2014 A New Year in Health Care Reform

After three (3) years of spirited debate, numerous lawsuits, and a Supreme Court ruling, the individual mandate kicked in January 1, 2014.  Individuals must have health insurance or pay a tax (as defined by the Supreme Court).  As an employer what should you be prepared for this year?

It has been an eventful year for the American health care system, to say the least.  More parts of the Patient Protection and Affordable Care Act (PPACA) have gone into effect and the launch of the health care exchanges across the country is now under way. There have been numerous challenges to the PPACA and many of its components. The U.S. Supreme Court has ruled the Act’s individual mandate constitutional, but continues to examine the constitutionality of other aspects of the law.

Insurers have shifted more and more of the health care cost burden to enrollees through high deductible, higher co-pays and fixed benefits plans. An increasing number of payers are using Medicare based pricing, data analytics and wellness programs in their efforts to control ever rising costs. Narrow networks are popping up across the country as a vehicle for cost control.

Whatever the New Year brings, we look forward to supporting you in your continuing efforts to control costs while maintaining a high standard of care.

The New Year Ushers in Health Care Reform

• All employers will have to pay additional taxes on their health insurance plans which may result in about a 5% average increase in premiums.
•  Waiting periods for benefits may not exceed 90 days from the date of hire.  This will be effective with your 2014 renewal.
•  Small group employers (2-50 employees) will have to include pediatric dental and vision in their 2014 health plans.
• Small employers who qualify for the Small Business Health Care Tax Credit, and want to take advantage of the tax credit, must purchase their health insurance through the SHOP Marketplace.  Yes, as your broker, we can assist you with the SHOP Marketplace.
• Applicable Large Employers are employers with 50 FTE (full-time equivalents) or more, and must offer affordable and minimum value coverage to full-time employees (employees who work 30 hours or more per week).   Employers must offer minimum value coverage to dependents, but do not have to meet the affordable test.  Employers are not required to offer coverage to spouses.  Penalties for not offering coverage have been delayed until 2015.  However, we do not know if penalties will begin January 1, 2015 or with the 2015 health insurance renewal; awaiting a response from the IRS.
• Applicable Large Employers who have variable hour employees, employees who have a fluctuating schedule, should select a measurement period (3, 6, 9, 12 months) and begin tracking hours to determine if variable hour employees meet the 30 hour requirement.
• Employers who issued 250+ W-2 forms for the 2012 tax year will need to include the cost of health insurance on their W-2 forms for the 2013 tax year.  Other employers may voluntarily include the cost of health insurance on their employees’ W-2 forms.

Individuals who do not have coverage in 2014 will be subject to a penalty which will be calculated one of two ways, whichever one is higher applies.

• $95 per person, $47.50 for individuals under 18; the maximum penalty for a family under this calculation is $285.
• 1% of yearly household income; the maximum penalty is the national average yearly premium for a bronze plan.
• The fee increases every year. In 2015 it’s 2% of income or $325 per person. In 2016 and later years it’s 2.5% of income or $695 per person. After that it is adjusted for inflation.

Individuals who are uninsured for just part of the year, 1/12 of the yearly penalty applies to each month the individual is uninsured. Individuals who have coverage for one (1) day during a month will be considered to have coverage and not pay a penalty for the month.  Individuals who have a short gap in coverage, who are uninsured for less than 3 months, may not be required to pay a penalty for those months.

Health Care Reform 2014 Compliance Checklist PDF. Please contact us if you have questions, if you need assistance with SHOP Marketplace, or you have employees who need assistance getting individual coverage to avoid the penalty.