On March 21, the House of Representatives
passed the Patient Protection and Affordable Care Act (H.R. 3590) by
the narrow margin of 219-212. Two days later, President Obama signed it
into law, unleashing one of the most momentous changes in decades into
the American workplace: universal healthcare coverage for nearly every
As a hotelier who runs a successful business, this new law creates a
new and awkward relationship between your employees and the U.S.
government. While the fight for further healthcare reform—or repeal of
this law—continues in the political world, as a prudent business owner
or general manager you should prepare for these new changes in your
everyday conduct of operations.
Most of the big changes in the law will reach full force in 2014. This
includes establishment of new state-based exchanges, individual
mandates to obtain coverage or face a penalty increasing to $750, and
new employer taxes based on company size if they do not offer minimum
coverage to their employees. 2014 will also be the year when the
federal government defines an essential benefits package, with all
qualified healthcare plans required to offer it as part of their
coverage. Insurance companies will also begin paying fees in 2014 to
support the program, starting at $8 billion.
Congress recognized that businesses would require a lot of time to
become compliant, so it phased in the law’s requirements over several
years. However, hoteliers should begin planning this year to become
compliant with the law’s demands by 2014. Hoteliers should also note
that 2010 contains some mandates that they need to begin following
Mandates for Minimum Coverage
Since the law requires only individuals to obtain healthcare coverage,
the new law does not contain an employer mandate. However, starting in
2014 the law does levy a tax on businesses with more than 50 employees
that do not offer a minimum level of coverage. But the law’s
requirements affecting businesses begin almost immediately.
Employers should note that all grandfathered group health or individual
plans in existence on March 23, 2010, which are used by a company for
new employees, are now required to provide minimum coverage that
satisfies the individual mandate.
Insurance plans for existing employees must be in similar coverage compliance by Sept. 23, 2010.
Effective that date, existing plans must have at a minimum:
Healthcare coverage under collectively bargained plans are exempt from the Sept. 23 deadline.
- No lifetime dollar limits on essential benefits
- No annual limits of value of “essential health benefits” except as permitted by the Department of Health and Human Services
- No revocation of coverage (except for fraud or intentional misrepresentation)
- Coverage of dependent children up to age 26
- No pre-existing condition exclusions for enrollees under 19
Small Business Relief
Small hotel businesses can look forward to some quick relief in 2010: a
tax credit to offset insurance premiums took effect immediately. Small
businesses are defined as ones with 25 or fewer full-time employees and
that pay an average annual wage of $50,000 or less.
To get the credit, the small business must already cover at least half
the cost of health insurance premiums for its workers. There are a few
additional restrictions, including caps on how high qualifying premiums
can be, and the credit works on a sliding scale. Hotels with fewer than
10 employees and average wages less than $25,000 can take the maximum
credit, while larger businesses with bigger payrolls collect a smaller
For example, a hotel with 10 employees that has a total payroll of
$250,000—meaning each worker averages $25,000—and spends $70,000
annually on health insurance premiums would max out the benefit,
collecting a credit of $24,500 on its 2010 taxes.
2011: Get Ready For Changes
More aspects of the law will be introduced on New Year’s Day 2011, so
hoteliers should prepare over the next six months for these additional
requirements. Employers will be required to report the value of
employees’ health benefits on W-2 forms. Also, employees will no longer
be able to use Health Savings Accounts (HSA) or Flexible Spending
Accounts to purchase certain items, including most over-the-counter
medications unless prescribed by a physician. The penalty for making
non-qualified healthcare purchases with an HSA increases to 20 percent.
An employer will face full taxation on a retiree’s drug subsidy.
Voluntary payroll deductions will begin for the subsidized CLASS
long-term care program, with working adults automatically enrolled
unless they choose to opt out.
That year will also see the first medical manufacturer taxes, which
will extract at least $2.5 billion from drug manufacturers and
importers. This cost will be passed onto consumers in the form of
higher costs for drugs and medicine.
Seasonal or Temporary Employees
As noted earlier, a full-time employee will be required by 2014 to
purchase insurance. However, a “full-time” employee is defined as
one who works at least 30 hours a week for the employer. Employers will
be required to offer these employees coverage no longer than 90 days
after hiring them.
Hotel businesses of a certain size that depend on seasonal or temporary
employees will have to factor in these new health care expenses into
their labor costs. Employers who have more than 50 employees will also
have to decide how to handle scheduling these employees for work
assignments if they want to avoid up to $2,000 in fines for not
offering coverage if the employee exceeds a 30-hour work week. However,
if a company does not exceed 50 full-time employees, there is no
AH&LA is committed to keeping its membership up-to-date about the
new healthcare law and what changes it will deliver to their lodging
businesses and their employees. For the latest information, or for a
quick background review of the new law and its schedule between now and
2014, please visit www.ahla.com/healthcare.
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