The Affordable Care Act
Businesses with 50+ full time equivalent employees must offer a Minimum Essential Coverage (MEC) plan otherwise they could incur a penalty of $2,700 (in 2021) times the number of full time employees (minus the first 30 employees). A $4,060 (in 2021) penalty can also occur if an employee goes to the exchange and gets a subsidy (tax premium credit). Penalties can increase each year by the growth in insurance premiums.
While the ACA “shared responsibility payment” and the individual mandate has been eliminated by the Trump Administration for 2019 and beyond, California has established it’s own individual mandate, so you still may be subject to a specific state tax penalty for non-compliance. The penalty for Californians who go without health insurance is 2.5% of household income or $696 per adult (this number will rise yearly with inflation), whichever is larger.
- Under rules of the ACA, most medical underwriting is no longer allowed, although some premiums may vary based on age and tobacco use.
- Insurance companies can not increase rates or deny coverage because of a pre-existing condition.
- Your dependents can remain on you policy until they turn 26 years old.
- Insurance companies can not consider gender when setting rates.
- Employer renewals must be based on the same rates as new business.
- The waiting period for employer benefits should not exceed 90 days.
Minimum Essential Coverage
Employer paid benefits must comply with the “Essential Benefits” of ACA. Specifically, employers must cover 60% of the costs of the following essential benefits. While not mandated in all states, Individuals in California who do not have employer coverage, or Medicare, must also maintain policies from the marketplace that contain these benefits.
- Ambulatory patient services
- Emergency services
- Maternity and newborn care
- Prescription Drugs
- Mental health and Substance Abuse disorder services
- Rehabilitative and habilitative services and devices
- Pediatric services, including oral and vision care
- Preventive and wellness services, and chronic disease management