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What is the Affordable Care Act?

The Affordable Care Act is a federal statute that significantly overhauls the US healthcare system. Provisions of the act have been taking effect between 2010 and 2020, impacting employers, individuals, insurers, and the government.

The Affordable Care Act (ACA) was signed into law in 2010. The full name of the statute is The Patient Protection and Affordable Care Act. It is also often referred to as Health Insurance Reform, Healthcare Reform, and ObamaCare.

The ACA was designed to increase the quality and affordability of health insurance. It introduced a wide range of mandates for employers, individuals, and insurers. The ACA also created subsidies and insurance exchanges to reduce the costs of healthcare for individuals and the government.

For employers, the Affordable Care Act impacts:

  • Benefits administration
  • Payroll, taxes, and fees
  • Employee communications

ACA regulations primarily apply to companies that have at least 50 full-time employees, and are therefore considered Applicable Large Employers (ALEs). These employers must offer full-time employees health care coverage that meets the requirements of the Employer Shared Responsibility regulation, or pay a penalty.

Employer regulations under the ACA include:

Benefits Administration

  • Medical Loss Ratio (MLR) Rebates
  • Dependent Coverage
  • Expanded Women’s Preventive Care Services
  • Flexible Spending Account (FSA) Annual Limit
  • Retiree Prescription Drug Expenses
  • HIPAA Certification
  • Annual Dollar Limits and Waiting Periods / Pre-Existing Condition Exclusions
  • Wellness Incentives
  • Automatic Enrollment & Nondiscrimination Rule
  • Small Group Coverage Reform

Payroll, Taxes, and Fees

  • Patient-Centered Outcomes Research Fee
  • Medicare Tax on Wages and Unearned Income
  • Form W-2 Reporting Forms 1094-C and 1095-C
  • 2014 Employer Shared Responsibility
  • Insurance-Carrier Industry Fee Reinsurance Fees
  • 2015 Employer Shared Responsibility
  • Excise Tax on High-Cost Plans (“Cadillac Tax”)

Employee Communications

  • Summary of Benefits & Coverage (SBC)
  • Employee Notice of Coverage Options
  • “Play or Pay” Individual Mandate
  • Annual Healthcare Reporting: Form 1095-C

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