The Affordable Care Act

This trillion dollar law is one of the most far-reaching and complex pieces of legislation to pass in recent history.  Since it was signed into law in 2014, Angus McRae Insurance has been studying the ways to minimize its cost to our clients.  We understand the nuances of the law and how to best construct an employee benefits package to work within it.

Key components of the Affordable Care Act include:

Individual Mandate – Most US citizens and legal residents must purchase qualified health insurance or pay a tax to the Internal Revenue Service.

Employer Mandate – Employer groups, that generally have greater than 50 full-time employees (including full-time equivalents), are defined as “applicable large employers” and must either offer affordable, qualified health insurance to their staff or pay a tax to the Internal Revenue Service.

Community rating – For fully-insured plans with 100 or fewer employees, insurers are required to base their premium rates off of four factors: member age, geography, family size and tobacco usage.  The ratio of highest to lowest rate cannot be greater than three to one.  Insurers are prohibited from basing premiums on a member’s health status or gender.

Reporting and notifications – There are a myriad of notice requirements under the Affordable Care Act.  These include:

  • Marketplace notice – Provided to employees notifying them of the existence of the federal insurance exchange and the possibility they may qualify for premium assistance.
  • IRS Form 1095-B – This form informs the employee whether or not they were insured by a plan that included the essential benefits under the ACA.
  • IRS Form 1095-C – This form informs the employee whether or not their employer made to them a “qualifying offer” of affordable health insurance.

Additional Taxes – The ACA has (or will) institute a number of additional taxes.  These include:

  • Individual Mandate -  For failing to purchase qualified health insurance, a person will pay the greater of $695.00 per adult and $347.50 per child (up to $2,085 for a family), or 2.5% of family income.
  • Employer Mandate – For failing to provide affordable health insurance to its full-time employees, Applicable Large Employers pay the lesser of $3,000 per full-time employee receiving premium assistance, or $2,000 per full-time employee (minus the first 30).
  • Patient-Centered Outcomes Research Institute (PCORI) tax funds comparative effectiveness research.
  • “Cadillac Tax” – This is a permanent, non-deductible, annual tax beginning in 2018 on high-cost employer-sponsored health coverage. The tax is 40% of the cost of health coverage that exceeds predetermined threshold amounts.

Angus McRae Insurance is committed to making the complex understandable.  We help our clients minimize costs and maximize employee benefits.  Give us a call today.

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