By Deirdre M. Hartmann, CPA, Nisivoccia LLP

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Health care reform, the Accountable Care Act (ACA), which was passed in 2010, was intended to provide more Americans with affordable health care coverage. With many major ACA provisions beginning on January 1, 2014, we’ve partnered with the NJ Society of CPA’s to explain the importance of the impact for individuals and small businesses.   

If you are like many working NJ residents, your employer has a group plan that covers employees for health insurance. Normally, the employer pays a portion of the premium for single coverage, and the employee contributes the balance and pays additional amounts if family coverage is needed.  So, what happens on January 1, 2014?

If you work for a small employer (50 or less full-time equivalent employees) there is no insurance mandate for those employers to provide health insurance to their employees under the ACA.  However, employers with more than 50 full-time equivalent employees will be have to pay an “employer shared responsibility” payment if they don’t offer health insurance or if the health insurance they do offer is considered unaffordable. The employer shared responsibility payment can range from $2,000 to $3,000 per employee. Thus, larger employers will have to decide whether or not they will continue to offer employee health benefits.

So, what will your options be if your employer drops coverage? Starting in 2014, both small employers and individuals will be able to obtain health coverage through affordable insurance exchanges. Think of an insurance exchange as Expedia or Priceline for health insurance. The insurance exchanges can be either state or federally run. New Jersey has chosen to let the federal government run its health insurance exchange. The goal is to promote a competitive and standardized market. The plans to be offered on the exchange will be standardized into four tiers: bronze, silver, gold and platinum. The difference between tiers will be the percentage covered before the patient must pay co-pays, co-insurance or deductibles. For example, take an individual who purchases a bronze plan – the lowest level of coverage – the insurance plan would pay 60 percent of the patient’s health care costs, while the patient would be responsible for 40 percent.  The higher the level of the plan, the less the patient’s out-of-pocket costs are.

Some individuals may decide that even with the exchanges, insurance is still too expensive to purchase. Households with incomes between 100-400 percent of the Federal Poverty Level ($23,050 to $92,200 for a family of four) may qualify for state Medicaid or tax credits that will help supplement the cost of obtaining coverage. Still others may decide to not purchase coverage at all.  For those chosing this option, a penalty will apply. Starting in 2014, the penalty will be the greater of either a flat rate based upon the number of adults and children in the household without coverage, ranging from $47.50 per adult in 2014 to $695 in 2016 and beyond; or a percentage of the family income, ranging from 1 percent in 2014 to 2.5 percent in 2016 and beyond.

The following article was sponsored by the New Jersey Society of CPA’s. For further information you can view their website by clicking HERE.

Deirdre M. Hartmann, CPA, is a principal at Nisivoccia LLP in Mount Arlington. She is a member of the New Jersey Society of CPAs. Contact her at