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EMPLOYER & LABOR CLIENT ALERT: March 2010 How the Federal Health Care Reform Law May Impact Your Business The recently enacted federal health care reform law has wide reaching impact on businesses large and small. Some of the items to be aware of are: 1. By 2014 all states will have to put in place Small Business Health Option Programs (“SHOP”) through which small businesses will be able to pool together to buy health insurance. The SHOPs will receive federal funding. It is estimated that using SHOPs to secure insurance may provide marginal premium reductions. 2. Until the SHOPs are in place, businesses with 10 or less full time employees earning less than $25,000 on average per year will be eligible for a tax credit of 35% of the health insurance costs. Companies with between 11 and 25 employees and average wages of up to $50,000 will be eligible for partial credits. Once the SHOPs are in place the tax credit will increase to 50% for the first two years that a business uses a SHOP to purchase insurance. 3. Beginning in 2014 businesses with more than 50 employees will be required to either offer health insurance or pay a penalty of $750 per full time employee. Under proposed amendments to the law part time employees will be included in the 50 employee figure on a pro rated basis determined on the number of hours worked. Also, the penalty may increase from $750 to $2,000. The penalties may serve as a disincentive to growth especially in today’s stalled economy. 4. Beginning in 2014 insurers will not be able to set rates or deny coverage based on pre-existing conditions. While this is a noble idea, one would anticipate that the costs that were previously passed on to the insured individuals will now be spread over all of a given plan’s participants. 5. “Cadillac plans”, those plans costing
more than $10,200 for individuals or $27,500 for families will be
subject to a 40% tax, to be paid by the insurance company, on the amount
over the dollar thresholds. The reality is that the insurance companies
will pass the tax on to the insured through increased premiums. This Laddey, Clark & Ryan, LLP Client Alert provides information of
general interest to our readers. It is not intended, and should not be
used, as a substitute for consultation with legal counsel. If you have
any questions regarding specific issues raised in this Employer Alert,
you may contact Thomas Ryan, Esq. or Linda Day, Esq. of Laddey, Clark &
Ryan’s Employment and Labor Practice Group at (973) 729-1880.
The Employment and Labor Practice Group
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