ACA: The Cost of Non-Enrollment

With the March 31 enrollment deadline looming, the Obama administration is working overtime to encourage uninsured Americans to purchase coverage in state or federal marketplaces. Approximately 50 percent of uninsured consumers plan to remain uninsured for a number of reasons, raising the important question: what is the cost of not enrolling in a valid healthcare plan?

Required Coverage

ACA-compliant health insurance policies must meet the law’s requirements for minimum essential coverage, which includes all government-administered plans as well as new and grandfathered employer plans and coverage offered by universities. While other plans may also meet the minimum essential coverage standard, consumers who hold non-compliant policies will be subject to the same penalty as uninsured consumers. Vision and dental-only plans, workers’ compensation, and healthcare savings accounts do not qualify as compliant policies.

Most consumers are required to carry a compliant healthcare plan; however, the ACA provides a number of exemptions for consumers who are unable to afford a qualifying plan or who fit other criteria.

How does the penalty work?

The 2014 penalty for uninsured consumers is the greater of $95 per adult/$47.50 per child, up to $285 per family, or one percent of your family’s gross adjusted income above the tax return filing threshold. (If your income is not high enough to require a tax filing, you are exempt from the individual mandate.)

Despite the focus on the $95 flat fee, more consumers earn more than the $19,650 that matches the $95 fee and will be required to pay a higher amount. For example, a family earning $50,000 annually would have to pay $297, or one percent of their eligible AGI – $12 more than the flat fee maximum. Though penalties are capped at approximately $9,800, many families do not make enough to meet this cap and will be on the hook for their entire penalty.

Can I enroll after the March 31 deadline?

Your ability to enroll in the federal marketplace after the deadline depends on a number of conditions. Currently, consumers who have attempted to purchase a healthcare plan prior to March 31 will be granted a limited extension to complete their enrollment. Once extensions have ended, you must wait until the next open enrollment period unless you have a change in life situation that qualifies you to enroll.

If you signed up for a policy before March 31 that features a gap in coverage (i.e. does not start immediately), you will not have to pay the penalty. Also, if you are without insurance for less than three months after the deadline you will not have to pay the penalty. For periods longer than three months but less than a year, you will be responsible for each month’s portion of the annual penalty for as long as you are uninsured.

For questions about your specific healthcare needs and plans that are available, visit Healthcare.gov.

ACA: Employer Mandate Receives New Extension

Earlier this week, the IRS released its final rule on the employer mandate. Among provisions regarding employee transition periods and how to classify employees for counting purposes was a new extension of the employer mandate.

After a previous extension moved the start date to January 1, 2015, the mandate is now postponed until 2016 for employers with 50-99 full-time employees. In addition, while large companies with more than 100 employees are still subject to the mandate in 2015, they only have to offer coverage to 70 percent of their full-time workforce for the first year the mandate is in effect.

The Obama administration explained the extension as an effort to give affected companies additional time to come into compliance with the mandate. Two percent of U.S. companies are classified as mid-size and two percent are large, but those companies employ as much as 70 percent of the total labor force in the United States.

Criticism of the announcement centers on frustration that the individual mandate, seen by many to be more of a burden than the employer mandate, went into effect on its originally schedule date of January 1, 2014. Consumers still have six weeks, until March 31, to enroll in a qualifying healthcare plan. The delay of the employer mandate could push a number of those consumers to the online marketplaces if they are unable to obtain a policy through their employer.

The staffing industry is also frustrated with other provisions of the IRS final rule, which limit staffing agencies’ ability to classify their employees as variable-hour or to take advantage of look-back periods to determine their status for insurance purposes. This could potentially raise healthcare costs for these agencies if they are required to provide coverage to employees who are later determined to be variable-hour or part-time.

If you have a nurse staffing agency or work in the medical field and are worried about rising healthcare costs, PRN Funding’s healthcare factoring program can help you turn your receivables into immediate cash. Learn more about healthcare factoring and contact us to get started today.