What is Obamacare (the Affordable Care Act)?

Obamacare has become a common term, but what is it? Obamacare is another term for the Patient Protection and Affordable Care Act (PPACA), which was signed into law on March 23, 2010 by President Obama. The law has come to be known as the Affordable Care Act, the ACA, or simply “Obamacare.”

Obamacare Resources

How the QSEHRA Works for Employees

In this eBook, we go over exactly how the QSEHRA applies to employees no matter their current insurance situation.

Health Reimbursement Report 2017

Download this report to see charts showing data for industry, family status, region to see if a QSEHRA will work for you.

The Comprehensive Guide to the Small Business HRA

Everything you need to know about the new QSEHRA. Including cost comparisons, case studies, and other tools.

Stay Informed

What Does Obamacare Do?

PPACA was signed into law in 2010 and represents one of the biggest changes to the American healthcare industry. As such, the comprehensive health insurance reforms are having a major impact on the healthcare industry for employers, individuals and families, insurance professionals, healthcare providers, and financial planners.

The major Obamacare changes include:

  • New health insurance benefits, rights, and protections

  • New Health Insurance Marketplaces

  • New tax credits and subsidies to help individuals and small businesses purchase health insurance

  • Expansion of Medicaid eligibility in many states

  • Improvements to Medicare

  • New mandate requiring all individuals to have health coverage

  • New mandate requiring large employers to offer health coverage

In this guide on Obamacare, we’ll discuss many of these changes to the healthcare system.

The Politics of Obamacare

Obamacare has been a debated bill since it passed in 2010. However, it didn’t start out that way.

For decades, the idea of reforming healthcare in America had bipartisan support. Over the last century, almost every President proposed some type of healthcare reform. Obamacare, modeled after healthcare reform in Massachusetts, was the first successful major national reform to healthcare since Medicare in 1965.

The Affordable Care Act was passed in the senate on December 24, 2009 and passed in the house on March 21, 2010. It was signed into law by President Obama on March 23rd, 2010 and upheld in the Supreme Court on June 28, 2012.

How Obamacare Impacts You, Your Family, and Your Business

The impact of Obamacare depends on who you are. Are you employed? Do you own a business? How do you purchase your health insurance? This section outlines how Obamacare impacts you, your family, and your business.

What does Obamacare mean for me, my family, and my business?

For individuals and families , the key Obamacare impacts are:

  • If you do not have health insurance coverage you will likely pay a penalty at tax time, called the Individual Mandate .

  • There are new options for purchasing health insurance, including the Health Insurance Impact_affordable_care_actMarketplaces .

  • Most individuals and families are eligible for discounts on health insurance, called the premium tax credits .

  • Individual health insurance has new advantages, and it is easier to buy than ever before. Most notably, you cannot be denied coverage or charged more based on a health condition.

For employers, the key Obamacare impacts are:

  • Larger employers (with 50+ employees) must decide if they are going to offer health insurance coverage to employees, or pay a penalty. This is called the Employer Mandate.

  • Small employers (with fewer than 50 employees) are not required to offer health insurance coverage to employees, and are not subject to a penalty.

  • There are new Obamacare reporting and compliance requirements that apply to businesses of all sizes.

  • Because of the new advantages of individual health insurance, most employers are abandoning traditional group health insurance and switching to individual health insurance reimbursement .

Where can I get insurance under the Affordable Care Act?

With Obamacare now in full effect, you have three main options for buying health insurance for yourself and/or your small business:

  • The ACA Health Insurance Exchange (“Marketplace”) in your state,

  • A licensed health insurance agent or broker, or

  • Directly from an insurance company.

Tip: To access the individual health insurance discounts (premium tax credits) or the small business healthcare tax credits, you need to purchase a plan offered on your state’s Health Insurance Marketplace.

When are the Open Enrollment Periods for Obamacare?

You can only enroll in individual health insurance during a specific annual open enrollment period, or during a special enrollment period. The purpose of these enrollment periods is to control costs - it keeps people from waiting until they get sick to purchase health insurance.

As the chart shows, the annual open enrollment period for coverage in 2015 began November 15, 2014 and extended through February 15, 2015. During this time, you can purchase any health plan available on the individual market, or change your health plan.

Note: These dates are subject to change.

If you do not purchase health insurance coverage during the annual open enrollment period, you will be unable to purchase coverage until the following year unless you qualify for a special enrollment period.

You are eligible for a special enrollment period if you have a qualifying life event such as marriage, divorce, birth or adoption of a child, you move to a new state, or you lose job- based health insurance. The special enrollment period generally lasts 60 days after the qualifying event.

If you miss the deadline for open enrollment and you do not qualify for a special enrollment period, there are short-term health insurance policies that can help. However, you may still have to pay the Individual Shared Responsibility Fee for not having minimum essential coverage.

Getting Tax Assistance Through Obamacare

As part of Obamacare, the federal government provides discounts for health insurance to eligible individuals, families, and small businesses.

For individuals and families, there are two tax assistance programs: premium tax credits and cost-sharing subsidies.

The premium tax credits help low- and middle- income people buy more affordable health insurance coverage through the Health Insurance Marketplaces. The premium tax credits provide discounts on the monthly premium you pay.

The cost sharing subsidies are discounts for lower-income families and help lower out-of-pocket medical expenses. The cost sharing subsidies are designed to help individuals and families pay for their deductible, co-insurance, and co-payments. The cost sharing subsidies are available in addition to the premium tax credits.

Additionally, there is tax assistance for small businesses to purchase coverage for employees. The small business health care tax credit is available to qualifying small businesses for up to two consecutive years.

To read more about Obamacare tax credits and subsidies, click here.

