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Here it is, yet another article on

Obamacare. The bottom line is, we think the Affordable Care Act is here to stay regardless of the next election’s outcome. Changes will likely occur, but aspects will likely continue forever. So let’s talk about the history of the ACA, about important rules yet to go into full effect and about where the ACA is headed. The ACA has faced many challenges,

with two advancing all the way to the Supreme Court. Both times, the Court upheld the act. The first case, National Federation of Independent Business v. Sebelius, questioned the constitutionality of the “individual mandate” requiring Americans to purchase insurance. The Court ruled it was a valid exercise of Congress’ power under the Constitution’s Taxing Clause. The recent King v. Burwell case challenged whether premium tax cred- its could be given for individuals purchasing coverage from the Federally Facilitated Marketplace in states without a state-run exchange. The Court upheld the tax credits. It seems the ACA is here to stay. In

fact, there are many provisions that have yet even to go into full effect.


MARKET RULES Let’s start with small businesses.

While the rules, which include a new rating structure, went into effect in 2014, many employers have transitional policies allowed to delay compliance until as late as 2017. That number actually will grow because in 2016 more employers will be included in the federal government’s

64 Summer 2015

definition of “small” (up to 100 employees), as opposed to 2014–2015, when states have defined sizes and most have used 50 employees as the threshold between small and large. And as more employers move into the “small” group category and as transitional policies expire, many employers will see much higher health insurance premiums.

PLAY OR PAY Other soon-to-be-felt provisions

include penalties for failing to offer quali- fied, affordable coverage to employees. Originally scheduled to be in force in 2014, these were delayed until 2015 and then delayed again until 2016 for employers with less than 100 full-time equivalent employ- ees. But they’re coming. Also in 2016, applicable large employers for the first time will be required to report to the IRS and to their employees regarding their offer of coverage for the prior calendar year.


THE CADILLAC TAX Changes are coming for individuals as

well. For example, penalties for failing to comply with the individual mandate are increasing. In 2014, these totaled $95 per adult and $47.50 per child up to $285 per household, or one percent of household income, whichever is greater. In 2015, these increased to $325 per adult and $162.50 per child up to $975 per household, or two per- cent of annual household income, whichev- er is greater. In 2016, they will increase again to $695 per adult and $347.50 per child, up to $2,085 per household, or 2.5 percent of annual household income— again, whichever is greater. Also in 2018, a 40 percent excise

tax—the so-called “Cadillac tax”—kicks in on health insurance premiums that exceed $10,200 for individual coverage and $27,500 for family coverage. Finally, there’s the Transitional

Reinsurance Program which collects con- tributions from health insurance issuers and self-insured group plans and makes payments to individual health insurance issuers that cover higher cost individuals. It was designed to stabilize premiums in the individual marketplace through 2014– 2016. After 2016, it ends.

WHAT’S AHEAD? While the Affordable Care Act is

more embedded than ever in the health care system, it still can be amended through the legislative process. Of note are two bills, H.R. 879 and H.R. 2050, that would repeal the Cadillac tax, and two bills, S. 1099 and H.R. 1624, that would change the federal definition of small employer to those with up to 50 employees while giving states the option to increase to 100 if they choose. R

Lynn Weirich, AIFA, RHU, CLU, ChFC, is the President of Business Financial Group. BFG was founded in 1998 and partners with employers to provide employee programs through its human resource management, group benefits and retirement plans, and payroll and financial planning services. Securities and Advisory Services offered through Commonwealth Financial Network, member FINRA/SIPC, a Registered Investment Advisor. Business Financial Group is located at 500 North Loop 1604 East, Suite 250, San Antonio, Texas 78232. Lynn may be reached at 210-495-8474.

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