No Delay in Individual Mandate

We weren’t really expecting a delay, but the New York Times is reporting that “Kathleen Sebelius, the secretary of health and human services, said Wednesday that the Obama administration would not extend the deadline for people to sign up for health insurance or delay the requirement for most Americans to have coverage.”

Sebelius testified before the House Ways and Means Committee Wednesday to discuss the agency’s funding requests for the 2015 budget, but she ended up facing a number of questions about the Affordable Care Act, which has seen a number of delays in the past few months.

The administration’s refusal to delay the individual mandate is probably a good thing. Since all plans are now guaranteed issue, meaning that insurance companies cannot decline to cover an individual due to pre-existing medical conditions, the risk of adverse selection and the higher premiums that go along with it is very high. To help offset that risk, the government is requiring most Americans to have “minimum essential coverage” or pay a penalty.

Though many people say the penalty is only $95 in 2014, that’s just the minimum penalty. As Kaiser Health News reports in its Capsules Blog, the penalty for failure to purchase health insurance is $95 per adult or 1% of the household income, whichever is greater.

The $95 figure has been thrown around so much that “most people who are aware of the penalty think it’s pretty small, at least for this first year. And that could turn into an expensive mistake.”

Still, the bigger incentive to purchase health insurance won’t be the individual mandate; rather, it will be the premium tax credits available to families who earn less than 400% of the Federal Poverty Level. And it’s these tax credits that have employers so confused about what they should do since offering group health insurance generally blocks employees and their family members from the financial assistance.

Fortunately, there is a new analytical tool called the Insight Catalyst Report (ICR) that can help employers evaluate their options. Provided by their insurance agent, usually for a fee, the ICR shows the impact of offering or dropping coverage not only on the employer but also on the employees, a critical consideration that is often left out of the “play or pay” conversations. Click here to learn more about the ICR and Private Exchange opportunity.

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