The official starting date for federal health care reform was Sept. 23, six months after it was enacted by Congress and signed into law by President Barack Obama. For many health insurance plans, the effective date was Oct. 1, or the actual annual renewal date for the health insurance plan.
It has created what Monica Neronha, assistant vice president of legal services at Blue Cross & Blue Shield of Rhode Island, called a “pretty aggressive timeline” for the volume of adjustments that need to be done.
While many of the changes go into effect “immediately” and others are phased in over the next four years, Neronha stressed that the effective date for many of the changes will be determined by when the health insurance plans are renewed.
She recently spoke with Providence Business News about the changes.
PBN: What are the top changes under the new law affecting businesses?
NERONHA: First, businesses need to calculate if they are eligible for the small-business tax credit and make a decision whether they want to claim it. The tax credit is effective for the 2010 tax year, for premiums paid in 2010.
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PBN: How does it work? PBN: What’s next on the list of changes for businesses that need to be addressed? PBN: What are some of the big changes, in terms of policies and coverage, in Rhode Island? PBN: Blue Cross has decided not to participate in the provision to allow plans in effect before March 23, 2010, to be grandfathered. Why?
PBN: Under the new law, there are increases in Medicare taxes for those who are making more than $200,000 a year. Is that correct? PBN: There is also a provision that forbids “salary discrimination” in favor of top executives. Could you explain what that is? PBN: Do you think that the federal health care reform is moving things in the right direction?
NERONHA: The tax credit is for the cost that employers pay for health insurance. Businesses that employ up to 25, and pay 50 percent of the costs of an employee’s health insurance, with an average wage less than $50,000, are eligible. For businesses with less than 10 employees, the average wage is less than $25,000. The maximum tax credit is 35 percent.
This is an important opportunity [here in Rhode Island], because there are a large number of employers who would qualify.
NERONHA: Companies will be required to file a 1099 [tax form] for all individuals and corporations providing goods and services. The proposed new regulation has gotten a lot of attention, because it puts a burden on employers of all sizes to maintain this information, get the tax IDs, and issue the 1099s.
Businesses need to look at the pending 1099 reporting issue, follow it closely in the news media, to see what happens in the interim, to make sure that they can comply with the changes, effective after Dec. 31, 2011, in case Congress doesn’t decide to change it.
NERONHA: For Rhode Islanders, the ability to cover dependents up to age 26 is a big change. Now, there is student coverage up to age 25. The new law increases the age to 26. And, you don’t have to be a student, and you don’t have to reside with a parent. This is a significant change, [particularly for] college grads that may have been caught up in the economy and unable to find a job.
Another significant change in coverage is that preventative services will be covered without cost-sharing. People who have not been seeking preventative services, for whatever reason, can now do so at no cost.
There will also now be a limit of $2,500 per year in flexible-spending accounts. And, to be eligible, all drugs must be obtained with a prescription.
And, for some of the changes in policy, such as cost-sharing for preventative services, it was a trend that we were moving towards anyway.
NERONHA: Yes, in 2013, there will be a Medicare tax increase in Rhode Island for a single person earning $200,000 a year and for a couple earning $250,000 a year. The tax is .9 percent on income above the threshold.
NERONHA: Under the new law, fully insured plans cannot discriminate in favor of highly compensated employees regarding eligibility and benefits. What that means is that an employer cannot offer richer benefits at a lower cost to the top-paid officers and employees at the expense of lower-paid employees.
NERONHA: Blue Cross very much supports it. [To some degree], it’s what we’ve been doing here in Rhode Island for a long time. It makes it easier for us to support. •