ACA Tax Credits and Subsidies

Premium Tax Credits for You and Your Family

As part of Obamacare, the federal government provides discounts for health insurance to eligible individuals and families. The tax assistant program, called premium tax credits, help many people buy more affordable individual or family health insurance coverage through the new state Health Insurance Marketplaces.

The health insurance tax credits are "advanced-payable" meaning they can be applied toward your ACA_tax_credits_subsidiespremium when you purchase health insurance coverage.

Tip: The premium tax credits provide significant savings. In 2014, 87% of people who purchased a health plan through the Marketplace received a discount, paying only $82/month on average.

You are eligible for a premium tax credit if you meet certain income requirements and do not have access to affordable health insurance through an employer or government program such as Medicaid or Medicare.

The tax credits are available to households with income up to 400% of the federal poverty line (FPL). As the following chart shows, this means households earning up to $46,680 for an individual in 2014, or $95,400 for a family of four, qualify.

The premium tax credits act as a cap on how much you pay for health insurance. The insurance premium is capped on a sliding scale between 2% -9.6% of income, depending on your income. For example, as the chart above shows, if you make $23,340 a year (200% FPL), the maximum amount you will pay for health insurance is 6.34% of your income which is $1,480/year ($123/month).

Remember, the premium tax credits are only available when you purchase individual or family health insurance available on your state’s Health Insurance Marketplace.

Cost Sharing Subsidies

Under the Affordable Care Act, cost sharing subsidies, or cost sharing reductions (CSRs), are discounts for lower-income families to help with out-of-pocket medical expenses.

The cost sharing subsidies are designed to help individuals and families pay for their deductible, co-insurance, and co-payments. The cost sharing subsidies are available in addition to the premium tax credits, which help eligible individuals pay for their monthly health insurance premium.

The cost sharing subsidies essentially allow individuals and families to pay for a standard silver plan, but get richer benefits.

Who Qualifies for a Cost Sharing Subsidy?

A cost sharing subsidy is available to households who:

  • Have an income between 100% and 250% of the federal poverty line (FPL). This is equivalent to an individual earning $29,175 in 2014, or a family of four earning $49,475.

  • Purchased a “silver” health plan from their state’s Health Insurance Marketplace.

  • Do not have access to affordable health insurance through work or a government program.

Those who are members of a federally recognized tribe are also eligible for cost sharing subsidies.

How Much Are the Cost Sharing Subsidies?

The cost sharing subsidies reduce the amount a family pays for out-of-pocket expenses and are based on household income and composition.

  • A family of four whose income is between 100% and 150% of the federal poverty level ($23,850 to $35,775) will be responsible for paying 6% of covered expenses out-of-pocket - compared with the 30% without cost sharing subsidies.

  • A family with an income between 150% and 200% of the poverty level ($35,775 to $47,700) will be responsible for 13% of expenses.

  • A family with an income between 200% and 250% of the poverty level ($47,700 to $59,625) will be responsible for 27% of expenses.

Small Business Health Care Tax Credits

As part of Obamacare, tax assistance is available to small businesses to purchase coverage for employees. The new small business health care tax credit is available to qualifying small businesses for up to two consecutive years.

Currently, the tax credit is worth up to 50% of a business’s contribution toward employees' premium costs (up to 35% for tax-exempt employers). The tax credit is highest for small businesses with fewer than 10 employees who are paid an average of $25,000 or less. The smaller the business, the bigger the credit.

To be eligible for the small business health care tax credit you must meet these three criteria:

  1. Be an employer with fewer than 25 full-time equivalent (FTE) employees, and

  2. Pay an average wage of less than $50,000 a year per employee, and

  3. Pay at least half (50%) of employee health insurance premiums (for full-time employees only)

To claim the credit, small businesses use Form 8941, Credit for Small Employer Health Insurance Premiums .

Essential Health Benefits and the Affordable Care Act

Obamacare requires that health plans offered in the individual and small group markets, both inside and outside of Health Insurance Marketplaces, offer a core package of items and services, known as "essential health benefits."

What are Essential Health Benefits?Obamacare_essential_health_benefits_affordable_care_act

Essential health benefits are a minimum package of ten items and services that must be covered by all plans in the individual and small group market. This includes health plans offered on the Health Insurance Marketplaces.

The 10 Essential Health Benefits

  1. Ambulatory patient services

  2. Emergency services

  3. Hospitalization

  4. Maternity and newborn care

  5. Mental health and substance use disorder services, including behavioral health treatment

  6. Prescription drugs

  7. Rehabilitative and habilitative services and devices

  8. Laboratory services

  9. Preventive and wellness services and chronic disease management

  10. Pediatric services, including oral and vision care

Obamacare Insurance Exchanges

Obamacare introduced new Health Insurance Exchanges (“Marketplaces”). The Marketplaces are websitesObamacare_insurance_exchanges where you can shop, compare, and enroll in an individual or small business health insurance plan.

Each state has a Marketplace that is either run by the state (ex: CoveredCA.com), or the federal government (HealthCare.gov). The Marketplaces are intended to make shopping for health insurance easier and give individuals and small businesses access to the tax credits.

This section provides more information on the Obamacare Marketplaces including how to sign up for coverage, the different state Marketplaces, and the types of health plans offered on the Marketplaces.

How to Sign Up For the Health Insurance Marketplace

Individuals signing up for coverage through the Marketplaces can follow these easy steps.

Step 1: Set Up a Marketplace Account

The first thing to do is set up an account with the Marketplace. This will either be a website run by your state’s government, or a federal marketplace website. To look up your state's marketplaces website visit www.HealthCare.gov.

Step 2: Fill Out an Eligibility Application

Next, fill out an eligibility application. This application asks questions about family income, household size, current health coverage information, and more.

