The Affordable Care Act: Through the Intersection of Change – Now What?

Guest Post by Ruben Reyes, Esq.,

ABD Insurance & Financial Services

Significant changes are right around the corner as the next implementation phase of the Affordable Care Act (ACA) approaches.  Over the past few years we have seen market reform changes that include the elimination of lifetime and annual limits on essential health benefits, no-cost preventive care, dependent coverage up to age 26 and the elimination of pre-existing condition limitations on individuals under the age of 19 to name a few.

In addition, we have seen new employer requirements including:  New Summary of Benefits and Coverage Notice; a Uniform Glossary of Terms; reporting the value of medical benefits on the employee’s Form W-2.

As we move forward through 2013 and into 2014, there are some key items to track.imagesCAFCYO9Q

1.  The Employer Exchange Notice – The ACA requires that all employers (large and small) provide each employee with a written notice providing information about the exchange and how to request assistance, describing the availability of a premium tax credit and outlining the implications for the employee if they choose to purchase a qualified health plan through an exchange. The law required employers to distribute the notice to all current employees by October 1, 2013.

2.  The Employer Pay or Play Provision-Mandates “large” employers (50 or more full-time equivalent employees) to offer minimum essential coverage that is affordable to the employee or pay a penalty of $2,000 annually for each full-time employee (excluding the first 30 full-time employees).  An employer may still be subject to a $3,000 penalty for each full-time employee that obtains coverage on the Exchange and receives a premium tax credit, if the employer provided coverage does not meet “minimum essential coverage” (coverage does not meet 60% actuarial coverage); and the cost for employee-only coverage is not “affordable” (cost exceeds 9.5% of the employee’s W-2 wages).

3.  The Individual Mandate – The ACA will require most U.S. citizens and legal residents to obtain health insurance or face a potential tax penalty.  Employees will obtain this coverage through employer sponsored group plans, the private individual market or the public Health Exchange.  The level of penalties will start relatively low in 2014 at $95 per individual or 1% of income (up to $695 per individual or 2.5% of income in 2016), whichever is greater.