Sean Rekemeyer
Regional Manager
 
(817) 277-9000

NPN #1329285

Affordable Care Act FAQ


 

 

 

Employers


Do I have to offer health insurance?
If you have 50 or more full time or full time equivalent employees, your are required to offer employer sponsored ACA compatible health insurance or pay a penalty.   There are several scenarios under which you may have more than 50 full time and full time equivalent employees and still not pay a penalty.

Small businesses will be able to purchase group like health insurance through the SHOP exchange (Small Business Health Options Program). The employer will receive one bill from the exchange for all of their employees regardless of how many carriers are involved. There are tax credits for small business owners to offer health insurance, but they can only be taken the first two years and then disappear.

The definition of a small business varies from State to State until 2016 at which time it will be defined as any company having 100 or fewer full time employees. To get the definition for your State, contact our office.

If you have 200 or more full time or full time equivalent employees, you will be required to automatically enroll each employee in the company sponsored health plan.  They can then choose to opt out.  

 

What size company is considered "small" and thus eligible to participate in SHOP?
Starting in 2016, a small business is defined as having 1-100 full time employees. 
Contact our office and we'll determine the exact definition for your State.

 

What defines a full time employee and what is a full time equivalent?
A full time employee is defined as anyone who averages 30hrs/wk.  The number of full time equivalents is calculated by adding up all the part time hours worked by your part time employees in an average week and dividing it by 30. 

You cannot avoid the obligation to provide insurance by making everyone a part time employee, but you can limit your penalty by minimizing the number of full time employees you have.  You only are required to provide health insurance for full time employees and thus lower your penalty by reducing full time staff.
 

 

How much is my penalty if I don’t offer health insurance?
Penalty = (# of full time employees – 30) * $2000.
EX: A company with 60 FT – (60-30)*$2000= $60,000/year

 

 

If I offer a group plan, what are the requirements so I don’t pay a penalty?
In general, minimum requirements for ACA compliant health plans are that they limit deductibles to a maximum of $2000 for an individual and $4000 for a family.  Out-of-pocket expense over and above the deductible are limited to $6400 for an individual and $12800 for a family.

The plans must also offer all the “Essential Benefits” as defined by the ACA that include:
     * Ambulatory patient services
     * Emergency services
     * Hospitalization
     * Maternity and newborn care
     * Mental health and substance use disorder services
     * Prescription drugs
     * Rehabilitative and habilitative services and devices
     * Laboratory Services
     * Preventive and wellness services, including a free physical each year
     * Chronic disease management
     * Pediatric services, including oral and vision care

In addition, the employee's portion of the premium cannot exceed 9.5%of the employee's household modified adjusted gross income.  This percentage is on a sliding scale and is lower for lower income families.  To determine the threshold for each employee, you will need to determine the Modified Adjusted Gross Income (MAGI) for that employee's household and have your accountant calculate the threshold.

NOTE: The MAGI is for the employee's entire household including spouse, children, etc, not just the adjusted gross income that you as an employer may be paying to the employee.  This means you must get tax return information on the entire household to make this determination.

​If the employee's part of the premium exceeds the allowed threshold, he/she is free to go to an exchange and purchase affordable health insurance, but the result for the employer can be a $3000 fine per employee filing on the exchange vs. $2000.

 

 

Can I offer a group plan and still owe a penalty?
Yes.  If the health plan is not ACA compatible or if the premium to be paid by the employee for the employee's portion alone is more than 9.5% of his/hers Modified Adjusted Gross Income (MAGI).  The employee then qualifies for help through an exchange and the employer pays a $3000 penalty for each employee who uses the exchange.

Grandfathered plans are exempt from these restrictions.

 

 

Are there other ways to offer health insurance for my employees that are less expensive?
Yes.  In many cases it may be less expensive overall for both the employer and the employee to pay the additional taxes and opt for non-ACA compatible health plans. 

Employees can purchase non-ACA compatible health plans like short term major medical insurance with pretax dollars through an IRS Section 125, Section 105 or Section 106p  arrangement. Under these options, the employer can fix their health insurance costs much the same way they do with a 401K plan.  Any contribution made by the employer can be in the form of pretax dollars. Employees can have money withheld from their check in pretax dollars to pay premiums. 

​The net result is a lowering of the taxable income for the employee and a lowering of the FICA matching requirement for the employer. In many cases, even including the additional taxes. the employee and the employer save over 50% compared to ACA compatible plans.

​Regulations regarding the implementation of these defined contribution plans are still evolving from the IRS, Treasury and HHS.  We have a number of third party administrators that we recommend to set up the appropriate plan for your company and insure compliance with all federal laws.  Ask us for a recommendation.

 

 

What does “Actuarial Value” mean in practical terms?
I’m sure to all you statisticians out there the term "actuarial value" is perfectly clear.  For the rest of us, here’s what it means. If you want the insurance company to pay more of your out-of-pocket expenses every year, it will cost you more in premiums.  If you have a preexisting condition and typically have a lot of medical expenses each year, the 90% or 80% plan will be worth it to you. Otherwise the higher premiums will far outweigh any benefit you might see.

​If on the other hand, you and your family are reasonably healthy and typically go to the doctor once or twice a year, it will be substantially cheaper for you to take the 70% or 60% plan.  Even with these plans, the maximum deductible is $2000 for an individual and $4000 for a family.  In the event of a major accident or critical illness, out-of-pocket maximums are limited to $6400 for an individual and $12,800 for a family.  And remember, every family member gets a free physical each year regardless of which level you're on.

