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Obamacare. I am hard pressed to think of another current topic that is more often discussed and at the same time less understood. We have all heard a lot about it, but what really is “Obamacare” in practical terms? That is a very important question for all business owners. This brief article is by no means a deep dive into the very complex and still-evolving law. Besides, no one wants to read that anyway. Instead, it is intended to be a reminder to take a look at your coverage to see if you are in compliance, and to consult with professionals if necessary.
Obamacare is the commonly used name for the Patient Protection and Affordable Care Act, which was passed by Congress on March 23, 2010. When I first “sized up” the Act and its associated regulations some time ago, I discovered that if you printed them all out they would create a tower of paper over SEVEN FEET TALL. No, I didn’t kill a whole forest by actually printing it out. Not only would that be a waste of resources, but let’s face it, no one is going to read all that—especially since it seems to be evolving over time and is a bit of a moving target. As soon as you think you have a grasp on it, it changes yet again. Between changes to the content and delays in implementation, it has been difficult to stay out in front of it.
Now that it has recently been rolled out, it is time to understand and comply with it. There are three major components of the Act that need to be addressed by business owners:
THE INDIVIDUAL MANDATE:
The United States Supreme Court has declared that the individual mandate is constitutional under the taxing power of Congress. The Individual mandate requires that individuals must obtain “minimum essential health coverage” for themselves and dependents, or pay a tax. With a few narrow exceptions that can’t be explored in detail here, this requirement applies to everyone.
For purposes of this short article, and considering the core audience of Utah Business Magazine subscribers, I will focus on employed individuals. Employees fall into one of two categories as illustrated below.
THE EXCHANGE/HEALTH INSURANCE MARKETPLACE: (for small employers)
You have likely seen advertisements for “Avenue H.” That is the name for Utah’s Exchange, which is an online marketplace (www.avenueh.com) to shop, compare, and purchase coverage for individuals and small employers. Utah has chosen to define “small” as less than 50 employees. However, in 2016 that will increase to less than 100, and thereafter may change again. As with many facets of the Act, stay tuned. There are many intricate subsidies, credits, cost reductions, etc. that can’t be explored here. Plus, I don’t want anyone to fall asleep while trying to read through this article.
The healthcare plan you choose must be a “Qualified Health Plan” which means, among other things, that it must provide at least the ten (10) enumerated benefits that have been determined to be “essential health benefits.” It also means it must not exceed certain limitations on the amount of deductibles, out-of-pocket limits, and other threshold limitations. Moreover, there are rules for determining whether a premium you are being charged is fair, such as age, tobacco use, geography. Pre-existing conditions, claims history, and other factors may not be used in determining the premium you can be charged.
EMPLOYER SHARED RESPONSIBILITY/ aka EMPLOYER MANDATE: (for large employers)
Large employers must offer health coverage to all full-time employees (and dependents under age 26) or pay a penalty. Large employer is currently defined in Utah as 50 or more full-time employees or FTEs, and full-time is defined as 30 hours or more per week or 130 hours average per month. As you may already know, the math can get complicated when determining FTEs, and there are some unique considerations under the Act. Also, be aware that affiliated companies and subsidiaries may be lumped together and considered to be a single employer.
Failure to offer such coverage can result in significant penalties. For example, if coverage is not offered, the penalty is $2,000 annually for each FTE not covered (except for the first 30), and if coverage is offered, but is not affordable or doesn’t meet other value requirements, the penalty can be as high as $3,000 annually for each employee who instead goes to the Individual Exchange for coverage and receives a subsidy. The penalties are not tax deductible expenses for employers, but the costs of offering the benefits are tax deductible.
There are a plethora of other details and nuances, but hopefully the foregoing is at least a very brief summary of the major points of the new landscape we now live in. If you have not already done so, now is the time to make sure you are in compliance.
Brian C. Webber is the chairman of Clyde Snow's Health Care Practice Group. In over 15 years of practice, he has represented a wide range of health care professionals, entities and facilities in both DOPL proceedings and civil litigation. He also represents clients in complex commercial litigation, produtcs liability and other areas in both state and federal courts.