There has been a flurry of health care reform activity in Washington over the last couple of days. House Democrats unveiled their version of health care reform July 14, which includes a “pay-or-play requirement” directed at employers. On July 15, the Senate Health, Education, Labor, and Pensions (HELP) Committee approved health care reform legislation that would also require most employers to either offer insurance to employees or pay an annual fee.
House Health Care Reform Bill
The House bill would require employers that don’t provide health insurance coverage to their employees to pay a penalty or fee, and the amount of the fee or penalty would be based on the employer’s payroll. Companies with annual payrolls of $250,000 to $300,000 would have to pay a fee equal to 2% of their payroll. Companies with an annual payroll of $300,000 to $350,000 would have to pay 4%, and companies with a payroll of $350,000 to $400,000 would pay 6%. The highest fee would fall to employers with an annual payroll over $400,000 — they would have to pay 8% of their wages as a penalty for not providing insurance. However, employers with an annual payroll below $250,000 wouldn’t have to pay a penalty or fee.
In addition to penalizing employers that don’t offer insurance, the House bill would create a government-run, public insurance option to compete with private insurers. Employees who could obtain insurance through their employers would still be able to sign up for the government plan if the premiums for the employer-provided insurance would be more than 11 percent of their family income.
The bill would raise taxes on individuals with higher annual income ($280,000 and above for individuals and $350,000 and above for couples filing jointly), penalize individuals who don’t have insurance coverage (except in cases of hardship), and improve Medicare. The bill also provides subsidies to help individuals buy insurance and prohibits insurers from denying coverage to any individual based on preexisting conditions.
Senate HELP Committee Health Care Reform Bill
If the Senate bill that was approved by the HELP Committee today passed both houses of Congress, most employers would have to offer health insurance to their employees or pay an annual fee of $750 for each full-time employee. However, employers with fewer than 25 employees would be exempt from this “pay-or-play requirement.”
Additionally, the Senate bill would create a public health insurance option to compete with private insurers. The legislation would also require all individuals to have health insurance coverage, provide discounts to individuals who can’t afford insurance, and make more people eligible for Medicaid.
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