Good Neighbor Insurance is continuing to update our clients on the new health insurance laws to you, our clients. It may seem confusing at first but as we “walk” through these laws we will learn the “upside” and the “downside” of what it means to us. With all the changes on the horizon, one of the most common questions asked us at Good Neighbor Insurance, www.gninsurance.com, is “what do these health care laws mean to me”? The simplest answer is: It all depends on how old you are and for whom you work. These changes may seem overwhelming, but a quote from Lao Tse says it all, “the journey of a thousand miles begins with a single step.” So listed below are several steps to help you understand the health care changes which were signed into law on March 22, 2010.
YOUNG ADULTS (26 YEARS AND UNDER)
- If you are 26 years old or younger you may stay on your parents’ insurance policy until the grand age of 27.
- If you buy coverage on your own in the exchanges (see Definition below) you may have access to cheaper health care coverage.
- If you buy the traditional health plans (see Definition below), you will pay less than those older than you.
- Traditional insurance plans in the exchanges may cost more than what you may buy now.
- You must be covered or else you will be fined / penalized. The current fine is under $700 a year for a single person but will be going up each year.
NOTE: As of 2009, 30 percent of Americans ages 19 -29 are now uninsured.
AGES 65 AND UP (MEDICARE AGE)
- You will receive free preventative services under Medicare.
- If you have Medicare Part D (see www.gninsurance.com/medicare.asp), you will pay less when you reach the coverage gap now known as the donut hole.
- If you have Medicare Advantage plan (see https://www.gninsurance.com/medicare-supplement-coverage-for-seniors/), your Rx company may cut your extra benefits or increase your co-pays.
- Until 2019, Medicare beneficiaries earning $85,000 or more, will pay higher Medicare Part B premiums.
NOTE: 10 million seniors now in Medicare Advantage (one of two options in Medicare Part C) plans.
SMALL BUSINESS OWNERS (TYPICALLY BUSINESSES WITH 2-49 EMPLOYEES)
- Starting 2010, if you have 25 or fewer employees, you may be eligible for a tax credit to help you buy coverage for your employees. Check with your accountant to see when and how you may receive this tax credit.
- Starting in 2017 you will be able to purchase group insurance in two ways: (a) by going the normal group option of a group plan or (b) going onto the exchange (see Definition below) with other businesses, thereby purchasing group insurance collectively.
- After 2014 businesses will only be eligible for a possible two-year tax credits to help them purchase coverage.
- Starting in 2014, for those with fewer than 50 employees the employer will be fined around 8 percent of payroll. The fine may be a little lower for those with less than 25 employees. It currently is slated to be between 3-4 percent of his total payroll. This fine will help pay for the “exchange” plans (see Definition below) that his employees may purchase.
- Forty nine employees is the maximum number a company may have without providing group health insurance internally. However, if an employer with less than fifty employees does not provide health care for his employees, the IRS will request a fine of 4-8 percent of his total payroll, depending on the number of employees he has.
- Please realize that every person must have health insurance by 2014. If they do not purchase an individual plan, or through an individual exchange plan, or through an employer group plan, or through one of the federal government plans like Medicare, Medicaid, etc, then that individual will be fined each year by the IRS.
- If one of your employees receives financial health insurance benefits from the US government you as the business owner will be charged a $3000 tax. This tax will even be charged to the business even if your employee’s spouse receives government health insurance benefits. This tax is triggered when your employee or spouse of your employee falls under 1.33 of the poverty chart. It can also be triggered if they receive health insurance benefits from the exchange plan(s) the State has created. This $3000 business tax will be taken out even if the employee or spouse of the employee receives government help for 1 month out of a calendar year.
LARGER COMPANIES (TYPICALLY 50 OR MORE EMPLOYEES)
- In 2014, companies with 50 employees or more will be required to provide their employees with health insurance or face a fine. The fine starts at $2,000 annually per employee for employees #31 and up.
- Group insurance through your employer will have a limit on out-of-pocket spending, which will allow for richer plans than normal.
- However, on the “Cadillac” plans (see Definition below), there will be a 40 percent tax on individual plans that cost over $10,200 annually and over $27,500 annually for a family plan. The tax will apply only to the amount above these two annual figures.
- Premiums will increase due to federal minimum benefits. This will apply on all plans whether purchased through a private insurance carrier, through an individual private health plan, through the exchange, or through small and large group plans. One of the main reasons for premium increases is because all pre-existing conditions will be covered on all government and private health care plans starting for children. These increases will start on September 23, 2010 for children and January 1, 2014 for adults.
- If you do not qualify for subsidies or entrance into an exchange, you may be stuck with your employer’s group plan.
NOTE: Presently, companies with 200 or more employees, 98 percent now offer health benefits.
LOW INCOME EARNERS
- If you are among the lowest wage earners, even if you do not have children or a disability, you will become eligible for Medicaid.
- If you earn less than 400% of the poverty level, about $88,000 in 2009 for a family of 4, you may be eligible for some subsidies to help you buy coverage. Please realize that some of these federal subsidies are taxable as income if you receive them.
- Buying insurance may strain your budget even if you do get subsidies. However, you will have to purchase and maintain coverage unless you qualify for a hardship waiver.
NOTE: By 2014, 16 million low-income Americans will be added to Medicaid.
PEOPLE WITH A PRE-EXISTING CONDITION
- Starting in 2014, you will be able to purchase insurance from any company who sells in your area, and you will pay the same as everyone else in your age group. The company will not be able to place annual or lifetime limits on your coverage, and regulations will limit your out-of-pocket spending.
NOTE: In 2007, 36 percent of Americans were turned down or charged higher premiums because of their pre-existing conditions.
Traditional health plans: Plans that are provided by private health insurance companies such as Blue Cross, Health Net (www.gninsurance.com), United Health Care, Humana, Aetna, etc. These plans are your typical HMOs, PPOs, HSAs, and no co-pay plans.
Exchanges: An organized marketplace for the purchase of health insurance set up as a governmental (usually State government) or quasi-governmental entity to help individuals and business purchase the most cost-effective plans in that State. The US federal government has mandated each State to have at least two exchange plans available for individuals and businesses. The exchanges will bring together private health insurance companies through government minimum requirements to compete for business among individuals and businesses. Exchanges are another option for health insurance and will be predominately run by private health care companies with State and Federal government overseeing the process.
Cadillac plans: These are also called “gold-plated” insurance plans. They are usually defined by the total cost (what you pay for a non-group plan or what the employee and employer pay collectively for a group plan) rather than what the insurance covers. Starting in 2014, there will be a 40 percent tax for individuals whose insurance plan costs over $10,200 annually and for a family whose plan cost over $27,500 annually. Monies over those two annual amounts will be taxed. For example, if your family plan costs $30,000 annually (what you and your emp0loyer pay together for the year), than you will be taxed 40 percent on $2,500 (the difference of what your total cost minus the $27,500).
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