SUMMARY OF AFFORDABLE CARE ACT
HEALTH CARE REFORM IMPACT IN 2013
While most of the changes take place in 2014 or after, there are some that will occur beginning in January 2013 listed here.
- The Act defines a full-time employee as working 30 hours a week. This does not affect employer contributions but will make the employer’s insurance program subject to different review standards.
- Benefits must begin within 90 days of eligibility.
- Part-time employees can be required to work 1250 hours before they are eligible for insurance coverage.
- Seasonal employees who work less than 6 months, part-time and independent contractors do not need to be covered by the employer plans.
- The employer cost for health, dental, vision, EAP and COBRA insurance will be reported to the IRS on the W2 form with no action taken, the same as deferred compensation is now reported.
- There are defined women’s preventative care benefits provided without charge within the network.
- Each plan must provide a Summary of Benefits in standard form and this will be sent out in January. It outlines plan benefits and can be used to compare the various plans available.
- The Uniform Glossary to define health care terms across the board has been developed and will be posted on websites to make sure that everyone understands the same terms.
- The aggregate limit on essential health care costs is $2 million per year. If not defined as essential a benefit can be capped or eliminated.
- Flexible Spending Accounts for medical care are limited to $2500 per year.
- An Exchange Notice will be provided to employees to allow them to opt for cheaper insurance through the State Exchange system. The California Exchange will be up in mid-2013 and providing insurance and insurance subsidies in 2014.
- There will be heavy marketing of the Exchange benefits to bring eligible people into the program and get them insured.
- There is an increase to the Medicare tax of .9% for those earning over $200,000 and a tax of 3.8% on unearned income, for example, capital gains.
- The Exchange operates like group insurance so that no one will be denied coverage and employees may opt for the Exchange if their cost of insurance through the employer is greater than the Exchange plan with or without subsidy.
- There are penalties to the employer if they fail to provide affordable insurance of no more than 9.5% of household income.
- The option of moving to the Exchange creates the potential for risk redistribution if healthy employees move to the Exchange causing the employer plan costs to increase, and if retirees move to the Exchange the cost of active employee plans could be reduced.