Starting in 2015, The Affordable Health Care Act guarantees all Americans will have access to quality health insurance coverage regardless of their health status or pre-existing conditions. Some employers will be required to offer this health insurance to their employees, but what you may not know is that all individuals must have health insurance. This means that if you are employed by a company that has less than 50 full-time employees or you are self-employed, you too are required to have insurance or you will be penalized as well.
Employers Must:
- Calculate if they have 50 full-time equivalent employees
- Employee cost of the insurance cannot exceed 9.5% of household income, box 1 of W-2
- The plan must pay for at least 60% of expenses
- There are 4 plans: Bronze = 60% of benefits, Silver = 70%, Gold = 80%, Platinum = 90%
- Lower income taxpayers will get a refundable credit
- If the employee does not want the coverage, they must opt-out
- Coverage must include:
| A. Hospitalization | F. Rehabilitative services |
| B. Maternity & newborn care | G. Lab services |
| C. Mental health | H. Preventive and wellness |
| D. Substance use | I. Chronic disease management |
| E. Prescription drugs | J. Pediatric service with oral and vision care |
Employer Penalties: If an employer that has 50 employees does NOT offer the insurance, they will have to pay penalties = $2,000 per employee, but the 1st 30 employees are not subject to the penalty. The penalty will be charged monthly.
The second penalty that may be assessed = $3,000 per employee if the coverage is not affordable.
Employer Example: XYZ Company has 64 full-time employees and does not provide insurance. XYZ company will be charged a $64,000 penalty ($2,000 x 32 excess employees over 30).
Individuals Must: Individuals who are not covered by an employer plan are required to obtain coverage for himself and dependents. There are exempt persons – total household income $18,700 for family or $9350 per individual, not a citizen of US, in jail, Indian tribe members, or persons of certain faiths will not be required to have the insurance. If required, the penalty is either the greater of $95 per adult and $47.50 per child up to a max of $285 or 1% of the household income. Penalty amounts will increase in 2015 & 2016.
Individual Example: Tom and Nancy are married with 3 children. They do not have health insurance. Their income is $50,000. The penalty is $500 (1% of the household income or $285, whichever is larger).
