6 things to know about ACA

The federal Patient Protection and Affordable Care Act of 2010: Congress passed it, the Supreme Court upheld it and now, Americans must prepare for it. Also known as “Obamacare,” it’s new, complicated and often confusing, but it doesn’t have to be.

According to the Obama administration, more than 30 million Americans who currently don’t have health care insurance will gain coverage under the new plan.

However, the uninsured won’t be the only citizens affected – the new law means sometimes drastic changes for the estimated 250 million Americans who already have health care, whether through private insurance, Medicare or Medicaid. Those changes can be cause for concern for individuals and employers, industry professionals say.

“We are all in learn-as-we-go mode right now and that’s not good for anybody,” said Jeff Baggett, health insurance specialist with Naught-Naught Insurance Agency Inc. in Ozark. “There are too many unknowns right now. They didn’t have a plan before the game started. Now, they are trying to change rules in-game and that can be confusing for anyone trying to follow along.”

Insurance experts say the devil is in the details when it comes to this ever-evolving law and have identified six key areas to focus on right now.

1. Get to know your deadlines

Call it a mandate or simply a financial penalty, but the truth is all Americans must have health insurance in 2014 or pay a price.

There are two important dates to keep in mind.

The first is Dec. 15. Those seeking insurance must sign up by Dec. 15 for coverage to begin on Jan. 1 – the earliest any plans under the new law take effect.

The second important date has recently changed due to the slow roll out of the federal health exchange marketplace, HealthCare.gov, and confusion over wording in the original law. Previously, citizens had to sign up by Feb. 15, guaranteeing coverage would take effect by the March 1 deadline, in order to avoid fines. The extension, granted for 2014 only by the U.S. Department of Health and Human Services, creates a special one-time exemption for people who get covered by March 31, the end of the open enrollment period.

“The website started out with some glitches, but having used it, I can say it’s one of the cleanest and easiest websites to follow,” said Lynne Haggerman, human resources consultant with Lynne Haggerman & Associates LLC.

Another key date in the implementation also has been pushed back – the deadline for large companies, with more than 50 full-time equivalent employees, to provide insurance has been delayed until Jan. 1, 2015.

2. Take advantage of early renewals

While small businesses with 50 or fewer full-time employees are not required to provide employee health insurance, Erica Gaynor, small group and individual benefit adviser with Ollis & Co. says the reality is most do, and ACA can affect them in a big way, usually in the pocket book.

“Comparing small-business coverage in 2013 to small-business coverage in 2014 in an apples-to-apples way is almost impossible,” Gaynor said.

“We are trying to get as close to possible to 2013 plans, but in most cases I’m seeing a 35 to 50 percent rise in premiums.”

To help stymie ACA’s effects on small businesses, agents are encouraging employers to consider early policy renewal, which Naught-Naught’s Baggett said essentially locks in the 2013 rates for another year.

“If you renew by Dec. 31, you can hang on to those rates until December 2014, essentially giving small business more time to let the government get through its discussion on the law,” he said.

While a popular option, Gaynor said early renewals aren’t the final solution.

“Is it the best solution? No,” she said. “We all know it’s like putting a Band-Aid on a bleeding heart. However, it may be the best solution for small businesses right now.”

3. Avoid penalties

Anyone who doesn’t have medical insurance by March 31 – either through a new health exchange plan or through their employer – will have to pay a $95 penalty, or 1 percent of their annual income, whichever is greater. And the fee will rise by 2016, when the penalty will be 2.5 percent of annual income, or $695.

“The penalties are there to encourage people to get coverage,” Haggermann said. “The only way this law is going to fully work is if everyone buys into it and everyone takes part.”

For individuals, any penalties would be assessed when paying 2014 taxes.

According to the Department of Health and Human Services, individuals won’t be penalized in very specific instances.

Exemptions include, if the lowest-price coverage available costs more than 8 percent of the household’s adjusted gross income or if income is below the threshold required for filing taxes, which in 2012 was $9,750 for a single person and $27,100 for a married couple with two children.

The exemption also applies to illegal immigrants, people in prison, federally recognized Native American tribes and recognized religious sects with religious objections to insurance, including Social Security and Medicare.

On the employer end, when the large company mandate kicks in Jan. 1, 2015, Haggermann said the annual penalty for companies that don’t provide insurance will be $2,000 for each employee, excluding the first 30.

4. Determine the plan

Individual insurance sold on the marketplaces comes in four levels – platinum, gold, silver and bronze – with the main difference being the premium and the cost-sharing.

According to the Kaiser Family Foundation, an independent health care policy organization, on average, bronze plan holders will pay about 60 percent of medical costs, with silver covering 70 percent, gold covering 80 percent and platinum covering 90 percent.

However, Gaynor said the basics a plan must cover don’t differ much.“One of the reasons new plans cost more is because all plans must now cover what are called ‘essential benefits,’” she said. “The max out of pocket is the same on every plan – $6,350 for an individual and $12,700 for a family.”

Gaynor said “essential benefits” would include hospitalization, labs, prevention services and maternity.

5. Paying for the plan

According to the Obama administration, as of June 2012, 360,000 businesses that employ 2 million workers had already benefited from the small-business tax cuts in the law. And once the Affordable Care Act takes full effect, about 18 million individuals and families will get tax credits for health insurance coverage averaging about $4,000 apiece.

“Many small business already qualify for tax credits,” Haggerman said. “Under the new law, to qualify, an employer must pay at least 50 percent of employee premiums and have 25 or fewer employees who make an annual salary of $50,000 of less.”

Most individuals shopping in the new marketplaces are expected to qualify for a subsidy. According to the Kasier Foundation, sliding-scale subsidies will go to those earning between about $11,590 and $46,000 a year as individuals. If individuals qualify, they will likely pay a portion of their household income – from 2 to 9.5 percent – toward a premium cost.

6. Know your enemy

“Our clients are most concerned about educating themselves and their employees,” said Tom Jensen, employee benefit department manager with Hollister-based Connell Insurance Inc. “At this stage in the game, I would hope everybody has already met with their adviser, but I know a lot of people have not.

“There is a huge need for education on this topic and despite all the seminars offered, people are still seeking out more.”

Jensen said employers should not only already be consulting with their insurance provider, but also their certified public accountant, human resources manager and even their lawyer.

“Seminars are good, they give an overview, but you need to know how this specifically affects you,” he said. “In Branson, many employers deal with seasonal workers and unions. How do they calculate full-time equivalent employees? A lawyer can help you view and interpret that law for your company.”

To that end, Jensen said Connell Insurance will host its third annual Health Care Reform Update, 8:30–11:45 a.m. Nov. 15 with guest speakers from The Wellpoint Cos. Inc. and a panel discussion with representatives from law firm Polsinelli PC and CPA firm The Whitlock Co.

The Home Builders Association of Greater Springfield also will host Naught-Naught’s Baggett from 3–6 p.m. Nov. 6.

“There are no black and white answers,” Baggett said, “but we can do the best to understand what’s happening right now.”

Gaynor echoed her colleagues, adding it is more important than ever to talk with an adviser and pay attention to the mailbox for information from health care providers.

“We are doing all we can to keep clients educated. Mailings about their benefits are a large part of that,” she said.

“Reform is here, but it may look different from day to day. Information is key.”