Healthcare Reform: Are You Mandated to Have Coverage?
The U.S. Supreme Court decided June 28, 2012, to uphold the Affordable Care Act. The justices ruled the mandate was constitutional because Congress has the authority to tax if someone does not have health insurance.
Who Is Mandated
Beginning in January 2014 there will be an individual mandate; this means everyone, with a few exceptions, must have a qualifying health insurance policy. The policy must have the 10 essential benefits and conform to other state mandates. If you do not purchase insurance, the courts have ruled you will pay a tax to the IRS on your 2014 income taxes. The tax is $95 or 1 percent of your family income, whichever is higher. The tax increases every year until it reaches 2.5 percent of income in 2016.
There will be subsidies for individuals with incomes under 400 percent of poverty level ($89,400 for a family of four in 2011). It looks like these subsidies will only be available if purchased through the state exchange. The household portion of the insurance premium must not be over 9.5 percent of your household income.
Businesses with 50 or fewer employees do not have a mandate to provide health insurance, but if they do, it must be at least a Bronze-level plan. There will be state exchanges that will help small businesses shop for insurance products. There will be subsidies for lower-income workers through the exchange.
Small-business tax credit for providing health insurance. There is a 35 percent tax credit based on the premium your organization pays for health insurance. This credit increases to 50 percent in 2014. To qualify, the business must have fewer than 25 full-time employees and an average wage of $50,000. You also must pay at least 50 percent of the premium cost.
Businesses with 51 or more employees must provide health insurance starting January 2014. If they do not provide health insurance, there will be a tax (penalty) of approximately $40,000 plus $2,000 per employee over 50. The insurance must at least be the Bronze level of benefits and cost no more than 9.5 percent of the employee’s wages. The penalty will be enforced by the IRS.
The PPACA has been in effect for two years. There are many benefits already in place. These include unlimited lifetime maximum, dependent coverage for adult children to age 26, and no pre-existing conditions exclusion for children under age 19.
The next year will bring many changes. The individual states will work with the insurance industry to set up exchanges and create products of many different coverage levels. The purpose is to provide a resource for the consumer to be able to compare like insurance products. Benefit Consultants Northwest has created a website – www.bcnw.com/getinformed – to continuously update you on these changes.Editor’s Note: Benefit Consultants Northwest authored this article and is an ASA associate member and sponsored benefit provider. Learn more by visiting ASA’s benefit portfolio (ASA.bizunite.com), or contact BCNW directly at (866) 422-3393 or via email at firstname.lastname@example.org.
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