Immediate Implication of Health Care Legislation to Employers

Beginning on January 1, 2011 numerous changes will occur affected employers of all sizes as a result of the health care legislation that passed in March of this year. 

• Coverage for all dependent children up to age 26.  The definition for "dependent" child is not the same as in the IRS regulations, it is much broader and will include nearly every adult child;
• No lifetime policy limits, and by 2014 no annual limits;
• No preexisting condition exclusion for children under age 19.  This will be phased out and beginning in 2014 no one can be excluded for a preexisting condition;
• No reimbursement for over the counter drugs from HSA's (Health Savings Accounts).

In addition, starting in 2012, all business purchases that exceed $600 in a calendar year will require a 1099 filing.  This will have a hugely negative effect on business by greatly increasing the cost and time to conduct ordinary business.  Even the smallest of businesses, purchasing supplies from a big box retailer such as Office Depot or Staples, will certainly surpass the $600 threshold, requiring an IRS filing at the time of the transaction or face potential penalties from the IRS.

In conclusion, it is difficult to see how these changes will have a positive impact on employers cost and administrative structure.  We will address the impact of cost reporting, the employer mandate as well as the exchanges in a future posting.