Dems Unveil Latest Health Reform Proposal

October 29, 2009 (PLANSPONSOR.com) - Employers with 100 or fewer employees could buy health insurance coverage from a new Health Insurance Exchange in 2013, as part of proposed health reform legislation unveiled Thursday by U.S House Speaker Nancy Pelosi (D-California) and other Democratic leaders.

According to news reports and a Congressional summary of The Affordable Health Care for America Act (H.R. 3962), small businesses would be eligible for federal subsidies to help pay for workplace policies, while large firms would be required to cover their workers and most individuals would be required to carry insurance.

Employers that choose to offer coverage would contribute at least 72.5% of premiums for workers and 65% for families.   With low-wage workers, the person can opt for subsidized coverage through the exchange partly funded by that person's employer.   Companies not offering qualified coverage would contribute 8% of their payroll to help cover expenses of workers seeking coverage through the exchange.

The bill indicates that an employee's share of premiums for employer-provided coverage offered through the exchange may be paid on a pre-tax basis through a cafeteria plan, but exchange coverage that is not employer-offered is not eligible to be offered through a cafeteria plan.

"In addition to the targeted assistance, the exchange and market reforms provide a long-sought opportunity for small businesses to benefit from a more organized, efficient marketplace in which to purchase coverage," the Congressional summary indicated.

The 8% requirement is phased in for small businesses with an annual payroll between $500,000 and $750,000. There is also a tax credit program to help low-wage small businesses offer coverage to their employees.

The bill summary said small businesses with annual payrolls below $500,000 are exempt from requirements to offer or contribute to coverage, including the 8% payroll payment.