Div A, Title 4: Shared Responsibility

There are two subtitles to this 28 page title, but not really. You see, subtitle A, “Individual responsibility,” is one sentence long: “For an individual’s responsibility to obtain acceptable coverage, see section 59B of the Internal Revenue Code of 1986 (as added by section 501 of this Act).” We’ve already been there: Get insurance coverage or pay an additional 2.5% on taxable income.

Even though Subtitle B (Employer Responsibility) is everything else, it too turns out to be fairly simple (though with lots of tiny details). For that matter we’ve touched on most of it before.

Here’s the simple: Employers are for the most part responsible for helping employees have coverage. They can provide it, paying a portion of the premium (that 30%, not above the 30%). They can pay toward their employee’s individual plans. They can choose not to provide a plan and instead contribute an amount to the Trust Fund. If they’ve a hardship or if they are a small business they don’t have quite as much burden; in two ways. First, these sorts of burdens don’t have quite as heavy an obligation. Second, even that obligation can be offset by credits and subsidies.

Seriously, if you want you can quit reading – I’m just going to go into some of the niggles and breaks now. Though you might want to know…

Still with me? OK, let’s hit the first jaw-dropper. The minimum employer share for a full-time employee is 72.5% of the premium for individual plans and 65% for families. I’ll wait while you catch your breath.

Actually that’s not too far off what most employers who provide do already. It’s still a shock to see. Let’s get a solid handle on it, shall we? The Basic plan individual cap is $5,000. If coming through an employer, then, the employer can be expected to pay $3625 or a bit over $302 a month. For a family that number is $6500.

The employer is not allowed to reduce wages to compensate – it’s employer contribution, not hidden employee contribution. But that amount is the expectation whether it’s employer provided or the employer supplements an individual plan (although the employer is allowed to pay based on “basic”, not on the plan the employee chooses – no being forced to pay for gold plating.)

If the employer chooses instead to pay the trust fund it’s 8% of the employee’s wage. Just for giggles, a family insurance person needs a wage of $81,250 for the employer to pay the same cap. On the other hand the individual employee’s break-even is $45,312.50.

Before you get bent out of shape, remember that there’s still the cost-sharing element – and further that the cap is (probably) higher than the premium should come to. So in reality the employers will probably pay less – emphasize that word “probably”.

I’ll note right here that there will be a lot of employers, particularly those who are heavy in low-wage employees (WalMart and its peers, fast food, etc) who will probably feel much more comfortable paying the 8%. I’m going to point out also that these employees are likely to get screwed unless they hit one of the ‘hardship’ loopholes (which might or might not happen). Most of this ilk will be “large” employers and so the employees won’t be eligible till Y3 or later.

However (grin) while it’s possible there’s a loophole, it appears to me that the employer cannot only provide insurance for some employees. In other words if it’s available for the executives (whether employer provided or employer subsidized) it must be available on the same terms for all. (caveat – the amount paid can be adjusted by work-hours.) Note the company does not have to make a great break for supplemental insurance and for that matter is not required to offer such for everyone. Also (if I’m reading it correctly) they can agree to pay a greater proportion for some employees – everyone gets a minimum but not everyone gets all the breaks.

Employers can set up an automatic enrollment of employees, but the employees must get notice and an opportunity to opt out. The reason for this is that the employers are allowed to have individual plans to which the employer must contribute (to the amount they’d contribute to the company plan).

I’ve already noted that small businesses with payrolls of less than $750,000 per year have lesser participation responsibilities if they choose to just pay the exchange trust fund.

The remainder of this title is about recordkeeping and oversight requirements for the HCA plus the penalties to a company that doesn’t provide support – something I’ve mentioned already. Worse, it’s repetitive as it needs to get written into several parts of the US code – mostly tax code, but a few other place.

There’s a bit more in there about how multiple employers and aggregate employers are covered – mostly ‘it’s proportionate’. And a bit about how agencies who are having THEIR turf trod upon must work out the conflicting authority in light of the laws and requirements. That, though behind the scenes, is going to be a LOT of fun. (sarcasm, folks, unless you’re not touched by it.)

Next will be title 5: IRS code changes. ugh.

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