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How the Health-Care Overhaul Impacts Your Shop

by Ralph Weber

Towers are among the small businesses that will feel heavy impact from the national health care overhaul by the federal government, as an estimated 65 percent of towing companies currently operate without health benefits for employees.

Regardless of whether you offer health insurance benefits to all or some of your employees, 2010’s Patient Protection and Affordable Care Act will increase your costs and taxes, and add administrative tasks to your workload.

Summing up this 2,700-page federal act, think of health insurance like car insurance: as a service that you must have or pay a fine.

The PPACA failed to tackle the problem of rising insurance premiums, and if you think about this scenario, you’ll know that there is only one way for the average person’s premiums to go … up. With car insurance, a repeat offender would be charged more because they cost the company more, but that is not possible with this Act. And a healthy person won’t be able to elect a lower premium/higher deductible plan either.

This new Act consists of a handful of key elements (many are already in effect). Others will come into play as we approach 2016. Here are the ones that most affect towers:

The individual mandate: Every U.S. citizen and legal resident must buy government-approved health insurance, or pay a fine of $695 per year. Certain religions are exempt, and individuals earning less than 133 percent of the federal poverty line will be enrolled in Medicare.

The employer mandate: Any employer with 50 or more employees must provide a government-approved health plan or pay a fine of $2,000 per employee per year. If their health plan is too expensive or they do not contribute at least 60 percent of the cost for employees and dependents, they must pay an additional penalty.

Guaranteed-issue health plans: Any health plan issued must immediately cover pre-existing injuries or illnesses without provisions.

Subsidies: Employers with fewer than 25 full-time employees with an average income of $50,000 or less may be eligible for a subsidy. The subsidy percentage is increased for the fewer the number of employees, the lower the average income and the higher the percentage of the premium paid by the employer.

New paperwork: Starting this year, employers must issue a 1099 slip to any vendor where they spend $600 or more throughout the year. This includes office supply companies, equipment suppliers, training schools and even gas stations where you buy $600 or more in fuel for the year. Additionally, you must include the value of the health plan on each employee’s W-2 form.

New taxes: Current deductions will decrease or stop altogether. Medications are no longer tax deductible without a prescription, and medical expenses can only be deducted after they exceed 10 percent of income (not the 7.5 percent allowed now). There will be new taxes on brand-name drugs and medical devices (like a pacemaker). In 2010 there was no estate tax, but this year the estate tax is scheduled to increase from 0 percent to 55 percent.

Children: Children will be allowed to stay on their parents’ health plan until they are 26.

Lower deductibles: All plans will have to reduce their deductibles to

Preparing for the Health Reform Act

Educate yourself: The most important thing you can do right now is educate yourself on the new changes as they happen and try to prepare for the extra expenses. Talking to an insurance broker will help you ensure that you are on the right track. Offer a health plan: See if you qualify for a partial subsidy by offering a health plan now. Some of your employees may qualify for a Medicaid plan, but in some instances enrolling them in Medicaid may mean that you do not have enough of your employees participating in your company-sponsored health plan, resulting in another penalty for you. Participate in a Refund Health Plan: In many states, Refund Health Plans are available to companies with as few as 10 employees, and since towers typically have low medical claims, these can save you a lot of money. Join a state association co-op plan: By pooling resources in a co-op plan, owners will benefit from lower costs. If your state association doesn’t have a co-op plan, ask them for one. Opt-out and pay the fine: This may be less costly in the long run, depending on the size of your company. Then negotiate medical costs in advance directly with the doctor with a service like MediBid.com, or call the doctor and ask if they offer a cash discount. (Many doctors do because they can save on the overhead spent on insurance billing. continue to page 20

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