Health Care Reform: Key Terms

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Individual mandate: Also known as the minimum coverage provision, intended to increase the number of Americans with coverage. Some people will buy insurance through an employer, while others will be eligible for a government program like Medicare. In June, the U.S. Supreme Court upheld this key part of PPACA with a 5-4 verdict ruling the mandate as constitutional and defining it as a tax. PPACA requires most people to have health insurance, and the individual mandate is a penalty levied upon those who choose not to carry it. Starting in 2014, those who do not have insurance will face penalties of 1 percent of income, or $95, whichever is greater. The amount will grow incrementally each year. 

 

Full-time employee: One who is employed on average at least 30 hours per week.

 

The Employer Shared Responsibility Provision: Taking effect in 2014, this provision applies to employers that have at least 50 full-time employees. It requires employers to offer health insurance, and for it to be adequate and affordable for employees, or the employer faces a fine of $2,000 per FTE (not counting the first 30) or $3,000 per FTE if minimum value is not achieved.

 

Companies with fewer than 50 FTE will not face penalties for not providing health insurance.

 

Small business: One that employs fewer than 50 full-time employees.

 

Affordable Insurance Exchanges: Exchanges will allow individuals and small businesses to compare health plans, get answers to questions, discover tax credit eligibility and enroll in a health plan that meets their needs. For small employers, exchanges are intended to “level the playing field” to allow a better choice of plans and insurers at a lower cost. Starting in 2014, small businesses with fewer than 100 employees will have access to exchanges. Small businesses will also be eligible for tax credits.

 

Small Employer Tax Credits: Companies that have fewer than 25 FTE, have low-wage workers and pay at least half of the premium cost might qualify for tax credits to help pay for insurance. The rate is 35 percent of health insurance premiums until 2013, and is scheduled to increase to 50 percent after 2013. 

 

Automatic Enrollment: Employers that have more than 200 full-time employees are directed to automatically enroll new full-time employees in one of the employer’s health benefits plans, and to continue to enroll current employees in a health benefits plan offered by the employer.