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Affordable Care Act (Four Part Series)

Courtesy of Keyser Benefits

(Note: This is the 1st article of a 4 part series on the Affordable Care Act courtesy of Keyser Benefits)

What is U.S. Healthcare Reform?

"U.S. Healthcare Reform" typically refers to the Patient Protection and Affordable Care Act (the "ACA"), also known as the "Affordable Care Act","PPACA" or "Obamacare". The ACA was enacted in March of 2010 and includes provisions that go into effect at various times. Some provisions are already effective, others will go into effect over the next several years, and one key provision will not become effective until 2018 (the so-called "Cadillac Tax"). The ACA amended several existing U.S. laws, most notably the Employee Retirement Income Security Act, the Internal Revenue Code, and the Public Health Safety Act.

What is the Individual Mandate?

The individual mandate is a requirement that all "applicable individuals" purchase health insurance or pay a tax penalty. "Applicable individuals" may include both American citizens, wherever located, as well as certain non-U.S. persons as more fully described below. Moreover, not just any health insurance will meet the requirements of the individual mandate, and the failure to purchase the right kind of insurance may result in application of the penalty. The insurance must meet "minimum essential coverage" guidelines (MEC). The penalty is described in more detail below.

What is the Employer Mandate?

The employer mandate is a requirement that any U.S. employer with at least 50 full-time equivalent employees during the preceding calendar year offer its full-time employees health insurance that meets certain requirements. If an employer fails to offer its full-time employees the opportunity to enroll in such insurance, or the employer offers insurance that does not meet certain requirements, and an employee instead receives Federal subsidies for the purchase of insurance on an Exchange, the employer will be required to pay a penalty (described in more detail below). The employer mandate and its accompanying reporting requirements have been delayed one year until January 2015.

What is an Exchange?

An Exchange is a marketplace for the sale of ACA-compliant health insurance to individuals and employees of small businesses. Exchanges will offer coverage options to individuals and will administer tax subsidies to help lower to middle income individuals purchase that coverage. Under the ACA, a state can operate its own Exchange, operate an Exchange in partnership with the Federal government, or take part in the Exchange sponsored by the Federal government. Exchanges are set to open on October 1, 2013 for policies effective January 1, 2014. The availability of tax subsidies is limited by income requirements and would not be available to persons who have or were offered MEC through their employer or through an existing government plan.