Current and Future Impacts
Though some are just now feeling the impacts of healthcare reform, the Affordable Care Act (ACA) was signed into law more than five years ago. In 2010, the ACA began to change the way consumers, employers, insurers and providers view the cost and accessibility of healthcare.
For individuals and business owners, healthcare reform has impacted much more than simply managing health expenses. Healthcare reform has affected individuals and business owners with regard to taxes, the availability of care and even how many hours employees work.
During the 2015 Open Enrollment Period, 11.7 million individuals nationwide enrolled in the Exchanges, according to the Department of Health & Human Services. After a delayed rollout in 2014, about 330,000 have enrolled through the Small Business Health Options Program (SHOP).
The New “Tax Season”
The new dynamics individuals and business owners face with regard to tax implications are significant. Business owners with fewer than 25 full-time employees can potentially qualify for the Small Business Health Care Tax Credit of up to 50 percent of the employer’s contribution toward health insurance. When enrolling through the SHOP, this tax credit generally applies to businesses with average employee salaries of $50,000 per year or less that pay at least 50 percent of the full-time employees’ premium costs.
Beginning in 2016, the ACA will redefine “small group” health insurance to include employers with up to 100 employees (previously up to 50). Employers with their brokers and consultants have significant renewal decisions to make in 2015, as many small group employers have yet to renew into ACA-compliant plans. As the requirement changes, employers continue to consider how many employees are calculated as full-time for the purposes of insurance, taxes and penalties.
Individuals also have new tax implications. Those who did not have health insurance in 2014 must pay a tax penalty totaling the greater of $95 per individual, $285 per family or 1 percent of income. An enrollment extension for 2015 was granted until April 30 for those who meet certain criteria. The tax penalty jumps in 2015 to the greater of $695 per individual, $2,085 per family or 2.5 percent of income for those without insurance.
To Expand or Not to Expand: Medicaid in Florida
Medicaid expansion continues to be a lightning rod politically and in relation to the implementation of the ACA. Generally, premium subsidies are available for health insurance on the Federally Facilitated Marketplace (Federal exchange) in Florida for individuals with incomes between $11,670 and $46,680 (or between $23,850 and $95,400 for a family of four). Those individuals who make less than the requirement for subsidies, but more than the maximum allowed for Medicaid, fall into an income gap impacting their access to health insurance in states, like Florida, that have not expanded Medicaid.
Recently, Governor Rick Scott announced he no longer supports expansion of Florida’s Medicaid program for low-income adults due to skepticism over federal funding in future years. A total of 27 states have expanded Medicaid.
Due to the income gap in Florida without Medicaid expansion, some individuals bordering the low end of the income guidelines for subsidies are having to find part-time or overtime hours to qualify for subsidies.
Health First Health Plans has spoken with many Space Coast residents who fall into these income categories and face these realities. For those who do not qualify for premium subsidies, Health First helps connect individuals to local resources, including the Brevard Health Alliance.
A Supreme Decision
In March, the Supreme Court began hearing arguments in the case of King vs. Burwell regarding the validity of premium subsidies in states using the Federal Exchange.
The plaintiffs are challenging the legality of premium subsidies in states using the Federal Exchange as opposed to subsidies in states that created State-Based Exchanges. This challenge hangs the future implementation of healthcare reform upon the Supreme Court’s interpretation of the phrase “established by the State” in the ACA. During the 2015 Open Enrollment Period, 87 percent of enrollees qualified for subsidies on the Federal Exchange, averaging $263 per month.
If the plaintiffs prevail, the current subsidies of more than six million individuals in states using the Federal Exchange could become invalid and cause significant market disruption unless a transition plan is introduced. Many market analysts predict Plan B alternatives could include the use of private exchanges or existing Web Broker Entities to transition membership in states like Florida.
The outcome of the King vs. Burwell case is expected at the end of June, meanwhile, the future implementation of the ACA hangs in the balance.
Jason Alford is the director of individual sales and product innovation for Health First Health Plans.