 

 

Employees / Individuals / Self-employed


Does my employer have to offer health insurance?
No.  Employers who have fewer than 50 full time and full time equivalent employees are not required to provide health insurance. Those with more than 50 are required to either offer ACA compliant plans or pay a penalty.

 

Do I have to take my employer’s plan?
No. You can always apply to an exchange, either public or private, to see if coverage is cheaper for you and your family through an exchange. 

If the premium for your portion of the employer’s plan is between 8% and 9.8% of your household income (which must be < 400% of FPL), your employer can provide a Free Choice Voucher equivalent to the amount the employer would have contributed towards the employee’s health insurance. You can then use that money to go onto an exchange and purchase health insurance.

 

Are there less expensive options available for health insurance?
Yes. For those families whose household  income is between $60,000 and $300,000 per year, paying the penalty and applying for some form of non-ACA compatible health plan can result in savings of 40% to 60% over the cost of an ACA compatible plan.

 

How much is the additional tax if I don’t buy ACA compatible insurance?
2014: Additional Tax is $95 per adult and $47.50 per child (up to $285 for a family) or 1.0% of family income, whichever is greater.
2015: Additional Tax is $325 per adult and $162.50 per child (up to $975 for a family) or 2.0% of family income, whichever is greater.
2016 and beyond: Additional Tax is $695 per adult and $347.50 per child (up to $2,085 for a family) or 2.5% of family income, whichever is greater.

 

Who collects the additional tax?
The IRS as part of your annual income tax return.  You will be required to show that you had ACA compatible health insurance for yourself and every member of your family for a minimum of 9 months of the year or be required to pay an additional tax. 

 

Are there other options besides buying insurance on a government exchange?
Yes. Many insurance brokers will provide private exchanges that offer all the products available on the public exchanges plus addition products and services.  In addition, some health insurance carriers that may service your area, have opted not to participate in the government sponsored health exchanges, but instead are relying on brokers to sell their products. 

 

When can I sign up for health insurance?
Open enrollment is scheduled to occur between November 1, 2016 - January 31, 2017.  

​There are a series of qualify events that will allow people to sign up for health insurance in between the open enrollment periods, but simply coming down with a serious illness or have an accident are not qualifying events.  In these cases, you will be fully responsible for any and all medical bills. 

​It is advisable to have some form of insurance in place at all times, either ACA compatible or non-ACA compatible major medical coverage.  Non-ACA compatible plans will provide several million dollars worth of coverage at a substantially lower cost unless you qualify for a subsidy from the federal government.

 

How do I sign up for health insurance?
The price for any health insurance plan, whether you purchase through a government exchange or a private exchange is exactly the same.  The advantage of using a broker is that the broker works for you, not the government or the insurance company. 

​Brokers have access to more options than the government exchanges and represent a broad cross section of companies.  You’ll get the best deal that fits your family and needs from an experienced broker.​

 

How do I determine if I qualify for a help from the government to pay my premium?
The University of California at Berkeley has developed a calculator that provides the best estimate to date.  All of these calculations are subject to change as HHS continues to revise regulations and define specifics of implementation.

 

When do the new ACA compatible health plans go into effect?
Plans typically will have a January 1st effective date.  There are a number of “qualifying events”, such as loss of a job, divorce, death of a spouse… that can trigger someone to get health insurance in the middle of the year, but for most situations the open enrollment will be between October and December and the effective date will be January 1st of each year.

 

What happens if I don’t sign up for health insurance and decide to just pay the additional tax?
There are several qualifying events that make it possible for people to enroll in a ACA qualified health plan outside of the open enrollment period.  ACCIDENTS AND ILLNESS ARE NOT QUALIFYING EVENTS.  In other words, once you opt out of having any form of health insurance, if you have an accident or illness after January 1st, of a given year,  YOU WILL NOT BE ABLE TO OBTAIN ANY FORM OF HEALTH INSURANCE UNTIL JANUARY 1ST OF THE FOLLOWING YEAR.

BUT THERE IS A SOLUTION

An alternative for those who want to keep insurance costs low and still maintain coverage is non-ACA compatible plans like short term major medical coverage. They are typically 40% to 60% cheaper than exchange plans, provide $2 - $5 million dollars worth of coverage and  renew every year.  It is the ideal choice for those who are reasonably healthy and want to provide basic coverage for themselves and their families.​
 

 

What does “ActuarialValue” mean in practical terms?
I’m sure to all you statisticians out there the term "actuarial value" is perfectly clear.  For the rest of us, here’s what it means. If you want the insurance company to pay more of your out-of-pocket expenses every year, it will cost you more in premiums.  If you have a preexisting condition and typically have a lot of medical expenses each year, the 90% or 80% plan will be worth it to you. Otherwise the higher premiums will far outweigh any benefit you might see.

If on the other hand, you and your family are reasonably healthy and typically go to the doctor once or twice a year, it will be substantially cheaper for you to take the 70% or 60% plan.  Even with these plans, the maximum deductible is $2000 for an individual and $4000 for a family.  In the event of a major accident or critical illness, out-of-pocket maximums are limited to $6400 for an individual and $12,800 for a family.  And remember, every family member gets a free physical each year regardless of which level you're on.

 

 Click Here For Additional FAQ​ From The ​Kaiser Family Foundation​