The Affordable Care Act, is a combination of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 and will dramatically effect how health care is delivered in the United States. Provisions of the legislation affect not only health care providers, but also most individuals and employers.
The purpose of this legislation was to provide affordable minimum health care benefits to everyone. The legislation provided for the establishment of qualified health plans that will provide for essential health benefits consisting of minimum essential coverage.
The IRS, Department of Labor (DOL), Department of Health and Human Services (HHS), and other agencies have the task of interpreting and enforcing the legislation and to provide guidance.
In 2015, certain employers (i.e., generally those who had an average of at least 50 full-time employees in the previous calendar year) that do not offer health insurance coverage to their full-time employees (and their dependents) must pay a penalty. If an employer offers health insurance coverage that is unaffordable or does not meet a certain minimum value, they may also face penalties. Any penalty paid under this provision is not deductible as a business expense for federal income tax purposes.
Although part-time employees must be considered when determining the applicable large employer status, large employers only need to offer full-time employees (and their dependents) adequate health insurance coverage to avoid the penalty. The rules for determining full-time status is complicated and employers will be subject to many new reporting requirements. If your business is facing the large employer status, it would be best to consult your Certified Public Account to make sure your business is in compliance with the Affordable Care Act.
Individual Mandate for Health Coverage
The health care reform legislation requires most U.S. citizens and legal residents to have minimum health insurance coverage every month beginning on or after January 1, 2014. Those who do not have such health insurance will be subject to a penalty for each month they do not have minimum essential coverage. The penalty will be the greater of a flat fee amount (for each individual not covered by health insurance) or a percentage of household income over a threshold amount. There are certain individuals who meet certain financial or hardship criteria that will be exempt from the mandate.
NOTE: Some of the rules originally enacted have already been repealed, delayed or modified and more changes will occur as The Affordable Care Act is implemented. There are other exceptions to most of the information provided here. To make sure your business is in compliance with The Affordable Care Act, you should contact a Certified Public Account.