From builders, an Obamacare primer

Las Vegas -- Anticipating that many attendees at this week's International Builders' Show still had questions regarding the imminent changes to healthcare policy, the National Association of Home Builders offered three time slots for its ACA-related educational session.

In "Tips and Tools to Navigate the Impending Health Care Crisis: NAHB Prepares You For ACA Reform," Kristie Arslan (of Arslan Consulting Services) reviewed need-to-know items from an employer standpoint, emphasizing the importance of moving past emotional responses to the law in order to better understand and comply with it.

Arslan began with a brief run-through of rules affecting individuals, who are required to purchase insurance by March 31 of this year in order to avoid incurring a penalty. These included the prohibition on denying coverage to those with pre-existing medical conditions, the ban on lifetime limits, the ability for parents to keep their children on their plans until the age of 26, and more:

  • Insurance companies are now required to spend 80% of a customer's premium money on healthcare -- only 20% can be used on overhead costs. In that sense, customers may be eligible for rebates at the end of the year.
  • States can still determine the types of insurance options they offer, as long as they meet the basic minimum coverage guidelines for essential health benefits.
  • Some of the cheaper, lower-quality plans (such as catastrophic health plans) no longer qualify under the law.
  • States have the option of setting up their own exchanges, partnering with the federal government to set up an exchange or defaulting to the federal exchange. Most have chosen the latter.
  • If you like your plan, can you keep it? If you purchased your non-compliant plan before March 23, 2010 -- the date the ACA was signed into law -- your plan is grandfathered in. However, insurance companies may decide to drop those plans at any time if they decide it's not worth paying into them any longer.
  • If your plan was cancelled, you can apply for a hardship waiver for the year.
  • Some insurance companies are offering plans that don't meet the requirements because they're gambling that there are people who might be willing to pay the penalty and still get a base minimum of coverage, so it's important for individuals to verify the compliance of various plans.

Arslan also emphasized that non-payment of the penalty is not a criminal act. "They can't send you to jail if you don't pay, but they can garnish your wages or take it out of your tax return," she said. "They will get your money one way or another, so just be aware of that."

From an employer perspective, Arslan emphasized compliance requirements as well as some of the options -- and limitations thereof -- available to businesses.

  • The Small Business Health Options Program, or SHOP exchange, is a new small group market where employers can purchase group health insurance. Though the online launch has been delayed until 2015, employers can enroll now through an agent or broker. It will be open to employers with 50 or fewer full-time employees in 2015; in 2016, it will be open to those with 100 or fewer employees.
  • The SHOP exchange makes it possible for employers to offer multiple plan options but still pay one monthly fee. "You can pay one fee, even if your employees have five different plans under five different health insurance companies," said Arslan. "In theory, that's how it should work -- we'll see how things work once they implement that for you."
  • Tax credits are available to employers who purchase coverage through the exchanges. However, there are specific requirements they need to meet. Those with fewer than 25 full-time employees with an average annual wage of less than $50,000, who also pay at least 50% of their employees' insurance costs, can qualify for a maximum tax credit of 35% of one's total healthcare spending. Additionally, this credit only applies for a maximum of two consecutive years.
  • Those with fewer than 50 full-time employees are not required to provide or pay for health coverage.
  • Those who own or control multiple business entities, however, may need to jointly calculate the number of employees across all entities.
  • Employees must not pay more than 9.5% of their family income for employer-provided insurance. This means that an employee can decline coverage to join a spouse's plan, but it also means that the employee with the lowest family income sets the bar for the rest of the company.
  • All employers must provide employees with written notification of the new health insurance marketplaces.
  • Businesses that filed 250 or more W2 forms in the previous tax year are required to report the total value of employer-sponsored health benefits on the employee's W2.
  • Employers who don't meet these requirements can be held liable for penalties of $2,000 to $3,000 per employee.

Wrapping up, Arslan encouraged employers to review their own compliance heading into 2014 and to shop around on the exchanges to see if they can get a better deal.

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