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Changes ahead that could impact your employees and their families

Last summer the Supreme Court upheld the individual shared responsibility component of the Affordable Care Act (ACA). This was a historic decision, but many Americans are still trying to figure out what it means. This article is meant to explain how the ACA individual shared responsibility provision could impact your employees and their families.

 

Under the mandate, virtually every legal U.S. resident will be required to have health coverage — or what’s referred to as minimum essential coverage in the law — beginning in 2014, or pay a tax.

 

What qualifies as minimum essential coverage?

  • Insurance purchased through an employer
  • Insurance purchased through the individual market
  • Enrollment in a government-sponsored program (e.g., Medicare, Medicaid)

The penalty for not having minimum essential coverage will be the greater of a flat dollar amount or a percentage of income, and will increase in phases over three years:

 

GREATER OF:

 

Year Flat Dollar Amount Penalty
(per person)
or Percent of Income Income Levels

2014

$95 per adult and

$47.50 per child

(up to age 18)        

 

up to a flat dollar amount cap of $285 per household

 

1%

$28,500

Individuals and families with income under approximately this amount will pay a flat dollar penalty amount if they fail to obtain minimum essential coverage. Individuals and families with income over this amount will pay a penalty equal to 1 percent of their income.

2015

$325 per adult and

$162.50 per child

(up to age 18)   

 

up to a flat dollar amount cap of $975 per household

 

2%

$48,750

Individuals and families with income under approximately this amount will pay a flat dollar penalty amount if they fail to obtain minimum essential coverage. Individuals and families with income over this amount will pay a penalty equal to 2 percent of their income.

2016

$695 per adult and

$347.50 per child

(up to age 18)   

 

up to a flat dollar amount cap of $2,085 per household

 

2.5%

$83,400

Individuals and families with income under approximately this amount will pay a flat dollar penalty amount if they fail to obtain minimum essential coverage. Individuals and families with income over this amount will pay a penalty equal to 2.5 percent of their income.

 

After 2016, the tax penalty will be increased annually by the federal cost-of-living adjustment.

 

The Congressional Budget Office estimates that in 2016, 6 million Americans will pay a penalty because they are uninsured.1 For some people, going without coverage will be a matter of choice, but for others it will be simply be a matter of economics — they won’t be able to afford it. In either case, the potential for financially crippling medical bills and other health care costs may make the option of going without health coverage a risk not worth taking.

 

Wellmark is here to inform, lead, assist and support you through all the ACA changes. For more information, call your Wellmark representative, agent or broker about Wellmark coverage options that best meet your ongoing needs. Continue to monitor WeKnowReform.com for updates.

 

1  Payments of Penalties for Being Uninsured Under the Affordable Care Act. (Sept. 2012). Retrieved Nov. 1, 2012, from http://www.cbo.gov.

 

 

Wellmark is not providing any legal advice with regard to compliance with the requirements of the Affordable Care Act (ACA) or the Mental Health Parity Addiction Equity Act (MHPAEA). Regulations and guidance on specific provisions of the ACA and MHPAEA have been and will continue to be provided by the U.S. Department of Health and Human Services (HHS) and/or other agencies. The information provided reflects Wellmark's understanding of the most current information and is subject to change without further notice. Please note that plan benefits, rates, renewal rate adjustments, and rating impact calculations are subject to change and may be revised during a plan’s rating period based on guidance and regulations issued by HHS or other agencies. Wellmark makes no representation as to the impact of plan changes on a plan's grandfathered status or interpretation or implementation of any other provisions of ACA. Any questions about Wellmark's approach to the ACA of MHPAEA may be referred to your Wellmark account representative. Wellmark will not determine whether coverage is discriminatory or otherwise in violation of Internal Revenue Code Section 105(h). Wellmark also will not provide any testing for compliance with Internal Revenue Code Section 105(h). Wellmark will not be held liable for any penalties or other losses resulting from any employer offering coverage in violation of section 105(h). Wellmark will not determine whether any change in an Employer Administered Funding Arrangement affects a health plan’s grandfathered health plan status under ACA or otherwise complies with ACA.  Wellmark will not be held liable for any penalties or other losses resulting from any Employer Administered Funding Arrangement.  For purposes of this paragraph, an “Employer Administered Funding Arrangement” is an arrangement administered by an employer in which the employer contributes toward the member’s share of benefit costs (such as the member’s deductible, coinsurance, or copayments) in the absence of which the member would be financially responsible.  An Employer Administered Funding Arrangement does not include the employer’s contribution to health insurance premiums or rates.



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