From the information you provide in this section, the Marketplace website will calculate eligibility for certain discounts on your health insurance premium, such as Medicaid, Children’s Health Insurance Program (CHIP), or the premium tax credits and cost-sharing subsidies.

Step 3: Compare Plan Options

The Marketplace website then displays plans for side-by-side comparison. Compare:

  • The benefits offered through each plan
  • The monthly cost for each plan, with any discounts applied
  • Out-of-pocket costs
  • Deductibles
  • Co-payments
  • Coinsurance
  • Premiums

Tip: The monthly premium shown on the Marketplace website will have any discounts factored in. This amount reflect the actual amount due every month.

Step 4: Enroll in a Plan

Once you select a plan, enroll online. Once enrolled you will provide payment information -- how you plan to pay your monthly premiums to the insurance company.

If you or a family member qualify for Medicaid or CHIP, a representative will contact you to enroll.

What You’ll Need When You Apply

Here's the basic information you’ll need when filling out the application for individual health insurance. Be prepared with the following information:

  • Date of birth
  • Social security number citizenship status
  • Tax filing status, and number of dependents*
  • Current job and income information including current employer, wages, hours worked (i.e. a current paystub)*
  • Other income information such as pensions, rental income, alimony received, unemployment income, etc.*
  • Current insurance information such as how you are insured (employer, Medicaid, individual health insurance, etc.)*
  • Payment information, such as a credit card or bank draft (ACH) information

*These questions will only be asked if you are applying for federal assistance (premium tax subsidies, cost-sharing, Medicaid, CHIP, etc.).

Health Insurance Exchanges by State

Under Obamacare, each state had the option to either create and operate an Exchange (a state-run Exchange), default to the federally-run Exchange (healthcare.gov), or partner with the federal Exchange to help.

The following states operate a state-run Exchange:

The remaining states use the federally-run Health Insurance Marketplace, www.healthcare.gov.

Metallic Tier Plans on the Exchanges: Bronze, Silver, Gold, and Platinum

To help understand plan costs and coverage, Obamacare introduced standardized levels of coverage, called “metallic tiers of coverage.” These categories are intended to help you better compare plans “apples to apples.”

The four metallic tiers are Platinum, Gold, Silver, and Bronze. A fifth category, Catastrophic, is also available to some individuals.

As the metal category increases in value, so does the percent of medical expenses that a health plan will cover.

The Individual Mandate and the Affordable Care Act

What is the Obamacare Individual Mandate?

Under the Affordable Care Act’s Individual Mandate, most Americans are required to have health insurance, or pay a tax penalty if they don't. This Obamacare rule is called the “Individual Mandate” or “Individual Shared Responsibility Fee” and started in 2014.

Coverage can include job-based health insurance, individual health insurance, or insurance through a government program such as Medicaid or Medicare.

Is there a penalty for not having health insurance?Obamacare_individual_mandate_penalty

Yes. The penalty for not having “minimum essential coverage” is either a flat fee or a percentage of household income, whichever is greater.

If you don’t have coverage in 2015, you’ll have to pay the higher of these two amounts:

  • 2% of your yearly household income. (Only the amount of income above the tax filing threshold is used to calculate the penalty. For 2015, the federal tax filing threshold is $10,150 for a person who files as a single, $20,300 for somebody who files jointly.) The maximum penalty is the national average premium for a bronze plan.

  • $325 per person for the year ($162.50 per child under 18). The maximum penalty per family using this method is $975.

As the chart shows below, the penalty increases each year.

Individual Mandate Tax Penalty - Example

Nancy is single and earns an annual income of $40,000/year. Nancy went uninsured in 2015. At tax time, Nancy is required to pay an Individual Shared Responsibility Fee.

Nancy will pay either 2% of income (minus the federal tax filing threshold) or $325, whichever is greater.

Nancy’s annual income ($40,000) minus the federal tax filing threshold ($10,150) is $29,850. Two percent (2%) of $29,850 is $597.

Since this amount is greater than $325, Nancy will pay a $597 tax penalty.

How can I avoid the tax penalty?

You may not have to pay the Individual Mandate tax penalty if you are uninsured, and:

  • Are required to pay more than 8% of your household income for the lowest cost bronze plan.

  • Are not a U.S. citizen, a U.S. national, or a resident alien lawfully present in the U.S.

  • Had one gap in coverage for less than three consecutive months during the year.

  • Won’t file a tax return because your income is below the tax filing threshold. In 2013, the tax filing threshold was $10,000 for individuals and $20,000 for a couple.

  • Are unable to qualify for Medicaid because your state has chosen not to expand the program.

  • Participate in a health care sharing ministry or are a member of a recognized religious sect with objections to health insurance.

  • Are a member of a federally recognized Indian tribe.

  • Are incarcerated.

  • Qualify for a hardship exemption

Obamacare Minimum Essential Coverage

How does minimum essential coverage work?

Under the Affordable Care Act, minimum essential coverage (MEC) is the type of coverage an individual needs to have to meet the Individual Shared Responsibility requirement, also called the Individual Mandate . The Small Business HRA also requires that employees have MEC if they would like to receive reimbursements tax-free.

Health insurance that qualifies as MEC includes individual market policies, job-based coverage, government-sponsored coverage, and certain other kinds of coverage.

Is my health insurance minimum essential coverage?Obamacare_minimum_essential_coverage_affordable_care_act

The following types of health insurance policies satisfy the Individual Mandate.

