UPDATE ON THE PATIENT PROTECTION AND AFFORDABLE CARE ACT

In 2014, under the Patient Protection and Affordable Care Act of 2010, the states are supposed to set up insurance marketplaces or exchanges where individuals and small business can go to shop for health insurance policies.  As of the December 14, 2012 deadline, only 17 states and the District of Columbia had established the exchanges.  Seven other states have opted to establish Partnership Exchanges with the Federal Government.  This means the Feds will be involved in running the exchanges in over half of the states.

While this could change going forward, in the states where the Feds are running the exchanges, the chances are there will be a “one size fits all” approach to health insurance.  This would result in exchanges which are less flexible than exchanges tailored to meet challenges specific or unique to each state.  It is hoped the exchanges will create competition between insurance companies and drive down the cost of insurance.

Companies with fewer than 25 employees are not required to offer health insurance, so it is a fairly safe bet the companies that currently don’t offer insurance will continue to not offer it.  Those that do provide health insurance coverage to their employees will have an incentive to drop coverage, which will help the bottom line.  This means employers and employees in companies that employ less than 25 workers will probably be going to the exchanges, despite the convoluted tax credits which are available, provided the insurance and the company qualifies.  Hopefully, the options provided by the exchanges will be more affordable for these individuals.

Businesses with less than 50 employees are also not required to provide health insurance and have no consequences for not providing coverage.  Again, there are tax credits if coverage is provided, but attempting to qualify for them may be an effort many employers with less than 50 employees are not willing to make.  Many companies at this employee level may also choose to simply discontinue health care coverage and utilize the exchanges.

Finally, if a company has 50 or more workers, it is required to provide health insurance for its employees, starting in 2014.  Failure to provide coverage will result in an assessment of $2,000.00 per full time employee, after the first 30.  Furthermore, coverage must meet the definition of affordable, meaning the employer must pay for 60% of the premium and the worker can’t be required to pay more than 9.5% of family income, before deductions and adjustments, for coverage offered by employers.  The policy offered by the employer must also meet a minimum standard for “essential health benefits”.  The outline of this “comprehensive policy” can be found on the website: healthcare.gov.