Obamacare and Small Business

January 31, 2014 Updated: April 24, 2016

In March 210, President Obama signed The Affordable Care into Law to ensure that employer-sponsored health plans would not discriminate in such areas as employees with pre-existing medical problems, weight, or in accordance with level of income. Officials at the I.R.S. say, “…as of January, 2014, they are still attempting to define the worth of employee benefits and what exactly identifies discrimination.”

Under the Affordable Care Act, group health plans including those offered by Cigna, Aetna, Blue Cross Blue Shield and Humana among others, are prohibited from offering insurance to only a corporation’s highest earners. There have been delays in implementation but there are fines for companies in violation of the existing laws. An illustration of what companies are facing would be like in the case of a company with 100 employees that are only allowed to offer the top medical coverage plans to their top 15 percent of executives. This indicating they are discriminating against 85 percent of their employees. The company is fined $8,500 per day for non-compliance for 85 percent of their employees. It would take only ten days of non-compliance to accrue taxation fines of $85,000. 

Small and medium sized companies seem to be having the worst time complying with the Affordable Care Act regulations for affordable comprehensive health insurance for all employees.There are various packages available at different levels of cost, the hangup is that all decision-makers in a company must agree on the same level of care that they offer to their lower paid employees. The whole economic reversal would work if employers would leverage their numbers to force insurance companies to lower rates so all employees could afford medical insurance of the same quality.

Executive director of the health policy for the United States Chamber of Commerce, Katie W. Mahoney, spoke after the Presidents’ State of the Union address on January 28, 2014. She said, “the existing non-discriminatory laws are so convoluted that employers often complied with just the spirit of the law, rather than with the precise requirements of the regulations.” She advised, “a single set of non-discrimination rules and a single set of penalties for all types of group health plans,” to better serve all income groups.

The United States Small Business Administration outlined the strategy of the Affordable Care Act, often described as “OBAMACARE”, as having varying stipulations for employers with 100 or more employees, companies with more than 50 employees, companies with 50 or less employees and smaller companies with 25 or less employees. There are also specific stipulations for self-employed medical insurance benefits waivers and subsidies.

One such subsidy covers lower paid employees where the employer-provided insurance is more than 8 percent of their income, all kinds of situations are included in the subsidy and waiver formulas, such as number of family members, household income and location where employee is living. People on social security receiving Medicaid or Medicare do not have to do anything, the government is not changing any policies regarding these benefits.

Plans Gold and Platinum have lower deductibles but cost more overall, meaning larger pay check deductions. Plans Bronze and Silver have lower paycheck deductions but the so-pays and deductibles are higher. All plans must have annual caps for out-of-pocket costs, no matter how they are generated: co-pays, doctor and hospital visits, etc., that cap out at $6,350 for individuals and $12,700 annually for families, including families with pre-existing medical conditions. For persons with incomes under 250 percent of Federal poverty level, $28,000 for individuals, $59,000 family of four, there are provisions to provide lower out-of-pocket limits.

Obamacare doesn’t just effect employers but it will effect employees who don’t comply and get health care by 2014. The fines go up each year. The people who don’t sign up for a plan in 2014 will have to pay $95 dollars or 1% of income, whichever is higher, up to a maximum of $285. The fines increase to $325 or 2% of income in 2015 and $695 or 2.5% of income in 2016.

There are people who are exempt from the Obmamacare fines like people who receive Social Security Disability or Supplemental Security Income.  Under both these programs, people will have health insurance through Medicaid, and therefore meet the requirement of having a qualifying medical plan. If you have questions you should contact a disability lawyer like Ryan T. Wallace from Parmele Law Firm who will help guide you through the ACA and Social Security.

One of the most important stipulations included in these health care laws is that insurance companies can not longer refuse any applicant or their family members for having a pre-existing medical problem, weight or age. They are allowed to charge up to three times more for older employees than younger ones, and they can increase payments for smokers.

For more information about specific regulations and requirements in the Affordable Care Act, small and medium sized business leaders can contact: Healthcare.gov or call (800) 318-2596 for updated regulations as of January 1, 2014. Deadline for insurance sign ups is March 19, 2014.

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