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Navigating HCR/ACA

Health care reform can be a complicated matter. Let us help you understand the basics, stay informed and make the best benefits decisions for your business.

Need-to-know facts about

Health Care Reform

Small businesses are the innovators, modernizers and visionaries that transform today's workplace. When it comes to the changing health care landscape, these leaders know the importance of benefits in attracting and retaining the best employees.

Health care reform, also known as the Affordable Care Act (ACA), will have important effects on your small business, even with 50 or fewer full-time equivalent employees. So you don’t have to wade through thousands of pages of “legalese” to get the key facts, Aflac has simplified the key facts and what they mean for your business.

  • 1.

    Offerings requirements:

    Businesses with less than 50 full-time-equivalent (FTE) employees are not required to offer minimum-value health coverage to their workforces and will remain unaffected by penalties. It is crucial to understand the difference between full-time employees and FTEs when determining what your business will be responsible for providing. To quickly calculate your company’s FTEs, visit the Aflac FTE calculator. Even though the law doesn’t require you to offer a health plan as a business with less than 50 FTEs, it’s important to understand how the individual mandate affects your employees’ lives, and in turn, your business.

  • 2.

    Delivering benefits:

    Employers who are not required to offer benefits, but are looking to attract and retain top talent, should remember that 79 percent of workers say their overall benefits package is important to their job satisfaction and 59 percent at least somewhat agree they’d be likely to accept an employment offer with slightly lower compensation but a more robust benefits package.1 Benefits can be offered to employees through four key delivery options:

    • Insurer based: A traditional way of offering insurance, where employee benefits are provided through a single insurance carrier.
    • Private exchange: Online marketplaces where people and businesses can shop for, compare and buy health insurance.
    • SHOP Marketplace: The Small Business Health Options Program is a government-facilitated insurance marketplace where small businesses and their employees have access to health insurance coverage.
    • Self-fund: The employer funds their employee benefits. Employees pay premiums, and the company is responsible for covering all claims in the health care plan and controls any premium reserves. Components of this model are still facilitated by a carrier and/or TPA (third-party administrator).
  • 3.

    Reporting requirements:

    Starting this year, businesses of all sizes are required to report information about their employee health coverage, including basic employee data, dates and type of coverage, cost-sharing and any other information required by the IRS. Since many employers struggle to make heads or tails of health care reform requirements, they may choose to have a consultant or provider help file the reports. To learn more about exactly what’s required, take a look at these fact sheets:

  • 4.

    Applicable taxes and credits:

    The ACA is primarily intended to apply to group health plans and health insurers offering group or individual health insurance coverage. Because Aflac products are classified under the law as “excepted benefits” and voluntary benefits such as accident, cancer and hospital indemnity insurance can be funded through a pretax arrangement offered by an employer, many of the regulations don’t apply.

  • 5.

    The Cadillac Tax:

    While it’s not going into effect this year, a 40 percent Cadillac Tax (also called the health care law’s excise tax) is scheduled to take effect for applicable coverage with plan years beginning on or after Jan. 1, 2020. Although the tax is still a couple of years away and regulations may evolve before it is implemented, employers should start to consider how their plans may be affected when the tax becomes reality.

  • 6.

    Out-of-pocket (OOP) costs and limits:

    The ACA established out-of-pocket limits to protect consumers from runaway medical costs. The limits, which are $6,850 for individuals and $3,700 for families in 2016, include essential health benefits covered under nongrandfathered plans, but out-of-network procedures or treatments not covered under an individual’s plan can still cost consumers more than the established limits. Make sure to research the important details the ACA has implemented regarding OOP limits that help to protect your workers from excessive OOP costs.

  • 7.

    Employee communication requirements:

    The Affordable Care Act (ACA) requires all employers, small and big, subject to the Fair Labor Standards Act (FLSA) to communicate to their employees about their health care coverage options – regardless of whether the company offers employee benefits or not. While employers were expected to communicate this information to existing employees in the fall of 2013, employers are required to provide new employees with the Notice of Coverage Options within 14 days of hire.

Employer's guide to health care reform

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Important dates and milestones:
See the key dates you need to know

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Pay vs. play?
Know your options as a small business

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IRS reporting:
Need-to-know details about minimum essential coverage reporting

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Tax rules:
Stay informed of the tax rules to follow

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Cadillac Tax:
Understand how your plans may be affected


HCR benefits terminology

Insurance can be an overwhelming topic. Because your company’s benefits package is critical to your employees’ happiness and well-being, this glossary breaks down the key terms you need to know. Read on for an explanation of language that is specific to mandates and terms of the Affordable Care Act (ACA).


  • 1.

    Cadillac tax

    Beginning in 2020, an excise tax of 40% will be imposed on health plans whose value is more than $10,200 for individual coverage and $27,500 for a family. This tax only applies to the amount that exceeds the threshold.

  • 2.

    Essential health benefits (EHBs)

    EHBs are composed of 10 benefits categories that must be included in a qualified health plan, as defined by the ACA. Essential health benefits must include items and services within the following: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.

  • 3.

    Full-time equivalent (FTE) employee

    For some portions of the ACA, FTEs must be counted. In these cases, employers calculate the number of FTE employees they have in addition to all full-time employees (any employee with an average of at least 30 hours of service per week).

    This calculation is determined by dividing the total number of hours of service for the month of the employees who are not full time by 120. This is the calculation associated with the term “applicable large employer,” and such employers are subject to the employer shared-responsibility mandate.

  • 4.

    Individual mandate/Individual shared responsibility

    Most individuals must obtain minimum essential coverage or pay a penalty. Exemptions include, but are not limited to, religious objections, individuals with incomes less than 100% of the federal poverty level (FPL), Indian tribe members and hardship waivers.

  • 5.

    Individual premium tax credit or subsidies

    A fixed amount of money or percentage of the premium cost that is provided to help people purchase health insurance. Under the ACA, individuals with incomes between 133% and 400% of the FPL who purchase a health plan through the exchanges are eligible for these subsidies.

  • 6.

    IRS reporting

    Employers who self-fund employee health care are required to submit informational reporting about minimum essential coverage to the IRS. Employers who do not comply may face penalties for not filing informational reporting.

  • 7.

    Pay or play/Employer mandate/Employer shared responsibility

    Employers meeting size or revenue thresholds are required to offer minimum essential health benefit packages or pay a set portion of the cost of those benefits for use in the exchanges.

  • 8.

    Small business health care tax credit

    Certain small businesses that offer health plans are eligible for a tax credit, which varies with the size, contribution and tax status of the small business.

  • 9.

    Small Business Health Options Program (SHOP)

    Open to small businesses with less than 100 employees, the SHOP marketplace allows employers to control the amount of coverage offered and the amount they contribute to employee premiums. There are also small business health care tax credits available that pay up to 50% of premium costs, with the remaining 50% still eligible for tax deductions.

  • 10.

    Wellness Programs

    The ACA creates new incentives to encourage employer wellness programs, including programs such as those that reward employees who decrease their use of tobacco or achieve a lower cholesterol level.