We recently posted an overview of the Individual Mandate provision of the Patient Protection and Affordable Care Act (PPACA) that will require all individuals to purchase healthcare by January 1, 2014 or pay a tax penalty. While employers will be required to distribute to employees a notice of coverage options under FLSA §18B by October 1, 2013, it might be helpful to begin preparing your employees now for questions that will certainly arise. With the caveat that Health Care Reform is a constantly changing topic, here is a beginning set of Q & A that might help you get started.
1. What is a Health Insurance Marketplace and how does it work?

The Marketplace is an online tool that allows individuals to compare available health benefit plans and purchase coverage through their state’s website or through the Federal Marketplace. Open Enrollment will begin October 1, 2013 for coverage to be effective January 1, 2014. Oregon residents can go to Cover Oregon and Washington residents can go to Washington Health Benefit Exchange for more details. If you live in another state, the government has created a page to help you find your state exchange.

2. What if I don’t buy healthcare insurance?
If you don’t purchase healthcare coverage for yourself, the IRS will assess a penalty on your annual tax return. Beginning January 2014, the penalty will be assessed for each month you don’t have coverage or don’t qualify for an exemption. The total annual penalty will be:

2014: The higher of $95 per person (up to 3 people or $285) OR 1.0% of taxable income

2015: The higher of $325 per person (up to 3 people or $975) OR 2.0% of taxable income

2016: The higher of $695 per person (up to 3 people or $2,085) OR 2.5% of taxable income

2017 and forward: The 2016 penalty adjusted annually for cost-of-living increases

3. Am I eligible to buy coverage through the Health Insurance Marketplace?
Yes, you are entitled to buy coverage through your state’s Marketplace (or exchange), as well as other options:

  1. Keep your employer-sponsored coverage.
  2. Buy coverage through your state’s Health Insurance Marketplace. (Cover Oregon for Oregon residents or Washington Health Benefit Exchange for Washington residents.)
  3. If your household income is at or below 138% of the federal poverty level in states that are expanding Medicaid (such as Oregon and Washington), you may qualify for Medicaid. You can find out more information related to Medicaid by visiting HealthCare.gov.
  4. If you are under age 26, you may still qualify to stay on a parent’s plan.

4. Do I qualify for health insurance government tax credits or subsidies?
You must apply with your state Insurance Marketplace to find out if you qualify for tax credits or subsidies. Subsidies cannot be used toward your employer insurance premiums. Also, if your employer offers insurance that is deemed affordable and meets the minimum value standard, you and your dependents will not be eligible for subsidies.
5. How is “affordability” defined by health care reform?
Your employer’s healthcare plan is deemed “affordable” if your cost (the amount of premiums you pay) to cover yourself (employee only coverage) is not more than 9.5% of your household income for the year.
6. What is the “minimum value standard”?
Your employer’s healthcare plan is deemed to meet the minimum value standard if the plan’s share of the total allowed benefit costs covered by the plan is no less than 60 percent of those costs.
7. What happens on October 1, 2013?
Prior to October 1, 2013, your employer will provide to you a special notice explaining the Health Insurance Marketplace coverage options. On this form, your employer will indicate whether or not your employer’s healthcare plan meets the minimum value standard and if the cost of the coverage to you is intended to be affordable. On October 1, 2013 your state’s Health Insurance Marketplace will open online. You will be able to use the information from your notice to assist in determining if you qualify for a health insurance government subsidy. In order to receive premium quotes and plan comparisons, your Health Insurance Marketplace will ask for basic identifying information, your household income, and whether or not you are eligible for an employer-sponsored health plan. You should not be asked any questions related to your health or pre-existing conditions.
8. If I opt out of my employer’s plan, can I change my mind later and enroll again in my employer’s plan?
You will be able to re-enroll in your employer’s plan only during the next annual open enrollment period. For example, the Xenium PEO group benefit plan’s open enrollment is March with coverage effective April 1.
9. If I opt out of my employer’s plan, will that affect my taxes?
If you purchase insurance from your state’s Health Insurance Marketplace, you pay your premiums with post-tax money. If your employer offers a Section 125 plan in conjunction with the employer-sponsored healthcare plan, your premium deductions may be made on a pre-tax basis.
10. Do I have to purchase insurance for January 2014 or can I wait until my employer’s next open enrollment period?
If you were eligible for an employer-sponsored plan with a non-calendar year plan year that began in 2013 and ends in 2014, you will be eligible for transition relief beginning in January 2014 through the month in which the 2013-2014 plan year ends. You will not be liable for the individual mandate penalty for those months in 2014 in which you were eligible for this transition relief.
Be sure to read our other posts on health care reform. As always, your Xenium Benefits Department is here to assist you with your benefits questions and feel free to contact one of our representatives at benefits@xeniumhr.com or (503) 612-1564.