The Affordable Care Act: What Independent Consultants Need to Know

Presented by Independent Worker Experts Gene Zaino and Dave Putt December 2013

Presenters

Gene Zaino President and CEO

Dave Putt VP, Consultant and Client Services

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Agenda

Affordable Care Act

Coverage Options for Independents

Tax and Financial Impacts

MBO’s Approach to Healthcare for ICs

Predictions

The Affordable Care Act Defined

Goal: To Increase the Number of American’s with a minimum level of health Insurance coverage

•  Individual Mandate (effective 1-1-2014) –  Must have health insurance or face a penalty

•  Employer Mandate (effective 1-1-2015) –  Provide health insurance to all full-time employees or face a penalty

•  Public “Marketplace Exchange” –  Created to find and choose insurance coverage –  Impacts ICs private health insurance and medical HRAs

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Options for Independents to Acquire Insurance Independent consultants can obtain minimally qualifying coverage (the coverage required to avoid an IRS penalty) in a number of ways including:

§  The new Health Insurance Marketplace §  Employer-sponsored plans (through a company

like MBO Partners or through a spouse or parent’s employer)

§  Government sponsored plan such as Medicaid §  Individual or Family Health Plan

Looking for coverage?

Public Marketplace Insurance Exchange

•  Marketplace is intended to be a competitive online insurance shop which provides government-regulated and standardized health insurance plans

•  Design is intended to help individuals and businesses compare and chose insurance options

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ü  States can elect to have their own Marketplaces

ü  Broad participation in health insurance is critical; allows expensive medical treatment costs to be spread across a large group instead of just a few

ü  Links to all Marketplaces can be found at www.healthcare.gov

Marketplace Insurance Plans •  Plans are separated into categories based on the % of costs they

cover or “actuarial value”

• Categories are Bronze, , Gold, or Platinum

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Plan Type  

Typical

Deductible  

Typical

Coinsurance  

Out- of- Pocket

Maximum   Bronze  

$5,000  

30%  

$6,350  

Silver  

$2,000  

20%  

$6,350  

Gold  

$0  

20%  

$6,350  

Platinum  

$0  

10%  

$6,350  

Catastrophic Up to age 30  

$6,350  

$0  

$6,350  

Tax Impacts of the ACA for ICs

• Premiums through the Marketplace are after-tax only –  Tax credit for those with household income between 100% and

400% of the poverty line –  Generally, subsidy immaterial once income surpasses $28K

• Private Individual Plan Premiums –  May be deductible but have 7.5% AGI limitation

Unintended Consequences and Nuances Affecting ICs

•  Decline of Private Insurance Market –  State specific

•  Arbitrary Cancellation of Qualifying Plans –  Despite extended deadline

•  Spousal Penalty/Carve-out –  Denial of access –  Higher spousal premium

•  Tax deductibility of premiums –  Insurance bought on the marketplace vs. privately –  Employer cannot pay pre-tax premium payment on plan bought on

the marketplace on behalf of an employee

MBO’s Approach to Healthcare

• Provide Group Plan Coverage • Premiums are Pre-tax • No Spousal Penalties • Coupled with HRA up to $10,000 • Annually review insurance carrier to

ensure best rates

**MBO Associates are professionals whose primary occupation is an independent consultant.**

Additional Benefits MBO Offers

• Retirement Planning • Business Administration –  Personal business manager and online business center

• Tax Withholdings • Business Insurances

Predictions

•  Private Plans will go away if Marketplaces succeed

•  Large employer plans are more attractive – more stable

•  Continuing court cases on aspects of the ACA for years to come

•  ICs will be forced into Marketplace or need large employer plans

•  Exchanges will continue to struggle for the next few years

•  Government subsidy to Insurers goes away and premiums rise

•  Income Taxes will go up to fund the ACA program

Additional Information on MBO Partners

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