The Affordable Care Act, also known as the ACA, was entered into U.S. law in 2010. While its purpose was to increase accessibility to quality healthcare services around the nation, there is a lot of confusion regarding exact laws. Such confusion is only compounded by frequent changes in these laws and regulations, including the changes that are coming in 2016.
Effective as of January 1, 2016, the ACA’s definition of a “small group employer” will be increased from 50 to 100 employees. While this brings about numerous changes, one of the most noticeable differences will affect the ACA’s rating limitations, which will now be applied to all employers with a roster of 50 to 100 staff members. This gives insurance providers the ability to establish premiums according to factors such as the employee’s physical address, their age and even the size of their family. Some states even allow an employee’s usage of tobacco to be factored into rate calculations.
Prior to January 1, 2016, employers with a workface ranging from 50 to 100 employees were considered as a large employer. Under this classification, insurance providers were using factors such as an employee’s history of medical claims, their industry and their location.
Moreover, employers will now be required to count all employees who work less than 30 hours per week as full-time equivalents. This calculation can be done by totaling the hours of all full-time equivalents in your company, and then dividing by 30 if going week-by-week or dividing by 120 when calculating on a per-month basis.
Even more troubling is the fact that many employers, who were surveyed by the International Foundation of Employee Benefit Plans, believe that the costliest years of the ACA are still on the horizon. In fact, 33 percent of the survey’s respondents think that 2016 will yield the greatest cost increase, while 27 percent believe that the biggest cost increase will come in 2018. Regardless of the exact date, employers need to be diligent in order to keep track of the upcoming modifications.
According to Julie Stich, CEBS, current director of research with the International Foundation of Employee Benefit Plans: “Employers need to devote significant time and energy to maintain compliance with the law. The extensive amounts of data that employers are required to collect can take hours and even require complex IT infrastructures. The process has meant a cost increase for many, especially smaller organizations.”
Despite the upcoming increases in employee healthcare costs, 96 percent of survey respondents indicated that they expect to be maintaining their healthcare coverage in five years. Stich commented: “Healthcare benefits are seen as essential for attracting future talent and retaining current high-quality employees. Employers may change the structure of their healthcare plans or shift some of the cost burden to their employees, but it doesn’t appear they will stop offering healthcare benefits any time soon.”
To find out more information about the Affordable Care Act, including information regarding any upcoming changes to the law, please visit www.healthcare.gov. In addition, the U.S. Department of Health and Human Services’ website, www.hhs.gov, serves as a great resource for information on the Affordable Care Act.
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