Nov 15, 2013
The Affordable Care Act (ACA) (aka – ObamaCare) is constantly in the news, with some accurate information and sometimes some misleading information. The law itself is very complicated. Here is our attempt to simplify a few of the question areas:
- Are everyone’s health insurance rates going up?
- Do all employers have to cover their employees with health insurance?
- What is the “Premium Assistance Credit” and how do I qualify for it?
Yes & No! The law now requires health insurance to cover additional items not previously required to be covered such as maternity, birth control, pediatric dental, and unlimited lifetime coverage. So - Yes - These additional items will cost more. So where does that ‘no’ come in? Let’s take a look at the basis of how the premium is calculated. The insurance premium price is determined by only four criteria:
- Age – Older people won’t pay more than three times the amount younger people pay
- Premium Rating area – High cost areas will have more expensive insurance
- Number of family members covered
- Tobacco use
The first criteria – age – with its limit on what older people are required to pay, may actually cause a decrease in the premium for older people while young adults and especially young men may see an increase. (This would mean that while younger may want to continue with their existing health plans if possible. While older people may find it worthwhile to price out a new qualified ACA insurance policy.)
Simple answer is – No - if the employer has less than 50 full time equivalent employees, the employer is not required to provide health insurance for employees.
This is under what is called the “Employer Mandate”. The “Employer Mandate” has been delayed until the year 2015 – it was originally scheduled to commence on January 1, 2014. Under the “Employer Mandate”, only large employers are required to cover all full time employees. Full time employees are defined as employees who average at least 30 hours per week. Large employers are defined as employers with at least 50 full time equivalent employees. Full time equivalent employees include the actual full time employees and a ratio of part time employees based on their number of hours worked (excluding seasonal employees). (If an employer is close, a special calculation to determine the number of full time equivalent employees may be necessary.)
The “Premium Assistance Credit” is a tax credit intended to assist with the payment of health insurance premium for qualified individuals.
Recipient’s eligibility is determined on a month by month basis based on the following:
- Household income limit: the more you make the lower the credit - maximum of 400% of the federal poverty level (example - maximum income: $44,680 (single), $92,200 (family of four))
- Income to qualify is based on income level two years before enrollment period
- Not eligible for Medicaid or affordable employer insurance
- Must obtain insurance coverage through an insurance exchange
- Can’t be eligible to be a claimed as a dependent
- If married, must file a joint return
- Not covered by an employer plan and has not declined eligible employer coverage – unless Employer plan is unaffordable and employer plan does not provides minimum value
How does the premium assistance credit work:
- Recipient buys insurance at the insurance exchange (cannot be covered by employer plan).
- If advance assistance is chosen, the exchange determines recipient’s eligibility and advance payments are made by the exchange on behalf of the recipient.
- If advance assistance is not chosen, the premium assistance credit is calculated at tax time.
- At tax time, the actual credit for the tax year is computed along with the amount of advance payments made on the recipient’s behalf.
- If the credit exceeds the amount of advance payments, recipient gets a refund.
- If the advance payments exceed the credit, recipient owes the difference.
*This is information is only a quick guideline. As you have specific questions, call us.