Dealer Perspective Newsletter

The answer is no.  Under the Affordable Care Act (ACA or Obamacare), businesses with fewer than 50 full-time employees (or the equivalent in part-time workers) are NOT required to pay for health insurance for their employees and those employers will not face tax penalties if they decide not to buy health insurance for their employees starting in 2014.

Most people must have major medical health insurance in 2014 under the Obamacare individual mandate.  Low income people will be able to enroll on the public exchanges for Medicaid. Most people who earn more than the federal poverty level income and do not have health insurance today (64% according to the recent Princeton Research Associates survey) do not have immediate plans to buy health insurance on the public exchanges because they have until March 31, 2014 to get enrolled in a health insurance plan to avoid the individual tax penalty when filing their 1040s.

Penalty dollars are supposed to help offset the costs of caring for uninsured Americans.  Households with incomes above 400% of Federal Poverty Level will only escape paying tax penalties if insurance in their area costs more than 8% of their taxable income, after taking into account employer contributions or tax credits, or if they have a ‘hardship exemption’ such as home foreclosure.

Most of the benefits of Obamacare are already available to anyone who buys health insurance because the insurance reforms setting national standards for benefit provisions, such as no lifetime maximum and first-dollar coverage regardless of your deductible for certain preventative care, have already been made by health insurance carriers and new policy forms filled with the state insurance authorities.

But, if you want a subsidy (advance premium tax credit from the IRS) to help pay for your health insurance, here are the requirements.  You:

• Must live in the U.S. and purchase one of the metal (bronze, silver, gold, platinum) health insurance plans through your state health insurance exchange, or if your state does not operate an exchange, then through the federal exchange operating in your state.
• Be a U.S. citizen or national, or be lawfully present in the U.S.
• Have a household income between 133% and 400% of the Federal Poverty Level (FPL)
• Cannot be currently incarcerated

Start with the fact that our health care is expensive and so health insurance to pay for our health care is also expensive.  Obamacare is doing little to change the underlying, fundamental cost of health care.

Most people who are currently uninsured say they have not bought health insurance because they cannot afford it (61% according to Princeton Research Associates survey, June 2013), or they have been discouraged from trying to find coverage because of pre-existing health conditions.

The cost of coverage on the new state and federal health insurance exchanges remains one of the biggest surprises of the national health care overhaul, according to independent news outlets, and will only slowly be answered as consumers attempt to renew their existing health plans and enroll in the new ACA health plans with the new 2014 premium rates approved by their state insurance authority.

Normally, more competition means better prices.  But, people trying to purchase health coverage on the exchanges will find their choices and prices vary sharply, depending on where they live.  Some state exchanges have attracted a number of insurers and some newcomers with little or no track record, while people in other states will be limited to already dominant local Blue Cross plans.  The number and variety of health plans is smaller, due to ACA standardization of benefit designs.

To help people afford coverage, federally-subsidized plans will be available through the government exchanges beginning October 2013 and extending through the federal enrollment period, ending March 31, 2014.  This does not mean the actual cost of health insurance will be less; it means the federal government will be paying part of the cost through IRS-determined tax credits for qualifying low income households.  There will be a sliding scale of assistance.  Households with income nearest 100% of the federal poverty level (about $11,000) will get the highest subsidies to buy coverage and the credits slide to zero at 400% of FPL.

The U-Haul Dealer Benefits Program has offered high-value major medical and dental insurance to Dealers and their employees and families through our national private health insurance exchange for over 10 years.  And we continue to do so now that the government exchanges have begin operating this fall.  Some health insurance carriers will be discontinuing coverage, changing benefits or pulling out of certain states beginning January 1, 2014.  If you do not want to be forced to make a decision on affordable health insurance before you are ready, you can line up your coverage now through the U-Haul Dealer Benefits Program.

When you select one of the health insurance plans through U-Haul Dealer Benefits with an effective date up through December 31, 2013, you can be secure knowing that your coverage and monthly premium will stay the same for the next 12 months, if allowed by your state health insurance authority under its interpretation of Obamare.

It is complicated; after all, it is a federal government program.

If you meet residency requirements for subsidies, then your total household income has to be between 100% and 400% of the Federal Poverty Level in order to qualify for a premium tax credit, or subsidy, to limit what you pay for your health insurance.  These subsidies are set on a sliding scale so that what you spend each month for the second least expensive silver plan available in your area is limited to a defined percentage of your income.

Confused? Here is an example:

If your monthly income is 133% of FPL, you would be earning about $1,273 per month in 2013. If you wanted to buy the second least expensive silver plan available in your area, here is how that would work.  At that income level you would have to spend no more than 3% of your income, about $38 per month, to buy that second least expensive plan. The government subsidy pays the rest of your monthly premium.

As your income increases, so does your share of the cost for the monthly premium.  So, if your income rises to 400% of FPL, about $3,832 per month this year, you could spend no more than 9.5% of your monthly income (about $364) for that same plan (the second least expensive silver plan).  So, if the second least expensive silver plan available in your area costs $300 a month, and you earn 400% of FPL, you do not get a subsidy.  But, if the second least expensive silver plan available in your area costs $500 a month, the government would pay the difference between the $500 plan and your $364 cap.  In that scenario you would pay $364 per month for your health insurance plan, and the value of your subsidy would be $136; $500 minus your $364 cap.

Now, if there also happened to be a bronze plan available for $400 a month, you could enroll in that plan and get the same $136 subsidy. In that case, your plan would cost you $264 per month.  Or, if you wanted a gold plan that cost $600 per month, you would apply your $136 per month subsidy and pay $464 per month for your insurance policy.

Yes.  Here is what you get, starting in 2014:

• Applications for health insurance cannot denied because of pre-existing conditions.
• Preventive care services, without cost-sharing
• Mandatory coverage for womens health care (pap smears, birth control, etc.)
• Children can stay on parents health plan until age 26
• No lifetime dollar limits on health insurance for covered benefits
• Medical Loss Ratio requirements enforced on carriers

The tax penalties for individuals start small in 2014 and increase over time.  (Penalties on employers have been postponed until 2015.)

• In 2014, the penalty will be up to $285 per family (the greater of 1.0% of taxable income or $95 per adult and $47.50 per child).
• In 2015, the penalty will be up to $975 per family (the greater of 2.0% of taxable income or $325 per adult and $162.50 per child).
• In 2016, the penalty will be up to $2,085 per family (the greater of 2.5% of taxable income or $695 per adult and $347.50 per child.
• After 2016, the penalty will be increased annually by the increase to the cost-of-living.