Employer Coverage Under Obama Care

With all of the furor over a website that doesn’t work and millions of individual coverage policies being cancelled (actually, to be specific, just not re-offered after they expire at the end of the year), people covered by employer sponsored insurance may be thinking they have escaped the worst of Obama Care. Keep in mind that in the U.S., the vast majority of people are covered by their employer, not through individual policies, so anything impacting employer providing insurance will actually impact many times the number of people currently impacted by Obama Care.

The first impact is a tax (isn’t that what the Supreme Court said all of the penalties and fees in Obama Care were) euphemistically called the “Transitional Reinsurance Program Fee.” This tax is $63 per covered individual in 2014. So if you cover your family of 4 through your employer provided insurance, your employer will be paying $252 to the government for the privilege of providing you insurance in 2014. So those contribution increases you are seeing for next year aren’t just about the rising cost of insurance. A chunk, maybe a large chunk, of the increase is going right to the Federal government.

The second impact is the reporting that will be required later in 2014. Your employer is mandated to tell the Federal government the following about you:

  • The months you and your dependent were covered by company provided insurance.
  • The monthly cost of that insurance in total.
  • The amount you paid (your share of the cost) for that insurance (by the way it’s the law that the employer has to pay at least 60% of the cost so you can pay no more than 40% of the cost or the employer has to pay a penalty).

Keep in mind that your employer isn’t able to share that information with anyone without violating the Health Insurance Portability and Accountability Act (HIPAA), but the government conveniently exempted themselves from those requirements in the Obama Care law. This information will allow the Federal government to determine two things about you.

  1. If you followed the law and had health coverage throughout the entire year (if not you have to pay a penalty, I mean a tax).
  2. If you “cheated” and went to the public health exchange to get a subsidy because you make less than 400% of the Federal poverty limit ($80,000 for a family of 4). See, if your employer provides coverage, then you aren’t eligible for a subsidy even if it costs a big chunk (up to 9%) of your salary.

I guess now that the Affordable Care Act is the law, people are starting to figure out exactly what is in it (remember, it had to pass before we could find out).

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