The new Health Care Law is all about getting everyone covered for medical insurance. Lots of the law is focused on tax structures like the new Health Insurance Premium Tax Credit or various fees that employers have to pay if they don’t offer the right insurance. But some of the Affordable Care Act is centered on the new Health Insurance Marketplace. Here are some of the noteworthy aspects of the ACA:
- insurance companies can’t deny you because of pre-existing health conditions
- health insurance companies can’t just cancel you because you get sick
- anyone under 26 is covered
- you get free preventive care through your health insurance
- health insurance companies must now explain and justify their rate increases over 10%
- you can choose your plan through the Health Insurance Marketplace, run by most states
The Health Insurance Marketplace
This should be the exciting part for most individuals and families. Starting on October 1, 2013 you will be able to enroll for basic, affordable health insurance no matter what your condition and economic level. The Marketplace is available online at healthcare.gov or you can call the help center at:
There will also be people in your community who are trained to help you find health insurance on the new Marketplace. Keep an eye out for information as the date gets closer.
You can sign up for Marketplace emails to get information as it comes out. Go to the HealthCare.gov website here and enter your email address or phone to get texts.
What Does this Mean for Businesses?
The ACA has provisions for small businesses too. Just as there are new ways for individuals to buy health insurance, there are new ways for small businesses to buy health insurance programs for their employees. The program is called Small Business Health Options Program (SHOP). The marketplace for SHOP also opens on October 1, 2013.
SHOP is for small businesses. That means fewer than 50 full time employees. Business owners will be able to choose how much of the insurance premiums they want to pay. SHOP will make it easier to compare health insurance plans.
And if you own a business with more than 50 full time employees, have your accountant (or you yourself if you do your own taxes) look into the small business health care tax credit. You may be able to get a tax credit worth up to 50% of the premiums you pay. The rest will still be deductible. But the new tax credit is only for premiums on plans your business purchases through the Small Business Health Options Program.
Businesses don’t have to offer health insurance to their employees. It’s just that if they don’t, they have to pay a fee. That fee is called “shared responsibility payment”. It’s kind of like paying carbon offset points…you pay instead of changing your behavior.
There’s also a Health Care Law hotline for businesses who have questions about all this.
1-800-706-7893 (TTY users: 1-800-706-7915)
What Does Shared Responsibility for Employers Mean?
Here, any employer with at least 50 full time employees has to offer minimum essential coverage. If the employer fails to offer this, the company pays a fee. Even if the employer offers health coverage but it’s not that affordable, they pay a fine. Or, if they offer affordable coverage but it’s useless because it covers practically nothing, up comes the fee again. After all, the term is minimum essential coverage, right?
The IRS considers 30 hours to be full time. These full time employees should be able to claim the new health insurance premium tax credit based on having participated in the employer’s health coverage. If the employer is preventing then from claiming the tax credit by not offering minimum essential affordable health coverage, then they have to pay up.
To determine whether a health plan is affordable, the employer can use the employee’s W2 statement, rather than (total) household income. This is called safe harbor. Safe harbor also applies to figuring whether an employee is considered full time. The IRS allows the employer to use a “look-back period of safe harbor”. Although guidance hasn’t been issued yet by the IRS, the look-back period is expected to be limited to a 12-month period.
The look-back period becomes important when an employee works part time for part of the year but full time for the other part of the year.
For new employees, if they work full time for the first 3 months, they must be offered coverage under the employer’s group plan.
What is Automatic Enrollment?
Well employers now have to get in on the business of making sure their employees are covered by some form of health insurance. Now, if an employee is deemed full time, the employer has to automatically enroll that employee in the health plan of that company.
Now, don’t get your hackles up yet: the health care requirement for full time employees still only applies to employers who fall under the Fair Labor Standards Act (FLSA). Unless your business has more than 200 employees your business is not required to participate in the automatic enrollment of full time employees in your company’s health care program. So, it’s for large employers only.
What’s the Branded Prescription Drug Fee?
Last but not least there are parts of the Affordable Care Act that affect Drug companies, too. Think about it: what makes health care so expensive. Lots of things, but one huge factor is the ridiculously high price of prescription drugs. Well the ACA is out to fix that with the “Branded Prescription Drug Fee”.
Drug companies now have a nice fee they’ll have to pay for producing brand name drugs. Even drug companies who just import the foreign brand name drugs will get a fee too.