A ruling by the Internal Revenue Service (IRS) creates a significant obstacle to a new type of health care network that the Obama administration has promoted as a way to provide better care at lower cost, at least according industry lawyers and providers. Health care markets are rapidly changing as independent doctors and hospitals race to form networks, otherwise known as accountable care organizations, in which they coordinate care for patients. The doctors and hospitals have financial incentives to keep patients healthy and to control costs, and they can share in the savings if they meet performance goals. The new entities, which now cover more than 28 million people, according to Leavitt Partners, help manage care for Medicare beneficiaries, people with employer-sponsored insurance, and consumers who buy coverage through online marketplaces under the Affordable Care Act.
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1. Employers subject to the heath care mandate.
All companies with 50 or more fulltime equivalent employees are required to offer health care benefits to fulltime employees and their dependents. If not provided, they are subject to a fine (see below). The insurance plan must provide “minimum value” (plan pays at least 60% of the cost of covered health benefits and provide substantial coverage of inpatient hospital and doctors services).
2. Fines for non compliance: The amount is the lesser of:
(a) $3,000 times the number of fulltime employees, in excess of 30, who buy a federally subsidized policy through a state exchange and receive a premium assistance tax credit. To avoid this tax, the employer must pay at least 60% of benefit costs. The share of the premium paid by a worker can’t be more than 9.5% of earned income, based on the prior year=s W2. Since large employers are ineligible to buy group coverage on an exchange for two or three years, they should buy coverage through their present insurance brokers. Read more