The Patient Protection and Affordable Care Act , also known as Obamacare and sometimes abbreviated as PPACA or just ACA , passed in 2010 amidst a ton of hype. You can read Part 2 of this series on the Health Insurance Marketplace here and read Part 3 on Tax Credits for Small Businesses here . For those of you who became experts of the law back then, good on ye, as my Irish mother-in-law would say. For the rest of us who are still in need of some clarification, I’ll attempt to bring some clarification on what Obamacare is and how it impacts US small businesses. Since this is such an involved topic, I’ve made it into a three part series, hoping that will make all of this business-critical information easier to digest.
Patient Protection and Affordable Care Act
This health care reform act was signed into law by President Obama on March 23, 2010 but many of the provisions have not yet taken effect. The purpose of Obamacare is a one-two punch designed to increase the rate of health insurance coverage for all Americans while reducing the overall costs of health care. The mechanisms for accomplishing this include federal mandates, subsidies and tax credits to employers and individuals. Insurance companies will now be required to offer coverage to anyone and to offer that coverage at the same rate, regardless of gender or any pre-existing conditions.
Provisions Currently Effective
- Food vendors with 20 or more locations and all chain restaurants are required to display caloric content of menu items on the menu, drive-by menu and/or vending machine. (The Nutrition Facts snapshot at the right is real nutritional information for a seafood pasta dish at a certain well-known chain restaurant. Yes, that single dish comprises your entire daily recommended caloric intake in a single sitting plus 365% of your recommended daily saturated fat intake, which might make you think twice before you order it.)
- A 10% sales tax on indoor tanning was levied.
- Insurers may no longer impose lifetime dollar limits on essential benefits (hospital stays, for example) on new policies issued.
- Insurers are prohibited from canceling policies just because the policyholder becomes ill.
- All new insurance plans must cover child immunizations and adult vaccinations recommended by the Advisory Committee on Immunization Practices without charging co-payments, deductibles or co-insurance.
- Insurers must keep their administrative costs and profits to 20% of premium dollars for individual/small group insurers (15% for large group insurers).
- Employers are required to disclose their cost of providing health insurance benefits to employees on each employee’s form W2, box 12 (designated by a “DD” code).
Provisions Effective January 1, 2014
- Insurers will be prohibited from discriminating against anyone or charging higher rates based on gender or pre-existing conditions.
- All individuals must have health insurance or pay a penalty, whether that coverage is through an employer-sponsored plan, Medicare or Medicaid (individuals practicing certain religions are exempted).
- Participating states will create their own health insurance exchanges where individuals and small businesses can shop for and purchase health insurance coverage. States not participating will rely on the Federally-facilitated exchange.
- Federal subsidies will be available to low income individuals and families who purchase health insurance from the health care exchanges.
- Small businesses will also be eligible for subsidies and/or tax credits .
Businesses employing 50 or more full-time equivalent ( FTE ) employees must either offer health insurance or pay penalties for any employees who have received government subsidized health insurance. Note: a FTE is defined as an employee that works at least 30 hours per week in any month .
In this post, we’ve covered:
- What the Affordable Care Act is
- Things employers should be doing NOW to be compliant
- And 2014 changes you should be prepping for
Stay tuned for Part 2 of this blog series. Next up, we’ll focus on the health insurance marketplace .
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