The new law provides premium credits to eligible individual’s that will make the coverage more affordable. Eligibility for the subsides is limited to U.S citizens and legal immigrants who meet the income limits. Employees who have access to health insurance through an employer’s plan are not eligible for the subsides unless the employer’s plan does not have an actuarial value of at least 60 percent, or the employee’s share of premiums exceeds 9.5 percent of income.
- Premium tax credits. Refundable premium tax credits are available to eligible individuals and families with incomes between 100 percent and 400 percent of the federal poverty level which enables them to purchase qualified health insurance through a state Affordable Insurance Exchange. The tax credits are based on income and are designed to limit the amount spent on health insurance from 2 percent to a maximum of 9.5 percent of income which makes the insurance affordable. The premium credits are set on a sliding scale and range from 2 percent of income for individuals with incomes between 100 percent and 133 percent of the poverty level to 9.5 percent of income for individuals with incomes between 300 percent and 400 percent of poverty level. This provision becomes effective in 2014.
- Cost sharing subsides are also available that reduce the annual our of pocket payments for the deductibles, coinsurance and other cost sharing provisions. The cost sharing credits which are based on income reduce the annual cost sharing limits and increase the actuarial value of the basic benefit plan benefits. Cost sharing credits are available to people with incomes between 100 percent and 400 percent of the poverty level. This provisions becomes effective in 2014.
- Employer requirements. If an employer with at least 50 full time equivalent employees does not offer minimum essential coverage to full time employees and dependents and has at least one employee receiving a tax credit or cost sharing reduction to help pay for insurance through an exchange, the employer must pay a penalty.
Employees with 50 or more full time equivalent employees that do provide coverage to their employees and have at least one full time employee who is receiving a premium tax credit or cost sharing reduction, will be assessed $3000 for each employee receiving the subsidy or $2000 for each full time employee, whichever is lower. These provisions become effective January 1, 2014.
Finally, large employers with more than 200 employees must automatically enroll new employees in the employer’s lower cost plan if the employee does not enroll in a plan. Employees have the choice to opt out.
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