Saturday, November 2, 2013

Bad Week for Affordable Care Act--Cancellation Notices and Extension on Mandates.

If you like your current healthcare plan....

A selling point that was often repeated by President Obama was "If you like your doctor, you can keep your doctor. Period. If you like your plan, you can keep your plan. Period." While those on both sides of the political aisle discuss whether this was a lie, the fact is many Americans cannot keep their plans, even if they like it. Numbers ranging from hundreds of thousands, to millions of Americans received cancellation notices from their insurance companies. They cannot keep their health plan as it currently stands.

In the State of Michigan alone, approximately 140,000 people have received their notices.

Extension on Employer Mandate
The requirement for employers with over 50 employees to ensure every full-time worker by January 1, 2014 or pay $2,000 per full-time worker (excluding the first 30 employees) is still technically law, but the IRS will refrain from enforcing tax penalties until January 1, 2015. Sources close to the White House, including posts on the White House web page, cite the concerns of businesses as its main reason for the extension. However, it still urges employers to voluntarily comply if they can, and/or use this extended time to prepare. In either case, it gives health care/employment attorneys more time to consult their business clients as their businesses grow.

Extension on Individual Mandate
The individual mandate has been extended to March 31, 2014. The extension only applies to 2014. In 2014, the penalty is $95 per adult and $47.50 per child (up to $285 per family) or 1% of family income, whichever is greater. In 2015, penalty is $325 per adult, and $162.50 per child (up to $975 per family), or 2% of family income, whichever is greater. From 2016 and beyond, penalty is $695 per adult, $347.50 per child (up to $2,085 per family), or 2.5% of family income, whichever is greater. This extension may be very helpful as the individual mandate can prove costly, since it is designed for and will mostly affect young, healthy Americans who have, to this point, chosen not to pay for healthcare that they feel they don't need. Since insurance companies can no longer turn people down due to pre-existing conditions, the individual mandate curbs any incentive for young Americans to wait until they get sick to get coverage. 

The changes listed above may be tentative, but extensions may be recurring if the ACA continues to run into roadblocks like those experienced this week.