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About The Patient Protection And Affordable Care Act (PPACA)

Tuesday, May 31st, 2016

Throughout its existence, the Patient Protection and Affordable Care Act (PPACA) has been a political hot potato for a few years now. You may know it better as “Obamacare” or the Affordable Care Act (ACA). This Act was passed back in 2010 with the goal of changing the offering, administration, and acceptance of healthcare in the United States. The Affordable Care Act (ACA) has impacts on insurance companies, healthcare providers, patients, and employers. Employers need to know what the Affordable Care Act (ACA) is and how it impacts their businesses.

What exactly is the Affordable Care Act (ACA)?

The Affordable Care Act’s (ACA’s) main stated goal was to make healthcare coverage affordable and available to more Americans. This happened through a complex series of provisions that affected both the public and the private sector. Below are some of the key provisions of the Affordable Care Act (ACA).

Insurance companies can no longer deny coverage for preexisting or current health conditions.

All health insurance policies must meet minimum coverage standards.

Everyone must purchase health insurance coverage or pay an income tax penalty, unless an individual qualifies for an exemption.

Health insurance exchanges, at the state and federal level, are available for those who do not have coverage through their employers or the government.

Income subsidies are available for families and individuals who make less than 400% of the federal poverty level.

The Affordable Care Act (ACA) originally required each state to expand Medicaid coverage to accommodate more low income individuals. This means the provision made was optional by a Supreme Court decision. This “Medicaid Expansion” made states, like Texas, to opt out of Medicaid expansion.

How does the Affordable Care Act (ACA) affect employers?

The Affordable Care Act (ACA) does impact employers and how they offer healthcare coverage to employees. The effects vary according to the number of employees who are full-time.

To comply with the Affordable Care Act (ACA) provisions, the health insurance that employers offer to employees must meet the minimum standards. These minimum standards must include coverage for dependents up until age 26, insurance must cost less than 9.56% of an employee’s household income, and meet minimum value guidelines. In terms of Affordable Care Act (ACA) coverage, minimum value means that the plan covers at least 60 percent of the expected costs.

Most standard health plans meet these mandated minimums. However, dental only, vision only, accident/disability coverage, and workers’ compensation insurance do not meet these guidelines.

In 2016, companies that have 50 full-time-workers or more must offer healthcare insurance to at least 95% of those employees. The mandate does not apply to employers with fewer than 49 full-time workers.

Tax credits are available to employers who offer healthcare coverage and have 25 or fewer full-time workers with salaries averaging below $50,000. The exact amount of credits vary depending on the number of workers and their salary average. For a small business employing 10 or fewer full-time employees, making less than $20,000 on average, the tax credit will cover up to 50% of the employer’s contribution.

If an employer is required to offer health insurance but does not provide coverage, that company will be required to pay an “Employer Shared Responsibility Payment.” In 2016, the payment is $2000 per full-time employee, minus the first 30 employees. So, a company that employs 50 full-time workers, but that does not offer coverage, would owe a penalty of $2000 x (50 – 30), or $40,000.

If an employer does provide coverage, but it is not affordable or does not meet minimum value standards, the penalties are a bit different. The employer pays the lesser of $3000 per full-time employee who receives healthcare coverage subsidies, or $2000 per full-time employee, minus the first 30.

The intricacies of the Affordable Care Act (ACA)

The Affordable Care Act (ACA) includes a variety of other provisions that employers need to be aware of. One example is the amendment made to the Fair Labor Standards Act (FLSA). Employers cannot discriminate against or fire an employee who receives a federal premium subsidy for healthcare coverage.

As you can see, the Affordable Care Act (ACA) is having and will continue to have an impact on employers of all sizes. Understanding the ACA’s impact on your company is critical. You need to talk with attorneys who understand the Affordable Care Act (ACA). Contact Brown & Fortunato for more information. Give us a call at (806) 345-6300 or Contact Us via email. We welcome you to visit our office at 905 S. Fillmore St., Suite 400, in Amarillo, Texas.

This information is subject to change. Please check for updates that are more recent than the published date of this article.