Employer-sponsored coverage:

  • Employee coverage

  • COBRA coverage

  • Retiree coverage

  • Individual health coverage (health insurance you purchase from an insurance company directly or through the Health Insurance Marketplace)

  • Health insurance provided through a student health plan

  • Health coverage provided through a student health plan that is self-funded by a university (only for a plan year beginning on or before December 31, 2014, unless recognized as minimum essential coverage by HHS)

Coverage under government-sponsored programs:

  • Medicare Part A coverage

  • Medicare Advantage plans

  • Most Medicaid coverage

  • Children’s Health Insurance Program (CHIP)

  • Most types of TRICARE coverage under chapter 55, title 10 of the United States Code

  • Comprehensive health care programs offered by the Department of Veterans Affairs

  • State high-risk health insurance pools (only for a plan year beginning on or before December 31, 2014, unless recognized as minimum essential coverage by HHS)

  • Health coverage provided to Peace Corps volunteers

  • Department of Defense Nonappropriated Fund Health Benefits Program

  • Refugee Medical Assistance

What isn’t Minimum Essential Coverage?

The following types of policies are not considered minimum essential coverage, and do not satisfy the Individual Mandate.

Certain coverage that may provide limited benefits:

  • Coverage consisting solely of excepted benefits, such as:

    • Stand-alone dental and vision insurance

    • Accident or disability income insurance

    • Workers' compensation insurance

  • Medicaid providing only family planning services*

  • Medicaid providing only tuberculosis-related services*

  • Medicaid providing only coverage limited to treatment of emergency medical conditions*

  • Pregnancy-related Medicaid coverage*

  • Medicaid coverage for the medically needy*

  • Section 1115 Medicaid demonstration projects*

  • Space available TRICARE coverage provided under chapter 55 of title 10 of the United States Code for individuals who are not eligible for TRICARE coverage for health services from private sector providers*

  • Line of duty TRICARE coverage provided under chapter 55 of title 10 of the United States Code*

  • AmeriCorps coverage for those serving in programs receiving AmeriCorps State and National grants

  • AfterCorps coverage purchased by returning members of the PeaceCorps

* In Notice 2014-10, the IRS announced relief from the Individual Shared Responsibility payment for months in 2014 in which individuals are covered under one of these programs. Source: IRS.

Additionally, most insurance types offered between annual open enrollment periods, such as short term health insurance, fixed benefit plans, and supplemental insurance will not satisfy the Individual Mandate fee on their own, although they will help you be covered health-wise.

What happens if I don’t have minimum essential coverage?

If you do not have minimum essential coverage, and do not qualify for an exemption, you'll pay an Individual Shared Responsibility fee at tax time. Additionally, reimbursements received through the Small Business HRA during a month not covered by MEC must be included in an employee’s gross income.

Best Obamacare Health Plans

Tips for Getting the Best Health Plan

Obamacare introduced new changes that greatly benefit individual health insurance. Simply stated, Obamacare has made individual health insurance more affordable and more accessible than ever before.

Additionally, the Health Insurance Marketplaces makes it easier to shop and compare rates for different carriers and coverage levels.

For many, however, navigating health plan choices can feel overwhelming. This section covers tips on how to get the best Obamacare health plan.

Choosing the Best Health Plan

While many people get caught up on the monthly premium amount, selecting a health plan solely based on Obamacare_health_plan_choicesthe premium could be a misstep. For example, lower premium prices typically accompany higher-out-of-pocket costs.

The key to choosing the best health plan is to balance the monthly costs of the health plan with anticipated out-of-pocket costs when you receive care. One way to do this is to select the right coverage level. We’ll discuss this next.

Selecting the Right Coverage Level

In the past, it was hard to understand the coverage levels of plans. That’s no longer the case. As of 2014, individual health insurance plans are categorized in four standardized levels of coverage, called “metallic tiers of coverage.” These categories help you better compare plans “apples to apples.”

For example, all “silver” health plans have a similar out-of-pocket requirement. However, it is helpful to note, that within a category, each plan is unique and will have a different mix of copays, deductibles, and coinsurances.

Which coverage level to choose? If you anticipate using a lot of medical services, select a platinum or gold plan. Although the premiums higher, you will pay less out-of-pocket when it comes time to receive medical care.

If you do not anticipate having a lot of healthcare needs, selecting a silver or bronze plan may save you money. Although there will be higher out-of-pocket costs when you do need medical services, you will pay a significantly lower premium.

Read more about the metallic tiers of coverage.

Understanding the Deductible

Your deductible is the amount paid for covered care before the insurer begins to pay. For example, you may be required to pay $500 out-of-pocket for covered services before the insurance company pays; this would be a $500 deductible.

High deductible health plans are becoming more and more popular. While the appeal of a high deductible plan is the lower monthly premium, some consumers will end up racking up big bills before their health insurance even kicks in. If your employer offers a Health Savings Account (HSA) or a Health Reimbursement Account (HRA) to help lessen the burden of a large deductible, then a high deductible plan may actually work better for your financial needs.

While many lower-tiered bronze and silver plans may have a low monthly premium cost, they may be accompanied by high deductibles.

If you have health needs that require regular doctor visits, such as a chronic illness or pregnancy, you may be better off paying a little more monthly instead of racking up large medical bills.

Understanding Out-of-Pocket Costs

In addition to the deductible, look at other out-of-pocket costs such as coinsurances and copays.

Coinsurance is the percentage of allowed charges for covered services. For example, health insurance may cover 70% of the charges for a covered hospitalization, leaving you responsible for 30%. This 30% is known as the co-insurance. If the plan has a deductible, the coinsurance for covered services is usually paid after your deductible is met. Co-insurance can significantly affect the price of the insurance premium. Typically, plans with lower co-insurance have higher premium costs.

The copayment is a flat dollar amount paid to the healthcare provider for a covered service. For example, a $30 copayment may be required for each covered visit to a primary care doctor, and $10 for each generic prescription filled. Copayments vary from plan to plan and are sometimes different depending on the type of covered service received.

These out-of-pocket costs can have a significant financial impact, and just like with the deductible, it is important to balance your premium cost with anticipated out-of-pocket costs.

