Texas Associates Blog

Over 3 years have passed since the Obama Administration signed off on the Affordable Care Act which was considered the first step in a long journey towards lowering the number of American citizens without Health Insurance. With the State and Federally-operated Health Insurance Exchanges opening on October 1, and the January 1 2014 deadline looming, it seems we are finally beginning to see the journey towards Nationwide Health Insurance Coverage take pace.

However, a number of hiccups have slowed the implementation of the Affordable Care Act and following the recent postponement of the employer’s mandate, many US citizens and Businesses have been left to ponder the timeframe of Health Care Reform and whether or not it will take off as anticipated. In light of this confusion and uncertainty, here are a few points you need to know so that you and/or your Business can be fully prepared come January 2014.

What the Affordable Care Act means

The Affordable Care Act is a law which requires almost all American citizens to maintain a minimum level of health insurance coverage or else face a tax penalty. It also provides that large employers must offer coverage to full-time employees or else pay a penalty of up to $2,000 per employee. Smaller Business owners must also offer employees Health Insurance coverage but will be eligible for a tax credit to help cover the costs. The law also calls for Insurers to accept applicants regardless of pre-existing conditions or health issues, meaning employees and retirees no longer need an employment relationship to gain access to health coverage.

So far, 25 states have opted for federally-based exchanges while 19 have declared their preference of state-based exchanges. These exchanges will allow US citizens and Business owners to shop for Health Insurance coverage after October 1 which has been set as the opening date. Fees on employers, insurers, drug and device makers and higher earners as well as the introduction of new taxes will help fund the programme which is due to take effect on January 1, 2014.

Healthcare Trends in the US

Employer-based Health Benefits are the dominant source of Health Coverage in the US, however, this form of coverage has steadily declined since the year 2000, something that the Affordable Care Act aims to stabilise and rejuvenate. According to reports, 155.5m non-elderly US citizens with coverage in 2011 were covered by employer-based Health Insurance programmes. That figure represents a stark drop of 14.2m from 2000. The Affordable Care Act targets Employers, Big and Small, in an attempt to make Health Insurance a complete necessity for US citizens who may have opted against it in the past for financial reasons or other.

Over the past 20 years, Health Care Costs in America have increased dramatically, subsequently increasing the financial pressure on Businesses in providing Health Insurance coverage for employees. The Affordable Care Act will see the introduction of tax benefits as part of the long term objective of lowering Medicare costs.

Perhaps the most important figure of all is the 45 million US citizens who lacked Health Insurance in 2012, according to reports. This has been taken as a confirmation of the need for Health Care Reform across the country.

The role of Businesses

From discussing the provisions of the Affordable Care Act in relation to Health Care trends in America, it is clear to see that the substantiality of Health Care Reform will have much to do with the role of US Businesses, big and small. From providing Health Insurance to introducing preventative measures such as Wellness programmes, US Businesses will be at the heart of Health Care Reform.

Although the Employer’s mandate delay has caused confusion among employers, the decision is a clear indication that the implementation of the Affordable Care Act is in fact working. Businesses are still encouraged to purchase employee Health coverage after October 1, however, penalties for failing to provide Health Insurance will not take effect until 2015, giving employers more time to restructure. It has also been suggested that this delay will give the Obama Administration time to look at the law itself and make changes if necessary.

The eventuality factor remains, and employers now have more time to plan ahead and consider the long-term future of their organization. Businesses now have adequate time to conduct a reassessment of their Risk Management Strategy, consider introducing Wellness Programmes and consult their Insurer on the best possible Health Insurance policy that can be incorporated into their overall process. Although you won’t be subject to a penalty, now is the time to act ahead of the October 1 exchange window.

Health Care Reform can be quite confusing for both employers and employees. If you need to study up and see how you you’re affected by the Affordable Care Act, speak to one of our experts.