Please note: All information is current as of our last update on September 19, 2013. As the Affordable Care Act is constantly undergoing revision and change, please contact one of our associates for up to date information, specifics and quotes.

For individual and small group plans: Robert L Jones, CLTC (845)943-6625

For large group plans (>100 employees): David LaVoie (845)946-6665

GENERAL FAQ

For Individuals

For Small Businesses and Non-Profits

General FAQ

What is the Patient Protection and Affordable Care Act?

The Patient Protection and Affordable Care Act (PPACA), also commonly referred to as "Obamacare" or the Affordable Care Act (ACA) is a United States Federal statute signed into law by President Barack Obama on March 23, 2010.

What are the Goals of the ACA?

The goals of the ACA include:

• Increasing the quality of health insurance
• Making health insurance more affordable
• Lowering the uninsured rate by expanding both public and private insurance coverage
• Reducing the costs of healthcare for individuals and the government

Dates to Remember

When does the Patient Protection and Affordable Care Act go into effect?

The ACA rolls out gradually, with various components becoming effective each year from 2010 through 2018.

Who is affected by the ACA?

The federal government, state governments, health insurance carriers, and employers and individuals are all subject to the ACA’s provisions.

How will the ACA change health plans?

Under the ACA:

• Adult children may be covered up to age 26
• Individuals cannot be excluded from coverage due to a pre-existing condition
• Preventative health services will be covered with no cost-sharing (ie. Deductibles and co-pays)
• There are no lifetime limits or annual limits on essential health benefits
• Discrimination under an insured group health plan in favor of highly compensated individuals is prohibited
• Individuals have greater choice of health care providers and increased access to certain services
• Health plans will use a uniform explanation of coverage and standardized definitions, as well as a uniform glossary, making policies easier to understand
• There will be a required appeals process for benefit denials, including an internal appeal and external review
• Coverage cannot be terminated, except in the case of fraud or intentional misrepresentation of material fact. If coverage is cancelled, advanced notice must be given.

For Individuals

What is the Individual Mandate?

The individual mandate requires all individuals not covered by an employer sponsored health plan, Medicaid, Medicare, or other public insurance programs to secure an approved private-insurance policy or pay a penalty unless exempted by the IRS, or waived in cases of financial hardship.

The individual mandate is scheduled to take effect in 2014. At that time, individuals who choose not to enroll in a health insurance program will be required to pay a penalty—the amount of which will gradually increase every year through 2016. See the table below for more info.

2014 Penalty - $95 per adult, $47.50 per child (up to $285 per family) per year OR 1% of income (whichever is larger)

2015 Penalty - $325 per adult, $162.50 per child (up to $975 per family) per year OR 2% of income (whichever is larger)

2016 Penalty - $695 per adult, $347.50 per child (up to $2,085 per family) per year OR 2.5% of income (whichever is larger)

What if I Can’t Afford Health Insurance?

Low-income individuals and families above 100% and up to 400% of the federal poverty level will receive federal subsidies on a sliding scale if they choose to purchase insurance via an exchange (Annual income of $45,960 for an individual in 2013, or $94,200 for a family of four).

If you qualify, you can opt to receive the tax credits in advance, and the exchange will send the money directly to the insurer every month. This will reduce how much individuals owe up fromt. You can also choose to pay for your premium directly out-of-pocket, and then receive the tax credits when you file your taxes the following year.

What if I Already Have Health Insurance?

If you are already enrolled in a private, employer-sponsored, or public insurance program, you will be able to keep your existing health insurance. You may notice some changes to your policy, however. Under the ACA,:

• You may be eligible for free preventative screenings, such as blood pressure and cholesterol tests, mammograms, colonoscopies, and much more—even if you haven’t met your yearly deductible.
• Your healthcare policy may cover children up to age 26, even if they are married or eligible for healthcare through their employer.
• Your insurance company is prohibited from setting “lifetime limits”, or setting a dollar limit on what they spend on essential health benefits for your care during the entire time you are enrolled in that plan.
• You may be exempt from yearly dollar limits on essential health benefits.
• Your insurance company is prohibited from arbitrarily cancelling your policy when you get ill.

What About Grandfathered Plans?

Grandfathered plans are those that were already in existence on March 23, 2010 and have stayed essentially the same. Even if you enrolled in a grandfathered plan after March 23, 2010, the plan may retain its grandfathered status. If you are unsure as to whether your plan is grandfathered, check your enrollment materials. All health plans must disclose if they are grandfathered in all materials describing plan benefits. You can also check with your employer or your health plan’s benefits administrator for this information. Grandfathered plans are not held to the same restrictions as newer healthcare policies, but some will offer protections that they’re not required to. Check with your insurance agent or benefits administrator for details on your specific plan.

What if I have a Pre-existing Condition?

All new policies will be guaranteed issue by 2014 (Pre-existing conditions will no longer disqualify an individual from receiving health insurance coverage). Ina ddition, partial community rating requires insurers to offer the same premium to all applicants of the same age and geographical location without regard to gender or most pre-existing conditions.

For Small Businesses and Non-Profits

Small businesses have historically paid 18% more for health coverage than larger employers. Under the ACA, a tax credit is available to businesses with 25 or fewer full-time employees and average wages of $50,000 or less. The law builds off of the existing private employer-based system of health-insurance coverage.

Dates to Remember for Business

October 1, 2013 - Open Enrollment BeginsEmployers must provide employees a notice of the availability of coverage through the Exchanges

January 1, 2014 - Coverage BeginsInsurance market reforms go into effect

January 1, 2015 - Applicable large employers” must offer health care coverage under an eligible employer-sponsored plan to all full-time employees and their eligible dependants, or face the prospect of a penalty

January 31, 2015 - Employer reporting to IRS on employee coverage due

2016 - Transitional reinsurance fee ends

January 1, 2017 - Employers with more than 100 FTEs can purchase coverage through Exchanges

January 1, 2018 - 40% excise tax on high-cost (“Cadillac”) health plans begins

What is the Employer Mandate?

Also known as “pay or play” rules, the ACA’s employer mandate imposes new rules on businesses with 50 or more full-time and full-time equivalent employees (also referred to as “applicable large employers”). Beginning in 2015, applicable large employers must offer health insurance coverage to their full-time employees and their eligible dependents or face a potential penalty.

Does the Law Require that I Provide Insurance to my Employees?

No. Under the ACA, businesses are not required to provide insurance. However, if your business has more than 50 full-time and full-time equivalent employees, there may be a penalty if you opt not to provide insurance.

Who is Considered a Full-Time Employee?

Under the ACA, a “full-time employee” is an employee who is employed, on average, for at least 30 hours of service per week (or 130 hours in any month).

What are Full-Time Equivalent Employees, and How are They Different from Full-Time Employees?

Under the ACA, employers are required to take into account hours worked by both full-time and full-time equivalent employees in its calculations for the 50-employee minimum.

• A full-time employee is employed an average of 30 hours of service of more per week or 130 hours of service of more per calendar month (52 x 30 ÷12 = 130).
• A full-time equivalent employee (FTE) is a combination of employees, each of whom individually is not a full-time employee, counted as a full-time employee equivalent. For example, 100 employees who work half time are the equivalent of 50 full-time employees. An employer determines its number of FTEs by aggregating all its non-full-time employees, taking into account no more than 120 hours in a month, then dividing by 120.

What if I Need Help Providing High-Quality Coverage to my Employees?

Under the ACA, you may be eligible for tax credits to help you pay for your employees’ insurance if:

• You are a small employer with fewer than 25 full-time equivalent employees
• You pay an average wage of less than $50,000 a year
• You pay premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program (SHOP) Marketplace
• You cover at least 50% of the cost of single health care coverage for each of your employees

The maximum credit is 50% of premiums paid for small business employers and 35% of premiums paid for small tax-exempt employers, and will be available to eligible employers for two consecutive taxable years.

To learn more about claiming the tax credit, visit http://www.irs.gov/uac/Small-Business-Health-Care-Tax-Credit-for-Small-Employers.

What if I Already Provide Health Insurance for my Employees?

Group health plans that existed on March 23, 2010 and that satisfied certain procedural requirements are considered “grandfathered” plans, and are exempt from some of the ACA’s requirements.

What if I Fail to Offer a Group Health Plan to my Employees?

If you own a business with at least 50 full-time or full-time equivalent employees, and you fail to offer at least 95% of your full-time employees (and their eligible dependents) the oopportunity to enroll in a group health plan offered by the business AND any of your full-time employees have received a premium-assistance tax credit or cost-sharing reduction, you will be subject to an annual penalty of $2,000 for each of your full-time employees (excluding the first 30).

What if the Group Health Coverage Offered by my Business Does not Meet the Standards Outlined under the ACA?

If you own a business with at least 5 full-time or full-time equivalent employees, and the group health plan offered by your business is found to be “unaffordable”, or fails to provide “minimum value” under the ACA AND any of your full-time employees have received a premium-assistance tax credit or cost-sharing reduction, you will be subject to an annual penalty of $3,000 for each of the full-time employees who qualify for a premium-assistance tax credit or cost-sharing reduction.

What is the Penalty Employers Must Pay if They Fail to Comply with the ACA’s Employer Shared Responsibility Rules?

