The sweeping health care reform passed in 2010 finally takes full form in 2014. Here’s what HR needs to know.
The countdown to 2014 — when the entirety of the health care legislation passed in 2010 is set to take effect — has begun.
Three major changes will happen next year as a result of the Affordable Care Act, and each poses challenges for employers.
First, all taxpayers will be required to show proof of health insurance when paying their taxes or pay a penalty. Second, employers with more than 50 full-time employees will be required to provide health insurance or pay a penalty.
Finally, employees will have a choice between purchasing health insurance at work — and receiving the employer contributions — or purchasing it in an exchange and receiving federal subsidies to lower the cost of premiums.
Here’s a more detailed look into what employers need to know to prepare. The Mandate
Every man, woman and child will be required to have health coverage starting in 2014. This means large numbers of the uninsured will join exchanges and take advantage of this new low-cost avenue to purchase health insurance — without exclusions for pre-existing conditions or history.
Many experts, however, believe that only the sick will purchase insurance immediately since they cannot be turned away or charged higher rates. Millions of young, healthy people may simply pay the penalty for at least the first few years — in 2014, the penalty will only be $95 — or wait until they get sick to sign up for insurance.
This is good news if you’re an uninsurable sick person. But for employers, it’s likely to mean higher rates to cover the increased costs to the system.Pay or Play
Starting in 2014, employers with more than 50 full-time employees are required to provide health insurance or else they will have to pay a penalty if at least one employee joins the exchange and receives a subsidy.
The penalty is $2,000 per full-time employee minus 30. In other words, if an employer has 60 full-time employees, it would pay a penalty on 30 employees.
For some businesses, however, paying a penalty may be cheaper than offering insurance. Many companies are considering their options, weighing the impact of dropping insurance on recruitment and its effect on their ability to attract talent.