Healthcare Reform Basics in a Nutshell

The Affordable Care Act (ACA) commonly known as “Health Reform” or “Obamacare” was passed in 2010.  This law was aimed at making health care available to all Americans and its implementation continues today and will so for years going forward.

Everyone, with few exceptions, is required to have insurance or otherwise pay a penalty.  The coverage has been expanded to include benefits like preventive care at a $0 copay and coverage for pre-existing conditions, even if you did not have a major medical policy in place previously.

  • Larger companies (50+ employees) usually offer health insurance to their employees. Historically, an Employer contributes a portion of the premium.  This is currently the easiest way for an Employee to enroll into a medical insurance plan and often times their best option.  Now under ACA’s rules, if the Employer does not offer insurance OR does not offer a plan meeting minimum essential benefits and actuarial values and/or does not make the plan affordable, there are penalties that apply.  Employers with 50 or more eligible employees (a portion of the part time employees count toward this number), are subject to the ACA penalty’s however, to help the smaller Employer prepare for the new laws, the penalty is delayed until 2016 therefore, in 2015, the penalty is waived for those Employers who have 50-99 employees.
  • Smaller companies (fewer than 50 employees) usually elect to provide health insurance to their employees as well and may sometimes contribute toward the employee’s premium. Under ACA, the small group employer is now eligible to offer group insurance through the SHOP (Marketplace/Exchange).  Since these groups have less than 50 FT and FTE employees, they are not charged a penalty for not offering medical insurance to their employees.
  • Individual Mandate – Penalties apply to any individual person who does not enroll into a major medical plan. They may enroll through an Employer, with the insurance carrier direct, or in the Marketplace where they may qualify for a subsidy if they meet the income guidelines.

The Health Insurance Marketplace is a new way for people to shop for medical insurance.  All plans have standards that are set and approved by the government.  The marketplaces are set up and run either by the federal government, the state, or by both.  “SHOP” is set up for groups and the “Individual Marketplace” is set up for individuals who are not insured through an Employer.

Taxes and Penalties paid by larger companies help offset the costs of the ACA.  Companies like drug manufacturers also pay fees and taxes to help offset new ACA costs.

There are a few new expanded benefits that most plans are required to have like: 1) the new hire waiting period cannot exceed 90 days, 2) dependent children may remain on their parent’s plan until the age of 26, 3) you cannot be denied coverage due to a pre-existing condition, 4) there are no annual or lifetime limits on essential health benefits, and 5) most plans now have an annual out of pocket limit.  Therefore, once you meet this limit, ALL remaining benefit expenses are paid in full for the remainder of the year.

These are just the very basics.  There are countless additional details that vary depending on each individual situation and therefore you should seek advice from your benefits advisor.  Maybe we can help!

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