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Affordable Care Act Update

Affordable Care Act
Affordable Care Act
Affordable Care Act

Two days after we released our last update, the Federal Government posted on the Department of Labor website that although employers are required to provide the model exchange notice to employees, there will be no fine or penalty for failing to provide the notice.
We don’t believe that these kinds of notice requirements and no fault (no penalty) actions for failing to provide the notices will last long. The vast majority of employers and citizens are still unaware of the requirements that befall them under the ACA. It seems likely that the Fed’s just don’t want to exacerbate what will already be a steep learning curve by imposing fines on employers for learning what their new responsibilities entail under the ACA.

Employers are definitely better represented in Congress at the moment than the average citizen. The Employer Mandate has been postponed one year while the individual mandate still requires each U.S citizen to acquire coverage or face a first year penalty of $95 or 1% of their household income. As the rates for individual coverage available within the exchange are now becoming known, many in the twenty something crowd are in for a bit of sticker shock as premiums can be 5-6 times what individual coverage was outside of the exchange just a year ago. Insurance industry insiders believe it likely that those in the healthy, no pre-existing condition, twenty-something crowd will continue to opt out of coverage rather than pay the much higher insurance premiums for something they believe they will not need.

There is a name for what happens to insurance where only those that need it sign-up for it. It’s called a “Death Spiral”. Health plans in a Death Spiral raise premiums quickly because a higher proportion of unhealthy people sign-up for insurance while the healthy population opts out of coverage. In spite of where you land on the topic of wanting healthcare reform to succeed or fail, some forecasters give the ACA 18-24 months before the rising costs of healthcare require a major reconsideration of reform methodology.