As we reported previously, the IRS has delayed the Affordable Care Act’s reporting requirements and so-called “play or pay” assessments until 2015. Individuals and small businesses may wonder why they are still required to comply with the ACA in 2014 when large employers appear to be given a break.
One of the purposes of the ACA is to create conditions that help previously uninsured individuals get insurance. In 2011, over 47 million Americans were uninsured. That same year, the average non-group premium (i.e. amount paid by individuals who did not get health coverage through their employers) was over $400 per month in Vermont. Nationally, 57% of small businesses (50 or fewer employees) offered health coverage to their employees that year, whereas 92% of businesses with 51-100 employees offered health coverage, and 97% of businesses with over 100 employees offered health coverage, according to the Kaiser Family Foundation. While the IRS has delayed the “large employer assessments” that would serve to motivate larger employers to provide health coverage to their employees, in reality, only a relatively small number of large employers do not offer coverage. The employees of small businesses, on the other hand, are less likely to receive health coverage as a benefit.
Does this mean that small businesses are penalized under the ACA? Most small businesses are exempt from the ACA employer assessments, which may apply starting in 2015 only when the total number of FTEs exceeds 50, as we described in a previous post. Vermont law assesses employers who do not provide health coverage for their employees, but this assessment—sometimes called the “Catamount assessment”–predates the Affordable Care Act. And the Affordable Care Act provides some tax incentives to some small employers who elect to provide coverage.
Where does this leave individuals? Individuals in Vermont who cannot get health coverage from their employers (or from Medicaid) will buy health insurance through Vermont Health Connect, or choose not to be insured. Under the Affordable Care Act, individuals who choose not to be insured will pay federal taxes: $95 in 2014. However, individuals who qualify because their income is up to 400% of the federal poverty level, yet do not qualify for other public coverage such as Medicaid, may receive health premium credits and subsidies to offset the cost of insurance. According to Vermont Health Connect’s subsidy calculator, an individual with no children, earning $35,000 per year, may be eligible for $164 in subsidies per month.
The availability of a variety of plans across a range of prices, combined with premium credits and subsidies for qualified individuals, should dramatically increase the number of insured Americans, including Vermonters, in 2014. Since having more people in the insurance market to bring down rates for all people is the goal of the implementation of the Affordable Care Act, keeping the “individual mandate” under the ACA makes sense. Delaying the large employer mandate, on the other hand, will have little effect. Most of the employers affected already offer insurance to their employees and there will be little overall change in the number of people insured as a result of the delay.
The sighs of relief generated by the delay, even by those businesses who would be unaffected by the employer mandate, highlight the level of anxiety and concern among businesses over the coming changes. Our current system of health insurance is known (although not necessarily understandable), even if it is expensive and unfair to many and unsustainable for all of us. Hopefully, the time bought by the Obama administration in delaying the employer mandate will be put to good use by educating businesses and individuals about the ACA’s impacts so that the fear of the unknown and new will not swamp the good that will come of having affordable health insurance coverage available for all people.
The information provided in this blog is generic and based on the general definitions and provisions of the Affordable Care Act and Vermont law. This blog post and the information it contains should not be interpreted as legal advice for any specific situation. Individuals with specific questions about their business are encouraged to consult an attorney.
photo by Adrian Clark