The Affordable Care Act (the ACA)

How it affects Individuals and Businesses.  Healthcare reform is legislation intended to better our healthcare system in the US. Recent healthcare reform, known as the Affordable Care Act (ACA), will continue to be implemented over the next several years. It imposes complex new rules and guidelines for insurance companies, individuals and employers.

Below you will find some (but certainly not all) highlights of the new law and how it may impact employers and individuals under 65.*

Tax Penalties

Employer Mandate

Employers who have more than 50 or more full-time equivalent employees must offer those employees benefits that pays for 60% of the minimum essential benefits, as established by the ACA, or face a potential penalty.

The penalty applies when you have 50 or more full-time equivalent employees, and do not offer health coverage to them, and at least one employee receives a premium tax credit/cost sharing subsidy in the exchange, your tax penalty is $2,000 annually multiplied by the number of full-time employees (excluding the first 30 employees).   The penalty is increased each year by the growth in insurance premiums.

Individual Mandate

Individuals must now obtain qualifying coverage either through an individual policy or through their employer or face a potential penalty.  Currently the penalty is the greater of $695 for adults ($347.50 for a child) or 2.5% of income.  The maximum family penalty in 2016 is the greater of 2.5% of income or three times the per-adult penalty ($2,085).


  • No pre-existing clause. Insurance companies can no longer increase rates or deny coverage because of a pre-existing condition.
  • Dependents up to age 26 may be added to an insurance policy for both individuals and employer coverage.
  • Gender is no longer a factor in determining rates.
  • Renewal rates are the same as new business rates.
  • Waiting period should not exceed 90 days.

Open Enrollment Period

Individuals must purchase their health insurance during the annual open enrollment period. Failure to do so may result in penalties and having to wait until the next open enrollment to purchase coverage. Employers are able to offer benefits year round or during their normal open enrollment as usual.

Premium Discount/Tax Credits

Individuals and Small Businesses may be eligible for a tax credit under ACA healthcare reform laws.  Thus, the credit is applied as a discount on your monthly insurance premium. Accordingly, to see if you are eligible for a tax credit, please use the Subsidy Calculator provided by the Health Insurance Marketplace.  Or, if you are a business, use the Small Business Tax Credit Calculator provided by the Health Insurance Marketplace.  In any case, both businesses and individuals must purchase benefits through the Health Insurance Marketplace to secure their tax credit.  However, note that you must purchase benefits through the Health Insurance Marketplace to secure your premium discount.

Note:  Neither FSC Securities, nor its registered representatives, offer tax or legal advice.  As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.

Qualifying Coverage

To be in compliance with the new healthcare reform laws and avoid costly penalties, you must purchase Insurance coverage that pays at least 60% of the costs of the following “essential benefits.

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Prescription Drugs
  • Mental health and Substance Abuse disorder services
  • Rehabilitative and habilitative services and devices
  • Pediatric services, including oral and vision care
  • Preventive and wellness services, and chronic disease management

*To ensure you are compliance with the ACA, we recommend you call our office for assistance, as not everyone will interpret the law in the same manner.