Patient Protection and Affordable Care Act (ACA) Basics
The Patient Protection and Affordable Care Act (ACA) was passed by Congress and then signed into law by President Obama on March 23, 2010.
It was amended via the budget reconciliation process several days later and President Obama signed the Health Care and Education Reconciliation Act of 2010
on March 30, 2010. Together, these two measures comprise what is known as the federal health reform law. On June 28, 2012 the U.S. Supreme Court rendered a
final decision to uphold the health care law, and then on July 24, 2012 the Congressional Budget Office released a revised estimate as to what health reform
will cost the federal government over the next 10 years.
The Obama Administration has developed a number of official websites that provide access to information, regulations, guidance and more on the provisions of the health reform law.
is the official site of the new
Health Insurance Marketplace and the entry point for consumers who wish to shop for exchange-based coverage. For compliance resources regarding
Marketplace coverage and consumer assistance, CMS has set up the marketplace.gov
Most of the insurance market reform provisions of the new law fall under the jurisdiction of the Department of Health and Human Services’ Center for
Consumer Information and Insurance Oversight
The Department of Labor also has jurisdiction over many ACA provisions. The Department’s overview page
contains a wealth of information, and their
Frequently Asked Questions
pages give detailed answers to very specific ACA implementation scenarios.
The Internal Revenue Service has a site
dedicated to the tax-related provisions of the health reform law. In addition, they have a separate
with news releases, multimedia and legal guidance.
Finally, the White House Office of Health Reform
also is a comprehensive source of information.
Marketplace enrollees may experience problems resolving issues with the exchange. As such, the exchange may ask for additional documentation or
clarification. This resource discusses tips to resolve these data matching problems and
this resource discusses talking points for issuers responding to data matching issues.
ACA Resources for Clients
The health reform law is extraordinarily complicated and all of its provisions become effective at various times. To help you break the insurance coverage provisions and their implementation dates down in a manageable way for your clients
we’ve created a detailed timeline of federal healthcare reform law provisions that will impact Individual and employer health insurance consumers.
A condensed version of the timeline suitable for distribution to consumers and employer clients. Download and print copies here
you can purchase printed copies via NAHU’s online store
Frequently Asked Questions
Have a question on the employer responsibility requirements? Perhaps your burning question is about ACA’s subsidies. Now you can get answers
24 hours a day, seven days a week with NAHU’s newest Compliance Corner benefit: Frequently Asked Questions. We’ve posted dozens of
the questions that you’ve been asking along with the answers here
Compliance Information About Specific ACA Provisions
Individual Responsibility Requirements
This FAQ from the IRS addresses the eligibility and reporting aspects of the individual tax credit including the advance premium tax credit (APTC).
The IRS has posted the draft form and instructions that individuals
will use to assess any individual penalties. The new form and instructions attempts to simplify the process.
ACA Implementation (Part XVIII) and Mental Health Parity Implementation
The Department of Labor's Employee Benefits Security Administration has updated its website with FAQs about ACA Implementation Part XVIII and Mental Health Parity Implementation.
There are two main purposes for the annual employer reporting requirements of the ACA.
Section 6055 Individual Mandate Reporting—Overview
- The IRS Code Section 6055 reporting requirement is to help the IRS identify which persons have met the law’s individual mandate by
showing which employees and dependents are enrolled in group health insurance coverage that meets the law’s minimum essential coverage
- The IRS Code Section 6056 reporting is to capture the information regarding employer compliance with the employer shared
responsibility requirements, so that the IRS can assess employer penalties, if applicable.
IRS Code Section 6055 requires insurers, self-insured plans and government agencies and any other entities that provide MEC to employees and dependents to annually report on that coverage to both the IRS and to the covered individuals. The purpose of the reporting is twofold:
- So that the covered individuals can fill out the portion of their tax return relative to the individual mandate requirement correctly, and
- To help the IRS to verify individual compliance with the individual mandate.
From an employer’s perspective, if the employer, regardless of group size, offers a group health insurance benefit plan that is fully or partially self-funded, then the employer group health plan is responsible for completing the section 6055 reporting. If the employer, regardless of group size, offers a fully insured plan, then the health insurance carrier will be responsible for the Section 6055 reporting. If the employer offers both types of plan options, then the employer is responsible for the 6055 reporting for the self-funded group plan.
Section 6056 Employer Mandate Reporting—Overview
IRS Code Section 6056 requires that all applicable large employers subject to the law’s employer responsibility requirements annually file information returns with the IRS regarding whether or not they offer coverage to eligible full-time employees and also provide statements regarding this coverage to the employees. This reporting will be used by the IRS to administer the employer responsibility requirements, also known as the employer mandate.
The IRS will also use the information as part of the verification process of whether an employee is eligible for the premium tax credits available through the exchange.
It is important to note that even though employer mandate penalties may be delayed in 2015 for employers with 50-99 full-time equivalent employees that meet the criteria for transition relief, the employer reporting requirements for these employers are not delayed. That means that all of these employers still need to be tracking coverage offers and participation during 2015 for accurate employer reporting compliance in 2016.
Do small employers have to report?
Based on the new criteria, many small employers will not have to report information under either Code Section 6055 (individual mandate)
or 6056 (employer mandate), but some will and a group’s status for either employer reporting requirement could change annually. Therefore,
it is important for all employer groups and their licensed health insurance agents and brokers to review the group’s employer reporting
status carefully each year.
The employer reporting form requirements are not based on the traditional large group/small group employer group health plan size definitions
that HIPAA made commonplace. Instead, they are based on new criteria established by the ACA and the criteria for reporting information
applicable to IRS Code Section 6055 and 6056 are different. So all employers, both small and large, must examine the new criteria and determine
which, if any, employer reporting requirements are applicable to their group health plan.
The Section 6055 reporting requirements are based on whether or not the employer offers a fully insured group health plan or a self-funded
or partially self-funded plan. All employers, regardless of size, that sponsor a self-funded or partially self-funded plan must comply with
the reporting requirement, and all fully insured health plans will not be required to file annual reporting forms as a provider of health
coverage under Section 6055. Instead, the responsibility for the reporting for fully insured group plans will be borne by the health insurance
With regard to Section 6056, if an employer is subject to the employer shared responsibility provisions contained in IRS Code Section 4980H,
then the employer is also responsible for reporting information under Section 6056 about the coverage it offers to its full-time employees.
Most employers that are eligible to purchase coverage in the small group market are not also subject to the ACA’s employer shared responsibility
requirements, but some are, particularly if they are part of a larger controlled group or employ a large number of part-time workers. These
small employers will be required to report under Section 6056.
IRS Frequently Asked Questions for Code Section 6055
The IRS has developed a brochure that provides a good overview of key terms and reporting requirements for employers.
Video explanation of 1095-A form provided by exchanges regarding coverage through the exchange is available in this 11 minute CMS video.
Forms Numbers and Purposes
The IRS has finalized the employer reporting forms. The forms are:
- 1094-B is the transmittal form that insurers and self-funded employers will submit to the IRS along with the Form 1095-B
- 1095-B provides information on the coverage provided to an enrollee of an insured or self-funded plan
- 1094-C is the transmittal form that accompanies the Form 1095-C
- 1095-C is provided by large employers to each enrollee. It provides information on the coverage provided and when coverage was offered
- 1095-A is the statement that the exchanges will provide to their enrollees.
The final forms and instructions:
Preventive Care Services
All group and individual plans that do not have grandfathered status, including self-funded plans, have to cover specific preventive care services with no cost-sharing in plan years beginning on or after September 23, 2010. Additional specific women’s preventive services must be provided without cost-sharing in plan years beginning after August 1, 2012. This provision in the law applies to most employers unless the employer qualifies for specific religious exemptions.
