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Monday, 02 December 2019 08:16

Individual Mandate Repealed, but Not for These States

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Most HR professionals are aware that the ACA’s individual mandate no longer exists, meaning that most Americans will no longer need to verify on their 2019 tax return that they had health insurance. Not all are aware, however, that there are five states plus the District of Columbia where your employees ARE still subject to their state or District’s individual mandate, most of which are new in the last year. 

The federal requirement to carry minimum essential coverage and the associated penalty for not having health insurance was eliminated due to the Tax Cuts and Jobs Act enacted in late 2017 and went into effect on January 1, 2019. While there is no longer a requirement, individuals are still able to purchase coverage through the marketplaces, and the qualifications for a subsidy to help with those premiums remain the same.

Without the mandate and given rising premium costs, some individuals may elect to take their chances and go without health insurance to save money on a monthly basis. However, we recommend that your employees consider that a medical plan with the lowest coverage amount possible will still be a better option than no coverage at all in the event of something catastrophic. All health plans have an out-of-pocket maximum, which is the most that an individual would be responsible for in a given year. At the very least, the health plan is bankruptcy protection. Even if an employee has $1 million in hospital bills, they would never pay more than your plan’s out-of-pocket maximum (which cannot be higher than $8,150 for an individual in 2020). Without insurance, there is no out-of-pocket maximum, and the employee would be faced with the $1 million in hospital bills themselves!

There are now five states plus the District of Columbia that have their own mandate requiring individuals to have health insurance or pay a penalty. Those states are Massachusetts, New Jersey, Vermont, Rhode Island, and California. If you have employees residing in any of these states, you may wish to remind them that they are indeed required to carry insurance. More information on the potential penalties in these states can be found here

Just a reminder, the repeal of the individual mandate does not affect the employer mandate. Applicable Large Employers (ALEs) who have 50 or more full-time equivalents on average during the prior year are still required to offer their full-time employees minimum essential affordable coverage that meets the minimum value standard. More information on these requirements can be found here.

If you have questions about the individual mandate repeal or any of the Affordable Care Act (ACA) provisions, please contact your Fall River Client Manager today!

Read 1465 times Last modified on Friday, 11 September 2020 15:51