ACA and The New Exchanges

[Nemont]

I spent 8 hours yesterday in meetings designed to begin the implementation of the health insurance exchange contained within the ACA (aka ObamaCare).

One thing that caught everyone's attention is the recent guidance from the IRS on implementation of what it means to provide "affordable" care. If an employer offers "affordable care" to their employees and that employee decides they want to leave and go to the exchange, the employee does not receive a subsidy in the exchange regardless of where they fall on the Federal Poverty Level (FPL). In addition if the employee has a spouse and kids on the group plan with them and the Employer provides "affordable" care to the employee only, then by extension the Spouse and Children are not entitled to a subsidy either.

This ruling goes almost completely opposite of all the guidance given prior to the IRS guidance on this issue. Prior to this we were led to believe that if an Employer doesn't pay some part of the family premium then the spouse and/or children could receive a subsidy due to their premiums not meeting the "affordable care" rule.

This is going to create an entire class of people who would qualify based upon their income and the FPL guidelines who can't access the exchange based upon what their spouse's or parent's employer pays for single coverage.

Lots of other quirks in the rules but that one stood out as being one that creates some real friction.

Much of the rule making is going to drive employers to not drop coverage because of what it costs them and how penalties are treated.



Lots more to come.

Nemont

 

[putm2sleep]

You could have just purchased the Guide to Oboomacare for $19.95!

 

[putm2sleep]

Here you are....this is unreal, more like un-presidential. Is that a word? who cares, sorry you wasted your time.

 

[Ben Lamb]

How does effect state exchanges?

 

[Nemont]

How does effect state exchanges?

The rules apply to all exchanges, except private Exchanges, remember in Montana doesn't run it's own exchange.

So the challenge is that if you are currently covered on your spouse's group plan and your spouses employer offers "affordable care" then you are eligible for an subsidy in the Exchange. You can still get coverage through the exchange but the subsidy that may be more expensive then the group plan and both may still be deemed, by you, to be outside your ability to pay the premium.

Counting Employee is another fun exercise that leaves one scratching your head.

Nemont

 

[Nemont]

Here you are....this is unreal, more like un-presidential. Is that a word? who cares, sorry you wasted your time.

That challenge is that what is contained in that little pamphlet is already out dated due to recent IRS guidance and the continued new rule making. Plus that takes a 10,000 foot view and I need to understand from about 3 feet.

Nemont

 

[Ben Lamb]

So as an S-corp who provides health insuruance and HSA benefits to our employees, how does this effect me?

Remember, i'm not very bright on this stuff, so 4th grade level.

 

[noharleyyet]

Thanks for starting a thread on this Nemont. You have my full attention as all I've been getting from my pros are quizzical looks and "we'll have to wait and see" replies, most likely as a result of my uninformed questions.

 

[Nemont]

So as an S-corp who provides health insuruance and HSA benefits to our employees, how does this effect me?

Remember, i'm not very bright on this stuff, so 4th grade level.

First Question is how many people do you have as Full Time Employees? Full time is anyone working 30 hours or more for ACA regardless of what you call full time.

Then What kind of benefits do you offer? Everyone on group insurance regardless of size of employer will have to at lease offer a bronze level benefit and the deductible can't exceed $2,000 to the employee, You can self fund a deductible as the employer but that gets a little complicated.

Bronze level benefits means that it has a 60% actuarial.

So how does it affect you? Well the answer is that it depends on a bunch of variables: Current benefits, the income of your employees, the amount you are currently paying for your employees plan and what size of group you are.

I have some modeling software I use to illustrate to groups their costs of going different ways on the coverage.

Nemont

 

[sagebrush]

Short version: Big government program, employers get hosed and low income employees really get hosed.

Huge dollars will be spent just trying to figure out how to comply and employers will never really know for a fact if they are in compliance.

End of Step One.

Step Two: Once it beomes evident more people are not getting adequate medical care and employers are failing to implement programs "according to guideline", we will once again be "saved" with a national medical care program replacing the national medical insurance program.

 

[Nemont]

Short version: Big government program, employers get hosed and low income employees really get hosed.

