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Tuesday, September 28, 2010

HEALTHCARE IN BUSINESS: Am I Losing Good Employees Because of Benefit Choices?

Healthcare In Business with Ruth Lycke

As a small business owner and employer we are often saddled with the challenges that large businesses employ human relations departments for. You can be faced with the mounting pressures of the day to day financials of business, coupled with the endless rules and regulations regarding employees and employee benefits.
  • What is legally required?
  • What is important about "leave" benefits?
  • How does the healthcare law affect what must I do?
  • What will happen to healthcare benefits in the future?
The law requires you to cover certain costs of so called benefits. Depending on the state(s) where your business has employees these “benefits” can differ. Due to the potential complexity, we will limit what is talked about here.

Legally required benefits include:

  • Social Security Taxes — Every employer must pay social security at the same rate paid by their employees.
  • Unemployment Insurance — If you have employees, you are required to pay unemployment insurance taxes under certain conditions.
  • Workers Compensation Insurance — Businesses with employees are required to carry Workers’ Compensation Insurance coverage through a commercial carrier, on a self-insured basis, or through your state’s Worker’s Compensation Insurance program.
  • Disability Insurance — If your employees work in California, Hawaii, New Jersey, New York, Puerto Rico or Rhode Island, you will have to provide a partial wage replacement insurance coverage to eligible employees for non-work-related sickness or injury. (The term “eligible employees” is used because the requirement varies by state, employee work hours, employee(s) location(s) and employee type. Part-time workers are often excluded from these requirements.)
For your information all benefits are regulated by state and/or federal law.

Important “leave” benefits:

  • The Family Medical Leave Act, which applies to private employers with 50 or more employees and to all public employers.
  • COBRA benefits, which provide former employees, retirees, spouses, former spouses and dependant children the right to temporary continuation of health coverage at group rates. (NOTE: You may be required to provide COBRA to an employee that has been terminated or laid off.)

What effect has the healthcare law had on what you are providing?

The initial changes of the healthcare law began to take effect on Sept. 23, 2010, six months after the health-reform bill was signed into law and these include:

The preservation of job-based coverage: for employees who get health insurance through work, coverage’s should remain the same. Certain consumer protections are supposed to go into action including:
  • Lifetime caps on coverage are banned (Insurers will have to adopt new procedures allowing appeals of coverage denials.)
  • According to the new Patient's Bill of Rights insurers can no longer:
    • Cancel your coverage if you become sick
    • Set lifetime limits on coverage
    • Put annual dollar limits on coverage (this is phased in over 3 years)
    • Deny coverage to children under age 19 who have pre-existing conditions
    • Impose barriers to and/or refuse to pay for emergency care (even outside the insurer's network.)
  • Young adults can stay on their parents' insurance plans until age 26.
  • High Risk: Individuals who have been uninsured for six months and have a pre-existing medical condition (can apply for coverage through new high-risk pools being set up in each state) *This will last until 2014 when insurers cannot discriminate on the basis of health status.
  • Starting in 2010, businesses with up to 25 workers and average wages per worker up to $50,000 per year can get tax credits to offset the cost of insuring their employees.

What about the future:

  • Beginning in 2011
    • States will be responsible for enhanced review of health-insurance company rate increase requests. (insurers will have to spend 80 to 85 cents out of every premium dollar on medical care)
  • Beginning in 2014
    • Insurance marketplaces (exchanges) will be based in each state.
    • Private insurers will offer coverage options for individuals and small businesses in the exchanges. They will have to take all people that apply.
    • Subsidies, the largest part of the reform law in terms of cost,
      • tax credits to offset the costs of premiums and out-of-pocket expenses for individuals and families who meet income qualifications
    • Incentives to buy health insurance
      • Those who don't have insurance have to pay a penalty when they file their federal taxes. (Despite what you may have heard or read, no one will go to jail if they don't buy health insurance. More than 20 states are currently contesting the "individual mandate" in the federal law. Years will pass before a final decision is made and it will probably end up in the hands of the Supreme Court.)
  • Beginning in 2018
    • The new law expands the so called “safety net health-insurance program” to a projected 13 million more people, on top of the 50 million people it already serves. States can choose to start the expansion early, in 2011, with federal dollars paying the full cost. My question is this, where will the money come from to pay for it? All states have to provide the expanded coverage beginning in 2014.

Complicated isn’t it! The biggest question that remains unanswered is how much will this cost the employer and how well will the changes be integrated. The fact remains that the “employers” burden has and will continue to increase and you will have to weigh heavily the cost of “benefits” for each employee and may have to scale back as a result.

I doubt in this economy where there is so much unused talent you are loosing anyone but it is clear that the days of simple employee management have gone. We are entering a new era of not only “managed care” but micro-managed employment. If you are a small and emerging enterprise you will want to think long and hard about outsourcing HR duties until you can afford to bring them in-house. Benefits will have to be paid and will be expected by the best employees, your choices will determine how many you can afford, what state(s) you operate in, what is required by law, and what you need to supply to remain competitive.

For more information, please visit Ruth's TNNWC Bio.

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