The Affordable Care Act (ACA) has elicited significant commentary along the presidential campaign trail and multiple attempts by some members of Congress for its repeal.
So far, however, the law has sustained these attacks, and more employers will be required to offer health insurance to workers this year as the employer mandate is phased in. Beginning January 1, 2016, employers with 50 or more full-time employees are required to offer health insurance to workers or face penalties. Prior to 2016, the mandate applied to employers with 100 or more employees.
For individuals choosing not to buy health insurance, the fee increased to $695 or 2.5% of income, whichever is higher.
Employers receive reprieve on “Cadillac” tax
In the tax and spending package passed by Congress in December 2015, the so-called “Cadillac” tax on high-cost employer health insurance plans was delayed and will not take effect until 2020. The legislation also makes the tax a deduction for businesses.
Originally scheduled to take effect in 2018, the tax was designed to discourage employers from offering high-cost plans. The ACA would apply the 40% tax for insurance premiums that exceed $10,200 for individuals and $27,500 for a family.
Another piece of the ACA was repealed on November 2, 2015, when President Obama signed a two-year budget package. The legislation included a repeal of the ACA’s automatic health-care enrollment requirement. This rule would have required employers with more than 200 full-time employees to automatically enroll their workers in a health plan, unless the employees opted out. The automatic enrollment feature would likely have added to administrative costs for employers.
For more information about fees and deadlines, read Putnam’s investor education piece, “What business owners should know about the Affordable Care Act.”
Health-care costs continue to rise
Despite attempts to temper some of the challenges of implementing the ACA, health-care costs continue to rise, according to a recent report from the Congressional Budget Office (CBO).
Under current law, the cost of employer-provided health insurance is expected to increase nearly 60% over the next 10 years, according to the February report. The average premium for single coverage is expected to rise to $10,000 by 2025 from the current $6,400, and to $24,500 for family coverage, up from $15,500, the CBO stated.
White House budget includes some ACA reforms
While largely considered a political “wish list,” President Obama’s final budget request for fiscal year 2017 included some proposals to reform parts of the ACA.
One proposal attempts to redefine the threshold for plans requiring a “Cadillac” tax, by recalculating the definition of a high-cost plan. In another proposal, President Obama tries to encourage more states to expand Medicaid coverage by allowing the 19 states that have not embraced Medicaid expansion to receive a 100% government match for three years no matter when they plan to expand.
Still, the final budget proposal is not likely to win approval, although elements of the proposal could be advanced by Congress.
More than 12 million insured
About 12.7 million people signed up for health coverage or were re-enrolled for 2016 as of January 31, 2016, according to the Department of Health and Human Services. Also, 2.7 million people ages 18 to 34 are enrolled in health insurance plans in HealthCare.gov states.