Back when the ACA was originally passed, it included an “individual mandate” which imposed a penalty on people for not having health insurance. Many argued that Congress did not have the constitutional authority to compel people to purchase health insurance. In 2012, the NFIB v. Sebelius case determined that such constitutional authority exists in the “tax and spend” clause that allows Congress power to levy taxes.
Then, in 2017 the Trump administration reduced the tax to $0, which then raised a question whether it could be called a tax. If not, it could no longer be propped up by the ruling in NFIB. Many argued that this action undercut the law’s legitimacy and rendered it unconstitutional. This was the central argument in California v. Texas, decided June 17th. Instead of providing a ruling on whether the ACA could stand as modified, the Supreme Court held that the plaintiffs lacked eligibility to bring the case, leaving the ACA intact but still vulnerable.
https://www.supremecourt.gov/opinions/20pdf/19-840_6jfm.pdf — full court opinion here
Here is the calculator to check rates with the April first updates (applied May first). If you do nothing, don’t worry you will get them when you file your 2021 tax return.
To our customers call us at 920-544-0058 to apply changes as the application can be tricky and we want to make sure everything the way it should be for you!
Important update on the recently passed American Rescue Plan for members who may be impacted. Passed on March 11, the American Rescue Plan includes provisions that reduce how much members pay for their health insurance coverage in the Marketplace.
Previously the amount of money an individual or family was expected to contribute to their health insurance premiums was capped at 9.83% of the household income. Under the new law, that percentage decreases to 8.5%. All income caps have been removed until 2023.
On April 01, 2021
On-exchange Members have two options.
1.) Call us and let us know that you want to update Information between April 1- May 15, 2021.
• On-exchange members are able re-run or to have their agent re-run your eligibility report to receive the additional tax credits or subsidies. If you are a client, we want to help to make sure everything is done correctly.
• You can select the same plan you are currently enrolled in or can choose a new plan.
• What you have spent towards your deductible and out-of-pocket costs will transfer if they stay on the same plan but might not if you move your plan.
2.) It is okay if you do nothing. If you choose not to update your information but are eligible for additional tax credits or subsidies, they will be reconciled at tax time in 2022.
• You may be eligible to receive a refund if you overpaid.
In either instance, any additional tax credits from January 1- to April 1 will be retroactively applied and reconciled for you when you file your taxes in 2022.
Off-exchange individuals may also want to see if you are newly eligible for tax credits or subsidies beginning April 1.
Off-exchange individuals will need to schedule a phone conference or come in for an appointment to check their eligibility. If you are eligible for a tax credit or subsidy and enroll in a new plan, we will help you cancel/term your existing off-exchange plan.
For additional information, please review this CMS fact sheet. We will share any updates as we receive them.
Please feel free to call or email us with questions (920) 544-0058.
Diane Casey and Jonathan.
Woodhead Insurance Services LLC
IRMAA is an acronym for Medicare’s Income-Related Monthly Adjustment Amount (IRMAA). This is a higher premium charged by Medicare Part B and Medicare Part D to individuals with higher incomes.
Social Security uses the most recent tax return provided by the IRS. This means that the IRMAA determination ends up being based on a tax return from two years ago. For example, the 2020 IRMAA determination is based on 2018 tax return.
The number used is the Modified Adjusted Gross Income (MAGI) and it is a sliding scale. The sliding scale currently starts at $85,000 for individual income and $170,000 for married filing jointly income.
Unlike late enrollment penalties, which can last as long as you have Medicare coverage, IRMAA is calculated every year. You may have to pay the adjustment one year, but not the next if your income falls below the threshold.
So if you will be starting Medicare in the next few years make sure are aware of this increase to your costs. Let us know if you have any questions.
Below are links to Medicare’s website that has the charts for what you will pay for part B and part D premiums.
Changes have been made to make this a more enticing option. Health Reimbursement Arrangements (HRAs), an employer-funded benefits option since the 1970s, will undergo an extensive transformation beginning in January 2020.
An HRA is a type of benefits arrangement in which employers reimburse employees for health insurance expenses like monthly premiums, deductibles, and out-of-pocket medical costs. Both sides of this agreement receive tax benefits, as businesses can claim a tax deduction for the reimbursements and employees are reimbursed for eligible expenses tax-free.
This allows the employer to help fund the cost of healthcare but not take on the administration of the benefits. It gives the employee more freedom to choose a plan that works with their provider of choice, but to ensure that the employee understands the plan and benefits, it is helpful to work with an agent. The health insurance agent will educate and assist your employee to find the right plan for them.
It is not right for all businesses or all employees and there can be pit falls that you will need to comprehend prior to making this decision. Employees cannot use tax credits for health insurance and get employer sponsored payments. For some employees this would push them to higher deductibles. An evaluation would need to be done by an agent. Woodhead Insurance Services LLC is here to help.
Individual Coverage Health Reimbursement Arrangement (ICHRA): In June 2019, the Trump administration finalized new HRA rules that will create two new types of HRAs for 2020. ICHRA, like QSEHRA, will enable businesses to reimburse employees for premiums and other qualified expenses, but there are key differences between the two. ICHRA regulations include the following core features:
- Businesses of any size will be eligible to offer ICHRAs.
- No restrictions on the annual amount employers may reimburse employees.
- Businesses may offer varying terms, and reimbursement allotments, to different employee classes (such as full-time, part-time, seasonal, non-salaried, etc.).
- ICHRAs enable large employers to fulfill the Affordable Care Act’s employer mandate, which requires them to offer affordable, minimum essential health coverage to at least 95 percent of their full-time employees.
- ICHRA terms must remain uniform among employees of the same class, except that businesses may alter allotments based on the employee’s age or the number of dependents. ICHRA contributions, in order to satisfy the employer mandate, must provide employees an opportunity to purchase “affordable” individual market plans. According to the IRS, an ICHRA is considered affordable if “the remaining amount an employee has to pay for a self-only silver plan on the exchange is less than 9.86% of the employee’s household income.”
- ICHRA beneficiaries must maintain individual health coverage, through purchasing on-exchange or off-exchange insurance plans.
Excepted Benefit Health Reimbursement Arrangement (EBHRA): Also coming to the 2020 HRA environment are EBHRAs, another component of the recent Trump administration directive. EBHRAs allow employers to contribute up to $1,800 per year toward their employees’ expenses that are not covered by their group plan. These types of HRAs can be used to reimburse employees for expenses such as short-term insurance and dental, vision and home care, among other certified costs. Under EBHRA regulations, these employers must also offer a group health plan.
How will the new HRA landscape — particularly the arrival of ICHRA — impact employers and employees? What about HR platforms and InsurTech companies?
It’s expected that the new HRA rules, especially the availability of ICHRAs, will transform the employer-sponsored health insurance market by transitioning employees from group plans to the individual market. For employers, this lessens their administrative burden. For employees, this means more personal choice and greater control of their insurance options.
With more businesses eligible to offer HRAs, it’s likely the individual market will grow substantially over the next few years. And, millions of employees will experience shopping for and enrolling in on-exchange and off-exchange individual plans for the first time.
According to a U.S. Departments of Health and Human Services, Labor, and the Treasury estimate, it will take employers around five years to fully adjust to the updated rule, at which time roughly 800,000 businesses will offer ICHRAs. This, the departments’ modeling suggests, will cover about 11 million employees and family members.
The White House calculates that, as an effect of the new directive, the size of the individual market could increase by as much as 50%.
Woodhead Insurance Services it here to help you with your employee needs as they shop for a plan for themselves or their families. Call us today to learn more. 920-544-0058