The new meaning of healthcare reform
NATIONAL REPORT — While sweeping healthcare reform legislation passed Congress, it will take until 2014 to create the infrastructure needed to support small business, experts say.
But getting familiar with the new law is just what practice owners should be doing. The plan calls for states to set up Small Business Health Options Programs to help small businesses pool resources to buy insurance. These programs are an attempt to ease insurance costs, but the Congressional Budget Office estimates the true savings will likely be marginal.
There are generous tax credits for offering insurance this year, but larger practices may face fines for not offering any health insurance to their employees. If they offer health insurance, small veterinary practices could increase their chances of recruiting the best employees when competing with bigger practices, says Karen Felsted, DVM, chief executive officer of the National Commission of Veterinary Economic Issues.After everything gets implemented by 2014, the changes will most definitely mean greater administrative costs to comply with the law, explains Mark Lutschaunig, DVM, director of the American Veterinary Medical Association's (AVMA) Governmental Relations Division. And practices — large and small — that already offer insurance may save money. Beyond that, the devil will be in the details, Felsted says. "We are not going to know until some of this starts to be put into place. And some of it may be changed through future legislation."
"Right now, this is so new, I think probably everybody is scrambling to get an understanding of how it's going to work," Felsted says. She recommends seeking help from tax professionals, health insurance agents and staying on top of the news.
"For the average person to work through this, it's a confusing, frustrating mess," says Michael Cavanaugh, DVM, executive director, American Animal Hospital Association. "I would encourage people to ask questions of folks whom they trust and have people advising them to make some sense of it."
Lutschaunig says some veterinarians will say the whole thing is a "boondoggle." Others will say we need reform because costs are going through the roof.
"Once you take that away, the exchanges that they are going to set up will help smaller businesses purchase health insurance for their employees, hopefully, cost effectively," Lutschaunig says.
Breaking it down simply: Practices with 50 employees or less won't be required to offer health insurance to their employees, but it may become more affordable through the state insurance exchanges that will open in 2014, Felsted says. Offices with 25 or fewer employees should consider the total cost after factoring potential tax credits of 35 percent of the practice's insurance contribution. The credits increase in 2014. If those practices already offer health insurance, they could be eligible for those tax credits this year.
Both Felsted and Lutschaunig agree that most veterinary practices have 50 or fewer employees. And the reason most of them don't typically offer health insurance is the cost.
"I think if it were cheaper, many practice owners would look at it," Felsted says.
If the employees don't get insurance through their employer, they can purchase their own through the state exchanges and potentially get lower rates than buying insurance on their own, Felsted says. Then the individual could be eligible for tax credits, Lutschaunig says.
Practices with 50 or more employees will be required in 2014 to offer health insurance at levels determined by law. That includes covering at least half of the premium and providing a certain level of coverage. As the law stands now, if they don't, they'll be subject to fines of $2,000 per employee after the first 30 employees are exempted, according to a summary on the Henry J. Kaiser Family Foundation's Web site.
Lutschaunig says practice owners have a number of decisions to make. But it all boils down to this one: Do they want to offer health insurance to their employees?
Gary Burge, DVM, says offering health insurance as a benefit was the best way to compete for the best employees. Burge founded National Pet Care Centers and has retired since selling the company to Veterinary Centers of America.
"We've tried to operate on a higher quality: better people, more skill sets, and charge more for it," Burge says. "My way of thinking, it was a natural way of doing business. Plus, I thought it was a good thing to do."
And for Burge, getting his arms wrapped around this law is a tough job. He's done a lot of reading about it, but he's relying on his tax professionals to break it down for him.
Already, AVMA has a short Q&A section on its Web site ( http://www.avma.org/advocacy/federal/legislative/HealthCareReform_QA.asp) and Lutschaunig says the association will be releasing some useful guidelines in the next month or so. Lutschaunig suggests the Kaiser Family Foundation's Web site (http://healthreform.kff.org/ ) for some useful summaries of the law.
Likewise, the American Animal Hospital Association is preparing some assistance. And the Internal Revenue Service has some information on how small businesses could benefit from the new legislation, including some sample scenarios and frequently asked questions on its Web site at irs.gov/.