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How Will Obamacare Affect You?

The news is full of stories about the Affordable Care Act—better known as Obamacare—but most of us don’t really understand what the law requires. In this blog, we’d like to give you some basic information about Obamacare.

If you have insurance through your employer, you’ll be able to keep it (and you’ve probably already noticed that some preventive services have been added over the last couple of years). If you’re on Medicare or Medicaid, you can stick with your existing coverage. If you’re not covered at work or through a government plan, you’ll be able to get insurance through the appropriate federal or state site or through certified insurance agents (you could also buy insurance outside the system, although you wouldn’t qualify for subsidies).

And if you find the information and choices confusing, you can get advice from a certified insurance agent—who can sign you up at no additional cost—or from certified enrollment entity representatives or certified enrollment counselors. If you’re a small business owner, things are more complicated, so using an agent can save you a lot of time.

History

The Affordable Care Act (ACA) was enacted in March 2010. Some provisions took effect almost immediately, and others are being phased in. In the first phase, policies issued or renewed after September 23, 2010, had to offer coverage for adult children through age 26 and couldn’t impose lifetime benefit caps. Most provisions are going into effect on January 1, 2014, although mandates for businesses employing more than 50 full-time employees* have been delayed until January 1, 2015.

States were given the option of having their residents go through the government insurance marketplace at www.healthcare.gov or setting up their own exchanges. Only 10 states and the District of Columbia set up their own marketplaces. Federal government subsidies were offered to support an expansion of Medicaid (to cover those with incomes as high as 133% of the federal poverty line), but about half of the states turned it down after the U.S. Supreme Court ruled that the federal government could not mandate the Medicaid expansion (leaving a lot of really poor people unable to afford insurance).

California, however, has set up its own insurance marketplace (at www.coveredca.org) and has agreed to expand Medicaid (Medi-Cal) coverage. For coverage beginning on January 1, 2014, you’ll need to apply by December 15, 2013. The open enrollment period ends on March 31, 2014 for individuals, who’ll have to wait for the next open enrollment period next fall. Small business owners can sign up any time.

Required coverage

You may have heard some complaints about rates being higher through Obamacare. For some people, this will be true, in part because the ACA requires that most insurance companies offer “essential health benefits” that many plans did not previously include. These benefits are expected, over the long run, to save lives and lower costs:

  • Preventive and wellness services (100% coverage)
  • Chronic disease management
  • Maternity and newborn care
  • Pediatric services, including oral and vision care
  • Laboratory services
  • Prescription drugs
  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Mental health and substance abuse services, including behavioral health treatment
  • Rehabilitative and habilitative services and devices

Not only are companies required to cover more kinds of health needs, but they are also forbidden to deny coverage for pre-existing conditions. This may be the most important element of the ACA for parents of asthmatic children and sufferers of other chronic conditions.

Four levels of benefits are offered through the federal marketplace or state exchanges: platinum, gold, silver, and bronze. Low-income individuals and families may be able to qualify for federally subsidized insurance if their income falls within brackets based on the federal poverty line. For example, a family of four qualifies for maximum subsidies with an income of $23,550, with subsidies tapering off until its income reaches $94,200 (when income is below these brackets, people will need to see if they qualify for their state’s Medicaid program). You can find out more at https://www.healthcare.gov/will-i-qualify-to-save-on-monthly-premiums/.

Individuals who do not enroll in a health insurance plan by January 1, 2014, could face fines, although there are many exemptions—and at the beginning, the fines might be cheaper than buying insurance.

Employer-provided coverage

Businesses with more than 50 full-time employees will be required to provide health insurance to their employees, but the start date has been delayed until January 1, 2015, because implementation became more complicated than anticipated. Businesses with fewer than 50 employees will not be required to provide insurance, but they may choose to do so because giving your employees medical insurance:

  • Increases employee loyalty
  • Helps you recruit and retain the best talent
  • Increases productivity and reduces employee absenteeism
  • Offers tax advantages

To encourage small businesses to provide health insurance, the ACA set up a new program: the Small Business Health Options Program (SHOP). The program is designed to simplify buying and administering health insurance for small businesses with 50 or fewer employees (100 or fewer beginning in 2016).

Businesses have been able to deduct employee health premiums from their income for many years, but the SHOP marketplace offers the additional incentive of tax credits to employers who have 25 or fewer full-time employees whose salaries average $50,000 or less—if the employers pay 50% or more of the health insurance premiums.

Although the program has been in effect since the 2012 tax year, starting in 2014 the maximum tax credit rises to 50% of premiums paid (the remainder of the premiums may be deducted as a business expense). Businesses with 10 or fewer full-time employees who earn an average of $25,000 or less may qualify for the maximum credit, with other businesses on a sliding scale. (Average salaries do not include owners’ salaries. For more details, see https://www.coveredca.com/hbex/shop/index.html.)

Find out more about small business coverage

Accretive Wealth understands that small business owners are busy people, so we have set up two events where you can find out more. The first event is a dinner meeting—focusing solely on Obamacare—at our offices on Monday, October 21, from 6:30 p.m. to 8:30 p.m.; see our Facebook page for more details. Zain Jeewanjee, CEO of Zain Jeewanjee Insurance Agency, will make a presentation and answer your questions.

On Tuesday, October 22, from 12:00 p.m. to 1:30 p.m., we’re having a lunch meeting at the Silicon Valley Capital Club in San Jose. In addition to discussing Obamacare at this event, we’ll be looking at small business 401(k), profit-sharing, and defined benefit plans. Zain Jeewanjee will be joined by Stephen Dobrow, CEO and president of Primark Benefits.

If you would like to attend either of these events, please contact Faraz at (925) 365-1533 or send an e-mail to lifeplan@accretivewealth.com.

 

*A full-time employee works an average of 30 hours a week.

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