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The Affordable Care Act

The Affordable Care Act of 2014

•    Requirements of Individuals & Government – The Affordable Care Act in 2014 (ACA) changes the insurance landscape considerably. The ACA requires that all US citizens purchase health insurance either privately or through their employers. Individuals who fail to purchase health insurance are fined or incur a tax penalty calculated as a percentage of their annual income. Low-income earners are eligible for federal subsidies to aid in the purchase of health insurance coverage. To make insurance available, the ACA establishes federal exchanges through which individuals may purchase coverage. It also provides subsidies for states to establish their own insurance exchanges through an expansion of the state’s Medicaid program. As part of the mandatory insurance requirements, insurance companies cannot exclude applicants based upon pre-existing conditions. Collectively, these provisions make health insurance available to all US citizens.

•    Requirements of Businesses – The ACA also places requirements on businesses to sponsor health insurance plans for employees. A business with 50 or more full-time employees (defined as working 30 hours per week during any week of work) must allow employees to purchase health insurance for themselves and their dependents through the employer-sponsored plan. Covered employers who fail to sponsor insurance plans may be subject to fine or tax penalty. The employer incurs a penalty if any employee who qualifies for a federal subsidy based upon her level of income purchases insurance through a federal or state insurance exchange.

•    Discussion: How do you feel about federal requirements for employers to sponsor insurance plans for employees? Why do you think health insurance plans are linked to employment? Can you make an argument for any other methods of providing health insurance access to individuals?

•    Practice Question: Mica is an employee of ABC Corp, a large employer in her state. She makes a very low hourly wage and is worried about her responsibility to purchase health insurance or face a tax penalty. What are the requirements on ABC Corp to sponsor an employer healthcare plan that Mica can purchase? If Mica cannot afford the insurance coverage, what other options are available to her?

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