Health Care Reform at a Glance
Health Care Reform is the common name for the Patient Protection and Affordable Care Act, the landmark legislation Congress passed and signed into law in March 2010. In its first three years, significant changes swept the health insurance landscape, even as the law weathered legislative challenges. The Supreme Court’s upholding of the individual mandate in June 2012 was the law’s final certification, and employers and employees nationwide are now preparing to comply with current and future provisions.
Shared Responsibility for Health Coverage
The Employer Shared Responsibility provisions that start in 2015 could penalize applicable large employers if they do not provide adequate insurance coverage and their employees receive tax credits to purchase insurance.
All existing health insurance plans must now:
- Prohibit lifetime limits and rescissions.
- Restrict annual limits.
- Limit excessive waiting periods.
- Provide coverage for non-dependent children up to age 26; before 2014, this is limited to non-dependent children who do not have employer-issued coverage.
In 2014, group health plans are also required to prohibit pre-existing condition exclusions and annual limits.
Required W-2 Reporting
Employers filing 250 or more Forms W-2 must now report the value of employees’ health benefits on the forms. Learn more about this reporting requirement.
Summary of Benefits and Coverage (SBC) and Uniform Glossary Requirement
Health insurance carriers, group health plans, and their administrators must provide applicants, enrollees, beneficiaries, and participants with an SBC and Uniform Glossary. This is applicable as of the first day of open enrollment on or after September 23, 2012. Learn more about this requirement.
Restrictions on Cafeteria Plans
Flexible spending account contributions are currently capped at $2,500 and exclude over-the-counter medications without a doctor’s prescription as reimbursable expenses. Penalties for non-medical health savings account and medical spending account distributions increase to 20 percent. Learn more about Consumer-Directed Health Care Plans.
Health Insurance Marketplaces
The federal government and states will create and maintain health insurance marketplaces (formerly known as exchanges), where health insurance providers compete for customers on equal terms. The marketplaces will be open to anyone without employer-provided coverage who wants to purchase health insurance. If a state does not create a marketplace, the federal government will create one for it. Marketplace open enrollment begins October 1, 2013 before launching on January 1, 2014.
Employer Penalties for No Coverage
Employers are not required to offer group health insurance. In 2015 however, employers with more than 50 full-time equivalent employees who do not offer coverage (or offer coverage that does not meet the provision’s standards) may be assessed a penalty if even one full-time employee receives a federal government subsidy to purchase coverage through a marketplace.
Employer Penalties for Unaffordable Coverage
In 2015, if an employee opts out of an employer plan because coverage is unaffordable— meaning the premium exceeds 9.5 percent of family income— and obtains a subsidy for coverage through a marketplace, the employer must pay the lesser of:
- $3,000 for each full-time employee receiving a premium credit, or
- $2,000 for each full-time employee, excluding the first 30 full-time employees from the assessment
Employer Penalty for Low-Value Plans
Employers will be penalized if their health plans do not have an actuarial value of at least 60 percent.
Maximum Waiting Period for Coverage
The waiting period for any group health plan beginning on or after January 1, 2014, cannot exceed 90 days. A waiting period is defined as the time that must pass before an employee can be covered under a plan. This applies to employees who are reasonably expected to work full-time at the date of hire.
In 2014, employers with more than 200 employees must automatically enroll employees into employer-offered health insurance plans. Employees can opt out of coverage.
Employer Notice to Employees on Health Insurance Exchanges/Marketplaces
By October 1, 2013, employers are required to provide written notices to all employees — regardless of benefit enrollment status or full- or part-time status — about health coverage options, including notification about federal and state health insurance marketplaces. Employers can send the notices by mail or electronically. In 2014, an employer will have 14 days from the employee's start date to provide a notice.
The Department of Labor has provided model notices for employers who do not offer insurance, as well as for employers who offer coverage to some or all employees.