Affordable Care Act (ACA)
From Wikipedia, the free encyclopedia
The Patient Protection and Affordable Care Act (PPACA), commonly called the Affordable Care Act (ACA) or "Obamacare", is a United States federal statute signed into law by President Barack Obama on March 23, 2010. Together with the Health Care and Education Reconciliation Act, it represents the most significant regulatory overhaul of the U.S. healthcare system since the passage of Medicare and Medicaid in 1965.
The ACA was enacted with the goals of increasing the quality and affordability of health insurance, lowering the uninsured rate by expanding public and private insurance coverage, and reducing the costs of healthcare for individuals and the government. It introduced a number of mechanisms—including mandates, subsidies, and insurance exchanges—meant to increase coverage and affordability. The law also requires insurance companies to cover all applicants within new minimum standards and offer the same rates regardless of pre-existing conditions or sex. Additional reforms aimed to reduce costs and improve healthcare outcomes by shifting the system towards quality over quantity through increased competition, regulation, and incentives to streamline the delivery of healthcare. In 2011 the Congressional Budget Office projected that the ACA would lower both future deficits and Medicare spending.
On June 28, 2012, the United States Supreme Court upheld the constitutionality of the ACA's individual mandate as an exercise of Congress's taxing power in the case National Federation of Independent Business v. Sebelius. However, the Court held that states cannot be forced to participate in the ACA's Medicaid expansion under penalty of losing their current Medicaid funding. Since the ruling, the law and its implementation have continued to face challenges in Congress and federal courts, and from some state governments, conservative advocacy groups, labor unions, and small business organizations.
As of April 2014, more than 10 million Americans have enrolled in healthcare coverage since the ACA's launch. This figure includes more than 8 million individuals who have selected insurance through the health insurance marketplaces established by the ACA, and another 3 million who have enrolled in Medicaid during the Act's rollout.
Keywords: ACA, Obamacare, PPACA, Patient Protection and Affordable Care Act
The timeline below shows which ACA provisions are currently in effect and upcoming provisions that will begin soon.
- Dependent Coverage – Extends dependent coverage for adult children up to age 26 for all individual and group policies.
- Medical Loss Ratio Rebate – Requires health plans to report the proportion of premium dollars spent on clinical services and other related costs. Insurers are required to provide rebates for coverage to employers, who can use the rebate to reimburse employees, reduce future premiums, or improve plan benefits.
- Restrictions on Cafeteria Plans – Increases tax on distributions from Health Savings Accounts that are not used for qualified medical expenses from 10% to 20%.
- Summary of Benefits and Coverage – Requires private individual and group health plans to provide a uniform summary of benefits and coverage (SBC) to all applicants and enrollees. The goal is to help consumers compare health insurance coverage options before they enroll and understand their coverage once they sign up.
- Elimination of Employer Medicare Tax Deduction – Eliminates the tax-deduction for employers who receive federal subsidies for Medicare Part D retiree drug payments.
- Limit to FSA Contributions – Limits the contribution amount for a flexible spending account to $2,500, with an annual increase by the cost of living adjustment.
- Medicare Tax Increase – Increases the Medicare Part A (hospital insurance) tax rate on wages by 0.9% (from 1.45% to 2.35%) on earnings over $200,000 for individual taxpayers and $250,000 for married couples filing jointly. Also imposes a 3.8% assessment on unearned income for higher-income taxpayers.
- Notice to Employees of Coverage – Requires employers to provide all employees with a notice describing the health coverage available through insurance exchanges. (Open enrollment begins 10/1/13)
- W-2 Reporting – Requires employers issuing 250 or more Forms W-2 in the preceding calendar year to report the cost of coverage under an employer-sponsored group health plan.
- Automatic Enrollment – Employers with 200 or more employees are required to enroll employees into the employer’s group health insurance plan automatically. This provision has not taken affect pending a final government ruling.
- Health Insurance Marketplaces – Creates state-based health insurance marketplaces that individuals and small businesses with up to 100 employees can use to apply for qualified coverage.
- Individual Insurance Requirement – U.S. citizens and legal residents are required to have and maintain health insurance, or pay a fine starting at $95/person or 1% of income in 2014, increasing to $695 in 2016.
- Limit on Waiting Period – 90 day maximum waiting period for health coverage.
- Nondiscrimination in Eligibility and Benefits – Prevents employer group health plans from discriminating in favor of highly compensated employees.
- Pre-existing Conditions / Annual Limits – Prohibits pre-existing condition exclusions and annual limits on the dollar value of coverage.
- Wellness Incentives program – Permits employers to offer employees rewards of up to 30% (potentially increasing to 50% for programs established to reduce or prevent tobacco use) of the cost of coverage for participating in a wellness program and meeting certain health-related standards.
- Employer Shared Responsibility – Assesses a penalty of $2,000 per full time employee on employers with 100+ employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit. Employers with 100+ employees that provide coverage but have at least one full-time employee who receives a premium tax credit will pay the lesser of $3,000 for each employee receiving a premium credit or $2,000 for each full time employee. In both cases, the first 80 employees are exempt. This exemption is reduced to 30 employees in 2016 and will likely be eliminated after 2016. Learn more about Employer Shared Responsibility
- Employer Shared Responsibility (50-99 employees) – Delays the ESR penalty for employers with 50 to 99 employees until January 1, 2016. Learn more about Employer Shared Responsibility
- Tax on High-Cost Insurance - Imposes a 40% excise tax on employer-sponsored health plans if group health coverage exceeds the following estimated limits: $10,200 for individual coverage and $27,500 for family coverage.
Health Care Reform Overview
The Patient Protection and Affordable Care Act (PPACA), often referred to as Health Care Reform, is a groundbreaking piece of legislation that focuses on making affordable health coverage available to all U.S. citizens. Over the four years since the law was signed in March 2010, there have been notable changes in the health insurance industry that affect insurers, employers, employees and their families. Health care reform has taken center-stage as the legislation continues to evolve with updated mandates and compliance that affect nearly everyone in the U.S. TelePayroll is here to help guide your business through the regulations and mandates brought about by health care reform and to ensure your business remains compliant.
Provisions for Business Owners
With hundreds of provisions mandated by the Affordable Care Act, it is easy to lose track of which rules affect your business. Find out which provisions affect your business and what you need to do to stay compliant:
One of the major provisions of the Affordable Care Act is the responsibility employers have to provide affordable health coverage to their employees, which is called the Employer Shared Responsibility or ESR.
Beginning January 1, 2015, employers with 100 or more full-time equivalent employees who have at least one employee receiving a premium subsidy for coverage will face penalties under the following scenarios:
- The employer doesn’t offer minimum essential coverage to full-time employees and child dependents
- The coverage offered does not provide minimum value of 60% of medical expenses or is found to be unaffordable (exceeds 9.5% of employee’s household income)
In 2015, large employers may be assessed a penalty if they do not offer coverage to at least 70% of their full-time employees. In 2016, this threshold increases to covering 95% of full-time employees. To comply with the Employer Shared Responsibility and avoid penalties, employers must keep track of employee hours in 2014 to figure out how many full-time equivalent employees are on staff.
Solutions for Health Care Reform
The provisions of the Affordable Care Act affect business in a big way and reach much further than the health care industry. New regulations on reporting and monitoring require businesses to put more emphasis on payroll administration, so having a reliable payroll provider is now more important than ever. Our team understands this and we have designed solutions for health care reform that will ensure your business complies with ACA provisions.
TelePayroll has been in the payroll business for over 50 years so you can feel confident that we have the knowledge and experience to keep your business compliant and running smoothly.