The first open enrollment period for the government’s newly formed Healthcare Exchanges finally kicked off beginning October 1, 2013. Available to those individuals and families who either have no health insurance offering available through their employers or where insurance is offered but exceeds 9.5 percent of the individual’s gross income, the exchange will provide six levels of coverage including four ‘metal’ named plans of silver, bronze, gold and platinum and two additional plans one of which is a catastrophic plan specifically for individuals younger than age 30 and those suffering financial hardship.
As part of the Patient Protection and Affordable Care Act (PPACA), nearly all individuals will be required to demonstrate and maintain proof of “minimum essential coverage,” which includes: qualified employer-sponsored health insurance plans, qualified plans purchased in the individual market, government-sponsored health insurance programs (e.g. Medicare, Medicaid), and grandfathered group health plans. (NFIB)
Uninsured individuals not meeting the minimum requirements will be subject to the individual mandate tax. In 2014, the individual tax will be $95 ($285 per family) or one percent of household income above the filing threshold. In 2015, the ‘fine’ rises to $325 ($975 per family)or two percent above the filing threshold. By 2016, the fine increases to $695 or 2.5 percent above filing threshold (note that for families, this fine will be $2085 in 2016).
A very small number of Americans will be exempt from the individual insurance mandate. Those individuals include: (1) people with religious objections; (2) American Indians with coverage through the Indian Health Service; (3) undocumented immigrants; (4) those without coverage for less than three months; (5) those serving prison sentences; (6) those for whom the lowest cost plan option exceeds 8 percent of annual income; and (8) those with incomes below the tax filing threshold ($95,00 for single and $19,000 for couples under age 65 in 2011). (NIFB)
How will individuals access health insurance?
Starting October 1st, individuals can use the phone, Internet, mail or visit a designated healthcare center for personalized assistance in selecting a plan. Community Health Centers were targeted by PPACA as a resource where individuals and families could go to receive additional information and assistance in enrolling into the health care exchanges. Supported partially by Navigator Grants, these community health centers applied for and received grants to help cover some of the associated costs of outreach and enrollment assistance. There are approximately 1,300 health centers operating 9,000 delivery sites throughout the U.S. These Community Health Centers are located in all fifty states and can be found online by visiting the National Association of Community Health Center’s web site at http://www.saveourchcs.org. Healthcare counselors, called ‘Navigators’ will have completed special training and certification to qualify as a ‘navigator’ and each approved Community Health location must have a navigator on staff to assist individuals and families through the exchange and healthcare election process.
Through one of the enrollment options mentioned above, individuals and families must enroll in “an essential health benefits” (EHB) package, which at the time of this publication is still being more clearly defined.
Starting in October 2013, small business owners with less than fifty full-time equivalent employees will be able to visit the Small Business Health Options Program (SHOP) marketplace. There they can learn about the healthcare exchange, can compare healthcare plans and check on small business health care tax credits available for up to 50 percent of the total premium cost when purchasing a SHOP plan. After 2016, SHOPs will be open to employers with up to 100 FTEs. If a small business opts to obtain insurance through SHOP, it will need to cover all full-time employees under the plan. Depending on the state where the business resides, a specific percentage of employees will need to participate in SHOP to qualify (for specifics visit healthcare.gov). For self-employed small business owners with no employees, the individual Health Insurance Market place will be the designated resource for health insurance coverage options.
If an employee goes to the healthcare exchange:
1. The employee will not receive an employer contribution to the group health plan.
2. The employee will not receive any pre-tax benefits. Plans on the Exchange can only be paid with post-tax dollars.
3. If an employee joins the exchange and decides that they do not like it, they cannot return to the company plan until the following Open Enrollment period or unless they have a qualified life event (QLE) such as a birth, marriage or divorce.
To learn more about healthcare exchanges or how they will impact your business’ employees, visit healthcare.gov or talk with your small business accountant or business advisor.
To find a trusted accountant in your area, visit www.SmallBizAccountants.com.
Please be advised that, based on current IRS rules and standards, any advice contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty that the IRS may assess related to this matter. Any information contained in this article, whether viewed or subsequently printed, cannot be relied upon as qualified tax and accounting advice. Any information contained in this article does not fall under the guidelines of IRS Circular 230.
Copyright Information 2013 Professional Association of Small Business Accountants