The ACA provisions that we have been hearing most about will go into effect in 2014. These include the Exchanges, the Individual Mandate and the Employer Shared Responsibility Excise Tax better known as the “Play or Pay” provisions mentioned above.
States will have to decide by November 2012 between three options for the Exchanges: 1) state based; 2) state and federal partnership; or 3) federally facilitated exchange. As of this writing this is how the various state choices are panning out. Washington state, Oregon, Nevada, California, Utah, Colorado, Kentucky, West Virginia, Maryland, the District of Columbia, New York, Vermont, Massachusetts, Rhode Island, Connecticut and Hawaii have all chosen to have state-based exchanges. Arkansas and Illinois have chosen the state/federal partnership model and Alaska, Texas, Louisiana, Florida, South Carolina, Maine and New Hampshire have chosen to utilize a federally facilitated exchange.
As for the Individual Mandate, individuals must obtain minimum essential health insurance coverage for themselves and their dependents or face the penalties noted above.
The Play or Pay provisions require employers with 50 or more full time equivalent employees (30 hours of service per week) to provide health insurance that meets certain affordability and minimum coverage requirements or pay a penalty of the lesser of $2,000 per employee (minus the first 30 employees) or $3,000 per exchange-certified employee (An employee may qualify for Federal premium assistance if his or her income is less than 400% of the Federal poverty level (approximately $88,000 for a family of four). Of course some employers may think it cheaper simply not to offer health insurance, but rather pay the penalty. This could be penny-wise and pound-foolish. The penalties are not tax deductible as a health insurance contribution would be and the ability to attract and retain critical talent and maintain competitiveness is largely diminished without incentives such as health insurance, not to mention the administrative difficulties in time and effort of calculating and paying the penalty.
2014 effective provisions also include limitation to a maximum of 90 days for coverage waiting periods, prohibitions on dropping coverage for clinical trial participants, complete elimination of all annual limits on benefits and the elimination of pre-existing condition limitations for all participants, This is significant considering the number of individuals denied insurance because of medical conditions A statistic provided by the Commonwealth Fund found that over 13 million non-elderly American adults have been denied insurance because of their pre-existing medical conditions. Additionally, the Kaiser Family Foundation estimated that 21% of individuals who obtained their own health insurance and not through a place of employment were being charged a higher premium because of their condition or offered a plan that excluded coverage for the pre-existing condition.