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  The Patient Protection and Affordable Care Act (PPACA - commonly called Obamacare) and how it affects you.

Part 2

In February I wrote to our members about the Patient Protection and Affordable Care Act.  You can read my earlier note regarding PPACA here.  In this note, I will only be addressing how PPACA will be affecting individual members.  If you are running an American ministry with more than 50 full-time employees, you may also be affected from a corporate perspective.  If you would like more information about this, please contact us directly.

After much deliberation, we have decided that at this time TTc will not be amending our current policies or creating a new policy to match what is termed in PPACA as an insurance policy with minimum essential coverage.

As a non-US based entity TTc is not directly affected by the law, and are not required to provide insurance policies that comply with PPACA.  However, we did consider such a plan to see if this was going to be best for our members.  Below I have listed some of the reasons that we decided not to do this at this time.

1. TTc will not cover abortion:

One of the minimum essential benefits that a PPACA policy must have is cover for abortions.  TTc will not support in anyway the ending of someone's life.

2. Subsidies not an option:

One of the potential benefits of PPACA for Americans with lower incomes will be that they will be given certain subsidies to purchase compliant insurance cover.

We had considered creating a plan that could take advantage of these subsidies for our members.  However, we subsequently learnt that the only way to access these subsidies is if our plans were sold through one of the new public insurance exchanges that will be launched later this year.  The problem with this would be that we could no longer control who could become one of our members.  Since our inception, we have only ever covered missionaries and church workers, and this remains our primary purpose.  Using a public insurance exchange would force us to open up to anyone, which would be beyond our mission and calling.

3. Many members unaffected by the tax penalty:

One of the elements of Obamacare is the individual mandate.  This mandate requires US taxpayers to have a compliant insurance policy or pay a tax penalty.  However, there are a number of exemptions which a large proportion of our membership will fall under.  These include exemptions for:
  • Non-citizens (including individuals who are not US citizens or nationals for any day during the month and are either non-resident aliens for taxable year that includes the month or individuals who are not lawfully present)
  • Individuals who cannot afford coverage (when an individual does not have access to affordable coverage for a month if that individual's required contribution - determined on an annual basis - for coverage for the month exceeds 8% of the household's income for that taxable year)
  • Households with income below the federal income tax filing threshold
  • Members of Indian tribes
  • Individuals with hardship exemption certification
  • Short coverage gaps (less than three full calendar months and is the first short coverage gap in individual's taxable year, and not taking into account a month where another exemption applies
  • US citizens/residents residing outside the US – where the individuals have established they are residents of a foreign country/countries for an uninterrupted period of 330 days
  • Residents of US territories – individuals are bona fide residents of a possession of the US.

There are several other exemptions which may apply, but I did not think that some of these like "incarcerated individuals" were likely to apply to our membership.  This said, I estimate that 80-90% of our members will be exempt from the individual mandate.

4. Tax penalty smaller than initially thought:

As mentioned, those who do fall under the remit of the individual mandate will have to pay a tax penalty.  However, for any member affected, the penalties are smaller than we had initially thought.  Below are the details of the tax penalties starting in 2014.

2014 US$95 / Adult / Year
US$47.50 / Child / Year
US$285 / Family / Year
Or  1.0% of applicable income, whichever is greater
2015 US$325 / Adult / Year
US$162.50 / Child / Year
US$975 / Family / Year
Or  2.0% of applicable income, whichever is greater
2016 US$695 / Adult / Year
US$347.50 / Child / Year
US$2,085 / Family / Year
Or  2.5% of applicable income, whichever is greater

For example in 2014, a member with taxable income (household income minus any personal exemptions and standard deductions) of US$50,000 would pay a penalty of US$500 for the year.

5. The cost of a compliant policy:

When we studied the feasibility and cost of setting up an Obamacare compliant policy it was clear that the cost of such a policy would be significantly higher than the cost of our current policies plus the tax penalty, even at the 2016 rate.

This is something that we have taken much time to look at and I feel that at this time we are taking the correct course of action.  Please do feel free to contact us if you have any questions.  I recognize that there is certainly a spectrum of knowledge and awareness of the changes that are happening in the US.  Please do be patient with us if you do send questions, as it may take us slightly longer than normal to get back to you with answers.

Below are some questions that we have received from members already, and some of our answers:
  • Do we need to change our coverage?
    1. No, you are not legally obliged to leave TTc and purchase a compliant insurance policy.  If you fall under the individual mandate, which comes into effect in 2014 (you may be exempt under one of the reasons listed above) you have the choice to purchase a compliant policy, or you can choose to stay with us and pay the tax penalty.  This may work out to be cheaper for you.

  • If we stay with TTc, our understanding is that we will be penalized something like US$1,500 a year.  Is this true?
    1. In 2014, it is unlikely that you will have a fine this large, unless your income is in excess of US$150,000.  I do not expect that this will apply for many of our members.  However, the fines do increase in later years.  Please see the table above.

  • Don't you have to cover me for my pre-existing conditions now?
    1. No, TTc are not changing our policies to comply with this aspect of the new legislation.  As a non-US based entity TTc are not required to provide insurance policies that comply with PPACA.

  • I understand that I can now get cover for my 25 year old daughter as my dependent, even though she has a full-time job.
    1. No, TTc are not changing our policies to comply with this aspect of the new legislation.  As a non-US based entity TTc are not required to provide insurance policies that comply with PPACA.

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