Tips for Getting the Best Health Plan

As you browse health plan options, remember to:

  • Balance your premium with the deductible and other out-of-pocket costs (shopping by metallic tier can be helpful).

  • Understand how much you would pay for common medical procedures. Look at your medical history from last year as an example, taking into consideration any planned or known medical needs for the coming year (ex: pregnancy or chronic illness care).

  • Work with a trusted health insurance agent or broker to help understand the different costs and benefits.

ACA - Pros and Cons

There are several pros and cons on Obamacare. How you are impacted by these pros and cons depends ACA_pros_conswho you are, and how you purchase health insurance. This section covers the common pros and cons of Obamacare for individuals, families, and small business.

Obamacare Pros and Cons for Individuals and Families

As an individual, the Affordable Care Act has the following pros and cons.

Obamacare Pros for You and Your Family

  • Individual health insurance is guaranteed-issue (you cannot be denied or charged more because of pre-existing conditions).

  • Individual health insurance is made more affordable with premium tax credits (you are eligible if your family of four made less than $95,400 in 2014).

  • Individual health insurance is now required to cover Essential Health Benefits , a core package of healthcare services.

  • Medicaid eligibility has expanded in many states.

  • Health insurance is becoming more transparent.

Obamacare Cons for You and Your Family
  • If you don’t have coverage, and don’t qualify for an exemption, you will pay a tax penalty - known as the Individual Mandate.

  • You can now only sign up for individual health insurance during specific enrollment periods.

Obamacare Pros and Cons for Your Small Business

As a small business, the Affordable Care Act has the following pros and cons.

Obamacare Pros for Small Businesses

  • Your Small Business Does Not Have to Offer Health Insurance . If you are an employer with fewer than 50 FTE’s, there is no requirement for you to offer health insurance - the Employer Mandate does not apply to you. This is a big pro for small businesses who often find that alternatives to group health insurance - such as individual health insurance reimbursement - are the best health benefits solutions.

  • Individual Health Insurance Got a Big Make-Over. Individual health insurance is now better, and more affordable than traditional group health insurance. As such, small businesses are transitioning employees to individual health insurance and contributing to their premium expenses instead of offering group health insurance.

  • Small Businesses Can Reimburse Employees for Individual Health Insurance. As mentioned above, small businesses can reimburse employees for individual health insurance. This allows the business to contribute to employees’ healthcare, similar to how your business would contribute to a group health insurance plan. This type of reimbursement arrangement does not satisfy the Employer mandate, but remember - the employer mandate does not apply to small businesses.

Obamacare Cons for Small Businesses
  • The Affordable Care Act is Contributing to Higher Group Health Insurance Costs. As if group health insurance wasn’t expensive enough already, new Obamacare taxes and fees are increasing the cost of small group health insurance plans.

  • The SHOP Marketplace Isn’t Working for Small Businesses. Although the small business SHOP Marketplace seemed attractive on the surface, it is still a group health insurance plan and it doesn't address the core problems small businesses face with group health insurance including cost, participation requirements, and instability. Additionally, as the SHOP Marketplace has rolled out, there have been multiple implementation delays, technical glitches, and inflexible rules. As such, most small businesses are skipping over the SHOP.

  • There are New Compliance Reporting Requirements to Manage. If you offer any kind health benefits (group health insurance or individual health insurance reimbursement), there are new compliance and reporting requirements to comply with. Sure, these new rules have a purpose, but for a small business it means more time each year to ensure compliance.

Uninsured Rates Following the Affordable Care Act

One of the goals of the Affordable Care Act was to reduce the number of Americans without health insurance. Various Obamacare provisions, specifically the Individual Mandate, Medicaid expansion, and the Marketplaces, have already led to a significant drop in the number of uninsured Americans.

This section looks at how Obamacare is impacting the uninsured rates in the U.S.

Current Uninsured Rates

According to a recent Gallup poll, the uninsured rate is 13.4% (as of the 3rd quarter of 2014). This is the lowest recorded uninsured rate since Gallup began tracking it in 2008.

Who are the Uninsured?Obamacare_uninsured_rates

According to research by Kaiser Family Foundation, most of the uninsured are in low-income working families. In 2013, nearly 8 in 10 were in a family with a worker, and nearly 6 in 10 have family income below 200% of poverty. Adults are more likely to be uninsured than children. People of color are at higher risk of being uninsured than non-Hispanic Whites.

How Does Obamacare Help the Uninsured?

Obamacare aims to help the uninsured by:

  • Expanding Medicaid Eligibility. Many states have expanded their Medicaid eligibility to all residents under 65 with family incomes up to 138 percent of the federal poverty level (FPL). This is an optional ACA provision, however, and some states have not expanded eligibility.

  • Premium Tax Credits Cost Sharing Subsidies. These two tax assistance programs helps middle- and low-income families afford health insurance coverage. This is important, as Obamacare also mandates all citizens to have coverage or pay a tax fee.

Affordable Care Act 2015 Statistics

This section outlines Obamacare rules for 2015 including open enrollment dates, Federal Poverty Line Obamacare_affordable_care_act_statisticslevels, and the individual and employer shared responsibility fees.

Open Enrollment for 2015

Under Obamacare, there are now annual open enrollment periods for guaranteed-issue individual health insurance. There are two types of enrollment periods: (1) annual open enrollment periods; and (2) special enrollment periods.

As the chart below shows, the annual enrollment period for coverage in 2015 begins November 15, 2014 and extends through February 15, 2015. During this time, anyone can purchase any health plan available on the individual market, or change plans.

If you fail to purchase health insurance coverage during the annual enrollment period, you will be unable to purchase coverage until the following year unless you qualify for a special enrollment period.

