes in the types of coverage they provide, they may face higher costs associated with increased take-up of the policies they offer their workers, due to the new requirement for individuals to obtain health insurance coverage.
Small Employers (Fewer than 50 Full-Time Workers)
Financial Obligations and Assistance
Small employers have the most to gain under the PPACA employer provisions. The law imposes no financial requirements for small employers to contribute toward their workers' health insurance costs. However, the law does provide some financial assistance (i.e., tax credits) for some small employers to maintain or begin offering coverage to their workers. These tax credits become available in 2010 and will offset a portion of the purchase of health insurance by low-wage employers with 25 or fewer workers. Depending upon the size and average wage of the employer, these tax credits could cover up to 35 percent of the employer's premium contribution, and they will be available to an eligible employer until 2014. Credits of up to 50 percent of the employer's contribution will be available for two consecutive years as of January 1, 2014, for coverage purchased through the exchanges.
While no small employer will be required to provide coverage to their workers, those that do provide coverage must limit waiting periods to no more than 90 days and eliminate lifetime and annual benefit limits.1 Employers that offer dependent coverage will also be required to offer that coverage to their workers' adult children up to age 26 (with no requirement that the employer contribute to that coverage, as is true today). Pre-existing condition exclusion periods for children will also be prohibited after six months of the enactment of the PPACA. These changes could increase premiums somewhat for some employers and workers purchasing plans today that are not in compliance with these requirements. However, the premium effects are expected to be very small and can be offset, if desired, with modest changes to deductibles or other cost sharing requirements.2
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