“ObamaCare, Federal Healthcare Law, Affordable Care Act…”
I know by now you all have heard of this, referred to as one of the names referenced above, that has now become something that we all must become better educated on. I have decided to work on a monthly communication to keep you informed as the regulations are released, and we have a better understanding of what each of us need to know. At this point it doesn’t affect everyone, but I feel in the coming years it will be something that regardless of company size we all will be faced with. Although there are several good components in the bill, there are several costly ones for groups with 50 or more eligible employees.
PPACA is aimed primarily at decreasing the number of uninsured Americans and reducing the overall costs of health care. The law requires that all individuals not covered by an employer sponsored health plan, Medicaid, Medicare, or other public insurance programs, secure an approved private insurance policy or pay a penalty unless the applicable individual is a member of a recognized religious sect exempted by the Internal Revenue Service, or waived in cases of financial hardship.
Healthcare exchanges will commence operation in each state, offering a marketplace where individuals and small businesses can compare policies and premiums, and buy insurance (with a government subsidy if eligible). There is talk that some states may elect to opt out of offering these exchanges. As I learn more about this, and what states, I will update. This will be covered in more depth in the coming months. Minimum standards for health insurance policies are to be established and annual and lifetime caps are to be banned. Co-payments, co-insurance, and deductibles are to be eliminated for select health care insurance benefits considered to be part of an “essential benefits package” for Level A or Level B preventive care.
The penalty for employers with more than 50 full time eligible employees will be $2,000 per eligible employee beginning January 1, 2014. This penalty will also not be allowed to be taken as a business tax deduction or business expense on your tax return.
We have found a policy that meets the requirements as the regulations stand today for an annual cost of $1,200 ($100 per month per employee). This is not only a $800 annual savings, but also a tax deductible business expense, unlike the penalty for non-compliance. You can also obtain a waiver from your employee if you offer them access to your existing major medical plan, but the cost to the employee cannot exceed 9.5% of income for these employees, and it also has to be deemed “affordable” as well. As you can imagine the cost of offering this to your employees will be in most cases more expensive than the $100 per month “essential benefits package” option.
With all this being said, we are here to assist and guide you thru the understanding of PPACA as well as an affordable way to comply. If you currently do not have the magic number of 50 eligible full time employees, you are OK at this time, but we do not know what 2015 and beyond will bring.
It is my plan to update everyone monthly with information that we have researched and learned about day to day. If you have any questions about compliance, or general questions, please give us a call.