Susan Morrissey of Morrissey Advisory Services makes a presentation at the Sag Harbor Chamber of Commerce breakfast Wednesday about the impact the Patient Protection and Affordable Care Act will have on local businesses.
By Tessa Raebeck
On October 1, the initial enrollment period for the Affordable Care Act (ACA) begins and the new public health insurance exchange created by the act will go live. Like a number of Americans, many residents of Sag Harbor remain unsure about what these changes mean for them, their businesses and their families.
The Sag Harbor Chamber of Commerce hosted a breakfast Wednesday morning at The American Hotel to explain ACA and its impact on village residents. Licensed broker Susan Morrissey of Morrissey Advisory Services on Bay Street spoke about the act and how it relates to local businesses.
Morrissey, who completed the New York State Health Benefits Exchange certification in the Affordable Care Act just last week, clarified what options are available for small business owners, sole proprietors and individuals.
President Obama signed the Patient Protection and Affordable Care Act into law in 2010, with the intent of providing public health insurance at an affordable rate to the millions of Americans who are uninsured. Some provisions of the law have already taken effect over the past three years, but many are yet to be implemented.
“There are 1.1 million individuals in New York State alone that go uninsured,” said Morrissey Wednesday.
ACA implements a variety of measures that aim to extend coverage and clarify the rights of insured individuals. The act eliminates pre-existing conditions so insurance companies can no longer use them as a reason to deny coverage. It extends the dependent care age to 26, allowing young adults to stay under their parents’ coverage for longer. Insurance companies can no longer legally cancel your coverage if you get sick or charge women more than men for the same plan. Many preventive services, such as HIV screening and immunization vaccines, will now be covered at no cost to the individual.
ACA also eliminates limits on medical costs for essential health benefits, establishes tax credits and subsidies for those who qualify and mandates that every individual have insurance. If you choose to go uninsured in 2014, an annual fine of approximately $95 per adult or $280 per family will be levied. The fines are expected to increase over the next few years.
“Small business employers do not have to offer health insurance to their employees, nor do they have to contribute to premiums,” said Morrissey. “There is no penalty for the small business owner — it all falls on the individual if you choose to go uninsured.”
There will be a virtual health insurance marketplace at healthcare.gov, with plan and cost information available October 1. After you fill out an application with basic information on your income, marital status, etc., it will display the available plans in your area. The marketplace, also referred to as the exchange, will determine whether you qualify for lower out-of-pocket costs, lower costs on your monthly premiums for private insurance plans and free or low-cost coverage through Medicaid or the Children’s Health Insurance Program. The site also offers extensive information on all aspects of the act.
An open enrollment period to sign up for ACA coverage on the exchange will begin October 1 and end March 31, 2014. All those who sign up prior to December 15 will receive coverage beginning January 1, 2014 and lasting one year. Those signing up after December 15 will receive it in subsequent months, so if you sign up on January 15, your coverage would begin on February 1.
Private exchanges still exist, but those who opt for private coverage rather than going on the public exchange will not be entitled to the types of tax credits or subsidies that the ACA provides for when you purchase from the public exchange.
“Individuals and small business owners will have many options to choose from,” said Morrissey. “They’ll be explained in detail. It will have affordable plans and will maintain your records for 10 years. [The exchange] also provides a producer directory and a listing of certified brokers in your local area that you can reach out to help you navigate the system and will communicate to the insurer and the IRS what plans you are on.”
All plans, private and public, are now required to cover “essential health benefits,” which include: prescription coverage, hospital coverage, mental health care, laboratory work, maternity and newborn services, preventative and wellness care, ambulatory services, rehabilitation, emergency room services and pediatric care with oral and vision care.
Issuers are required to provide those they insure with a covered network of doctors, facilities and hospitals in their geographic area.
“Long Island is going to be one geographic area,” said Morrissey. “So they have to have in the plan doctors that are accessible throughout the island.”
Small businesses that purchase insurance from the exchange can qualify for tax credits and subsidies if they have 25 or fewer employees who earn an average annual salary of less than $50,000, a valid business in New York State, offer a qualified health plan to full time employees and contribute at least 50 percent of the premium. Eligibility requires that insurance be purchased on the public exchange.
According to Morrissey, the tax credit for small businesses within the guidelines is 50 percent of medical costs for a taxable company and 35 percent of medical costs for a nontaxable company.
“Let’s just say you do go above 25 employees, it goes to 35,” said Morrissey. “If you’re entitled to the tax credit it will be on a sliding scale, so they won’t take away the whole thing.”
“If you’re an employee and your boss offers a small group plan and you choose to waive that coverage because you want an exchange plan,” explained Morrissey. “You can go out and shop on that exchange. The employee will be paying with after tax dollars for that insurance premium, whereas if they’re part of the group they pay for their insurance with pretax dollars.”
An employer does not have to contribute to a percentage of the premium for an individual who waives their employer insurance coverage. If an individual chooses to opt out of any insurance, they incur the penalty, not their employer.
“Hopefully the individual market rates will be affordable,” said Morrissey. “They’re supposed to be.”
Morrissey encouraged individuals to contact their brokers for free counseling on the upcoming changes.
“I’m in a situation,” she said. “I have a small business, I offer health insurance and I’m going to be researching the exchanges hard because I want to know if I can save on my own insurance. But individuals should definitely use a broker. This is a complicated, big decision.”