.jpg)
Whether you love it, hate it, or fall somewhere in between, the Affordable Care Act, more commonly known as Obamacare, seems certain to remain the law of the land until at least 2017. And with the arrival of 2016, the ACA’s provisions call for certain changes to take effect under the law as Obamacare continues to move in stages toward full implementation.
These changes will affect business owners, individuals, and families, and come in the form of increased paperwork requirements for businesses that want to remain in compliance with the law and stiffer penalties for those who opt not to comply.
Individual Penalties Rise
Because one of the key goals of the ACA is to increase the number of Americans with some form of health insurance, the law provides for penalties for those who fail to purchase qualifying coverage. Individuals, whether single or members of a family, who don’t purchase health insurance must pay either a per-person penalty or a percentage of their income, whichever is higher.
For individuals, the law’s per-person penalties for failure to purchase qualifying coverage are increasing sharply in the new year. The penalties will rise from $325 to $695 per adult and from $162.50 to $347.50 per child. The maximum penalty for families who fail to purchase qualifying coverage will rise from $975 to $2,085.
Alternatively, individual penalties can be calculated at 2.5 percent of household income, up from 2 percent in 2015. The maximum penalty under this method of calculation would be equivalent to the total annual premium for the national average price of a bronze-level plan sold through the marketplace.
Changes under Employer Mandate
Originally scheduled to take effect in 2014, the Employer Shared Responsibility provision of the ACA was postponed and came into force beginning in 2015. However, like other portions of the ACA, its implementation was scheduled in gradual stages. Beginning in 2016, more small and medium-size employers will have to provide health insurance coverage for their employees or face a penalty for failing to do so.
Starting this year, employers with 50 to 99 full-time equivalent employees must provide health insurance for at least 95 percent of their full-time employees and dependents up to the age of 26. Businesses in this category face a fine of $2,000 per employee for failure to provide the minimal coverage required under the law. Employers in this category were exempt until this year from the provisions of the law.
Bigger Employers Affected Too
Like the foregoing category of employers, those with 100 or more full-time equivalent employees will now have to offer health insurance coverage for at least 95 percent of their full-time employees. This is an increase from the 70 percent coverage mandated under the law in 2015. Employers with 49 or fewer full-time employees remain exempt from the Employer Shared Responsibility provisions of the law.
Figuring out who qualifies as a full-time equivalent employee under the ACA requires a good deal of calculation on the part of employers. Under the law, a worker must average at least 30 hours a week in a month or work a total of 130 hours in a calendar month.
For employers, calculating their total number of full-time equivalent employees is just one of the many challenges they face under the ACA. For example, considerable paperwork is required to ensure that employees are advised of their rights under the law, while the employer must also provide the government with documentation that shows compliance with the law.
Employee Notification Requirements
Employers are obligated to inform their employees about the health insurance marketplace and must provide each employee with a “Summary of Benefits and Coverage” form. They also must establish a waiting period of 90 days or less before offering health insurance coverage to new employees.
In an article posted at the website of U.S. News & World Report Health, writer Donna Fuscaldo points out that employers who fail to properly advise their employees or report to the government could find themselves faced with a costly audit by the government.
Steve Jackson, senior vice president of strategic development and channel sales at a Pennsylvania-based payroll services company, told Fuscaldo that employers are facing more audits for failure to maintain proper documentation or report as required by law. “We’ve seen a 300 percent increase year over year in the number of Department of Labor audits,” he said, “and we fully expect to see an increase in audits into 2016.” Most small and medium-size companies don’t have an in-house attorney who can oversee ACA-related operations to ensure that everything is done according to the letter of the law, he said.
SHOP to Serve More Employers
On the plus side, businesses with 50 to 99 full-time equivalent employees can now shop for health insurance coverage on the online marketplace of the Small Business Health Options Program, also known as SHOP. Previously, SHOP was open only to businesses with 50 or fewer full-time equivalent employees.
Although it is primarily a function of the marketplace and not a provision of the law, premiums for health insurance coverage under the ACA seem likely to rise in 2016. An article posted at the website of The Motley Fool notes that health insurers are experiencing financial pressures related to their sale of health insurance coverage under Obamacare. As one of the more extreme examples of such pressures, it points to UnitedHealth’s late 2015 warning that it might have to withdraw from the program. While noting that the UnitedHealth development is fairly extreme, it reports that other health insurers are dealing with these financial pressures by requesting premium hikes, some of which could be substantial.
Fortunately for the vast majority of those purchasing health insurance coverage, the effects of these premium increases will be largely blunted by the subsidies the insureds receive under the law. The article at Motley Fool indicates that those in five states — Arizona, Hawaii, Minnesota, New Mexico, and Tennessee — will see after-credit prices increase, “and most of those cases involve situations in which participants in those states were paying less than the typical amount nationwide.” But someone has to foot the bill for these higher premiums, which means “the federal government will end up paying more of the share of higher premiums to insurance companies, making the demand on the federal budget greater in 2016 than in past years.”
If you’d like to read more about the Affordable Care Act and other topics of interest to health consumers, check out our blog.
Don Amerman is a freelance author who writes extensively about a wide array of nutrition and health-related topics.
We specialize in providing our over 1,000,000 customers with relevant product and condition information created by our professional editorial staff which includes our team of medical writers, medical practitioners, and health educators. eDrugStore.com Staff on Facebook