“Applicable large employers” must pay a penalty if:

• The business fails to offer at least 95% of its full-time employees and their eligible dependents the opportunity to enroll in a group health plan offered by the business, AND any full-time employee receives a premium-assistance tax credit or cost-sharing reduction. This is referred to as the no-coverage penalty, or the 4980H (a) penalty, and it amounts to $2,000 annually per employee (with the exception of the first 30 employees).
• The group health plan offered by the business is either “unaffordable” or fails to provide “minimum value”, AND one or more full-time employees receive a premium-assistance tax credit or cost-sharing reduction. This penalty is referred to as the coverage penalty, or 4980H(b) penalty, and it amounts to of $3,000 for each of the full-time employees who qualify for a premium-assistance tax credit or cost-sharing reduction.

How Often are the Coverage and No-Coverage Penalties Assessed?

Both penalties are assessed monthly.

How are the Coverage and No-Coverage Penalties Paid, and When?

The IRS will contact employers to advise them of their potential liability and provide them an opportunity to respond before any liability is assessed. The information that the IRS uses to make its preliminary assessment will include information that the employer provides to the government. If it is determined that an employer is liable for an assessable payment after the employer has responded to the initial IRS contact, the IRS will send a notice and demand for payment. That notice will instruct the employer on how to make the payment.

How do I Know if my Plan Provides “Minimum Value”?

Under the ACA, “minimum value” refers to the comprehensiveness and generosity of a plan’s benefits. A health care plan meets “minimum value” if the plan pays at least 60% of the total benefits under the plan.

What Does the ACA Consider “Affordable” Coverage?

Coverage is considered “affordable” by the ACA if the employee portion of the self-only premium (not including the employee’s dependents) for the employer’s lowest-cost coverage that provides minimum value does not exceed 9.5% of the employee’s household income. In other words, if the employee’s share of the premium for employer-provided coverage would cost the employee more than 9.5% of his or her annual household income, the coverage is not considered affordable for that employee.

What is the “Small Business Tax Credit”?

The “small business tax credit” is a tax credit available to small employers with no more than 25 full-time equivalent employees (FTE) for the taxable year, provided the business contributes a uniform percentage of at least 50% toward its employees’ health insurance. Those businesses with 10 or fewer FTEs, whose average taxable employee wages are $25,000 or less are eligible for the full tax credit. (The tax credit phases out as the number of FTEs increases from 10 to 25, and as average employee wages increase from $25,000 to $50,000).

What is the Amount of the Small Business Tax Credit?

Beginning in 2014, the maximum credit is up to 50% of the employer’s contribution toward premiums. The maximum credit for nonprofits is up to 35% of the employer’s contribution. The small business tax credit is available to an employer for two consecutive tax years only.

What do I Need to Tell Employees About the Availability of Group Health Plan Coverage?

In addition to the notice requirements already in existence under the Employee Retirement Income Security Act (ERISA), the material terms of the plan document must be communicated to employees in a summary plan description (SPD) that summarizes the material terms of the plan in language that can be understood by the average plan participant. Generally, the SPD will include the following information:

• The name of the plan administrator
• A designation of any named fiduciaries in addition to the plan administrator under the claims procedure for deciding benefit appeals
• A description of the benefits provided
• The standard of review for benefit decisions
• Who is eligible to participate
• The effective date of participation
• How much the participant must pay toward the cost of coverage
• Plan sponsor’s amendment and termination rights and procedures, and what happens to plan assets in the event of plan termination
• Rules restricting and regulating the use of Personal Health Information (if used by plan sponsor)
• Subrogation, coordination of benefits, and offset provisions
• Procedures for allocating and designating administrative duties to a third-party administrator or in-house benefits committee
• How the plan is funded
• How insurer refunds are allocated to participants
• Information regarding the Consolidated Omnibus Budget Reconciliation Act (COBRA), HIPAA, other federal mandates such as the Women’s Health Cancer Rights Act, pre-existing condition exclusion, special enrollment rules, mental health parity, coverage for adopted children, Qualified Medical Support Orders, and minimum hospital stays following childbirth

What Information do I Need to Include on my Employees’ W-2 Forms Relating to Health Benefits?

See this chart created by the IRS: http://www.irs.gov/uac/Form-W-2-Informational-Reporting-of-the-Cost-of-Employer-Sponsored-Group-Health-Plan-Coverage

For More Information

• Affordable Care Act Tax Provisions
• Affordable Health Care for America: Employers and Health Reform
• AHIP – Affordable Care Act Resources
• Centers for Medicare and Medicaid Services
• Find Help in Your Area
• Healthcare.gov on Facebook
• Small Business Health Care Tax Credit for Small Employers
• The Affordable Care Act – State by State
• The Official site of the Health Insurance Marketplace
• United States Dept. of Labor: Health Plans & Benefits
• United States Dept. of Labor: Fact Sheet: The Affordable Care Act and Wellness Programs
• US Department of Health & Human Services – Healthcare
• US Small Business Administration Health Care Resources

Note: The materials on this site have been provided for informational purposes only and should not be construed as legal or tax advice or as a recommendation of any kind regarding health care reform. If you have questions about whether a provision applies to your plan, contact your insurance carrier, plan administrator, employer, or local health agency.