Affordable Care Act A Broker s Perspective. Jeffrey M. Barry Barry Insurance Group

Transcription

1 Affordable Care Act A Broker s Perspective Jeffrey M. Barry Barry Insurance Group

2 What Is So Expensive? Is it health insurance? Is it the increased cost of healthcare?

3 Essential Health Benefits Ambulatory patient services, such as doctor's visits and outpatient services Emergency services Hospitalization Maternity and newborn care Mental health and substance use disorder services, including behavioral health treatment Prescription drugs Rehabilitative and habilitative services and devices Laboratory services Preventive and wellness services and chronic disease management Pediatric services, including oral and vision care

4 How Are Businesses Affected? May have to pay penalty. May get tax credit if less than 25 EEs EEs No tax credit. Full time equivelent(30 hours/wk, based on formula for Full Time Equivelents/FTEs)

5 What Are The Rules Today? Census completed. Insurance companies provide preliminary rates. Employer picks one. Applications submitted for final rates. Insurance company provides final rates. Employer signs documents and issues a check.

6 What Are The Rules Tomorrow? Groups Under 50 Census completed. Insurance companies provide community rates. Based on zip code, tobacco usage and group size/age. No medical underwriting. Rates for younger groups will go up and rates for older groups will go down. Employer picks a plan. Employer signs documents and issues a check.

7 What Are The Rules Tomorrow? Groups Over 50(Not much change) Census completed. Insurance companies provide preliminary rates. Employer picks one. Applications submitted for final rates. Insurance company provides final rates. Employer signs documents and issues a check.

8 To Offer or Not to Offer Size of the group is based on the number of Full Time Equivelents(FTEs). FTEs are based on a 120 hour month. Penalties for not offering affordable coverage($3000)-waived until Penalties for not offering coverage at all($2,000)-waived until We ve heard.. I will just 1099 all of my employees? Still considered company employees if they do all of their work for one company.(twc 1099 rules) I will make everyone part time. Your choice but production will suffer. Limiting the size of your company and/or growth.

9 Individual Subsidy Citizens and legal residents with incomes between 100% - 400% of the federal Poverty Level(~$10,800) Income Level Premium as a Percent of Income Up to 133% FPL - 2% of income % FPL 3 4% of income % FPL 4 6.3% of income % FPL % of income % FPL % of income % FPL 9.5% of income

10 Individual Subsidy Example Pat is 45 years old and has an income in 2014 that is 250% of poverty (about $28,735) The cost of the second lowest cost silver plan in the exchange in Pat s area is projected to be about $5,733 Under PPACA, Pat would not be required to pay more than 8.05% of income, or $2,313, to enroll in the second lowest cost silver plan. The tax credit available to Pat would be $3,420 ($5,733 premium minus the $2,313 limit on what Pat must pay).

11 The Mysterious Plans Tier Actuarial Value Deductible Coinsurance Out-of-Pocket Limit Bronze 1 60% $4,375 20% $6,350 Bronze 2 60% $3,475 40% $6,350 Silver 1 70% $2,050 20% $6,350 Silver 2 70% $650 40% $6,350 *NOTE that these are individual amounts.

12 Tax Credits The light at the end of the tunnell!!!

13 Beginning in 2010, business with fewer than 25 full time equivalents and average annual wages of less than $50,000 that pay at least half of the cost of health insurance for their employees are eligible for a tax credit.

14 The full credit is available to employers with 10 or fewer employees and average annual wages of less than $25,000. The credit phases-out as firm size and average wage increases. The credit is capped based on the average health insurance premium in the area where the small business is located

15 Introduced In Two Phases For tax years 2010 to 2013, eligible employers may receive a tax credit of up to 35% of the employer's contribution toward the employee s health insurance premium. For tax years 2014 and later, eligible small businesses that purchase coverage through the state Exchange may receive a tax credit of up to 50% of the employer s contribution toward the employee s health insurance premium.

16 Employers are eligible to take the tax credit for two years. Tax-exempt small businesses meeting these requirements are eligible for tax credits of up to 25% of the employer s contribution toward the employee s health insurance premium for tax years 2010 to 2013, and up to 35% for tax years 2014 and later.

17 An Example $100,000 employer cost for health insurance benefits 20% tax bracket $20,000 deduction Total Cost = $80,000

18 Another Example $100,000 employer cost for health insurance benefits 20% tax bracket, 50% tax credit $50,000 tax credit $10,000 deduction Total Cost = $40,000

19 Tax Credit Rules Max credit at 10 or fewer employees No credit after 25 employees = 15 For each additional employee after #10, you lost 1/15th of your credit Max credit at $25k or less in average wages No credit after $50k in average wages = 25 For each additional $1,000 in average wages after $25k, you lose 1/25th of your credit

20 Reference IRS: Kaiser Family Foundation:

21 Contact Information Jeffrey M. Barry Featherwood Dr., Ste 115 Houston, TX Phone: