With over 1000 pages of text and tens of thousands of additional pages of issued regulations, notices and guidance, it can seem hard to see the forest for the trees when it comes to the Affordable Care Act (ACA). This list can help your company begin to master the fine points that apply to businesses with 50 or more full-time equivalent employees.

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1. Assess your company's risk for penalties: Employers with 50 or more full-time equivalent employees will be subject to a shared responsibility payment if the employer fails to offer affordable minimum value coverage and at least one full-time employee obtains a premium tax credit or cost-share reduction through the Health Insurance Marketplace. If an employer offers coverage, it must be offered to substantially all full-time employees and their dependents.1, 2 It is important for employers to keep detailed records of compliance with the shared responsibility provision, including determination of full-time employee status and other applicable details.

  • Affordable: Does not exceed 9.5 percent of employee's annual household income
  • Minimum value: Plan pays at least 60 percent of covered health expenses

Note: The IRS offers safe harbor to allow employers to use other methods to calculate household income (e.g. W-2 income, rate of pay or federal poverty line) since employers typically do not know an employee's household income. Additionally, starting in 2015 businesses with 100 or more full-time equivalent employees need to provide affordable, minimum value health care coverage to 70 percent of all full-time employees and their dependents, unless the employer qualifies for 2015 dependent coverage transition relief, or face a penalty. In 2016, the 70 percent threshold is increased to 95 percent, and the shared responsibility penalties will also apply to employers with 50 or more full-time equivalent employees.


2. Distribute a Summary of Benefits Coverage (SBC) to employees: This required communication must be provided to all applicants and enrollees before enrollment or re-enrollment and include an accurate description of the applicable plan's benefits and coverage. This requirement applies to group health plans (both insured and self-insured) and health insurance issuers offering group or individual health insurance coverage.3 A sample from the Department of Labor (DOL) is available to help you get started at: dol.gov/ebsa/healthreform/regulations/summaryofbenefits.html.


3. Communicate to current and future employees about coverage options: Whether or not your company offers employee health insurance options, this notice is required for all employers subject to the Fair Labor Standards Act. While companies 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. To help employers issue the notices, templates from the DOL can be found at: dol.gov/ebsa/healthreform/.


4. Distribute applicable MLR rebates due to your employees within three (3) months: Major medical insurers that do not meet new medical loss ratio (MLR) requirements are now required to issue rebates to policyholders by Aug. 1 each year. In most cases, it is the employer's responsibility to distribute the participant portion within three months of receiving the rebate. The details on distribution depend on the type of plan offered (e.g., church plan, ERISA, etc.).4 The IRS FAQ provides additional information on these rebates at: irs.gov/uac/Medical-Loss-Ratio-%28MLR%29-FAQs.


5. Report Cost of Coverage on employees' W-2 forms: To help show how much an employer contributes toward an employee's health care coverage, employers that issued 250 or more W-2 forms in the prior year are required to report the total aggregate cost of major medical health benefits and certain pre-tax funded supplemental health coverage provided to each employee on the employees' W-2 forms. This information will be reported in Box 12, using Code DD. The reporting is for informational purposes only and has no tax impact to the employer. Reporting is optional for employers who file fewer than 250 W-2 forms until further guidance is issued by the IRS.5

6. Comply with flexible spending account (FSA) limits: For cafeteria plan years beginning on and after Jan. 1, 2015, employer-sponsored cafeteria plans must limit employee annual salary reduction contributions to health flexible spending arrangements to $2,550. The $2,550 limit applies to employee participants on a plan-year basis and will be indexed for cost-of-living adjustments for future plan years.6

Note: The limit does not apply to certain employer non-elective health FSA contributions, or to any contributions or amounts available for reimbursement under other types of FSAs (such as a dependent care FSA), health savings accounts (HSAs), health reimbursement arrangements (HRAs), or to salary reduction contributions to cafeteria plans used to pay an employee's share of health coverage premiums.

7. Withhold additional Medicare tax on high-wage earners: A 0.9 percent additional Medicare tax raises the Medicare tax rate for certain earners from 1.45 percent to 2.35 percent. The additional Medicare tax applies to an individual's wages, compensation and self-employment income that exceeds a threshold amount based on the individual's filing status ($250,000 for married taxpayers who file jointly and qualifying widow(er) with dependent child, $125,000 for married taxpayers who file separately and $200,000 for all other taxpayers). It is paid solely by employees and does not have to be matched by employers; however, the employer is responsible for withholding the additional Medicare tax from wages or compensation paid to an employee in excess of $200,000 in a calendar year.7

8. Withhold applicable Medicare assessment on net investment income: A 3.8 percent net investment income tax is applied to individuals, estates and trusts with net investment income and modified adjusted gross income above certain thresholds ($250,000 for married taxpayers who file jointly and qualifying widow(er) with dependent child, $125,000 for married taxpayers who file separately and $200,000 for all other taxpayers).  Investment income may include interest, dividends, capital gains, rental and royalty income, non-qualified annuities, income from businesses involved in trading of financial instruments or commodities and businesses that are passive activities to the taxpayer.8 Check with your payroll service provider or tax or accounting advisor for specifics.


9. Keep benefits waiting period limits to 90 days or less: Health care reform restricts waiting periods to a maximum of 90 days for group health plans and group health insurers.9 You'll be sure to stay compliant with this rule by keeping benefits waiting periods for newly eligible employees to 90 days or less.


10. Confirm payment of the required contribution to the temporary reinsurance program: During the first three years post-reform (2014–2016), a temporary reinsurance program for the non-grandfathered individual insurance market will be funded by a required contribution from all group major medical plans. The per capita amount is paid for each enrollee by the insurer or third-party administrators on behalf of self-funded plans.10 Confirm with your insurer or third party administrator that the contribution is assessed for applicable plan years. If your company doesn't offer insurance, the fee isn't applicable.


11. Comply with applicable health-contingent wellness incentive standards: Generally, a health-contingent wellness program requires individuals to meet a specific health standard to gain a reward. Examples include: a reward for not using or decreasing use of tobacco or a reward for achieving a specified cholesterol level or weight. The maximum permissible reward under a health-contingent wellness program is now 30 percent of the cost of individual health coverage and the maximum reward for programs designed to prevent or reduce tobacco use is 50 percent.11


12. Begin collecting data for IRS health insurance coverage reporting: Annual reporting of health insurance coverage for large employers and those with self-insured health plans begins in 2016 for the 2015 plan year for employees receiving coverage. Reporting includes dates of coverage, the employee- and employer-paid portion of the premium and other information required by the Department of Health and Human Services (HHS). Statements are to be provided annually to employees by Jan. 31.12 Learn more with the following links:


13. Ask your benefits consultant about requirements, standards, restrictions and limits: If your company offers health coverage to employees, there are several benefits design requirements, including standards, restrictions and limits. Be sure to ask your benefits consultant about:

  • Design requirements: Benefits plans offered in the large group market must (1) meet minimum value requirements, (2) meet affordability standards and (3) provide certain preventive services at no cost to employees.
  • Out-of-pocket limits: Employee cost-share payments for in-network covered services and out-of-network emergency services cannot exceed specified out-of-pocket limits: $6,450 for individual coverage and $12,900 for family coverage in 2015.
  • Lifetime and dollar limits: These are prohibited on essential health benefits.
  • Rating restrictions: Premiums cannot vary based on health status or gender, and rate fluctuations are limited to a few general factors: family size or tier, geography, age (3:1) and tobacco use (1.5:1).
  • Exclusions: Employees cannot be excluded based on pre-existing conditions.
  • Dependent child coverage: Coverage must be accessible for dependent children up to age 26.
  • Non-discrimination requirements: Highly compensated employees cannot be offered better health insurance coverage than other employees.
  • Size definition change in 2016: Starting Jan. 1, 2016, employers with up to 100 employees will have to comply with federal and state laws applicable for small employers.

For more information:

As you continue to navigate health care reform, you can rely on Aflac to provide updates and helpful information at: aflac.com/healthcare_reform. To learn more about coverage available in your state, visit: healthcare.gov, sba.gov/healthcare, cciio.cms.gov and irs.gov.

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