COVERAGE YEAR

ANNUAL OPEN ENROLLMENT PERIOD

2015

November 15, 2014 – February 15, 2015

2016

November 1, 2015 - January 31, 2016

2017

October 15, 2016 - December 7, 2016

2018

October 15, 2017 - December 7, 2017

2019

October 15, 2018 - December 7, 2018

2020

October 15, 2019 - December 7, 2019

Note: These dates are current as of March 2015. Dates are subject to change.

Federal Poverty Line for 2015

The Federal Poverty Line (FPL) is a standard measurement of household income, used to determine eligibility in Medicaid, CHIP, and the premium tax credits. The most current FPL levels are for 2014. The FPL is adjusted annually for inflation.

The following FPL charts show the FPL levels for the 48 contiguous states and DC, as well as for Hawaii and Alaska.

FPL (2014) for 48 Contiguous States and DC

 

Annual Household Income Percent of FPL (2014)

Family Size

100%

138%

150%

200%

300%

400%

1

$11,670

$16,105

$17,505

$23,340

$35,010

$46,680

2

$15,730

$21,707

$23,595

$31,460

$47,190

$62,920

3

$19,790

$27,310

$29,685

$39,580

$59,370

$79,160

4

$23,850

$32,913

$35,775

$47,700

$71,550

$95,400

5

$27,910

$38,516

$41,865

$55,820

$83,730

$111,640

6

$31,970

$44,119

$47,955

$63,940

$95,910

$127,880

7

$36,030

$49,721

$54,045

$72,060

$108,090

$144,120

8

$40,090

$55,324

$60,135

$80,180

$120,270

$160,360

FPL (2014) for Hawaii

 

Annual Household Income Percent of FPL (2014)

Family Size

100%

138%

150%

200%

300%

400%

1

$13,420

$18,520

$20,130

$26,840

$40,260

$53,680

2

$18,090

$24,964

$27,135

$36,180

$54,270

$72,360

3

$22,760

$31,409

$34,140

$45,520

$68,280

$91,040

4

$27,430

$37,853

$41,145

$54,860

$82,290

$109,720

5

$32,100

$44,298

$48,150

$64,200

$96,300

$128,400

6

$36,770

$50,743

$55,155

$73,540

$110,310

$147,080

7

$41,440

$57,187

$62,160

$82,880

$124,320

$165,760

8

$46,110

$63,632

$69,165

$92,220

$138,330

$184,440

FPL (2014) for Alaska

 

Annual Household Income Percent of FPL (2014)

Family Size

100%

138%

150%

200%

300%

400%

1

$14,580

$20,120

$21,870

$29,160

$43,740

$58,320

2

$19,660

$27,131

$29,490

$39,320

$58,980

$78,640

3

$24,740

$34,141

$37,110

$49,480

$74,220

$98,960

4

$29,820

$41,152

$44,730

$59,640

$89,460

$119,280

5

$34,900

$48,162

$52,350

$69,800

$104,700

$139,600

6

$39,980

$55,172

$59,970

$79,960

$119,940

$159,920

7

$45,060

$62,183

$67,590

$90,120

$135,180

$180,240

8

$50,140

$69,193

$75,210

$100,280

$150,420

$200,560

Individual Shared Responsibility Fee in 2015

Obamacare requires certain individuals to purchase health insurance or else pay a fee at tax time. This is called the "Individual Shared Responsibility Fee" or "Individual Mandate".

What is the Individual Shared Responsibility Fee?

The Individual Shared Responsibility provision requires you and each member of your family to either:

  • Have minimum essential coverage, or

  • Have an exemption from the responsibility to have minimum essential coverage, or

  • Make a shared responsibility payment when you file your 2014 federal income tax return in 2015.

You are required to report minimum essential coverage, report exemptions, or make any Individual Shared Responsibility payments when you file your federal income tax return.

How Much is the Individual Shared Responsibility Fee in 2015?

If you don’t have coverage in 2015, you’ll have to pay the higher of these two amounts when you file your 2015 taxes (in 2016):

  • 2% of your yearly household income. (Only the amount of income above the tax filing threshold is used to calculate the penalty. For 2015, the federal tax filing threshold is $10,150 for a person who files as a single, $20,300 for somebody who files jointly.) The maximum penalty is the national average premium for a bronze plan.

  • $325 per person for the year ($162.50 per child under 18). The maximum penalty per family using this method is $975.

The fee increases each year.

Read more about the Individual Mandate here.

Employer Shared Responsibility Fee in 2015

The Affordable Care Act requires certain large employers to either offer employees health insurance, or be subject to a penalty. This is called the "Employer Mandate" or "Employer Shared Responsibility" fees.

Employer Shared Responsibility Fee Rules for 2015

The administration has offered transitional relief in 2015 for the Employer Shared Responsibility fee. Here are the rules for 2015.

For 2015, if an employer with at least 50 full-time employees (including full-time equivalents) does not offer "minimum essential" and "affordable" coverage -- or offers coverage to fewer than 70% of its full-time employees (and their dependents) -- the employer will owe an Employer Shared Responsibility fee IF one of their employees purchases a health plan through the exchanges and receives a federal tax credit or subsidy.

To summarize for 2015:

  • The employer shared responsibility fee only applies to employers with 50+ FTE employees.

  • The employer is subject to the fee if they do not offer minimum essential, affordable coverage to at least 70% of full-time employees.

  • The Employer Shared Responsibility fee is equal to the number of full-time employees the employer employed for the month (minus 80) multiplied by 1/12 of $2,000, provided that at least one full-time employee receives a premium tax credit/subsidy for that month.

