Every U.S. citizen and legal resident must purchase or have company-sponsored major medical health care insurance beginning Jan. 1, 2014.
Or do they?
Questions and confusion continue to surround the Affordable Care Act, the more than2,000-page health reform law passed in 2010.
For example: Beginning Jan. 1, 2014, employees working for companies with 200 or more full-time workers must be automatically enrolled in a company’s health insurance plan — but employees can opt out.
David Smythe, chair of the School of Business for the University of Phoenix Colorado campus, tried to help answer some of the questions surrounding the law at a Friday morning seminar presented by the Colorado Springs Technology Incubator..
While some provisions of the Affordable Care Act are already in effect, the majority of the legislation becomes law next year, with other provisions taking affect through 2018.
For corporations, one of the most burdensome parts of the legislation is attempting to discern how many employees are actually on the payroll, Smythe said. Congress in 2010 established that all employees working 30 hours per week, or 120 hours per month, are to be part of the calculation that determines who is eligible for health care coverage, Smythe said. Before the law, it was up to employers to decide how many hours — up to 39 — a person could work and still be part-time.
Still, determining who qualifies for health care insurance remains complicated. For example: seasonal employees must be included in the FTE calculations, unless they work less than 120 days — or four months a year — and are classified as seasonal on payrolls.
Contract employees are not included in FTE equations, and the Internal Revenue Service is watching employers to make sure they don’t dump current full-time workers onto self-employed rosters. But that won’t keep some employers from ditching employees altogether to lower health care costs, Smythe said.
“I have already been told by some employers that they will reduce their rosters,” he said. “Three million to 5 million people could lose their company-sponsored health plans because it will be cheaper to pay the tax.”
“The tax” is a $2,000 penalty that all employers with 50 or more employees must pay the federal government if they don’t provide health care coverage to employees.
Smythe warned of several other issues, including:
• “Many of the 30.1 million people in the country who have purchased their own (insurance) plan may need to get another one because their plans won’t meet the federal government’s minimum 60 percent coverage requirement,” he said.
• Medicare tax costs will increase by 3.8 percent for individuals with incomes of $200,000 and couples with $250,000.
• Insurance companies that offer plans deemed Cadillac plans — coverage that costs $10,200 or more annually for individuals or $27,400 annually for couples — will be accessed a 40 percent excise tax penalty. “That tax will undoubtedly be passed on to consumers,” Smythe said.
Contact Ned Hunter: 636-0275.