The Affordable Care Act: Where Do You Stand?

by Mike Hunter

Many employers are feeling overwhelmed by a flurry of new regulations governing their benefits packages, taxes and methods of compliance as required by the Patient Protection and Affordable Care Act. Fortunately, many organizations are aware of this and are gearing up to make 2013 the year of information. The new healthcare reform law includes a number of new taxes and fees that employers will need to become familiar with as well.

While there are many more regulations and compliance elements to the Affordable Care Act for businesses, below are some highlights within each of the four categories by which businesses must identify themselves.

Self Employed: Self-employed individuals must have the basic health insurance coverage (known as “minimum essential coverage”). Self employed will have a choice of four levels of benefits packages that differ by the percentage of costs the health plan covers. Plans will be in effect January 1, 2014, with open enrollment beginning October 1, 2013.

Employers with Fewer than 25 Employees: Small businesses may take advantage of a Health Care Tax Credit to offset the mandated costs. This is targeted at those businesses with low- and moderate-income workers. The Small Business Health Options Program will offer small businesses increased purchasing power to find lower-cost programs and a better choice of high-quality coverage.

Employers with Fewer than 50 Employees: The Small Business Health Options Program benefits these employers as well and manages cost by pooling risk. By 2016, employers with 100 employees will be able to participate in SHOP.

Employers with 50 or more Employees: Beginning in 2014, employers with 50 or more full-time/full-time equivalent employees must offer affordable minimal essential coverage to all employees. Employers are required to provide employees with a standard “Summary of Benefits and Coverage” form explaining what their plan covers and what it costs.


Breaking Down the Numbers

Explaining some of the key figures in the Patient Protection and Affordable Care Act

50 When a business has at least 50 employees — full-time plus full-time equivalents, averaged over 12 months — it is required to offer healthcare coverage.

(χ-30)($2,000)=PENALTY Businesses that fall under the requirement to provide healthcare coverage but don’t provide it will pay a penalty: Take the total number of employees in the company (χ), subtract 30, and multiply that result by $2,000. That’s how much they will pay.

χ ÷ 120  The number of full-time equivalents is determined by taking the total hours worked in a given month by non-full-time employees (χ) and dividing that number by 120.

χ ÷ 52  To determine whether the status of a “variable-hour employee” is full time or part time, take the total hours worked over the course of 12 months and divide by 52. If less than 30, the employee is part time. If 30 or more, the employee is full time.

26  Starting the coverage year following a dependent’s 26th birthday, employers are no longer required to allow employees to sign up their children for the company healthcare plan.

30 Full-time employment is defined as at least 30 hours per week.

9.5%  If a job-based healthcare plan costs 9.5 percent or more of an employee’s income, the employee is eligible to purchase a health insurance plan through the exchange.

35%  For-profit businesses with fewer than 25 employees may take a tax credit of up to 35 percent of the cost of their healthcare plan to help offset the cost of company healthcare insurance; percentage is set to increase to 50 percent in 2014.

100% –  400%  If a family’s household income is in the range of 100 to 400 percent of federal poverty level, the family qualifies for a tax credit to reduce the cost of healthcare coverage purchased through a health exchange.

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