Grandfathered Health Plans
Individual and group health plans that existed on or before March 23, 2010 had the option to choose grandfathered status once health reform was enacted. However, individuals and employer group plans that elected to keep their current policy on a grandfathered basis can only do so if they maintain essentially the same benefits and follow strict rules that limit increases to employee cost-sharing or out-of-pocket costs. An amendment to the grandfathered plan rules issued in November 2010 allows all group health plans to switch insurance companies and shop for the same coverage at a lower cost and maintain their grandfathered status, so long as the structure of the coverage doesn’t violate one of the other rules for maintaining grandfathered status. Once a plan loses its grandfathered status, it is subject to all of the law’s market reforms when they take effect.
Extension of Coverage for Adult Children
All group and individual plans, including self-funded plans and grandfathered plans, in plan years beginning on or after September 23, 2010, have to cover dependent “children” to age 26.
MLR Rebate Compliance
All individual, small group and large group health plans were subject to medical loss ratio (MLR) requirements beginning on January 1, 2011. Individual and small group insurers must ensure that 80% of their premium revenue is directed towards medical claims and large group insurers must adhere to an 85% MLR. Self-funded plans are exempt from this requirement. Any plan that does not meet these requirements beginning in 2011 must issue a rebate to consumers by August of the following plan year.
Summary of Plan Benefits and Coverage
Beginning with plan years and open enrollment periods that start on or after September 23, 2012, all group plans and group and individual health insurers (including self-funded plans) will have to provide a summary of benefits and a coverage explanation that meets specified criteria to all enrollees when they apply for coverage, when they enroll or reenroll in coverage, when the policy is delivered and when any material modification is made to the terms of their coverage outside of the coverage renewal period. The summary and explanation are commonly referred to as a SBC, and will require substantially more information than current summary plan descriptions.
The health reform law established that eventually all employers must include on Forms W-2 the aggregate cost of employer-sponsored health benefits, for informational purposes only. The provision was originally supposed to apply to benefits provided during taxable years after December 31, 2010. However, enforcement of this provision was delayed for one year and made optional for the 2010 tax year (reported in 2011). The IRS has also specified that for smaller employers (those filing fewer than 250 W-2 forms) this requirement remains optional through at least 2012 (i.e., for 2012 Forms W-2 that generally would be furnished to employees in January 2013). Optional treatment for smaller employers will remain in effect until further guidance is issued, which has not occurred yet.
FSA contributions for medical expenses will be limited to $2500 per year, with the cap annually indexed for inflation.
- IRS Notice 2012-40 provides that the $2,500 limit on employee pre-tax health FSA contributions applies on a plan year basis and is effective for plan years beginning after December 31, 2012.
ACA’s limit on out-of-pocket expenses will be fully implemented with 2015 plan years. Transition guidance had allowed for a special transition period for
2014 that allowed plans with multiple service providers to exceed the out-of-pocket maximum.
- Click here for the Department of Labor's frequently asked questions Part 18.
What Does my State Require for Pediatric Dental?
- Click here for a chart that provides state-by-state details regarding the pediatric dental plans offered on the exchange.
Small Business Health Options Program (SHOP)
The Full-Time Equivalent (FTE) Employee Calculator
(Spanish Version) for SHOP provides a quick means to check whether an employer
group is eligible for the federal SHOP. Calculating FTEs for SHOP may result in a different outcome than calculating FTEs to determine whether an employer
is a large employer.
The SHOP Tax Credit Estimator
(Spanish Version) offers a tool to determine if a small employer
is eligible for the small business tax credit.
Coverage for American Indians and Alaska Natives
American Indians and Alaska Natives have several unique benefits under the ACA. These resources from the federal Indian Health Service may be helpful.
For more information, please contact Senior Director of Health Reform Compliance Pam Mitroff.
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