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HEALTH CARE REFORM

Health reform’s delay on the employer mandate raises lots of questions

There’s a new delay in health care reform.

It’s a one-year postponement of what’s known as the employer mandate of the Affordable Care Act.

That mandate says large employers, or those with 50 or more full-time employees, have to provide health insurance for their employees or pay a penalty. Originally, the requirement was supposed to take effect this coming January. Now the date is pushed back to 2015. That gives larger employers a year’s grace before they have to provide health insurance that meets government standards.

All else is on go

The delay doesn’t change anything else, however. The rest of the Affordable Care Act stays on schedule, and for the immediate future, that includes these items.

The state exchanges. The government says these are rolling along on time. The exchanges will begin open enrollment October 1, 2013, and coverage will start January 1, 2014.

States have three options here. They can set up their own exchanges. They can set up exchanges that are in partnership with the federal government. Or they can do nothing and have only federal exchanges.

As of the end of May, 23, 2013, states plus the District of Columbia had opted to set up exchanges. The remaining 27 were scheduled to see only the federal exchanges. Those setting up their own exchanges are:

Arkansas Massachusetts
California Michigan
Colorado Minnesota
Connecticut Nevada
Delaware New Hampshire
Dist. of Columbia New Mexico
Hawaii New York
Idaho Oregon
Illinois Rhode Island
Iowa Vermont
Kentucky Washington
Maryland West Virginia

 

• The individual mandate. People who do not get coverage either from their employers or on their own have to pay a fine. Next year, the amount is $95 per person or 1% of the taxable household income, and it goes up each year from there until 2016 when it peaks out at $695 per person or 2.5% of household income.

That begins in January, 2014.

• Subsidies on plan premiums. People with incomes lower than 400% of the federal poverty level will get subsidies or tax credits on their premiums.

The subsidies will not go to the individual but will be paid monthly to the exchange plan.

The coverage options notice requirement. All employers, no matter how small, must give their employees a written Notice to Employees of Coverage Options by October 1 2013, which is when the new exchanges are set to become operational.

They must also give the notice to new employees at the time of hiring.

It outlines the availability of the health insurance exchanges in the state. It advises that the current coverage the employer provides can be lost if the employee buys coverage through an exchange. And it tells whether the employer’s plan meets the minimum requirements under the health reform law.

The Department of Labor has sample forms available for employers who do offer health coverage and for employers who do not.

Go to http://www.dol.gov/ebsa/healthreform/index.html. Scroll down to “Notice to Employees of Coverage Options” and click on the two items titled “model notice.”

And that’s causing confusion

The mandate delay creates a lot of uncertainty.

For example, subsidies are available to employees whose employers don’t provide government-approved benefits. But now no employers are required to provide those benefits, so who gets a subsidy?

Also, under the individual mandate, which starts in January, uninsured individuals who refuse employer coverage have to pay a tax next year. But with employers not required to provide anything just now, what’s to refuse?

A lynchpin late in coming

The employer mandate is the lynchpin of the healthcare reform system.

Under that provision, any company with 50 or more full-time employees has to provide health insurance that meets government requirements. And any company that does not do so and has an employee who buys federally subsidized health care at an exchange has to pay a $2,000 penalty for each employee.

The provision is burdensome because of the administrative work involved. It requires businesses to submit monthly reports showing the work hours of their full-time employees – particularly difficult for organizations where employees work variable schedules.

Confusing matters even more, what health reform considers full-time is 30 hours a week, not 35.

Many businesses with near 50 employees (they’re being called the 49ers) have been trying to dodge both penalty and paperwork by putting more workers and new employees on part-time status.

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