Regardless of your political affiliation, you have to appreciate the magnitude of the moment.
Sweeping health care insurance legislation has passed Congress. (The Senate will still take up the "reconciliation" part of the bill which will make some additional modifications because the House only approved of the Senate version.)
So, now’s the time to ask: What does this mean for employers?
No one really knows. Oh, you’ve been hearing lots of commentators talk about how lots of jobs will be lost (or saved) as a result of this. Or they will talk about what this means for our country. But in truth, it’s much like looking at a crystal ball — you’re much more likely to get a distorted picture than a real one.
So rather than guess about what will happen for employers in the future (or speculate about future changes that may or may not be made), let’s talk about what we know.
Employers are not, technically, required to provide health insurance to their workers under the bill that passed. But if employers with 50 or more employees do not provide health insurance, they will be required to pay a fine of $2000 per worker each year if any worker receives federal subsidies to purchase health insurance. Fines will be applied to entire number of employees minus some allowances (under the formula — at least in the reconciliation bill — the first 30 employees are probably not going to be counted).
But again, here’s the most important part: If you are an employer will less than 50 employees, you will not be impacted directly from this bill because you will not be penalized if you don’t offer health insurance.
For those employers that do offer coverage, you’re not out of the woods just yet. Under the passed bill, if the employee finds the insurance too expensive because it would represent too much a percentage of their income, the employee may purchase insurance on the open market (or at least the marketplace of exchanges that the measure also establishes). The employer would then be required to provide a voucher to the employee on the percentage that the employer would have kicked in had the employee chose to continue with the employer-sponsored plan.
There is an additional provision for employers of 200 or more employees: If you, as an employer, do offer health insurance to your employees, then you will have to automatically enroll those employees in the plan.
So, you might be wondering, should I start planning for this? Well, unlike some of the COBRA-subsidy provisions that have gone into effect immediately, this law has a great deal of buffer built in. In fact, many of these provisions do not start until January 1, 2014 — or nearly four years from now.
But there are others that go into effect more quickly, including a provision to require employers to extend coverage to include adult children (up to age 26) of employees.
As you might expect from a 2000 page bill, there are certainly other provisions that might affect employers. Various blogs and publications have begun summarizing some of those provisions including Business Insurance and Washington Employment Law Update. I expect we’ll hear more this week too as everyone starts to analyze it in more detail.
For employers that have low-cost workers, there is no doubt that this measure will have some impact because of the penalties that may be applied if health insurance is not offered. But how much of an impact that will be will have to be determined by each company on a case-by-case basis.
For now, each employer should consider appointing a small group of employees (including those from human resources and finance areas) to figure out what health care reform will mean to that employer. And stay tuned, I don’t expect we’ve heard about this for the last time.