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American Insurance NW Inc. Blog

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Health Care Reform - A Closer Look

It appears that the Patient Protection and Affordable Care Act (PPACA) is here to stay.  It survived the constitutional challenge in the US Supreme Court and the electoral challenge with the re-election of President Obama.    Now,  that we are just a year away from full implementation, it’s time to take a closer look and see how this landmark legislation will affect you, your health care and your pocket book.

First, when you realize that the law does not apply to 96% all of business firms things get simpler. Only employers with 50 or more full-time employees are subject to the law so most businesses have no requirements at all.

Beginning in 2014, only employers with 50 or more full-time employees will be subject to a tax penalty if they don’t provide health insurance.   

So, the main impact of the Affordable Care Act falls on individuals. Beginning in 2014, just a year away, virtually every U.S. citizen and legal resident will be required to purchase health insurance or face a tax penalty.  There are only a few exceptions from the individual mandate –

  • Religious Reasons
  • Undocumented immigrants
  • Incarcerated citizens
  • Members of Native American tribes
  • Those with family income below the threshold requiring a tax return

To satisfy the mandate, individuals must obtain health insurance for the entire year through one of the following sources:  Medicare, Medicaid, CHIP, veteran’s health programs, a plan offered by an employer, or health insurance purchased on your own or through a Health  Insurance Exchange that qualifies as a Bronze level plan (60% actuarial value).  Many individuals will be eligible for subsidized premiums through the Health Insurance Exchanges.

The penalty for non-compliance will be phased-in  according the following schedule:

2014 - $95 or 1% of income (whichever is higher)

2015 - $325 or 2% of income (whichever is higher)

2016 - $695 or 2.5% of income (whichever is higher)

After 2016 – the penalty will be increased annually by the cost-of-living adjustment


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