Last week, we discussed the Affordable Care Act’s (ACA) ), commonly known as “Obamacare”, looming October 1, 2013 notice requirement. Now that you have notified your employees of their options under the ACA, you must explain what it means for them.
Many employers are preparing handouts and scheduling all-hands meetings to answer many of these questions. Inevitably, at least some of your employees are going to be confused. Indeed, lawmakers, regulators, and lawyers are scratching their heads as to how to navigate the ACA’s minutiae. To help, we’ve prepared sample answers to a few of the questions most likely to be asked:
Q: Why am I receiving this notice?
A: You have no doubt heard news reports about “Obamacare,” which is also known as “Healthcare Reform” or the “Affordable Care Act”. Under this new law, employers are required to notify all of their employees of their ability to purchase their own insurance coverage under new “Health Insurance Marketplaces.” With all that said, you should know, too, that the new Marketplaces do not impact your eligibility for coverage under the Company's health plan.
Q: Can I purchase insurance on the Health Insurance Marketplace if I find a cheaper plan than the one that the Company offers?
A: Yes. Almost anyone will be eligible to purchase insurance coverage on the Marketplace. However, in the event that the Company offers to provide insurance coverage for you and your dependants, the ACA will then limit the affordability of any plan you could instead obtain in the Marketplace.
Q: Can I qualify for a tax subsidy if I purchase coverage on the Health Insurance Marketplace?
A: Employees whose employers offer them affordable, minimum value coverage will not qualify for a tax subsidy. If you are not eligible for coverage from an employer (or you pay more than 9.5% of your income to purchase coverage through your employer) you may qualify for a subsidy, and you should explore your coverage options on the Marketplace.
Q: Is the health coverage I have through my employer “affordable” and of “minimum value”?
A: This question is difficult. The general rule is that employer-provided-coverage is “affordable” if an employee ultimately does not pay more than 9.5% of his or her income for self-only coverage. Coverage is of “minimum value” if the plan's share of the total benefit costs covered by the employer is no less than 60% of the total cost – in short, if you pay for only 40% and your employer pays for the remaining 60% of all health care costs.
Q: Weren’t the individual mandate penalties delayed until 2015?
A: No. Although certain penalties for large employers have been delayed until 2015, the individual mandate is scheduled to take effect on January 1, 2014. After that, individuals who do not obtain coverage may be subject to an annual penalty equivalent to the greater of $95 or 1% of their household income.
Of course, employees are likely to have many more questions in the months following October 1, 2013. Employers can always refer their employees to various federal government resources, such as www.healthcare.gov, but outside counsel can not only assist in answering these questions, but also in preparing a comprehensive approach to maintaining compliance with the ACA.