Dental and Vision Plans Eligible for Tax Credit

Dental and Vision Plans Eligible for Tax Credit

The tax credit for small businesses to be effective January 1, 2010 under the Patient Protection and Affordable Care Act (PPACA) will be extended to dental and vision plans in addition to medical plans. Under the PPACA small businesses can claim a federal tax credit of up to 35 percent of the employer’s contribution toward their employees’ health insurance premiums. The Council of Economic Advisers estimates that there are currently more than 4 million small businesses eligible for the credit. To claim the credit, employers must:
*       Have fewer than the equivalent of 25 full-time workers
*       Pay average annual wages below $50,000
*       Cover at least 50 percent of the cost of health care coverage for their workers

For more information contact the IRS at www.irs.gov

New Rules on Group Health Benefits

New Rules on Group Health Benefits

New Federal regulations were announced yesterday designed to discourage employers from reducing their employee  health benefit plans.

The new rules place new requirements on employers that have health plans. These plans (commonly referred to as “grandfathered” plans) were in operation when the president signed the new healthcare law on March 23.  Employers   have an incentive to retain this grandfather status because it exempts them from some of the healthcare law’s new mandates, as they were in existence before the reform laws were passed.    Employers with “grandfathered” plans will now be able to charge more for health benefits,  but with some limits.

 The rules limit how much companies could raise co-pays, deductibles and other employee contributions.  Co-pays, for example, could not be raised more than $5 or a percentage equal to 15 percentage points plus the rate of medical inflation, whichever is greater.  Employers also could not lower their contribution to their employees’ premiums by more than 5 %. Employers would also be able to adjust benefits, but not eliminate them entirely.  As an example, if a plan currently covers prescription drugs, it could not remove this coverage  although it could change the covered prescriptions available.

An employer can choose to give up grandfathered status and still offer health benefits, however the company’s health plan would then be considered a new plan and would be subject to new regulations. Such as covering  cancer screenings with no co-pays or other cost sharing.

There will be more changes coming  in 2014. Businesses then will have to offer plans with a minimum standard of health coverage, which will be outlined by the federal government. Grandfathered plans would not have to meet this standard.

Both new and grandfathered plans are already subject to some mandates starting next year, including a prohibition on lifetime benefit limits and a requirement that plans cover dependent children to age 26.

Beginning in 2014, small businesses will be able to shop for benefits for their employees in new insurance exchanges designed to improve coverage options.  Large employers could face penalties if they do not offer coverage to their employees.

IRS Video on Small Group Tax Credit

Here is a IRS video about the new Small Group Tax Credit available to businesses in 2010.

Does Health Reform Smile Upon Dental Benefits?

Does Health Reform Smile Upon Dental Benefits?

In our continuing review of the new Health Reform Laws, we are continuing to dissect the provisions of the law.  The law was intended to provide coverage to the currently uninsured and underinsured regarding medical coverage.  There has been little interest regarding the impact on dental care, specifically individual and group dental benefit plans.

The health reform law includes a mandatory requirement for oral health care benefits for children under the age of 21, referred to as the pediatric dental benefit.   Unfortunately, the health reform law does NOT include the elimination of annual and lifetime maximums and expansion of dependent child definition to age 26 as mandated for medical plans.

So for those with a stand-alone dental plan, it looks the health reform plan is, in effect, toothless.

Why Worry About Health Reform?

Why Worry About Health Reform?

HPO does not believe there is cause for concern on the part of employers regarding recent Health Care Reform.  Indeed, this legislation is geared to provide to the needs of the uninsured and underinsured and will make necessary changes to our system, such as the exclusion of pre-existing coverage limitations and lifetime benefit limitations.

 Employer based group health plans will remain in place and may include tax advantages to the employer. Any employer group with more than 50 employees will face a penalty beginning in 2014 for not offering health coverage to their employees. Offering or retaining coverage can actually foster employee loyalty and longevity, as well as decreased absenteeism and Workers’ Compensation costs.  Any changes to group health insurance system will be incremental and will not be fully completed until 2014. 

There really is no way to predict any possible cost increases as a result of the reform.  Employers will continue to enjoy tax advantages from offering coverage to employees, and it is predicted that there will be growth within the marketplace.  It is the role of the Insurance Broker or advisor to continue to educate employers on the changing healthcare system.  

Please contact us at 88VISIONARY (888-474-6627) for additional information or updates on health care reform.