The Affordable Health Care Act: Incentives for Healthy Lifestyle Changes

The Affordable Health Care Act: Incentives for Healthy Lifestyle Changes

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The Affordable Care Act is here, and it goes into effect Jan 1 2014. Of course, not all of its provisions are enacted, but the major ones seem to be intact. In general, the aim of the ACA is to make insurance available to everyone in the U.S., regardless of whether they would otherwise qualify. In addition, there are supposed to be incentives for individuals to get and stay healthy. How will this law affect you?

Employers

Employers will be required to provide all full-time employees with affordable insurance coverage. If employees whose income falls between 100 percent and 400 percent of the federal poverty level aren’t offered insurance, employers face fines starting at $2,000 per employee.

But it’s not a simple matter of making sure full-timers are covered. The definition of a full-time employee extends beyond the traditional 40 hours per week to include anyone working an average of 30 hours per week per month or 130 hours per calendar month. Only employers with at least 50 employees that meet the definition of "full time" are required to offer insurance to their employees.

Foreign companies with at least 50 full-time employees performing work in the U.S. with U.S. source income are also subject to the law.

Employers can also give incentives to employees who participate in goal-oriented wellness programs. What this means, in practice, is that you’ll pay more for your insurance coverage if you don’t participate  and less if you do.

According to Kaiser Family Foundation, incentives like this correspond with a 14 percent increase in wellness program participation. Research has shown that, for every dollar spent on workplace wellness programs, healthcare and absenteeism costs drop significantly. By some measures, those costs are down $3.27 for every $1 spend on wellness. Absenteeism costs fall $2.73 for every $1 spent.

Employees

While companies like MediGapAdvisors.com are quick to point out that Medicaid will be expanded to 133 percent of the federal poverty level, not everyone will qualify for Medicaid. In general, if you fall between 100 percent and 400 percent of the FPL, you’re eligible for a subsidy for health insurance.

Getting insurance isn’t optional. Individuals who don’t get insurance coverage from their employer will have to buy it through a health insurance marketplace or a state-based exchange. That means if you don’t have insurance right now, start thinking about it. Time is running out. You only have until December to start the process so that you’re covered come January 1.

Even though there’s no medical underwriting, it may take up to 3-4 weeks for all of the paperwork to be processed and for you to receive proof of insurance coverage.

The Penalties

If you fail to obtain insurance, you’ll pay a penalty. The only exception is if the premiums would be more  than 8 percent of your gross income. Otherwise, the flat-rate fees are $95 in 2014, $325 in 2015, $695 in 2016. From there, the plan calls for increases that are indexed to inflation and subject to a cap.

Susan Thomson is a veteran health industry analyst. She enjoys blogging about the causes and effects of changes on the care and the patients.

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