Health care reform is a highly debated topic in the United States right now — from the news and the presidential election to the water cooler and the dinner table. This week, the US Supreme Court made a landmark decision to uphold President Barack Obama’s health care law in its 5-4 majority ruling on National Federation of Independent Business et al v. Sebelius, Secretary of Health and Human Services.
The Supreme Court ruling is a whopping 193 pages long, so you probably won’t have time to sit down and read it in its entirety. The question that you probably have is: what does this law mean for me, my family and my business? Here is a quick, simplified guide to the new health care law.
Health Care Reform at a Glance
1. The Supreme Court upheld almost all of President Obama’s law, including the controversial “individual mandate” that requires Americans to have health insurance or pay a penalty. The court determined that the mandate is constitutional because it is essentially a tax for people who do not have health insurance.
2. Starting in 2014, almost everyone will be required to have insurance or face a penalty, and subsidies will be available to those who can’t afford coverage. The health care law is expected to insure approximately 30 million of the estimated 50 million uninsured people in the US (overall, 9 out of 10 of the eligible population of citizens and legal residents). Young people will be able to stay on their parents’ insurance plan until the age of 26.
3. Insurers will not be allowed to deny coverage to people with pre-existing health conditions or charging those people more. The law also requires insurers to provide basic benefits, such as preventive care without co-pays from the patient.
4. Most employers will face fines if they don’t provide health insurance for employees. Companies with 50 or more full-time employees will be required to offer workers coverage by 2014 or pay penalties, starting at $40,000 and going up by $2,000 for every additional employee past 50.
5. Employers must offer health care plans that cover at least 60 percent of health care expenses, and insurance must cost the employee less than 9.5 percent of his or her family’s salary. If insurance plans don’t meet these standards, the company must pay a higher penalty of $3,000 per employee. This rule doesn’t affect most of the country’s nearly six million employers, but it will apply to 200,000 small businesses.
6. Self-employed solo entrepreneurs will also be required to purchase health insurance under the new law. New insurance markets should make it easier for small businesses and individuals to afford coverage. According to CNN Money:
Starting in 2014, solo entrepreneurs and small businesses can shop for less expensive insurance through exchanges in each state.
One-person businesses can turn to exchanges for individuals. Companies with up to 100 workers may turn to Small Business Health Options Programs. Both have a similar approach to bringing down costs: increasing the size of the insured pool spreads out risk.
No exchange is up and running yet. In theory, though, they will give small firms the long-awaited ability to buy insurance at rates that once only belonged to large companies.
7. Some small businesses will still be eligible for the existing health care tax credit, which has been in place since 2010. The federal government rewards businesses for providing health insurance if they have fewer than 25 workers and pay average salaries of $50,000 or less. The average credit last year was $2,700 per business, and only 170,300 companies received it for tax year 2010, though the government estimates between 1.4 million and 4 million were eligible.
8. Another provision that might help small businesses is the rule that insurers must spend at least 80 percent of every dollar on medical care and not administrative costs. If insurers don’t meet this requirement, the law forces them to refund the difference as health care rebates. This rule is already in place. For example, in California this month, 4,400 companies received $3.5 million in refunds from insurance company UnitedHealth.
Are you a small business owner, a solo entrepreneur or an employee? Do you think the new health care law will help or hurt you? Share your comments below.