ACA Provisions & Timelines
The Patient Protection and Affordable Care Act (P.L. 111-148) encompasses sweeping provisions for all participants in the health care marketplace, including consumers, insurers, employers, providers and hospitals, pharmaceutical companies, and even states and state-run programs themselves.
Here are some of the most important provisions directly affecting you as an employer. This is not a comprehensive summary of all the law’s provisions, but rather a selection of the top provisions pertaining to employers, employees and their private group health plans. This information does not constitute legal advice. For detailed, customized guidance on how health care reform will affect your company and your employees, please contact your Burnham Benefits representative.
From time to time, the federal agencies that oversee the implementation of the Affordable Care Act make adjustments to the law's various compliance deadlines. Below are two important sources of timeline information. Your Burnham compliance team stays current on timeline changes as they occur; consult your Burnham service team for up-to-the-minute guidance.
Kaiser Family Foundation
U.S. Department of Health and Human Services
Expanding Access to Coverage
Individual Mandate and Insurance Exchanges
- Most U.S. citizens and legal residents will be required to have health insurance under the law. Those without coverage pay a tax penalty of the greater of $695 per year up to a maximum of three times that amount ($2,085) per family or 2.5% of household income.
- PPL 111-148 will create state-based American Health Benefit Exchanges through which individuals can purchase coverage, with premium and cost-sharing credits available to individuals/families with income between 133-400% of the federal poverty level (the poverty level is $18,310 for a family of three in 2009).
- The law will also create separate Exchanges through which small businesses can purchase coverage.
- The law requires employers to pay penalties for employees who receive tax credits for health insurance through an Exchange, with exceptions for small employers.
- The law will assess employers with 50 or more employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit a fee of $2,000 per full-time employee, excluding the first 30 employees from the assessment. Employers with more than 50 employees that offer coverage but have at least one full-time employee receiving 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, excluding the first 30 employees from the assessment. (Effective January 1, 2014)
- Employers with fewer than 50 employees are exempt from any of the above penalties.
- The law requires employers that offer coverage to their employees to provide a free choice voucher to employees with incomes less than 400% FPL whose share of the premium exceeds 8% but is less than 9.8% of their income and who choose to enroll in a plan in the Exchange. The voucher amount is equal to what the employer would have paid to provide coverage to the employee under the employer’s plan and will be used to offset the premium costs for the plan in which the employee is enrolled. Employers providing free choice vouchers will not be subject to penalties for employees that receive premium credits in the Exchange. (Effective January 1, 2014)
- Employers with more than 200 employees are required to automatically enroll employees into health insurance plans offered by the employer. Employees may opt out of coverage.
Changes to Private Insurance
Medical Loss Ratio and Premium Rate Reviews
- Health plans will now be required to report the proportion of premium dollars spent on clinical services, quality, and other costs and provide rebates to consumers for the amount of the premium spent on clinical services and quality that is less than 85% for plans in the large group market and 80% for plans in the individual and small group markets. (Requirement to report medical loss ratio effective plan year 2010; requirement to provide rebates effective January 1, 2011)
- The law requires that states establish a process for reviewing increases in health plan premiums and require plans to justify increases. Requires states to report on trends in premium increases and recommend whether certain plan should be excluded from the Exchange based on unjustified premium increases. Provides grants to states to support efforts to review and approve premium increases. (Effective beginning plan year 2010)
- By law, insurers must now provide dependent coverage for children up to age 26 for all individual and group policies. (Effective six months following enactment, but many insurers are moving to extend coverage earlier than mandated)
Insurance Market Rules
- One of the most significant provisions of P.L. 111-148 is that it prohibits individual and group health plans from placing lifetime limits on the dollar value of coverage and prohibit insurers from rescinding coverage except in cases of fraud.
- The law also prohibits pre-existing condition exclusions for children. (Effective six months following enactment) Beginning in January 2014, prohibits individual and group health plans from placing annual limits on the dollar value of coverage. Prior to January 2014, plans may only impose annual limits on coverage as determined by the Secretary.
- The law does grandfather existing individual and group plans with respect to new benefit standards, but requires these grandfathered plans to extend dependent coverage to adult children up to age 26, prohibit rescissions of coverage, and eliminate waiting periods for coverage of greater than 90 days. Requires grandfathered group plans to eliminate lifetime limits on coverage and beginning in 2014, eliminate annual limits on coverage. Prior to 2014, grandfathered group plans may only impose annual limits as determined by the Secretary. Requires grandfathered group plans to eliminate pre-existing condition exclusions for children within six months of enactment and by 2014 for adults. (Effective six months following enactment, except where otherwise specified)
- P.L. 111-148 imposes the same insurance market regulations relating to guarantee issue, premium rating, and prohibitions on pre-existing condition exclusions in the individual market, in the Exchange, and in the small group market. (Effective January 1, 2014)
- Requires all new policies (except stand-alone dental, vision, and long-term care insurance plans), including those offered through the Exchanges and those offered outside of the Exchanges, to comply with one of four standardized benefit categories. Existing individual and employer-sponsored plans do not have to meet the new benefit standards. (Effective January 1, 2014)
- Limits deductibles for health plans in the small group market to $2,000 for individuals and $4,000 for families unless contributions are offered that offset deductible amounts above these limits. This deductible limit will not affect the actuarial value of any plans. (Effective January 1, 2014)
- Limits any waiting periods for coverage to 90 days. (Effective January 1, 2014)
- The law will create a temporary reinsurance program to collect payments from health insurers in the individual and group markets to provide payments to plans in the individual market that cover high-risk individuals. Finances the reinsurance program through mandatory contributions by health insurers totaling $25 billion over three years. (Effective January 1, 2014 through December 2016)
- Allows states the option of merging the individual and small group markets. (Effective January 1, 2014)
Premium and Cost-Sharing Subsidies to Individuals
- Employees who are offered coverage by an employer are not eligible for premium credits unless the employer plan does not have an actuarial value of at least 60% or if the employee share of the premium exceeds 9.5% of income. Legal immigrants who are barred from enrolling in Medicaid during their first five years in the U.S. will be eligible for premium credits.
Premium Subsidies to Employers
Small Business Tax Credits