28 NWLawyer | FEB 2014
by Chris Free
The Affordable Care Act (ACA) has proven to be very flexible legislation. It is fair to assume that something has changed between the time this article was written and
the time you are reading it. With that
said, let’s dig into some of the major
concerns that are upon us.
Likely the farthest-reaching piece of
the ACA is the individual mandate. The
goal is to ensure as many people have
insurance as possible by taxing people
who don’t purchase insurance, or obtain it from an employer or another
source. There are some exemptions for
very low-income people, Native Americans, people enrolled on TRICARE,
Medicare, or with VA benefits, and a
few other scenarios. There are also subsidies for people who don’t have access
to affordable coverage and are under
400 percent of the Federal Poverty
Line ($45,960 for single, $94,200 for a
family of four).
Insurance companies will be required to report Social Security numbers which have coverage to the IRS,
so they know whether or not to assess
these new taxes for people who do not
have coverage. In 2014, the taxes max
out at 1 percent of an individual’s income for the year. In 2015, it’s 2 percent. And in 2016, it’s up to 2. 5 percent,
with indexing beyond that. Either way,
the penalty will be unlikely to encourage the young, invincible members of
our society to enroll in the new insurance market.
NWLawyer, the law changed around
SHOP subsidies in Washington state.
Now, if your business is in Clark or
Cowlitz county, you can access SHOP
subsidies by buying coverage through
the SHOP. However, the federal government has offered us some reprieve. They
are now allowing employers who do not
have access to the SHOP to still access
In addition to the subsidies for small
employers, the delay in the employer
mandate and shared responsibility payments (penalties) is a welcome reprieve
for larger companies. The mandate and
penalties have been pushed back to 2015,
but that doesn’t mean employers can wait
to start planning.
The employer mandate applies to
employers with more than 50 full-time
equivalent employees. For these purposes, the federal government is defining “full-time” as employees working
130 hours per month (a refinement of the
30 hours per week definition that was
originally used). If these penalties apply
to your or your clients’ businesses, 2014
is the time to start doing time-tracking
for employees classed as part-time, seasonal, or temporary.
In addition to the 130-hour eligibility
requirement, employers of all sizes are required to limit benefits waiting periods to
90 days from the date of hire. (It’s important to note that many employers have a
waiting period of “first of the month following 90 days.” This would invariably
require new employees to wait 90 days
and then wait additional days until the
first of the month. For this reason, many
Members of the Solo and Small Practice Section recently invited employee benefits
consultant and health insurance expert Chris Free to discuss the implications of
the Affordable Care Act (ACA) on solo and small practitioners. Below, Chris expands on his presentation with further detail and updates to the ACA.
What’s in Your Cart?
The new subsidies are available to individuals through a marketplace called the
exchange, or www.WAHealthPlanFinder.
org. Even better, there are no longer any
health risk questionnaires or pre-existing
condition limitations for individuals. No
one is denied coverage.
Washington state has had the most
successful exchange rollout, when measured by enrollment as a percent of the
population. That’s not to say it hasn’t been
bumpy, for many have been caught up in
technological limbo, even while holding
a cancelation letter from their insurance
carrier. For better or worse, though, the
exchange will be open to new enrollments until March 31, so there is still time
for the bumps to be smoothed over and
get people enrolled.
There was also an intention within the
ACA to help small employers through a
Small Business Health Options Program
(SHOP) exchange. Just like the individual exchange, the SHOP was intended to
deliver an insurance-purchasing experience and deliver subsidies for those who
need them. Unfortunately, Washington
state’s SHOP exchange was unable to
attract more than one carrier — Kaiser
Foundation Health Plan of the Northwest
— to participate.
The Washington exchange reached
out to the federal government to figure
out a workaround that would deliver the
subsidies to employers who purchase
coverage outside of the SHOP, but who
otherwise qualify. Unfortunately, the
federal government took a significant
amount of time to figure this out for
Just after submitting this article to
Practitioners and Small Businesses