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
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.
The goals of the ACA include:
|October 1, 2013||Open Enrollment Begins|
|January 1, 2014||Coverage Begins|
|March 31, 2014||Open Enrollment Closes|
The ACA rolls out gradually, with various components becoming effective each year from 2010 through 2018.
The federal government, state governments, health insurance carriers, and employers and individuals are all subject to the ACA’s provisions.
Under the ACA:
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)
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.
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,:
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.
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.
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.
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
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.
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.
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).
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.
Under the ACA, you may be eligible for tax credits to help you pay for your employees’ insurance if:
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.
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.
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).
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.
“Applicable large employers” must pay a penalty if:
Both penalties are assessed monthly.
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.
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.
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.
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).
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.
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:
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
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.