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Washington Watch - August 18, 2010

Wednesday, August 18, 2010

Washington Watch On Hiatus

Members of the House and Senate are currently back in their home districts until September. Until they return, Washington Watch will take a brief hiatus. For the latest micro-business news, check out the NASE Staff Blog.

Visit the blog here.


“Keeping The Health Plan You Have” Not So Simple For Entrepreneurs

When it comes to health insurance, micro-businesses and the self-employed have long faced difficulties finding coverage that meets their affordability and health needs. The new health care law, the Affordable Care Act, offers entrepreneurs the choice to keep the plan that they already have, provided that it meets certain requirements. The trouble is that most entrepreneurs are uncertain that their plan will meet these new rules and how the changes required by the health reform law will affect their monthly premium costs, according to a survey released today by the NASE.

Micro-business perceptions of “grandfathered” plan status:

  • Sixty-five percent of micro-businesses say they only somewhat or slightly understand the new "grandfathered" plan requirements and how it may impact their ability to keep their plans.
  • Of those aware of the requirements to maintain "grandfathered" status of a health plan, 43 percent believe they can keep their plan. Fifty-seven percent were either unsure or knew that they would not be able to keep their current plan.
  • Ninety-two percent believe the self-employed and small business owners should receive a notice from their insurer or from the Federal Government about whether their plan qualifies as a “grandfathered” plan

With close to 50% of micro-business respondents wishing to keep their current coverage, a clear understanding of the “grandfathered” status regulations will be essential to a small-business owner’s ability to maintain their existing coverage.

“The self-employed and micro-businesses are always looking at how to get the best deal and health coverage is no exception,” commented Kristie Arslan, executive director of NASE’s Legislative Offices. “Our concern with the current “grandfathered” status regulations is that it leaves business owners with little wiggle room to make key adjustments to their existing health plan to maintain its affordability for the business owner and employees. Ultimately, micro-businesses will be forced to drop their plan they were hoping to keep and be pushed into the new insurance market which is likely to offer more robust, but also more expensive health plans.”

Full survey results are available online on the NASE’s Research & Statistics> page.  


House Passes Medicaid, Education State Aid Package

After briefly being called back from recess, the House passed a $26.1 billion law (H.R.1586) created to help states better afford Medicaid in years to come. The package also contains aid for state and local goverments struggling to maintain teacher and other county education worker jobs, as well as hire needed personnel.

Under the law, Medicaid will continue to receive enhanced federal funding authorized under the stimulus through next summer. For the first quarter of the year, states will receive a hefty 56.2 match for the cost of their Medicaid programs, with reduced matches as the year continues. In states with rising unemployment figures, additional funding will be available.

For the education sector, a $10 billion jobs fund will help beleaguered districts avoid layoffs in elementary, junior high and high schools. The funding must be used to retain current employees or hire additional employees.

The Senate approved the bill early this month, so it now heads to President Obama for his signature.


Social Security and Medicare Trust Fund 2010 Report Highlights

The Social Security and Medicare Board of Trustees provides annual financial reports on the two programs; the 2010 version was released earlier this month.

The report expects Social Security’s Disability Insurance Trust Fund to dissipate by 2018—2 years sooner than expected by the 2009 report. The cost of paying Disability Insurance benefits has exceeded tax revenue since 2005. In 2009, the cost of all Social Security benefits equaled 4.8% of GDP. The report anticipates the cost to increase to 6.1% of GDP by 2035 and drop down to 5.9% by 2050. Also in 2009, the 75 year forecast for the Old-Age and Survivors Insurance and Disability Insurance combined deficit was equal to 2.00% of taxable payroll. Now in 2010, it would be 2.06%, but the Trustees say that since the Patient Protection and Affordable Care Act increased the breadth of taxable payroll it is actually1.92%.

The report also expects Medicare’s overall financial outlook to decrease in the short run due to the recession.  However, it predicts Medicare’s Hospital Insurance Fund (HI) to remain viable 12 years longer than thought last year—now until 2029. The trustees credit HI’s improvement to a provision in the Affordable Care Act which reduces most payment updates for Medicare-provided goods and services.

To see the Trustees’ official summary, click http://www.ssa.gov/OACT/TRSUM/index.html.


Washington Watch Online

Visit NASE Advocacy to view archived editions of Washington Watch. While you’re there, read the latest updates from the Washington, D.C. office, write your Congressperson, and find out how you can join the fight for micro-business.