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.
2014 | |
EFFECTIVE DATE | ACA PROVISION |
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. |
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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. |
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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. |
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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. |
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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. |
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Pre-existing Condition Prohibition Group health plans and health insurance issuers may not impose pre-existing condition exclusions on coverage for anyone. |
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Plan years beginning on or after Jan. 1, 2014 (continued) |
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. |
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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. |
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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. |
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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. |
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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. |
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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. |
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After 2014 (delayed) |
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. |
2015 | |
EFFECTIVE DATE | ACA PROVISION |
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. |
2018 | |
EFFECTIVE DATE | ACA PROVISION |
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. |