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How the Affordable Care Act Will Impact Your Business in 2015
Since it passed in 2010, the Patient and Protection and Affordable Care Act (the full title of the bill) or “ACA” has transformed the way Americans and business buy health insurance. From access to availability, minimum requirements of health care coverage, and enhanced consumer protections, every single American’s health insurance has been impacted. This year additional changes could be coming down the pipe, including implementation of the individual coverage penalty, a Supreme Court challenge to health care subsidies, and repeal of the entire bill by the Republican controlled Congress. As a business owner, it is important that you keep abreast of the latest health care news!
Quick ACA Re-Fresher
The three core elements of the ACA were: access, coverage and affordability. The law created the establishment of health insurance marketplaces that allowed for individuals and small businesses (49 or less employees) to purchase health insurance through an “exchange”; either run by your state or the federal government. Within those exchanges you had the option of four plans: Platinum, Gold, Silver, or Bronze, all will various monthly deductibles and out-of-pockets expenses. The Platinum plan would have a higher monthly deductible but very low or no out-of-pocket expenses versus the Bronze plan that would be opposite, low monthly deductible and higher out-of-pocket expenses.
The ACA also set new standards for the coverage requirements in an acceptable health insurance plan. Plans now must cover ten essential health benefits like hospitalization coverage, prescription drugs, and maternity care. States could also expand essential health benefit requirements in their state, for instance, Washington State covers acupuncture and cochlear implants.
In order to ensure that individuals purchased health insurance, the law also set limits for out-of-pocket costs. In 2015, a health insurance plan is only acceptable if the most an individual could pay out-of-pocket per year is $6,600 or $13,200 as a family.
Changes in 2015
Individual Penalty
In 2015, the biggest impact of the ACA for millions of individuals will come into effect, verification of coverage via your 2014 tax filing. The ACA requires every individual to have a qualified health care plan, failure to provide verification of health care coverage on your 2014 tax filing will result in a penalty that will be assessed on your 2014 return. The penalty for 2014 is the higher of either $95 or 1% of your total household income above roughly $10,000. In 2015, this goes up to $325 or 2% of your income above $10,000.
King v. Burwell
The U.S. Supreme Court will hear arguments in King v. Burwell in the coming weeks, challenging the distribution of federal subsidies for health care premiums paid to individuals and families enrolled in the federally-facilitated health exchange because their state of residence declined to establish a state-based exchanged. Plaintiffs argue that the legislative language in the ACA established premium assistance only allows for enrollees in state facilitated exchanges to receive premium assistance and that the IRS incorrectly interpreted the language to allow for premium subsidies to be distributed to all ACA enrollees regardless.
In 2014, nearly 87% of health care exchanged enrollees, roughly 4 million Americans, received nearly $36 million in subsidies. Many health care experts believe that should the Supreme Court rule with the plaintiffs and block the use of subsidies in federally-facilitated exchanges, the individual marketplace created by the ACA will crumble sending health insurance costs skyrocketing.
Republican Control of Congress
Without a doubt the upcoming year will see numerous legislative attempts to repeal, replace, and in some cases generally undermine the ACA by the Republican controlled Congress. Already in the 114th the Republican led House of Representatives voted to repeal the 30 hour work week definition to the generally accepted 40 hour work week definition of full-time employee, it is unclear when the Republican led U.S. Senate will take-up the measure. Congressman Boustany (R-LA) has re-introduced legislation repealing the employer mandate, requiring companies with 50 or more employees to provide employer-sponsored health insurance or face significant, crippling fines. It is expected that Republicans will introduce legislation repealing the individual mandate penalty in the coming weeks.
It is unlikely that even if the House and Senate pass popular repeal measures that the President would sign them into law, due to their nature of undermining the core tenets of the ACA. In fact, already the President has issues a veto threat deceleration on the changes to the full-time work week definition passed by the House Republicans. However, it would not be surprising if Republicans and the Obama White House do find some areas of reform that they could agree on, but first Republicans must work through their repeal efforts.
NASE Tackles Health Reimbursement Arrangements Restrictions
While Congress is distracted with their efforts to repeal the ACA, the NASE is laser-focused on bringing attention to a significant consequence caused by the Departments of Treasury, Health and Human Services, and Labors decision to restrict Health Reimbursement Arrangements (HRAs) for the self-employed and under 49 employee, employers.
On September 13, 2013, the Departments of Treasury, Health and Human Services, and Labor,released Technical Release No. 2013-03, ”Application of Market Reform and other Provisions of the Affordable Care Act to HRAs, Health FSAs, and Certain other Employer Healthcare Arrangements.” The guidance stipulates that an employer that offers an HRA to two or more employees, but does not offer a group health care plan, is not compliant with annual limit regulations and the business would be subject to penalty. However, a single employee business can still offer an HRA plan and would not run afoul of compliance issues under the ACA.
The NASE does not believe that an HRA should be viewed under any circumstance as a qualified group plan and we do not disagree with the following assessment within the technical guidance, “HRA 105 Plans, by definition, will not meet the requirements of an ACA compliant health insurance plan.”
Our assessment of the technical guidance has found support on Capitol Hill, in the closing days of the 113th Congress, Reps. Boustany (R-LA) and Thompson (D-CA) introduced bi-partisan legislation, H.R. 5860, Small Business Healthcare Relief Act of 2014 , which would allow for standalone health reimbursement arrangements (HRAs) for small employers (with 49 employees or less). The legislation will be re-introduced in the early weeks of the 115th Congress. For the NASE, this will remain our top legislative priority in the 114th Congress.
Crystal Ball Predictions
Perhaps there is no crystal ball, but undoubtedly 2015 will see the possibility of significant changes to the ACA. From the enforcement of the individual mandate penalty, the a earthshattering supreme court ruling, and the systematic, coordinated effort by House and Senate Republicans to repeal the core of the ACA, the health care crystal ball is hazy at best. The NASE will continue to advocate and supports efforts that make health insurance flexible, affordable, and comprehensive for the 23 million self-employed.