Obamacare in a Nutshell" I just received an email from my employer concerning Obamacare. I work for a major company that has very good insurance. This is the text of the email, which of course, applies to everyone in the country, not just to employees of my particular company: "With the Affordable Care Act (ACA) comes the new Individual Mandate penalties, which are effective beginning January 1, 2014. This Compliance Tip explains how you, as an employee, may be impacted by the Individual Mandate in the event you decline coverage offered through your employer and do not obtain coverage through other means. What is the Individual Mandate? Beginning in 2014, the law requires most U.S. citizens and legal residents to have qualifying health insurance coverage, or pay a tax for each month where coverage was not obtained. This coverage is called “minimum essential coverage,” and the plan offered through your employer meets this standard. Are there any valid exceptions to not having minimum essential coverage? Yes. According to the IRS, individuals may claim an exemption for the following reasons: On the basis of religious conscience Members of a health care sharing ministry Members of recognized Indian Tribes Households under the threshold for filing a tax return Short coverage gaps of less than three months Those who claim hardship Unaffordable coverage options, where household cost of coverage exceeds a determined percentage of income Those who are incarcerated Those not lawfully present in the United States What are the penalties for not having minimum essential coverage? The IRS will assess penalties once the individual files for taxes starting with the 2014 tax year. The penalty will be assessed on a monthly basis, for each month the individual does not have coverage. A penalty which is the greater of either a flat rate amount, capped at 300% for the family, -OR- a percentage of household income threshold which is capped at the national average of a bronze level plan will be utilized. 2014 Flat rate per uninsured individual: $95/$285 for family, 1% of household income over the tax filing threshold, whichever is greater. 2015 Flat rate per uninsured individual: $325/$975 for family, 2% of household income over the tax filing threshold, whichever is greater. 2016 Flat rate per uninsured individual: $695/$2,085 for family 2.5% of household income over the tax filing threshold, whichever is greater If I waive coverage available through my employer, can’t I just go to the Federally Facilitated Marketplace, known as the Exchange, and get subsidized health insurance? For those who apply for coverage on the Marketplace, subsidies may be available for those who fall between 100% and 400% of the Federal Poverty Level. Generally, those with employer sponsored coverage are not eligible for subsidies if the coverage meets certain conditions.* What the individual mandate means for employees: Can my family members receive a subsidy from the Marketplace, if I waive coverage for them? It has been determined that those related to the employee will not qualify for subsidies from the Marketplace in the event they have access to coverage through an employer-based plan. In other words, if you decline coverage for your dependents, and the coverage offered under the plan meets conditions*, your dependents would not be eligible for subsidies through the Marketplace. What if my employer has a renewal date other than January 1, 2014? Does this mean I will be assessed a penalty for the months leading up to the next available open enrollment? Relief is provided to those employees, and members of their households, who work for an employer who has a non-calendar year renewal date. Penalties will not be incurred for those months in 2014 that lead up to the plan’s renewal date. *The conditions include having a plan that meets “minimum value,” where an actuarial value of 60% or more is assigned, and the cost of coverage is “affordable,” meaning, the cost for employee-only coverage is 9.5% of income or less. This publication is intended for general educational purposes only. Although compiled using reliable sources, nothing within this publication should be construed as tax or legal advice. Individual circumstances may impact which regulations are applied, and you are encouraged to contact your tax or legal representative for further discussion. Nothing in this publication is intended to dissuade individuals from pursuing coverage available through the Federally Facilitated Marketplace, or though other means. Sources relied upon in compiling this Compliance Tip include: irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared- Responsibility-Provision kff.org/infographic/the-requirement-to-buy-coverage-under-the-affordable-care-act/ gpo.gov/fdsys/pkg/USCODE-2011-title26/pdf/USCODE-2011-title26-subtitleD-chap48-sec5000A.pdf irs.gov/pub/irs-drop/n-13-42.pdf irs.gov/PUP/newsroom/TD%209611.pdf "
Posted on: Thu, 05 Sep 2013 15:30:38 +0000
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