Understanding the Affordable Care Act as a Medical Practice and Employee
Five years ago, when the President signed the Patient Protection and Affordable Care Act (PPACA) into law, it changed the face of healthcare. Individuals and medical practices will be affected differently depending on which side of the coin you are on.
How does it affect individuals?
Effective January 1, 2014, the PPACA required that U.S. Citizens and foreign nationals residing in the country must legally secure health insurance. Any person that is required to file a tax return must provide proof that each household member had health insurance coverage by month.
There are three forms that an individual may receive as proof of insurance:
- IRS Form 1095-A will be issued to individuals who procured insurance through Healthcare.gov or a state marketplace.
- IRS Form 1095-B will be issued by insurance carriers or large employers who self insure to individuals who are covered under employer-sponsored policies issued by the carrier or large employer.
- IRS Form 1095-C will be issued by large employers who sponsor health insurance policies to all employees covered under the policy.
Insurance exchanges will be issuing Form 1095-A and individuals should expect to see them in the next few weeks. However, health insurance carriers and employers are not required to issue Forms 1095-B and 1095-C until the following year for the 2015 tax year.
If your medical practice employees did not have coverage during the year, there will be a minimum $95 penalty assessed with a maximum penalty of $285 per family. These penalties are expected to increase in 2015 and beyond.
How does it affect medical practices when it comes to compliance reporting?
Medical practices with less than 50 full-time employees are not required to provide health insurance or issue reports on their employees’ coverage. If your practice self-insures, then you may be subject to reporting requirements that are designed for large employers.
Your medical practice may receive an advantageous tax credit if you have less than 25 full-time-equivalent (FTE) employees and you paid at least 50% of the employee’s healthcare insurance premiums. The medical practice must also have purchased health coverage through a Small Business Health Options Program (SHOP) exchange.
What if I have more than 50 employees?
If your medical practice consists of 50 or more full-time employees, you must provide qualified health insurance at rates that are affordable for each employee. Reporting requirements related to IRS Codes 6055 and 6056 will be applicable to large employers in 2016, for the 2015 tax year.
Will the ACA impact growth in medical practices?
Growth may be seen within the primary care industry, where historically there was a projected shortage of primary care physicians (PCP). Just a few years ago, the New York Times reported that 48 million people were uninsured and that number represented 15.4% of the country. With the implementation of the ACA, ten essential health benefits are now covered. These include hospitalization, prescription drugs, maternity and newborn care, mental health and substance abuse services.
To jumpstart the supply and demand for qualified PCPs, the ACA created incentives like scholarship funding, loan repayments and forgiveness programs to expand the number of primary care doctors, nurses and physician assistants. Adding an additional PCP to a medical practice could boost your bottom line as you provide another resource that offers preventive care of new patients covered under the law.
What should you do?
Regardless of the size of your medical practice, being aware of how the PPACA affects you, your practice, and your employees is important. Having the ability to field questions and plan for your future can help everyone navigate the changing face of healthcare.