Under the Affordable Care Act (ACA, also referred to as “Obamacare”), most individuals will be required to carry health insurance as of January 1, 2014 or else face penalties. This will affect employers as well, as businesses with more than 50 employees will be required to offer health insurance to full-time employees or face a penalty of $2,000 per employee.
Under the mandate, the maximum allowed annual deductible for single individuals will be $2,000, or $4,000 for any other plan (e.g. plans for married couples, families, etc.). The aim of the changes under the ACA is to ensure that all individuals have access to affordable health care coverage.
To help people afford coverage under the new mandate, the ACA will establish health insurance exchanges and offer subsidies for individuals in households with income up to 400% of the poverty line, provided they are not eligible for other acceptable coverage. In California, the exchange will be known as Coverage California, or SHOP (Small Business Health Options Program) for small businesses. The exchange will be open to all individuals and companies with less than 50 full-time employees.
Employers with less than 50 employees won’t be required to offer benefits, nor is it likely that small businesses who already offer benefit packages to their employees will be incentivized to drop their coverage and encourage their employees to enroll in the exchange, since most of these employees make more than 300% of the federal poverty level (FPL) and would therefore be eligible for only a very small subsidy or no subsidy at all.
Additionally, while many small business owners might feel obligated to raise employee wages if they stopped providing a health plan to their employees in favor of having employees seek insurance through the exchange, wages are taxable whereas employer-provided health insurance is both non-taxable to the employee and tax deductible for the company. This makes it more beneficial (for both the employees and employer) for the employer to continue offering a health plan. Nevertheless, as of January 1, 2014, qualified small businesses will be offered two years of tax credits if they meet certain conditions.
Individuals who are not covered as of January 1, 2014 will face an annual penalty of $95, or up to 1% of income over the filing minimum (the minimum income a person can make without having to file a tax return), whichever is greater, although there are some exemptions to this rule, including religious reasons and for those who would pay more than 8% of their income for the least expensive policy available.
There is a lot to know when it comes to the changes under the Affordable Care Act, especially for employers. The knowledgeable agents at Benefit Packages can help you understand the upcoming changes and help you prepare well in advance to ensure the transition is a smooth one. Benefit Packages has been helping individuals and employer groups find coverage with reputable insurance companies like Blue Cross of California for 25 years. Contact us today at 1-800-356-3615, or visit our website.