Give me the ACA Basics

The overriding goals of the Patient Protection and Affordable Care Act (P.L. 111-148) were to dramatically expand health insurance coverage, lower the costs of health care, and improve the delivery of health care.  The last two goals are focused specifically on the medical field and how medical service providers are paid.  We will not be covering those.  However, the first goal: dramatically expanding health insurance coverage, is one that affects all of us.

The authors of the Affordable Care Act (theoretically Congress) decided that the best strategy to dramatically increase health insurance coverage would be to encourage everyone to do whatever they needed to do to buy health insurance.  Congress took a two-pronged approach to this strategy: first the ACA requires every individual to secure health insurance and applies penalties for failing to do so; second, the ACA requires employers to obtain health insurance for all Full-Time Employees, or else the employer faces penalties.

Health Insurance is expensive, and not everyone can afford it.  So another critical piece of the ACA is the Premium Tax Credit.  Now this “Advance Premium Tax Credit” is one-of-a-kind as far as we can tell because it is the only refundable tax credit that someone can actually take advantage of during the tax year in which the person “obtains” the credit (as opposed to taking it on their income tax return).  When an individual buys health insurance through an ACA-created health insurance exchange, the APTC gets paid directly to the health insurance company.  If it turns out the individual didn’t qualify for the APTC for that tax year, they have to pay it back when they file their taxes (ouch!).

So the theory is: if we get everyone to buy health insurance, and make it affordable, then we will dramatically expand health insurance coverage.  We can get everyone to buy health insurance by taxing them if they fail to do it, and we can make it affordable by giving tax credits to help them out.  The money we collect from the penalties will go into the pot to pay the money we pay out in tax credits.

…in theory.

For information on determining if your business is an Applicable Large Employer click here.

For information on determining which employees must be offered coverage, and when (as well as the consequences if you do not), click here.

For information on how to count hours of service, click here.

For information specifically on how seasonal workers are treated differently, click here.