Business news from the Fredericksburg region.
Affordable Care Act demystified
With all the commotion surrounding the Affordable Care Act, it’s no surprise that many people are unsure of what the nuts and bolts of this law mean for them.
“It doesn’t matter which side of the fence you’re on; it’s here, and we have to figure out how to make it work for us,” said Brad Edwards of Richmond-based Bankers Insurance LLC.
During a recent talk for local businesses, Edwards outlined obligations to employees for both small businesses—those with fewer than 50 full-time equivalent employees, and large businesses—those with more than 50.
Here are a few things about the new health care law that Edwards, a certified insurance counselor and accredited advisor in insurance, said employers and employees alike should know.
The ACA rules generally apply to group health plans. Accident and disability coverage, separate dental and vision plans, liability insurance and some flexible spending accounts (FSAs) will not be affected.
Summary of benefits and coverage papers now will have to conform to a more detailed, uniform template, which must include definitions of standard terms, descriptions of plan coverage, exceptions and limitations, cost-sharing provisions, renewability and continuation, as well as other information.
While employers could previously make changes to a plan without notifying employees, they will now be required to provide 60 days notice before making any material modifications such as enhancement or reduction of covered benefits or services and stricter requirements for receipt of benefits.
For single people earning $200,000 or more a year, or married people earning $250,000 or more, there will be a 0.9 percent increase (from 1.45 percent to 2.35 percent) on the Medicare tax rate for the 2013 tax year.
FSAs—pre-tax money that is set aside for medical expenses and is forfeited at the end of a year—will now be limited to $2,500 a year. This limit does not apply to dependent care FSAs.
All Americans must have health insurance coverage, either individually, through their or their spouse’s job, or through the federal government, by March 31, 2014, or pay a penalty of $95 or one percent of their annual income, whichever is greater. This penalty will increase to $325 or two percent in 2015 and $695 or 2.5 percent in 2016.
Large employers will be required to offer affordable coverage to all full-time employees beginning in 2015 or be subject to fines. “Affordable” is defined as no greater than 9.5 percent of the employee’s annual income, and the plan must cover at least 60 percent of the cost of benefits. “Full time” is defined as any employee who works 30 or more hours a week.
The waiting period for new hires to obtain coverage from their employers will be limited to 90 days.
Edwards made it clear that the contents of his presentations were neither exhaustive nor written in stone.
“With the ever-changing rules and things that are going on, what we said today could be outdated two weeks from now,” Edwards said after his presentation. “It’s something that everybody needs to be on top of.”
At least one local employer found the session helpful in clarifying her questions about the ACA.
“[I came] just to obtain some more information and see what changes have been made—what changes it looks like are going to happen down the road—so we are ready to go on January 1,” said Tasha Browne, vice president of finance and human resources for Lifecare Medical Transports, Inc. “The questions that I didn’t get answered are questions that I don’t think there are answers to yet.”
Bridget Balch: 540/374-5417