DLester78 (85.01)

Affordable Care Act - What's coming?

December 20, 2012 – Comments (3)

I am a financial advisor with a broker dealer who frowns upon writing blogs or other forms of social media.  I have to remain anonymous so that I don't get sidways with them.   I work with both businesses and families and I am getting many questions about the affordable care act (Obamacare).  I have a timeline of important things that may or may not be valuable to you.  I start with employers and move on to families at the bottom.  Hope you enjoy.

2012

- Uniform Summary of Benefits and Coverage (effective for plan years on or after September 23,2012)

     -  Employers must distribute a 4-page uniform summary of plan benefits and coverage prior to enrollment or re-enrollment

      -  Penalty for noncompliance is $1,000 per failure (i.e., $1,000  per person who does not recieve the summary.

Notice of Material Change in Coverage Requires 60-day advance notice (on or after September 23,2012)

New W-2 reporting requirment on the value fo health coverage (reporting required in 2013 for 2012 plan year coverage). Applicable for employers with 250 or more w-2 filings in 2011.

Patient-Center Outcomes Research Institute Fees ($1 times the average number of covered lives under the paln for policy years or plan years ending on or after October 1, 2012)  I still don't know what this means...

 2013

Cap on amount of contributions to a flexible spending account for medical expenses to $2,500 per year, beginning with the first plan year beginning on or after January 1, 2013.

Effective January 1, 2013, increased Medicare tax on certain employee wages (an additional .9% on earnings in excess of $250,000 for married taxpayers filing a joint return, $125,000 for married taxpayers filing separately, and $200,000 in all other cases.)  Also, a 3.8% assessment of unearned income for higher-income taxpayers.

Employers will begin being taxed on Retiree Drub Subsidy Coverage.

Employers must notify employees of existence of the health insurance exchanges and available coverage options (March 1, 2013)

2014

Additional employer coverage mandates begin:

- Pre-existing condition exclusions are prohibited fro all participants (all plans, including grandfathered)

- Waiting periods cannot exceed 90 days (all plans, Including Grandfathered)

- Annual limits prohibited

- Automatic enrollment for employers with more than 200 employees

- wellness program penalty/reward increases to 30%

Health insurance exchanges become operational

Individual mandates - tax on individuals for not obtaining health insurance

Employers furnish information on health benefits to employees and government

Employers are required to offer "minimum essential" health insurance to employees or face penalties

-   Non-compliance penalty: $2,000 per full-time employee if too little coverage provided

-   Free Rider Penalty (lesser of $2,000 per employee or $3,000 per employee electing coverage under health care exchanges) if coverage cost exceeds allowable household income level.

-   Free Choice Voucher (allows a credit to be used by those employees who are below allowable poverty threshold)

2015

Individual mandate tax increases to $325 or 2% of household income over filing limit

2016

Individual mandate tax increases to $695 or 2% of household income over filing limit

2017

Large Employer (ie over 50 full-time employees) may participate in exchanges.

2018

Cadillac Tax

-   Excise tax on employer sponsored health plans with aggregate expenses that exceed $10,200 for individual coverage and  $27,500 for family coverage.

-   Tax = 40% x Amount of coverage in excess of threshold

-   Applies to the aggregate value of coverage (ie, fully loaded)

-   Tax assessed against provider of coverage... that means the business

-   Analysts expect 60% of plans will be Cadillac Plans" by 2018.

For individuals and families not businesses here is the breakdown of penalty you will pay for not buying insurance.

2014 = Penalty is $95 per adult and $47.50 per child (up to $285 for family) or 1% of family income whichever is greater

2015 = Penalty is $325 per adult and $162.5 per child (up to %975 for a family) or 2% of family income whichever is greater

2016  and Beyond = Penalty is $695 per adult and $347.50 per child (up to $2085 for a family) or 2.5% of family income, whichever is greater.

Remember this is still confusing to almost everyone.  I listed some of the most straightforward facts that I could.  While I am not a fan of government control of anything I do not intend for this post to be a political statement. Most of this information was compiled from the chamber of commerce event in my town, research reports from some of my contacts, and fact sheets distributed by some HR law firms that I do business with.  This is a very confusing bill that wasn't even read by congress before it was passed.

Save your money and grow your networth.  We are going to need it as a country.