The Affordable Care Act and Divorce Part 2

Individuals and Small Business

In Part 1 of this series, I discussed how the Affordable Care Act (ACA) could provide an affordable health insurance option to an individual who lost the coverage he or she had with a spouse when a divorce was granted. In this article, I will discuss how the ACA works for both an individual and a small business.

Individuals

In the past, if you lost the health insurance coverage you had through your spouse as a result of a divorce you had to either:

• Obtain coverage through your own employer
• Purchase a private policy
• Elect the COBRA option from your former spouse’s employer
• Become uninsured

If you were either not employed or did not work for an employer who offered coverage, you either had to purchase coverage under a private plan or obtain coverage under COBRA through your former spouse’s employer.

The problem with obtaining private coverage was that you might not be eligible due to a pre-existing condition. The problem with COBRA was that it was often unaffordable and ended after 36 months, which was a real concern for those with a pre-existing condition.

Now, anyone who does not have health insurance through their employer is eligible to purchase it through the ACA marketplace. Premium credits are available to those whose income is between 100% and 400% of the federal poverty level, which is currently between $11,490 and $45,960 per year for an individual. And tax credits are also available to help eligible people purchase private coverage through the marketplace.

According to a Kaiser Family Foundation study, the unsubsidized cost to an individual purchasing mid-level coverage under the ACA is about $336.00 per month, while the average cost under COBRA would be around $500.00 per month. And you cannot be denied coverage due to a pre-existing condition.

Small Businesses

If you have a business with fewer than 50 employees you can also use the marketplace to purchase coverage for your employees. You may either offer one plan, multiple plans, or allow your employees to select from all the Small Business Marketplace plans available in the county in which they live or work.

Employer contributions can be:

• An uncapped percentage of the cost to the employee
• A capped percentage (a certain percentage up to a particular dollar amount)
• A defined dollar amount

And the business may be eligible for tax credits.

A small business can choose an effective date as early as January 1, 2014 or the first of any month that best meets their needs. So if the current plan you provide your employees ends in July you can choose to have coverage start in August, when that plan ends.

In my next article, I will discuss how the ACA impacts coverage under COBRA.