The Patient Protection and Affordable Care Act (PPACA, or ACA) is a federal law that was passed in March 2010 in order to give more people access to affordable health care coverage and medical care.
Many of the most consequential provisions of the ACA will take effect beginning in 2014, with far-reaching consequences for consumers, state officials, employers and health care providers. Most of us will be impacted by the ACA in some way, either by changes to our employer-sponsored or privately purchased health plan, or because of the requirement for individuals without coverage to purchase it or pay a fine.
You need to find out how your existing coverage (if any) will be affected, or if you will be required to purchase coverage on your own.
New Consumer-Friendly Provisions
The following new coverage provisions have already been implemented. They were designed to give consumers a favorable impression of health care reform before the full law takes effect.
- Some preventive services are now covered with no out-of-pocket costs
- Health plans cannot cancel your coverage once you get sick.
- Children with pre-existing conditions cannot be denied coverage. This will apply to adults after 2014.
- Insurers are required to provide rebates to consumers if they spend less than 80% – 85% of premium dollars on medical care. This provision is designed to reduce the amount that insurers spend on administrative costs in an effort to keep premiums down.
The Individual Mandate
The so-called individual mandate provision of the ACA requires that beginning in 2014, individuals must have health insurance or pay a fine. You can satisfy this provision with private insurance obtained on your own or through your job, or through government programs including Medicare, Medicaid, CHIP, Veterans Affairs, Indian Health Service, or TRICARE.
If you have health care coverage from your employer you most likely will continue to do so, particularly if you work for a large employer. Your employer might make changes to your plan design, and you can get those details from your employer.
If you work for a small employer, other changes may be coming and your employer should keep you informed. Some small employers are opting to no longer offer coverage to their employees.
If you do not get health insurance through your employer, you must purchase an individual health plan or pay a penalty. The penalty for individuals who do not obtain qualified health insurance in 2014 starts at $95 per year or up to 1% of income, whichever is greater. The penalty will rise to $695 per year or 2.5% of income by 2016.
Individuals who do not get health insurance from their employer but cannot afford to buy their own coverage may qualify for Medicaid.
If you do not qualify for Medicaid but still can’t afford health insurance, you might be eligible for government subsidies to pay for private insurance sold in the health insurance marketplace or state insurance exchanges. The exchanges are the federal and state-run health insurance marketplaces where you can shop, compare and buy health care coverage.
You can buy coverage on the exchanges beginning in October 2013, but coverage will start no sooner than January 1, 2014. Premium subsidies will be available for individuals and families with incomes between 133% and 400% of the poverty level, or $14,856 to $44,680 for individuals, and $30,656 to $92,200 for a family of four.
Some state insurance exchanges will be run by the state, while the federal government will run others. If your state exchange is run by the federal government, you will use the HealthCare.gov website to compare and purchase coverage. This website can also help you find out how to access the marketplace in your state.
The Employer Mandate
Beginning in 2015, businesses with 50 or more employees that don’t provide health care coverage and have at least one full-time worker who receives subsidized coverage in the health insurance exchange will have to pay a fee of $2,000 per full-time employee (the first 30 workers are excluded from the fee). This is commonly referred to as the employer mandate.
The employer mandate was recently delayed by one year—it was originally set to take effect in 2014. The delay has consequences for other parts of the law. For example, employers will now not need to comply with certain reporting requirements of the ACA until 2015. But those reporting requirements were designed to make it possible for the federal government to determine if individuals are eligible for tax credits or subsidies when purchasing coverage on a government-run exchange—which is set to start in October 2013. Without the information provided by employers, eligibility for subsides and tax credits will be determined by a self-reported “honor system.”
Employers also face a slew of new regulations and requirements for the plans they offer to employees.
New Penalties and Fees for Individuals and Businesses
The ACA imposes a variety of new taxes and fees on individuals and businesses, including:
- Beginning in 2013, individuals who earn over $200,000 per year and married couples who earn more than $250,000 per year will see a Medicare payroll tax rate increase from 1.45% to 2.35%.
- These earners will also face a new tax on unearned income (investments, interest, dividends, etc.) of 3.8%.
- Beginning in 2018, a 40% excise tax will be applied to the portion of most employer sponsored health coverage (excluding dental and vision) that exceeds $10,200 per year for individuals or $27,500 for families. This is often referred to as the “Cadillac tax.”
- New taxes and fees on medical device manufacturers and health insurers will likely be passed on to consumers in the form of higher premiums.
It is important to learn all you can about health care reform and how it will affect you, your family and your employer. Will your employer continue to provide coverage, or will you need to purchase coverage on your own? Will you be getting health care coverage for the first time?
HealthCare.gov is a comprehensive resource for finding out everything you need to know about health care reform and what it means for you, your family and your business. The independent agents at Evans, Ewan & Brady are prepared to help you as well. Call us today!
Call Paulette at Evans, Ewan & Brady Insurance Agency for all your health insurance at 512-869-1511.