Table of Contents

Table of Contents

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Enacted in 2010, the Affordable Care Act continues to be a challenge for many employers. Continue reading to learn more about ACA, its impact on both the employer and employee and what your organization should be doing.

What Is the Affordable Care Act (ACA)?

The Patient Protection and Affordable Care Act (PPAC), also known as the Affordable Care Act (ACA), is a comprehensive healthcare reform that was passed on March 21, 2010 and enacted on March 23, 2010. The main provisions of the act were to provide affordable health insurance to a broader population, expand Medicaid and promote preventive care to reduce healthcare costs.

Why Is the Affordable Care Act Important?

There are a number of reasons why the ACA is important. For example, an emphasis was placed on prevention rather than treatment, reduction in healthcare disparities, and access to care.

  • Emphasizes prevention. The ACA supports public health prevention efforts by creating the Prevention and Public Health Fund, which provides funds to agencies to support health activities such as the Center for Disease (CDC) breastfeeding campaign. In addition, the act requires preventive services for adults, women and children, such as free screening for blood pressure, depression and cholesterol in adults.
  • Reduces healthcare disparities. The Commonwealth Fund is a foundation that promotes better healthcare access, improved quality and greater efficiency for vulnerable populations (e.g., people of color and women). They found in 2017 that the lack of healthcare coverage for nonelderly adults fell from 20.5% in 2013 to 12.3% in 2017, a decline of 40% after the enactment of ACA.
  • Improves access to care. Gaining healthcare coverage through the ACA helped improve newly-insured patients’ access to care. The act expanded access to Medicaid based on one’s income, creating an eligibility income requirement of up to 400% of the federal poverty level (FPL). This allows more individuals to apply for subsidies and purchase health insurance via the Health Insurance Marketplace.

What Are the Responsibilities of the Employer for the Affordable Care Act?

In addition to having several requirements for health insurance plans, the law also provides provisions that employers must adhere to as well, such as who is covered under the act, health coverage requirements, and reporting.

Covered Employers

Organizations with 50 or more full-time employees (employees who average 130 hours a month) or part-time equivalent employees during each month of a previous year must provide healthcare coverage.

Coverage Requirements

Employers covered by the ACA are required to provide health insurance to 95% of their full-time employees and their dependents. If coverage is not provided, there is a penalty.

The health insurance offered must meet a minimum value, a plan that pays at least 60% of the total covered healthcare expenses. The plan must also be affordable, meaning less than 9.78% of their household income for employee-only coverage. This amount should be reviewed annually for updates.

Reporting

Employers who are covered by the Fair Labor Standards Act (FLSA) must provide their employees with a notice of their healthcare coverage options at the time of hire.

Employers who are not covered under the ACA must provide the notice of healthcare coverage to employees at the time of hire.

How Does the Affordable Care Act Affect Employees?

Prior to the adoption of ACA, insurers could deny coverage for pre-existing conditions, a condition(s) of health (e.g., breast cancer) prior to coverage. In addition, other features that could help the consumer make an informed decision such as cost, and/or covered services were not always provided.

With the exception of grandfathered insurance plans, those plans that were purchased prior to March 23, 2010, under ACA, employees received additional protection such as preventive services, young adults coverage, pre-existing exclusion provision, and a summary of benefits.

Preventive Services

Preventative care under the ACA is free for most plans, meaning certain services such as mammograms, blood pressure screenings, and colorectal cancer screenings are not subject to the plan’s deductible or co-pay.

Young Adult Coverage

ACA requires that dependent child care coverage be provided up to the age of 26. Children are considered dependent regardless of their marital status. Prior to the enactment of the ACA, adult children could be removed from coverage due to their age.

Pre-Existing Exclusion

The ACA prohibits health insurance organizations from refusing coverage or changing coverage for the insured due to a pre-existing condition. Insurers can no longer deny coverage for those conditions in that an employee was previously diagnosed such as cardia disease and/or cancer.

Summary Benefits of Coverage

Summary benefits of coverage (SBC) is a disclosure that provides information on the plan cost, health services provided, and other important information concerning the health plan. This is required to be provided to your employees.

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Questions You’ve Asked Us About the Affordable Care Act (ACA)

A year-end report is required by employers which includes both the employee and employer information. There are different types of documents required for reporting purposes: Form 1095-A. This form is provided to those who purchase coverage through the marketplace. Form 1095-B. This form is to be completed by those who are self-insured. Form 1095-C. This form is to be completed by employers who are considered an applicable large employer (50+ full-time employees or equivalents) under the act.
Full-time refers to employees who average 30 hours per week (or 130 hours per month). To calculate part-time equivalent employees, take the total hours worked in a month and divide it by 120 hours. Employers must include actual hours worked as well as paid time off, such as vacation and holidays, in the calculation of full- and part-time employment.

Wendy is a HR professional with over 10 years of HR experience in education and health care, both in the private and non-profit sector. She is the owner of KHRServices, a full service HR management agency. She is also SHRM and HRCI certified, serves as a HRCI Ambassador, and voted 2021 Most Inclusive HR Influencer.

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