None of the current proposals envision the elimination of private insurance. Instead, they rely on the continuation of private insurance and employer-sponsored health coverage.
Pay or Play: several proposals envision requiring employers to contribute to the cost of basic health coverage for their employees or pay a penalty of some sort — often referred to as "pay or play." A variation to 'pay or play' employer mandate known as a 'free rider' provision is in the Senate Finance Committee proposal. The free rider provision requires employers who do not offer health insurance to pay a fee for their employees who receive federal tax credits for health insurance offered through the exchange. All current proposals, however, would exempt small businesses by number of employees or total payroll.
Financial assistance for some: All current proposals also envision tax credits for small businesses to help pay for the cost of health insurance.
Insurance reform: most proposals affecting small business coverage involve a minimum level of benefits. In addition, some proposals would allow for premiums for small businesses to vary based only on general criteria (e.g. age and family composition) instead of employees' medical histories.
In the long run, it's impossible to tell. The result of the political process is unpredictable, and there are many issues and disagreements among those who will vote on health reform.
Even short term changes enacted under health reform are likely to take a significant amount of time to implement, most likely measured in years or quarters rather than months.
In either case, acting before reforms are implemented could be risky for most businesses.
As stated earlier, most reform proposals envision requiring employers to offer coverage, but also exempting some small businesses from this requirement. Others may be eligible for financial assistance. What this might cost and what assistance would be available depend on what reforms are enacted.
Some proposals contain a "public option," which would be a government run health plan that would meet requirements similar to those of private health insurance plans regarding benefit levels, cost-sharing, provider networks, and consumer protections. The public option would compete for customers with existing health plans.
Other proposals envision establishing health insurance co-operatives, or "co-ops," which would be independent, non-profit, member-run health insurance companies. These would also compete for customers with existing health plans.
All current proposals call for health insurance "exchanges" that would provide a central point for individuals and smaller employers to buy health coverage. As proposed, in order to receive financial assistance, small businesses and individuals would need to get their coverage through an "exchange."
Businesses should make their decisions on whether or not to buy health insurance coverage based on their current needs, not speculation about what reforms might be enacted.
None of the major proposals currently envision eliminating FSAs.
Even if Congress limits annual contributions, businesses and employees will still receive a tax benefit.
Some proposals have called for eliminating over the counter drugs not prescribed by a doctor as an item that can be reimbursed by FSAs.
Businesses should make their decisions on whether or not to provide an FSA based on their current needs, not speculation about what reforms might be enacted.
In order for the measures of cost containment or revenue driven by penalties to be effective the government under most proposals will now need to track which employers are offering qualified health insurance and which individuals receive coverage. Some proposals require reporting of the total cost the individual's health plan. Most proposals are vague on how reporting will be structured. One definitive proposal requires reporting the value of health insurance provided by the employer on the W-2.
