Employer Responsibilities Under PPACA

The degree to which any employer is affected financially by the Patient Protection and Affordable Care Act (PPACA) is determined principally by the number of its employees. “Small” employers - those with fewer than 50 full time equivalent employees – are essentially unaffected (financially) by the Act. “Large” employers – those with 50 or more full time equivalent employees – become subject in 2015 to certain penalties if any of their full time employees obtains subsidized insurance coverage through one of the new insurance exchanges, whether or not the employer offers health insurance coverage to its employees. While all “large” employers face identical potential penalties, there are some differences in the treatment of employers with 50-100 employees and of those with 200 or more employees. To determine your employer size for purposes of applicability of the Act, follow the instructions in Step 1 below. You will then be directed to an outline of significant provisions of the Act that you will find relevant to your organization, assuming that the Act is not modified or repealed. If you still have questions, please click here and enter your question(s). We’ll respond as soon as possible.


Results

Your total number of full-time employee equivalents is 0.
Small Employers (fewer than 50 FTE employees)


1. You have no new financial responsibilities imposed by PPACA.

2. You will have new health insurance alternatives through state-based Small Business Health Options Program (SHOP) exchanges.

3. You are not required to provide health insurance to your employees.

4. If you purchase health insurance through SHOP, you may be eligible for a tax credit of up to 50% of your contribution for two consecutive years beginning January 1, 2015.

5. If you provide coverage for your employees and do not have a “grandfathered” plan, your plan must meet the “essential health benefits” and other requirements of small group plans under the Act. (Non-compliant plans will not be legally available anyway, except for self-funded plans. See note below.)

Note: If your plan is not grandfathered (i.e. was not in place on or before March 23, 2010 or has lost its grandfathered status), and if small groups in your state are not currently “community rated” your plan premiums could be dramatically impacted by the change to community rating in 2015. Community rating will increase premiums for groups consisting of younger, healthier participants and will decrease premiums for groups consisting of older, less healthy participants. Small groups facing very large increases in premiums for qualified plans (i.e. those providing minimum essential coverage and essential health benefits) may wish to consider self-funding as a means of avoiding these requirements. Speak to your insurance broker about available alternatives.


Large-Size Employers (Over 100 FTE employees)


1. You are not required to provide health insurance coverage to your employees, but if you do not, and if any of your employees obtains subsidized health insurance coverage through the new health insurance exchanges, you will be assessed a financial penalty. The penalty in 2015 is 1/12 of $2,000 times thenumber of full time equivalent employees in excess of 30 for each month in which at least one employee purchases subsidized health insurance. The penalty will increase in subsequent years based oninflation.

2. If you do offer coverage, but (1) it doesn’t cover at least 60% of covered health expenses for a “typical population”, or (2) one or more of your employees obtains subsidized health insurance coveragethrough the new health insurance exchanges, you will be assessed a financial penalty of $3,000 for each such employee, or $2,000 per full-time employee in excess of 30, whichever is less. Penalties aredetermined and applied monthly as described in (1), above. For any employee to obtain subsidized coverage, his/her required contribution under your offered plan would have to exceed 9.5% of his/her household income.

3. If you have 200 or more FTE employees, you will be required to automatically enroll all full-time employees and all previously enrolled employees into a plan each year. Employees may then opt out of theplan if they wish to. Further guidance is expected from HHS.

4. Your plan is exempt from many of the requirements of new plans under the ACT, such as essential health benefits, but your plan is prohibited from imposing pre-existing condition exclusions, annual andlifetime benefit limits and rights of rescission.

5. You will not have access to state-based Small Business Health Options Program (SHOP) exchanges until 2017. States will have the option to expand eligibility to participate in SHOP in 2017 and later.


Medium-Size Employers (50-100 FTE employees)


1. You are not required to provide health insurance coverage to your employees, but if you do not, and if any of your employees obtains subsidized health insurance coverage through the new health insurance exchanges, you will be assessed a financial penalty. The penalty in 2015 is 1/12 of $2,000 times the number of full time equivalent employees in excess of 30 for each month in which at least one employee purchases subsidized health insurance. The penalty will increase in subsequent years based on inflation.

2. If you do offer coverage, but (1) it doesn’t cover at least 60% of covered health expenses for a “typical population”, or (2) one or more of your employees obtains subsidized health insurance coverage through the new health insurance exchanges, you will be assessed a financial penalty of $3,000 for each such employee, or $2,000 per full-time employee in excess of 30, whichever is less. Penalties are determined and applied monthly as described in (1), above. For any employee to obtain subsidized coverage, his/her required contribution under your offered plan would have to exceed 9.5% of his/her household income.

3. You will have new health insurance alternatives through state-based Small Business Health Options Program (SHOP) exchanges.

4. If you provide coverage for your employees and do not have a “grandfathered” plan, your plan must meet the “essential benefits” and other requirements of small group plans under the Act (unless your state elects before 2016 to define “small group” as fewer than 50 employees).