Newsletter 2013
Newsletter 2013
Affordable Care Act
Affordable Care Act
Print Full ArticleLast Reviewed: Jan 2014
Last Modified: Jan 2014
The Affordable Care Act provisions mandating individuals maintain health insurance coverage are finally kicking in, which means just about everybody will need to have coverage in place on the first day of 2014 or face a tax penalty, although a 3-month grace period effectively pushes the deadline to April 1. The mandate for employer provided coverage has been delayed to 2015. The state of Oregon (via its website CoverOregon.com) plays a role in the implementation of the ACA by operating the state's insurance exchange. The exchange website will process individual applications to obtain coverage from participating insurers and applications for the federal tax credit available to help many taxpayers pay for their insurance. You can only use the credit for insurance purchased through the exchange. The credit is not just available to low-income taxpayers, so everyone in the low to middle income level should check to see if they qualify.
By the time you read this, the deadline for applying for insurance that qualifies for the credit for 2014 will have passed and the deadline for obtaining coverage to avoid the tax penalty will be approaching, so we hope everyone has taken the time to do their research. If you participate in an employer plan or already have coverage through your own policy (including Medicare), there was no need for you to obtain coverage through the state exchange, but the federal credit is only available by obtaining insurance through the exchanges. If you have not yet enrolled, the current enrollment period extends through March 31, 2014. If you do not have insurance coverage by that point and are required to, there will be a penalty assessed on your 2014 tax return. The penalty will be $95 per adult and up to $285 per family for the 2014 tax year (or 1% of gross income, whichever is higher), and escalates to $695 for adults and $2,085 for families in 2016 and beyond (or 2.5% of gross income if higher).
The ACA also mandates certain employers provide insurance coverage to their employees. This mandate applies to employers with more than 50 full-time-equivalent employees (FTEs). The "testing" formula for this mandate and a credit available to assist with the insurance premium costs is very complicated. It is not as simple as counting heads to see if you have 50 FTEs. Rachel has taken on the difficult task of learning how to complete the FTE testing for these ACA requirements so if you need assistance in this area please feel free to contact her. Employers with fewer than 50 FTEs can voluntarily provide insurance coverage through the insurance exchanges.
This is only a brief description of the ACA and how it will impact the way we access medical insurance and health care. There is a very good article on the Consumer Reports website titled "Showtime for Health Care Reform" that we recommend for anyone wanting more information about the ACA. The CoverOregon website also has a helpful Q & A section. Lastly, the federal website healthcare.gov received plenty of well-deserved criticism, but does contain a wealth of information.
No one disputes that the ACA increases regulatory burdens on businesses and imposes extra costs on certain individuals (primarily younger adults) and businesses. The ACA is also supported by new federal taxes paid mostly by high income individuals. The expected benefits from the ACA and these added costs are the elimination of some harsh practices by insurance companies, some cost savings, and the availability of insurance coverage to everyone, even those who cannot afford it. It's an experiment on a very grand scale and we will just have to wait to see if it works.
