Monday’s news that the administration is delaying yet another part of the new health insurance laws adds confusion to what many have chosen to ignore as a complex topic.
If you hear one thing, hear this: Effective this year, it’s the law that Americans have health insurance by March 31. This year’s penalty is $95 or 1 percent of your household salary, whichever is greater. But fines will rise sharply in 2015 and 2016.
Meanwhile, employers of 50 or more — including an equation factoring in part-time workers — must offer affordable, quality health insurance to those who average 30 or more hours a week, or else face annual penalties of $2,000 per employee. That mandate also was set to take effect this year, but on July 3 was delayed until Jan. 1 — and, as of Monday, was delayed again for employers of 50 to 99 workers. Those medium-sized employers now have until Jan. 1, 2016, to provide health insurance.
Businesses with 100 or more employees still face a Jan. 1 deadline, but can avoid fines if they offer insurance to 70 percent of their full-time equivalent employees. they have until 2016 to ramp that up to 95 percent.
Oklahoma City insurance broker Wayne Pettigrew, a senior consultant with Group & Pension Planners Inc., feels it’s irrational that individual and employer mandates don’t line up. “They should have waited on the whole thing or quit delaying,” Pettigrew said Monday.
The delay is really causing problems for employees because the employer, in many instances, is not contributing yet, but the employee still faces the individual mandate, he said.
If they wait to provide insurance, employers could be “digging their own holes and not even knowing it,” Pettigrew said. For example, take a worker who buys coverage on the exchange this year. When their employer starts offering insurance, the worker may decide to stay with the insurance they bought on the exchange. That could result in a $3,000 fine for the employer.
To qualify for this delay, employers must maintain some level of previously offered health coverage through Dec. 31, 2015, and also must certify to the government that the employer qualifies for the delay, according to a client update by the McAfee & Taft law firm.
The requirement to offer coverage to dependents of full-time employees generally won’t apply in 2015 to employers that are taking steps to arrange for such coverage to begin in 2016, the firm said.
Meanwhile, businesses can’t plan for the future because they don’t know what health insurance is going to cost them, said Bob Funk, chief executive of Express Employment Professionals.
“Everybody is guessing as to the results and costs,” said Funk, who attended a recent American Staffing Association meeting, where he said members concluded the insurance market is “totally unsettled.”
At a glance
What is already in effect?
Insurers can’t deny coverage based on pre-existing conditions or impose lifetime coverage limits.
Most residents must have health insurance or pay penalty taxes on their 2014 tax returns. This new tax is the greater of 1 percent of adjusted household income or $95 per adult plus $47.50 per child; in 2015, the greater of 2 percent of adjusted household income or $325 per adult plus $162.50 per child; thereafter, the greater of 2.5 percent of adjusted household income or $695 per adult plus $347.50 per child.
Residents between 100 percent of the federal poverty level ($11,490 for 2013, or $31,322 for a family of four) and 400 percent ($23,550, or $94,200 for a family of four) who buy health insurance through Oklahoma’s federally run exchange will be eligible for variable tax credits based on annual income and family size.
Insurers must cover certain preventive services such as screenings and immunizations recommended by the U.S. Preventive Services Task Force with no co-payments or deductibles.
Children who don't receive health care coverage from employers can stay on their parents’ plans to age 26, regardless of marital or student status.
A new 80/20 loss-ratio rule requires health insurers to spend no more than 20 percent of customer premiums on administration.
Small employers who pay at least half the cost of single health insurance coverage for their employees may claim tax credits of up to 35 percent of premiums; 25 percent for tax-exempt organizations. The credit depends on the number of full-time employees, limited to 24, and average annual wages, which can be no more than $50,000. Businesses that use part-time help may qualify, even if they employ more than 25.
What parts have been delayed?
Mandates that will be delayed until 2015; 2016 for medium-sized employers:
Businesses with 50 or more full-time equivalent employees must offer health insurance to employees who average 30 or more hours per week from the preceding year or pay annual penalties of $2,000 per full-time employee, excluding their first 30. The formula to determine large employer status takes employees' total number of monthly hours worked during a designated three-month to 12-month measurement period. Employees who work more than 130 hours for the measurement period are considered full-time. If the company has fewer than 50 full-time employees, it also will want to count full-time equivalent employees by taking the total hours worked for a month divided by 120 (the total monthly hours for a full-time, or 30-hour-a-week worker) then add the two together. An employer with 35 full-time workers and 20 who average 24 hours a week, for example, could be deemed as having the equivalent of 51 employees. The 20 part-time employees who work an average of 96 hours per month would count as 16 full-time workers — 1,920 (20 multiplied by 96) divided by 120. Employers may not be subject to mandates if they only exceed 50 full-time equivalent employees for 120 days or less a year.
The waiting period for insurance for new hires can't exceed 90 days without penalty.
Businesses can face fines of $3,000 per employee for each worker who buys insurance on the exchange if the company's insurance is deemed inadequate (covers less than 60 percent of essential benefits) or unaffordable (costs more than 9.5 percent of a worker's salary, or $117.67 monthly for a minimum-wage worker).
Are you a consumer or company owner who has benefited from the new health insurance laws? If so, medical reporter Jaclyn Cosgrove and I want to hear your story. The Oklahoman on March 24 plans more special coverage of the Affordable Care Act — one week before enrollment ends in Oklahoma’s new federally run online health insurance marketplace. Until then, we stand ready to cover any future developments — including delays — in the law that has become familiarly known as Obamacare.