Health Care Reform: The Nonprofit’s Guide
John Orebaugh and Maryana Sandhu
Non-Profit Insurance Services
Over the past year, Americans have learned all too well that health care reform elicits intense emotion, passionate debating, political divisiveness, and, frankly, a whole lot of confusion. When President Obama signed the Patient Protection and Affordable Care Act this past March, many people didn’t know what to think. After all, the media seemed more interested in playing circus ringleader than objective reporter.
Thankfully, the National Council of Nonprofits has analyzed the 1,900-page bill and zeroed in on key provisions that will affect nonprofit organizations across the country. Some relevant areas include:
- Small Employer Credit: Provides a tax credit that will allow small nonprofit employers (25 employees or fewer, average wages less than $50,000 per year) to deduct 25% of qualified health costs from 2010-2013 and 35% of qualified costs for 2014 and onward for up to two-years from their withholdings tax liability.
- Health Insurance Exchanges: Provides a mechanism for individuals and employers to buy lower-cost health insurance as a part of purchasing pool. All employers with fewer than 100 employees and individuals with incomes between 133% and 400% ($24,352 – $73,240) of federal poverty level will be eligible to participate in the exchanges once they are operational. States are permitted to allow employers with more than 100 employees access to the exchanges after 2017. The law anticipates that the exchanges will be operational by January 1, 2014.
The small employer credit will have a sweeping effect on nonprofits, as an estimated 65% of the country’s nonprofit organizations have 25 or fewer employees. Larger nonprofits will be affected as well: according to The Chronicle of Philanthropy, a provision in the reconciliation bill will "stiffen the penalty for certain employers with more than 50 workers that do not offer health insurance. If at least one of a group's full-time workers must rely on subsidies to buy insurance, the employer would be fined $2,000 for each of its full-time workers."
If you want more information on how health care reform will affect nonprofit organizations, the National Council of Nonprofits website and the Providers’ Council website are great resources.
This historic legislation will impact every American individual, family, and business, and they need to know when and how. The following timeline gives brief descriptions about what changes will be implemented over the next 8 years. Some important highlights: lifetime coverage limits will be eliminated, pre-existing condition exclusions will be prohibited, and dependent coverage up to age 26 will be mandated. For more information on how health care reform will affect you, your family, and/or your organization, visit www.healthcare.gov.