The PPACA plans to make major changes to the health insurance industry.
Among other health care reform objectives, the Patient Protection and Affordable Care Act is designed to eliminate insurance company abuses and make health care more affordable. The federal statute was signed into law by President Barack Obama in March 2010. The 974-page document details specific initiatives covering topics such as doctor choice and emergency room access, early retiree reinsurance, appealing health plan decisions, and businesses.
Affordable Care Act
The Affordable Care Act is the portion of the law that cites specific provisions for small businesses. The average small business pays about 18 percent more than large firms do for health care, according to Healthcare.gov. This higher cost is due to the lower volume of policies. The Affordable Care Act changes this dynamic by allowing small businesses to band together to form larger pools, thereby making insurance costs more affordable.
Implementation and Timeline
Key provisions of the PPACA are being implemented over the next five years. Effective in 2011, the new law ensures that at least 80 percent of all premium dollars paid to insurance companies are spent on health care services and quality improvement. If insurance companies do not meet these mandates, then they must rebate the difference back to the consumers. In 2014, Exchanges will act as insurance marketplaces offering small businesses affordable and qualified health plans.
Pre-Exisiting Conditions
Until recently, many people with pre-existing conditions were denied coverage by insurance companies. Under the PPACA, children under the age of 19 may not be denied coverage from health plans -- regardless of whether or not the health issue was discovered before coverage was applied for. For adults who have been previously denied health care coverage due to pre-existing conditions, the PPACA provides the Pre-Existing Condition Insurance Plan.
Small Business Tax Credits
One of the first components to be enacted was the provision for small business health insurance tax credits. Small businesses may be able to receive a credit of up to 35 percent of their contribution for employee health insurance coverage. In 2014, this credit goes up to 50 percent. Special rules apply, such as the average annual wages of the qualifying employee must be below $50,000 and the business must cover 50 percent or more of the health coverage cost.
Tags: health care, Affordable Care, health insurance, insurance companies, denied coverage, health plans
