The ACA: Impacts to Large Employers in 2014 and beyond


The Affordable Care Act, or ACA, was passed in 2010. We’ve seen a lot of changes since then. We continue to support changes this year and in the years ahead. The ACA provisions that are effective in 2014 and beyond continue to change the health care system. These provisions have an impact on how people buy health insurance and what benefits companies offer to their employees.

We created a series of videos to help you understand how these provisions affect individuals, small employers and large employers. In this one, we’ll look at the top considerations for large employers – that’s companies with more than either 50 or 100 full-time employees or full-time equivalents. The number used depends on the provision and the state.

*Recent studies show that most large employers will continue to offer health care benefits to their employees through 2015. They will make adjustments to accommodate the new ACA mandated provisions. In 2007, 73% of large companies surveyed said they would continue to offer health care benefits for the next 10 years. Today only 25% make this prediction. They may consider different benefit strategies like a defined contribution plan, where they would give their employees money to buy health insurance on a private exchange. So, the way a lot of people get health insurance may change —even for people who have traditionally received benefits from their employer.

So large employers have a lot to consider:

  • Do our health plans meet the minimum essential coverage requirements?
  • Do we offer coverage to full-time employees and their dependents? For the ACA, employees are considered full time if they work a minimum of 30 hours per week or more on average. And children are considered dependents up to the age of 26.
  • Is the amount our employees pay for insurance affordable according to the ACA affordability requirements?
  • Should we change our benefit strategies?
  • Do we have choices about things like the out-of-pocket maximum, which gives our employees a limit on how much they will spend?
  • Are our plans in line with the 90-day maximum waiting period for coverage (or more restrictive state requirements)?
  • Do we impose an orientation period, and if so, is it in line with regulatory requirements?
  • What taxes and fees will affect us?
  • What are the employer reporting requirements?  
  • Do any of our plans favor highly paid employees?

That is a lot to consider! Let’s look at the Employer Shared Responsibility mandate – also known as the Play or Pay mandate. According to this mandate, applicable large employers, those who employ on average 50 or more full-time employees (including full-time equivalents) during the preceding calendar year, have to offer their full-time employees (and in some cases their dependents) access to minimum essential coverage. If they don’t, they may pay a penalty. There are also reporting requirements for employers and insurers under this provision. This was effective January 1, 2014, but enforcement of this provision doesn’t begin until 2016, for the 2015 plan year.

So what are the requirements?

  • Employers have to offer health coverage to all full-time employees who work a minimum of 30 hours per week or more on average.
  • The amount employees have to pay can’t be more than 9.5% of their household income. This is figured on the amount they would pay to insure only themselves.
  • The insurance has to meet on average at least 60% of the cost of what is covered by the plan.

And what about benefit strategies?

Instead of the traditional method where employees choose from a set of health plans, employers might consider giving their employees money to buy a plan on a private exchange. Private exchanges are kind of like public exchanges — employees shop for a health plan in an online marketplace. But the marketplace is private, so it’s not mandated by the ACA. And the employer can decide which plans employees choose from. When it comes to tax credits and subsidies, those are only available on a public exchange, because public exchanges are run by the state or federal government; private exchanges are not.

Other questions may come up when deciding on a strategy.

  • How can we be compliant with the ACA regulatory requirements, and at the same time contain medical costs and reduce our exposure to taxes, fees, and penalties?
  • Have we removed all annual and lifetime dollar limits for essential health benefits?
  • Do our employee wellness incentives meet the new guidelines?
  • How can we estimate the financial impacts of employees moving from employer-based plans to public exchanges?  

Answering these questions will help large employers come up with a benefit strategy that works for their employees and meets the ACA mandated requirements.

Let’s talk more about taxes and fees.

Health insurers and employers will be assessed new taxes and fees to help pay for some of the health care reform provisions. Some examples of the new taxes and fees are the Patient-Centered Outcomes Research Institute fee (PCORI), the Health Insurance Provider fee, the Transitional Reinsurance Contribution program, and the High Value Plan tax (also known as the Cadillac Tax), which takes effect in 2018.

Some of the money collected from these taxes and fees will be used to fund risk management provisions. These provisions support pricing stability on public exchanges. They offset the risks for insurers who enroll a lot of people with high cost claims. The taxes and fees will also help fund the tax credits and subsidies available on public exchanges.

And what were those reporting requirements?

There are penalties for not meeting the reporting requirements related to the Employer Mandate, but the federal government has delayed them. So generally, the first filing and statements for the 2015 plan year are due the first quarter of 2016. There are also other required reports. Employers already have to give employees a Summary of Benefits and Coverage. They also have to add the aggregate cost of coverage to employees' W2 forms if they file more than 250 W2 forms annually. And employers have to give a Notice of Coverage Options to employees within 14 days of their start date – it explains the availability and options of public exchanges.

There’s a lot for large companies to consider as a result of the ACA.

They have to be compliant with all the ACA provisions and evaluate the financial impacts of taxes and fees. They’ll need to continue evaluating how they plan to offer health plans to employees, and consider if a private exchange may be an option for them.

The passage of the ACA was an important step in expanding access to the health care system. While there are other important provisions of the ACA, the considerations presented here may have the greatest impact to large companies.

Aetna remains focused on transforming the health care delivery system so that all U.S. citizens have a choice of affordable, simple, health care options. We are committed to fostering compliance with the ACA and helping our customers achieve the same.

*2014 Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care

Aetna is the brand name used for products and services provided by one or more of the Aetna group of subsidiary companies, including Aetna Life Insurance Company (Aetna) and its affiliates.

This video is only a high level summary of the health insurance exchange requirements under the Affordable Care Act (ACA). Information contained in this video is subject to change as further regulations and guidance are issued. This video should not be considered to be legal guidance regarding ACA or its potential impact.