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ACA Compliance

On March 23, 2010, President Obama signed the health care reform bill, or Affordable Care Act (ACA), into law. The ACA makes sweeping changes to the U.S. health care system. The ACA’s health care reforms, which are primarily focused on reducing the uninsured population and decreasing health care costs, will be implemented over the next several years.

The Affordable Care Act (ACA) has made a number of significant changes to group health plans since the law was enacted over four years ago. Many of these key reforms became effective in 2014, including health plan design changes, increased wellness program incentives and reinsurance fees.

Additional reforms take effect in 2015 for employers sponsoring group health plans. In 2015, the most significant ACA development impacting employers is the shared responsibility penalty and related reporting requirements for applicable large employers. To prepare for 2015, employers should review upcoming requirements and develop a compliance strategy.

This Legislative Brief provides effective dates for key ACA reforms that affect employers and individuals. Reliance Insurance Group has extensive knowledge of the requirements and standards that employers will be held to be the new law and work to keep their clients within those guidelines. 

Please read below for more information.


Calendar years beginning after Dec. 31, 2013

Health Insurance Provider Fee

The ACA imposes an annual, non-deductible fee on the health insurance sector, allocated across the industry according to market share. The fee does not   apply to companies whose net premiums written are $25 million or less.

Taxable years beginning in 2014

Small Business Health Care Tax Credit

The second phase of the small business tax credit is implemented in 2014. Eligible employers can receive a credit for contributions to purchase health insurance for employees, up to 50 percent of premiums (35 percent for tax-exempt employers).

Delayed for one year, until 2015

Additional one-year delay may apply

Employer Coverage Requirements

See 2015 section below. The employer mandate penalties and related reporting   requirements have been delayed for one year, until 2015. Also, medium-sized   applicable large employers may qualify for an additional delay, until 2016.

Delayed for one year, until 2015

Reporting of Health Insurance Coverage

See   2015 section below. The employer mandate penalties and related reporting   requirements have been delayed for one year, until 2015.

Jan.   1, 2014

Individual Coverage Mandates

Most   individuals must obtain acceptable health insurance coverage or pay a penalty.   Individuals may be eligible for an exemption from the penalty if they cannot   obtain affordable coverage or meet other criteria.

Individual   Health Insurance Subsidies

The ACA   makes federal subsidies available through the Exchanges, in the form of   premium tax credits and cost-sharing reductions, for low-income individuals   who are not eligible for or offered other acceptable coverage.

Health Insurance Exchanges

Each   state must have a state-based competitive marketplace, known as Affordable   Health Insurance Exchanges (Exchanges or Marketplaces), for   individuals and small businesses to purchase private health insurance.

Reinsurance Payments

Health   insurance issuers and third-party administrators (TPAs) must make   contributions based on a federal contribution rate established by HHS. States   may collect additional contributions on top of the federal contribution rate.

Plan years beginning on or   after Jan. 1, 2014

Employer Wellness Programs

Under the   ACA, the potential incentive for employer wellness programs increases to 30   percent of the premium for employee participation in the program or meeting   certain health standards. Employers must offer an alternative standard for   employees for whom it is unreasonably difficult or inadvisable to meet the   standard.

Annual Limits Prohibited                                                                  

Plans   and issuers may not impose annual limits on essential health benefits.

Guaranteed Issue and Renewability

Health   insurance issuers offering health insurance coverage in the individual or   group market in a state must accept every employer and individual in the   state that applies for coverage and must renew or continue to enforce the   coverage at the option of the plan sponsor or the individual. Grandfathered   plans are exempt from this requirement.

Pre-existing Condition Prohibition

Group   health plans and health insurance issuers may not impose pre-existing   condition exclusions on coverage for anyone.

Plan years beginning on or   after Jan. 1, 2014


Nondiscrimination Based on Health Status

Group   health plans and health insurance issuers offering group or individual health   insurance coverage (except grandfathered plans) may not establish rules for   eligibility or continued eligibility based on health status-related factors.

Nondiscrimination in Health Care

Non-grandfathered   group health plans and health insurance issuers offering group or individual coverage   may not discriminate against any provider operating within their scope of   practice. This does not require a plan to contract with any willing provider   or prevent tiered networks. Plans and issuers also cannot discriminate   against individuals based on whether they receive subsidies or cooperate in an   FLSA investigation.

Insurance Premium Restrictions

Health   insurance issuers in the individual and small group markets (except   grandfathered plans) may not charge higher rates due to health status, gender or other factors. Premiums may only vary based only on age, geography, family size and tobacco use. These limits do not apply to issuers in the large   group market unless the state elects to offer large group coverage through the state Exchange.

Excessive Waiting Periods Prohibited

Group   health plans and health insurance issuers offering group or individual health   insurance coverage may not require a waiting period of more than 90 days.

Coverage for Clinical Trial Participants

Non-grandfathered   group health plans and insurance policies may not terminate coverage because   an individual chooses to participate in a clinical trial for cancer or other   life-threatening diseases or deny coverage for routine care that they would otherwise provide just because an individual is enrolled in such a clinical   trial.

Comprehensive Benefits Coverage

Non-grandfathered   plans in the individual or small group market must provide the essential   benefits package required of plans sold in the health insurance Exchanges.

Limits on Cost-sharing

Non-grandfathered group health plans are subject to limits on cost-sharing, or out-of-pocket   costs. The ACA’s annual deductible limit applies only to insured health plans offered in the small group market, whereas the ACA’s out-of-pocket maximum limit applies to all non-grandfathered health plans. However, the Protecting   Access to Medicare Act (enacted on April 1, 2014)   repealed the ACA’s annual deductible   limit, effective as of the date the ACA was enacted, back on March 23,   2010.

After 2014


Automatic Enrollment

Employers   with more than 200 full-time employees that offer health coverage will be   required to automatically enroll new employees (and re-enroll current   employees) in one of the employer’s health plans, subject to any permissible waiting period. Employers will not be required to comply with the automatic enrollment requirements until final regulations are issued and a final effective date is specified.

Jan.   1, 2015

Employer  Coverage Requirements

Applicable   large employers (ALEs) (employers with 50 or more full-time employees, including full-time equivalents) will be subject to penalties if they do not provide   health coverage that meets certain requirements to all full-time employees   and dependents. A full-time employee is one who was employed an   average of at least 30 hours of service per week. The employer mandate   penalties were delayed for one year,   until 2015. Therefore, these payments will not apply for 2014. No other ACA provisions are affected by the delay.

ALEs   with 50-99 employees may qualify for an additional one-year delay, until   2016, if certain eligibility conditions are met.

Coverage   provided on or after Jan. 1, 2015

Reporting of Health Coverage

ALEs and employers with self-insured health plans must report certain health coverage information to the IRS and covered individuals. The first   information returns and related employee statements will be due in 2016 for coverage provided in 2015.

Jan.   1, 2018

High Cost Plan Excise Tax

A 40 percent excise tax (known as a “Cadillac tax”) will be imposed on the excess   benefit of high-cost employer-sponsored health insurance. The annual limit   for purposes of calculating the excess benefit is $10,200 for individuals and   $27,500 for other than individual coverage. Responsibility for the tax is on the “coverage provider,” which can be the insurer, the employer or a third-party administrator.