The Affordable Care Act Will Be Here Sooner Than You Think

We’ve all heard that January 1, 2014 is when the “big changes” are taking place. The individual mandate tax goes into effect and requires uninsured American’s to buy insurance. Coverage under the Exchanges will first be effective on that date. All employers will be subject to the Pay or Play provision beginning January 1, 2014.

What many employers do not understand is that the Pay or Play Provision applies to all employers beginning on January 1, 2014. Said in a different way, if an employee currently sponsors a health insurance plan that renews June 1 every year, the Pay or Play Provision will still apply to that employer on January 1, 2014. Employers that offer health plans that do not run on a calendar year basis may mistakenly think that in 2013 they have one last renewal before the Affordable Care Act (ACA) requirements apply to them.

In fact, if an employer were to renew its plan in June, it could do so without complying with all of the new requirements that would otherwise apply on January 1, 2014. However, beginning in January 2014 it will be subject to the Pay or Play Provision regardless of whether it offers benefits to its employees or not.

In order to avoid the Pay or Play penalties, an employer is required to offer Minimum Value, Affordable coverage to all benefit eligible employees as defined by the ACA. Beginning January 1, 2014, this requirement applies to all employers regardless of when their plan renews.

Historically, new health insurance mandates applied to plans beginning at the first renewal following the effective date of the law. In the case of the ACA, the individual mandate, Pay or Play Provision, and ability to buy coverage on the Exchange are intertwined. In order for the ACA to work, it cannot allow individuals to seek out coverage on the Exchange and receive a subsidy where the employer sponsors a health insurance plan that either is not affordable or is not available to that employee. If an individual is employed but their employer does not offer them coverage, the individual will pay the individual mandate tax or go to the Exchange to buy coverage and once again may qualify for a subsidy. In that case, the employer will be subject to the “Pay” portion of the penalty to offset the expense to the government for providing subsidized coverage.

If your health plan renews on a date other than January 1, Mueller QAAS can help you determine if you qualify for Transitional Relief. Transitional relief serves to substantially reduce or eliminate the Pay or Play penalties which would otherwise apply.