Affordable Care Act Frequently Asked Questions

Obamacare FAQs - Individuals and FamiliesQuestions_affordable_care_act_obamacare

Q. I’m uninsured. Do I have to buy health insurance?

A. Most Americans are required to have health insurance, or pay a tax penalty if they don't. This ACA rule is called the “Individual Mandate” or “Individual Shared Responsibility Fee” and started in 2014. Coverage can include job-based health insurance, individual health insurance, or insurance through a government program such as Medicaid or Medicare. Read more about the Individual Mandate .

Q. What is the penalty if I don’t have health insurance coverage?

A. The penalty for not having “minimum essential coverage” is either a flat fee or a percentage of household income, whichever is greater. The penalty increases over the first three years. Read more about the individual fee .

Q. Is anyone exempt from the requirement to have health insurance?

A. Yes. You may not have to pay the Individual Shared Responsibility Fee if you are uninsured, and:

  • Are required to pay more than 8% of your household income for the lowest cost bronze plan.

  • Are not a U.S. citizen, a U.S. national, or a resident alien lawfully present in the U.S.

  • Had one gap in coverage for less than three consecutive months during the year.

  • Won’t file a tax return because your income is below the tax filing threshold. In 2013, the tax filing threshold was $10,000 for individuals and $20,000 for a couple.

  • Are unable to qualify for Medicaid because your state has chosen not to expand the program.

  • Participate in a health care sharing ministry or are a member of a recognized religious sect with objections to health insurance.

  • Are a member of a federally recognized Indian tribe.

  • Are incarcerated.

  • Qualify for a hardship exemption.

Q. What are the Health Insurance Marketplaces?

A. The Health Insurance Marketplaces are websites where you can shop, compare, and enroll in an individual health insurance plan. Each state has a Marketplace that is either run by the state (ex: CoveredCA.com), or the federal government (HealthCare.gov). The Marketplaces are intended to make shopping for health insurance easier and give you access to the premium tax credits. Read more about the Marketplaces here.

Q. What has changed about individual health insurance?

A. While individual health insurance plans are not new, Obamacare created three new advantages that make individual health insurance just as good – if not better – than traditional group health insurance. The new advantages are:

  • Coverage for a pre-existing condition (you cannot be denied coverage or charged more because of a medical condition).

  • Coverage of essential health benefits (a core set of health benefits and services).

  • Discounts, via the premium tax credits (which lower the cost of premiums for eligible individuals).

Q. How much does individual health insurance cost?

A. On average, individual health insurance costs less than group health insurance. The amount you will pay for health insurance depends on these factors:

  • Your location (state and county)

  • Your age

  • Your tobacco use

  • Eligibility for federal assistance (the premium tax credits or Medicaid)

  • The plan you select (carrier, network of providers, and level of coverage)

Q. When can I enroll in individual health insurance?

A. You can only enroll in individual health insurance during a specific annual open enrollment period, or during a special enrollment period. The purpose of these enrollment periods is to control costs - it keeps people from waiting until they get sick to purchase health insurance. If you do not purchase health insurance coverage during the annual open enrollment period, you will be unable to purchase coverage until the following year unless you qualify for a special enrollment period. Read more about Obamacare enrollment periods here.

Q. What are the premium tax credits?

A. As part of Obamacare, the federal government provides discounts for health insurance to eligible individuals and families. The discounts, called premium tax credits, help many people buy more affordable individual or family health insurance coverage through the new state Health Insurance Marketplaces.

The health insurance tax credits are "advanced-payable" meaning they can be applied toward your premium when you purchase health insurance coverage. Read more about Obamacare premium tax credits here.

Obamacare FAQs - Small Businesses

As a small business owner, you likely have questions about how the ACA impacts your business. This section answers common questions about the requirement to offer health insurance, ACA reporting requirements, and new health insurance options for small businesses.

Q. Is our small business required to offer health insurance?

A. No. Small employers with fewer than 50 full-time-equivalent employees are not required to offer health insurance under the ACA. This is called the “Employer Mandate” or “Employer Shared Responsibility Fee" and it does not apply to small employers. Read more about the Obamacare Employer Mandate here.

Q. Will our business be penalized for not offering insurance to employees?

A. No. There are no tax penalties for employers with fewer than 50 full-time employees who do not offer health insurance.

Q. How do I calculate how many full-time equivalent (FTE) employees I have?

A. There are three steps to calculate how many FTE employees you have.

Step 1: Calculate the number of full-time employees. A full-time employee is defined as working on average at least 30 hours of service per week in a given month. How many full-time employees do you have?

Step 2: Factor in part-time employees. To calculate the full-time equivalent of part-time employees, add the number of hours worked by part-time employees in a given month and divide the total by 120. How many full-time equivalent part-time employees do you have?

Step 3: Add together the full-time employees and the full-time equivalent of the part-time employees. This is the number used to determine whether your business is an “applicable large employer.” If the sum is 50 or over you are an applicable large employer, and the Employer Mandate applies to your business.

Q. What if my business grows to more than 50 FTE employees?

A. Employers with more than 50 FTE employees who do not provide minimum, affordable health insurance will be required to pay a tax penalty; if/when an employee buys individual insurance and receives a premium tax credit or subsidy. However, this requirement for employers with 50-99 FTE employees does not go into effect until 2016. For larger employers with 100+ FTE, this requirement starts in 2015.

For 2015, the Employer Shared Responsibility Fee is equal to the number of full-time employees the employer employed for the month (minus 80) multiplied by 1/12 of $2,000, provided that at least one full-time employee receives a premium tax credit/subsidy for that month.

If you are a larger employer, click here to read more about calculating penalties for not offering health insurance.

Q. What are the new health benefits reporting requirements for small businesses?

A. Even though small businesses are exempt from the Employer Shared Responsibility Fees, there are new ACA reporting and compliance requirements that may (or may not) apply. These requirements depend on how many employees you have, and the type of health benefits you currently offer (if any). For example:

  • New W-2 Reporting: Employers with 250 or more W-2 Form Employees must report the cost of employer-sponsored group health coverage on employees’ W-2 Forms.

