After all of the excitement of yesterday, with the details of the individual mandate and all, section 1502 is a bit of a letdown. It discusses how to amend the tax code, to alter the tax forms, to make a line for reporting this health coverage status that you are supposed to know and have, or you will get the penalty mentioned in section 1501. Important, but not very interesting to us.
So, we will move on to the next large section – Part II – Employer Responsibilities
Section 1511 sets out a plan for automatically enrolling companies with a large number of employees (>200) into one of the plans they offer.
This is interesting from a scientific point of view. Research has shown that something called the “status quo bias” will lead people to be more likely to enroll in retirement plans if they are opt-out, rather than opt-in. (Eric J. Johnson, and Daniel Goldstein, “Do Defaults Save Lives?” Science, 2003)One can assume, then, that this will probably apply to health insurance as well. Which will automatically avoid any tax penalties for those people who are working for larger firms.
Section 1512 states that the employers have to tell their employees at the time of hire about the health insurance Exchanges, the tax credit premium assistance, and the impact of free choice vouchers on income.
Section 1513 is about legal responsibilities to provide coverage. If a large firm fails to offer any of its full-time employees the chance to enroll in a health insurance plan, while at the same time offering even one full-time employee a health plan, then they must pay a penalty. One assumes this is to prevent executives from being offered health plans that the employees are not. They can still offer then at higher prices, but if they get too expensive, then the employee is eligible for the tax credit. However, if employees take the tax credit, then the businesses are assessed a penalty of $250 per employee per month that this is the case. Large employers, then, cannot just pass all of their costs onto the employee. If you provide free-choice vouchers (explained MUCH later down the road, although included helpfully after section 1515 for information) then that company is NOT subject to this penalty. This is true if the employer has over 50 full-time employees.
Lots more details about how to calculate firm size, and penalty amounts, and full time employees. There is a provision to perform a study to see if this rule has any impact on worker’s wages. A report even!
Section 1514 is like 1502, but for the employers – how to report all of this on their tax forms.
Section 1515 is entitled “Offering of Exchange-Participating Qualified Health Plans Through Cafeteria Plans”. What it boils down to is that if you offer one of these plans, and people enroll in it, even though that makes them eligible for the tax credit, you won’t be charged the tax penalty.
Tomorrow we will move on the Miscellaneous provisions!