Issue link: http://accesshealth.uberflip.com/i/105922
ACA: Small Businesses and Nonprofits Companies with fewer than 50 employers won't face any penalties for not offering coverage to employees. These small employers represent about 75 percent of the firms in the United States and employ nearly 34 million people. If a company doesn't offer insurance, its employees can buy insurance on the online marketplace. As for for-profit businesses with 25 or fewer employees, they can apply for tax credits now to cover up to 35 percent of the cost of premiums for their employees. To be eligible, businesses must pay for at least 50 percent of the employees' premiums. However, the workers' annual salaries cannot average over $50,000. In 2014, the tax credit increases to 50 percent for the next two years for small employers who purchase plans in state-based health insurance online marketplaces. Nonprofit organizations can now apply for tax credits of up to 25 percent to help pay for employee premiums, increasing to 35 percent in 2014. "We choose plans with higher deductibles to help keep down the costs of monthly premiums," said Ann Gosnell, executive director of House of Hope, a domestic violence nonprofit in Lexington, MO. The Affordable Care Act (ACA) is law. Americans everywhere will be required to move past the pros and cons and embrace the realities of what this means to them personally and financially. As steps are made to clear the air about what ACA means in household terms, this is what we know for sure: Ÿ Insurers can no longer cancel policies if you get sick (this practice is known as "rescission"), and they can't cancel your coverage if you make an honest mistake on your application. Ÿ Consumers can use an independent review to appeal insurance company decisions and receive a response in 72 hours for urgent medical decisions (also called a rapid repeal). Ÿ It is now illegal for health insurance policies to set lifetime limits on how much they would pay for an individual's medical bills. Ÿ As of September 23, 2012, insurance company limits on how much it will pay for an individual's medical expense must be no less than $2 million. However, insurers can still impose other types of benefit limits like doctor visit limits, prescription limits or limits on days in the hospital. Ÿ In August 2012, women began receiving free wellwoman visits, screening for g e s t a t i o n a l diabetes, domestic violence screening, breast feeding supplies and contraception. However, workplaces run by religious o r g a n i z a t i o n s that object to birth control do not have to pay for contraception, but insurers must pick up the costs. Existing plans can continue to charge for preventive care until 2014. Ÿ New private health plans must cover and eliminate cost-sharing (co-payment, co-insurance or deductible) for proven preventive measures such as immunizations and cancer screenings. Ÿ Most insurers must spend at least 80 percent (85 percent for insurers covering large employers) of the premiums paid by consumers on medical care and quality improvements. If insurers spend too much on salaries, bonuses or administrative costs—as opposed to health care— they must issue rebates to consumers each summer. Ÿ Young adults can stay on their parent's policy until age 26 regardless if they live at home, attend school or are married. However, some health plans are not required to extend benefits to young adults if they can get coverage at work. This exception becomes null and void in 2014. ACA in 2014 On January 1, 2014, most Americans will be required to purchase health insurance or pay a penalty. According to the Urban Institute, a Washington, D.C., think tank, the mandate will probably only affect about 7.3 million or two percent of the population. They contend that Americans either already have insurance, are exempt under the law, would qualify for Medicaid or would use tax credits to buy polices in the exchanges. Mandates and penalties Individuals are exempt from the mandate if they have insurance through an employer or purchase individual insurance or have insurance through Medicare, Medicaid, Children's Health Insurance Program (CHIP), Veteran's Administration and/or Tricare for active duty and retired military, Indian Health Services or a health care sharing ministry. Additionally, the mandate requires expenditures of more than eight percent of household income on the cheapest qualifying health insurance plan, even after tax credits and subsidies. Nancy Metcalf, Consumer Reports health insurance expert, explains it like this: Individuals will go to their state's exchange and complete information about family size, household income, etc. A family who is 200 percent of the federal poverty level (FPL) will pay a maximum of 6.3 percent of its household income on the insurance premium. The government will subsidize the remainder of the monthly premium. "If the cheapest plan in the exchange costs more than eight percent of household income—even with a subsidy— that family can decline the health insurance and not pay a penalty," Metcalf said. There is overlap between eligibility for exchange subsidies and eligibility for the Medicaid expansion. Metcalf says what is important to note is that anyone with a household income of over 100 percent of the FPL can buy on the exchange and get a subsidy if they qualify. But anyone with a household income of less than 133 percent of the FPL will be automatically eligible for Medicaid if they live in a state that opts in to the expansion. "Sometimes you see references to the expansion for individuals under 138 percent of the federal poverty level," Metcalf said. "That's because the law says that five percent FPL of income will be 'disregarded' when computing eligibility, making the effective level 138 percent." People who are required under the mandate to purchase health insurance and don't will pay a tax penalty. For an individual, the penalty starts at $95 a year or up to one percent of their income— whichever is greater. By 2016 the tax penalty rises to $695 per individual or 2.5 percent of income. For a family, the tax is capped at $285 in 2014 and rises to $2,085 or 2.5 percent of income in 2016. The IRS will collect the penalty via tax returns. Next year, federal returns will include a new form to list the source of health insurance.