  • PCORI/CER Plan Fees: If you offer a Healthcare Reimbursement Plan (HRP) or another type of self-funded (or self-insured) health plan, you are required to pay the Patient-Centered Outcomes Research Institute (PCORI) fees.

If your small business currently offers health benefits, there may be additional reporting or plan changes you need to make to comply with the ACA.

Q. What is the small business health care tax credit and how do I know if our business is eligible?

A. Since 2010, tax credits have been available to qualifying small employers who offer a group health insurance plan. In 2014, the tax credit is worth up to 50% of your contribution toward employees' eligible premium costs (up to 35% for tax-exempt employers). The tax credit is highest for small businesses with fewer than 10 employees who are paid an average of $25,000 or less. The smaller the business, the bigger the credit.

To be eligible for the small business health care tax credit you must:

  • Employ fewer than 25 full-time equivalent (FTE) employees, and

  • Pay an average wage of less than $50,000 a year per employee, and

  • Pay at least half (50%) of employee health insurance premiums (for full-time employees only), and

  • Purchase the health insurance plan through your state’s Small Business Health Options Program (SHOP) Marketplace; unless there are no SHOP plans offered in your region.

The credit is available to eligible employers for two consecutive tax years.

Q. What is the Small Business SHOP Marketplace?

A. As part of the ACA’s Health Insurance Marketplaces, there is an option for small businesses called the SHOP Marketplace. This is a new way for small employers with fewer than 50 employees (or fewer than 100 in some states) to purchase a traditional group health insurance plan.

If you want to access the small business tax credits you must purchase a SHOP plan (unless there are no SHOP plans available in your region).

However, if your small business hasn't been able to afford or qualify for group health insurance in the past, the SHOP doesn't offer much to change this.

Q. How is the ACA impacting the cost of small business health insurance?

A. Small businesses who offer group health insurance are likely to see premium increases because of the ACA. Why? New ACA taxes and fees are being passed on from insurance carriers to businesses and their employees, and there are new plan and coverage requirements that impact cost.

In fact, the Centers for Medicare Medicaid Services (CMS) reports that 11 million small business employees (65%) will see health insurance premiums rate increases as a result of the Affordable Care Act (ACA).

But it’s not all the ACA. The cost of traditional group health insurance has been steadily climbing over the last decade, causing many small businesses to drop coverage or increasingly shift costs to employees.

According to a National Small Business Association 2014 survey, small business health insurance costs have nearly doubled since 2009, with 91% of small businesses reporting increases in their health plan at their most recent health insurance renewal.

It’s no surprise that fewer than half of all small businesses offer traditional group health insurance to employees; it no longer works for small businesses or their employees.

Q. What are the new health insurance options for small businesses?

A. In light of the ACA changes, and opportunities, the best health insurance option for small businesses is individual health insurance and a premium reimbursement program.

With this approach, your business gives employees a healthcare allowance to spend on individual health insurance - instead of purchasing a group health insurance plan.

Your business sets the healthcare allowance amounts, so you have full control of the cost of health benefits. Unlike group health insurance, there are no minimum contribution amounts and no minimum participation requirements.

Employees use their healthcare allowance to purchase an individual health plan of their choice and those eligible can access the premium tax credits.

Read more about small business health insurance options.

Affordable Care Act Additional Reading

4 Obamacare Changes that Make Defined Contribution Irresistible

ObamaCare. Love it or hate it, one thing is true... the landscape of employer-sponsored health insurance is changing. Many of the Affordable Care Act ("ObamaCare") provisions strongly favor the individual health insurance market, making defined contribution health plans the ideal health insurance solution for most (if not all) US employers. Read more.

The Obamacare Solution - A Business Expense Account for Healthcare

For most businesses, the solution to ObamaCare is simple: Offer a “Business Expense Account” for Healthcare. Employers can get out of the health insurance business, and simply give select employees monthly allowances to spend on their own health insurance policy in a state health insurance exchange using a Section 105 medical reimbursement plan (aka Healthcare Reimbursement Plan or HRP). If you understand how business expense accounts work, you will understand how this health care approach works as well. Read more.

Affordable Care Act: Play or Pay?

Should we play or pay? Employers with over 50 employees are trying to figure out how to deal with the Affordable Care Act's "employer mandate" which requires applicable large employers to either offer health insurance, or else pay a tax penalty. Read more.

Obamacare is Killing Group Health Insurance... Why It's Already Broken

ObamaCare is killing traditional group health insurance. And as Paul Howard stated in a recent Forbes article, that’s probably a good thing. Why? Group health insurance is a BIG part of the healthcare problem. Read more.

10 Tweetable Obamacare Q As

What do you need to know about the Affordable Care Act (aka ObamaCare, the health care reform law, health care reform, ACA, PPACA)? Here are 10 tweetable ObamaCare questions, answered in 140 characters or less. Read more.

4 Ways the Affordable Care Act is Changing Health Insurance

The Affordable Care Act (aka ACA or Obamacare) is creating a major shift in the health insurance industry. Here's four ways the healthcare industry, specifically individual and small business health insurance, is positioned to change because of the Affordable Care Act. Read more.

Employer ACA Marketplace Notice Requirements

As part of the Affordable Care Act (ACA), employers are required to notify their employees of the coverage options available through the new Health Insurance Exchanges ("Marketplaces"). Read more.

ACA Employer Mandate and Rules for Controlled Groups

How does the employer mandate impact companies with multiple branches or businesses? When a business entity is considered a controlled group, the business is considered a single employer under the ACA employer mandate. Read more.

The Comprehensive Guide to the Small Business HRA