Huge dollars will be spent just trying to figure out how to comply and employers will never really know for a fact if they are in compliance.

End of Step One.

Step Two: Once it beomes evident more people are not getting adequate medical care and employers are failing to implement programs "according to guideline", we will once again be "saved" with a national medical care program replacing the national medical insurance program.

Don't disagree with this but I would point out that what were doing prior to ACA was not sustainable either so I guess doing something was just a first step.

There will be some massive growing pains and IMO there will be some HUGE winners and HUGE losers depending on where the lines are drawn and what employers decide to do.

It appears to me that if you are younger than 25 you need to make a decision about whether you want to subsidize all the over 40 people or simply pay the paltry penalty and go to the ER. Older people are going to benefit far more than younger people in most cases, not all but most.

Nemont

 

[webejmn]

Just ask your doctor. Mine says this is a joke and thank god he is about to retire. Seems real butt hurt bout where this is going to take us. Personally don't have enough info, but from what I have I don't like where its going among other points of this administration. Was a doctor that gave a speech at some meeting with our pres in attendance and he made some very valid points. Will have to see if I can find it. I am not impressed with Obama, but its been a while since I was impressed. Just should keep my trap shut fore I get in the crap again. Nite!

 

[cowboy]

Nemont: I have a specific question I have not been able to find an answer.

What is the difference between companies that have over 50 employees versus the vast number of us that have less than 50 employees? Is there a difference?

 

[Nemont]

Nemont: I have a specific question I have not been able to find an answer.

What is the difference between companies that have over 50 employees versus the vast number of us that have less than 50 employees? Is there a difference?

Companies with 50 or more employees face having to pay a fine of either $2,000 or $3,000 per Full Time Employee. Some rules apply to employers over 50 Employs and some rules apply to all employers regardless of size.

There is a formula to figure out Full Time Equivalence for those with part employees.

Nemont

 

[Nemont]

Note: I am not saying I support the ACA and in fact it really doesn't matter if one believes in it or not. It is the current law of the land and that means we all have to comply with it.

Nemont

 

[cowboy]

Note: I am not saying I support the ACA and in fact it really doesn't matter if one believes in it or not. It is the current law of the land and that means we all have to comply with it.

Nemont

Yep - Amen

 

[Ben Lamb]

First Question is how many people do you have as Full Time Employees? Full time is anyone working 30 hours or more for ACA regardless of what you call full time.

2.

We are just getting our benefits package set up. Right now we offer a high deductible plan for my wife (secretary) and myself (president). On top of that, the S corp will pay to $3,000/ yearcper person into a HSA to cover other expenses and meet the deductible ($5,000 per person).

I'd rather not state our income for personal reasons, but it's enough to keep a few SS recipients in catfood for the year.

 

[sweetnectar]

I'm getting that sick feeling in my stomach as I read this post. I think it started with the word "subsidy."

 

[Nemont]

2.

We are just getting our benefits package set up. Right now we offer a high deductible plan for my wife (secretary) and myself (president). On top of that, the S corp will pay to $3,000/ yearcper person into a HSA to cover other expenses and meet the deductible ($5,000 per person).

I'd rather not state our income for personal reasons, but it's enough to keep a few SS recipients in catfood for the year.

Well depending upon where you fall on the FPL there may be an incentive to change your plan and look at the exchange. Your current plan design would "likely" comply with the requirement for the Bronze level benefit due to the self funding down to a $2,000 deductible. Since your S Corp is paying 100% of the premium you would meet the affordability test. You or your S Corp is not subject to a penalty as you do not have 50 employees.

The reason that you may want to look at the exchange, depending on your FPL number is due to the subsidy (tax credit) available in the exchange.

Nemont


FPL DATA

 

[exponentialpi]

One can anticipate premiums to rise due to the health care exchanges. To what degree will vary dependent upon a number of factors, and subsidies incorporate another level of complexity. Recent news articles indicate some individuals might see premiums double under the ACA requirements . If you have some time, some interesting articles to read are:

Premiums Set to Rise

Health Insurance Sticker Shock

Health Care Spending

Policies will cost more, cover less