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FOCUS | ISSUE 3 | 2010


HEALTHCARE REFORM


AND YOUR PRACTICE A look at some effects on your business


It has been called the most sweeping piece of healthcare legislation since Medicaid and Medicare were instituted in 1965.


As a small business owner and employer, your dental practice will likely be affected by the Patient Protection and Affordable Care Act and the accompanying health reconciliation bill.


Some of the provisions of healthcare reform will take effect in 2010, and many of the other major provisions will not be effective until 2014. With so many moving parts and differ- ent dates, it can be diffi cult to keep straight. Following is a brief overview of some of the effects of the legislation.


TAX CREDIT FOR SMALL BUSINESS


Most small businesses should be able to qualify for this new tax credit. It is designed to moti- vate more companies to offer health insurance for their workers but also is applicable to those who already pay some portion of the premium for employees. You may wish to enlist the help of your accountant for this, because there are several guidelines to determine if you qualify.


For starters, the business must have fewer than 25 full time employees or the equivalent, pay an average salary of less than $50,000 and pay at least 50 percent of employees’ health insur- ance premiums. If the business meets these qualifi cations, the tax credit is 35 percent of the premiums paid for the year and increases to 50 percent in 2014. However, if your prac- tice has fewer than 10 employees that average a salary of $25,000, you will get the full credit, but if the salary is greater or the employee count is more, then the credit is gradually phased out.


Owners, and family members of owners, are generally not counted as employees nor is their salary considered in the average. Although employers will still get to deduct the cost of premiums for employees, the deduction will be


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HIGH-RISK POOLS FOR AMERICANS WITHOUT HEALTH INSURANCE


Individuals who have been denied private health insurance coverage because of a preex- isting condition will be able to get temporary coverage through federal high-risk pools. This is to be up and running by June 21, 2010 and will eventually phase out by 2014 when private insurers will be required to accept adults with preexisting conditions. (Children with preexist- ing conditions must be accepted by private insurers no later than October 1, 2010.)


Missouri already has a high-risk pool, but with higher deductibles and premiums than standard rates. The federal government will add about $5 billion to subsidize claims, and premiums will be based on standard rates. Other details are not yet clear, but should be forthcoming very soon.


DEPENDENT COVERAGE TO AGE 26


Insurers must allow young adults up to age 26 to remain on their parent’s plan that renews or starts after September 23, 2010. Dependents may be single or married and do not have to live at home. If the dependents themselves


reduced by the amount of the credit. However, the credit is still worth more than the partial loss of the deduction.


Even though the law passed in March, employ- ers will get to use a full 12 months of premium cost in calculating the credit. The premium cost also is subject to a small group market premium aver- age which will be published by the IRS. Any unused credit can be carried forward to future tax years. This could be a signifi cant savings for your practice.


have children, those children are not included under this provision. The dependents must not be covered under any other employer-spon- sored plan. Missouri passed a similar measure two years ago with HB 818. It is unknown yet if the federal requirement will work differently or be more advantageous.


CLOSING THE DOUGHNUT HOLE


Medicare will undergo a number of changes with the new law; most of these won’t take effect until 2013 or 2014. However, in 2010, Medicare benefi ciaries with prescription costs of more than $2,830 but less than $6,440 (the doughnut hole) will receive a check for $250 to help pay for their prescription drugs. In 2011, Medicare benefi ciaries who hit the doughnut hole will receive a 50 percent discount on brand name drugs, thanks to the forced gener- osity of the drug companies. In 2013 govern- ment subsidies will begin, and by 2020, the doughnut hole will effectively be closed.


EARLY RETIREE REINSURANCE PLAN


This is a program whereby the federal govern- ment will make use of $5 billion to reimburse employers who establish special in-house programs to provide medical benefi ts for early retirees, which is defi ned as someone 55 and older who is not an active employee nor is eli- gible for Medicare. This program is only avail- able to large group employers, defi ned as those having at least 100 or more eligible employees.


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