Healthcare Idiosyncrasy: Will You Opt Out of Coverage?

Healthcare Idiosyncrasy: Will You Opt Out of Coverage?

More and more idiosyncrasies of the Affordable Care Act (ACA)/Healthcare Reform are coming to light as the October 1, 2013 date approaches; the date that state and federal health insurance exchanges are to begin enrolling people in plans.

Fast Facts First:

  • Affordable Coverage – Under the ACA, affordable coverage is defined as health insurance offered by the employer that costs the employee less than or equal to 9.5% of their household income.
    • Idiosyncrasy Alert #1 – Health and Human Services (HHS) has ruled that the affordability factor applies ONLY to the cost of the employee, NOT that of insuring the entire family.
  • Tax Credits – Tax credits are available to those that do not have access to Affordable Coverage. This is defined as households whose incomes fall below 400% of federal poverty levels; $94,200 for a family of four.
  • State and Federal Health Exchanges – Affordable Insurance Exchanges are designed to make buying health coverage easier and more affordable (Source: Healthcare.gov). Additionally, please see our recent HR Alert on this.
HR Alert: Health Insurance Exchange

Is Your Employer Subsidizing You AND Your Family?

  • Idiosyncrasy Alert #2– It might be more affordable for an employer to NOT offer health insurance subsidies to an employee AND their family.

Dan Mangan’s article Obamacare penalty: Your family could pay more for insurance outlines a hypothetical example, using data for a family of four earning $50,000, from New York state’s health insurance exchange. His example assumes the family is being offered insurance for the entire family, but paying 50% of the employee’s premium and zero for he rest of the family. In that case, the premium for only the employee is well under the 9.5% affordability threshold. Idiosyncrasy Alert #3 – That also means the rest of the family would be disqualified from using subsidies on the Exchanges.

Idiosyncrasy Alert #4 – Using the same family in New York; if the employer doesn’t offer to pay ANY portion of the employee’s premium, the whole family benefits under the Affordable Coverage rule. Can you opt out of employer coverage to take advantage of a better offering on the state or federal Exchange?

Confused? Need to Know More?

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FosterThomas is a leading professional services company that provides solutions in the areas of Human Resources Consulting and Outsourcing, HR Staffing, Outsourced Recruiting, Employee Benefits Brokerage, Payroll Implementation and Services, HR for Government Contractors, Business Insurance, HR Compliance and Risk Management. We help organizations by providing solutions designed with a focus on cost containment strategies and increasing HR efficiency. FosterThomas HR Consulting was established in 1993 with offices in Annapolis, Maryland (Corporate), McLean, Virginia and Raleigh, North Carolina. Today, FosterThomas occupies a unique position as a full service provider of HR services.

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