What Are "Unacceptable" Health Insurance Plans?

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There is much talk surrounding the upcoming penalties associated with health insurance reform.
The most significant financial penalty is intended for those who refuse to buy a health plan altogether: either individuals or employers.
That begins in 2014.
At the same time, another financial penalty will be levied against those employers who only offer so-called "unacceptable" health insurance plans.
That provision will affect far more companies.
What does it entail? As many people know, the healthcare reform law creates minimum acceptable standards for coverage.
For example, their plan must cover preventative care services.
However, this provision is more closely related with costs.
According to the legislation, an employer-based health insurance plan is unacceptable if the share of premiums to be covered by an employee reaches over 9.
5 percent of their annual household income.
If their group health insurance fails to meet that standard, the employee will be eligible for a federal insurance subsidy.
As a result, their employer will be forced to pay an annual penalty of $3,000 per employee who requires assistance from the government.
The more employees whom require subsidies, the more they will have to pay the government.
Some predict that up to one-third of large employers will be affected, especially those with predominately low-wage workforces.
Although small businesses with less than 50 employees are exempt from the penalty, and the penalty itself is capped at $2,000 times the number of full-time employees in excess of 30, there is still concern over this provision.
Many experts wonder how employers will be able to determine if the health insurance plans they offer are acceptable cost-wise, because that also depends on any dividend or interest income they may receive, as well as any income from children or a spouse.
Unfortunately, some fear that if this could be determined, employers will make hiring and firing decisions on this basis - employees who would require a subsidy would be given the shaft from such personnel decisions.
One issue will soon be resolved: the administration will release guidelines that will distinguish between the affordability of individual and family health insurance coverage.
Most significantly, what will happen to employers if an employee can afford the former but not the latter.

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