October 2011

Steve Sleeper

Beauty Insider| by Steve Sleeper


How Health Reform Effects You

New Healthcare Reform laws are important for people in the beauty industry to know about. Though there is still a lot of talk on Capitol Hill about the future of the Healthcare Reform laws, here is a quick overview of changes currently in place and coming up.

What is Already in Place: Insurance companies can no longer place a lifetime limit (a cap on the dollar amount available for care over a patient's lifetime) on any insurance plan or cancel a plan when a patient becomes ill, except in cases of fraud. Insurance companies cannot deny coverage to children for pre-existing conditions (the same rule will apply for adults by 2014). Individuals can cover a child on their plan until the child is 26 years old.

Over the next four years, companies with 25 or fewer full-time employees will be eligible for a tax credit of up to 35 percent of health insurance costs. A ten percent excise tax is in effect for all indoor tanning services. Any new insurance plan must include checkups and preventative care with no co-pays (the same rule will apply to existing plans by 2018). Starting in 2011, employers will be required to report employees' health benefits on their W-2s.

Changes to Come: Starting in 2012, businesses will be required to send a 1099 form for every business-to-business transaction of $600 or more. Starting in 2014, a new Health Insurance Exchange for individuals and businesses will be created to allow for comparison-shopping for insurance coverage.

Starting in 2014, companies with more than 50 full-time (and equivalent part-time) employees will be required to provide insurance, pay penalties or, in certain cases, both. The penalty amounts will be based on the number of employees, whether the business offers insurance coverage, and if one or more employee qualifies for government subsidies for health insurance based on the federal poverty level ($88,000 for a family of four or more).

Penalties can be as high as $3,000 per employee, minus the first 30 employees, and can be higher for companies that require a 30-day waiting period before offering coverage.

Starting in 2014, all U.S. citizens and legal residents will be required to carry health coverage or face a penalty. To help increase access to health insurance, new federal tax credits will be available for people purchasing through the Health Insurance Exchange. Initially, the tax credits will assist people with incomes up to 400 percent of the federal poverty level ($43,000 for individuals or $88,000 for families of four) and phase-out on a sliding scale basis.

These penalties will be based on annual household income and can be as high as $695 or 2 ½% of your annual income.

Keeping Health Insurance under Control

It is hard not to notice the cost of health insurance continues to rise. In fact, some experts predict it is rising so fast that at the present rate, it will roughly double in four years. This can be attributed to a variety of factors: Normal inflation, advanced technology, practitioners' fear of malpractice lawsuits, an aging population, previously mentioned government-mandated health benefits and many others.

Here are some strategies you can consider to ease the burden of insurance costs on your pocket book.:

Increase Your Deductions: With this option, you would become responsible for a larger portion of your medical expenses. This strategy may be less painful than paying a higher medical insurance premium every month.

Change the Co-Insurance Percentage and / or Stop-Loss Level, or a Split-Level Co-Insurance Plan: These methods of lowering insurance premiums result in the same type of cost shifting as increasing your deductibles: you would be responsible for a larger portion of an insurance claim but they could lower overall monthly costs. These options should be reviewed carefully with your insurance agent or an independent agent to measure the impact of each.

Eliminate Some of Your Benefits: If you consider the fact medical insurance is designed to cover the major expenses, with the small expenses best covered by the individual, the elimination of some benefits may be a sensible alternative. Examples include eliminating accident benefits payable at 100 percent; reducing benefits to government-mandated minimums; reducing the outpatient co-insurance percentages. The results of these types of changes may have only a small impact on premiums.

Change Insurance Companies: If you are considering this option, here are a few important questions you should be asking before making a final decision: Will the new insurance company's pre-existing limitations have a negative impact? How different is the plan from your current plan? What is the new insurance company's claim payment history and timing?

I encourage every professional to stay current on healthcare laws and to do your homework when choosing a plan. There is a variety of resources online about Healthcare Reform, how to navigate the rules, and to determine what plan fits your needs. Professional Beauty Association (PBA) is available to answer questions and give advice. For information call 800.468.2274 or go online at probeauty.org.

Article Sources: National Federation of Independent Businesses; Kaiser Family Foundation; CNN Money

Steve Sleeper is the Executive Director of the Professional Beauty Association | National Cosmetology Association (PBA | NCA), a non-profit membership organization made up of beauty professionals, salons and spas, distributors, and manufacturers dedicated to improving their careers, individual businesses and the industry as a whole. For information, visit www.probeauty.org or call 1-800-468-2274.