Most Common Misconceptions About The ACA
The Affordable Care Act (ACA) is both expansive and intricate, and it’s no surprise that misconceptions regarding one of the most significant changes it brings, employer-shared responsibilities, are prevalent.
One of the simplest yet most common questions, according to Julie Bunde, director of product management and product and market solutions at Bloomington-based HealthPartners, is, “Who has to offer coverage and to whom?”
The answer: No employers are required to offer coverage to any employees under the ACA.
“Employers seem to think they have to offer coverage under this employer-shared responsibility rule,” explains Bunde, “but in reality nobody has to offer coverage, it’s really a matter of, ‘If I don’t offer coverage, am I subject to a penalty?’”
The employer-shared responsibility, also known as the “play or pay” provision, was delayed until 2015 but is top of mind for most employers. The key factor in determining whether an employer is subject to the rule is size. While a “large” employer may face monetary repercussions for failing to offer insurance, “small” employers will not face financial penalties if they don’t offer coverage.
But, according to Bunde, there is still a great deal of confusion about the differences between a “small” or “large” group.
A “large employer” is defined as one with at least 50 full-time or full-time equivalent employees. The ACA defines a full-time employee as working an average of at least 30 hours per week. The definition of full-time equivalents, however, is much more complex, and Bunde says many businesses are still strategizing and questioning how to design workers’ schedules to accommodate the “30-hour rule.” (Click here to learn more about properly counting your employees.)
Come 2015, large employers must offer coverage that meets certain requirements in order to avoid any penalties. But many have misunderstood those coverage requirements, says Bunde.
In order to avoid penalties, large employers must offer “affordable” coverage that provides “minimum value” to 95 percent of their full-time employees and their dependent children; coverage of legal spouses, however, is not a factor in determining whether a penalty will be levied.
To constitute “minimum value,” a plan must cover at least 60 percent of the cost of its benefits. To meet the “affordability” requirement, the employee’s contribution for health coverage cannot exceed 9.5 percent of his or her wages. Click here to learn more about how large employers are strategizing in order to avoid penalties.
Bunde has also fielded repeated questions about which plans need to cover “essential health benefits.” Such benefits fall into 10 categories, ranging from emergency to mental health services.
“Individual and small-group plans, in and out of health group exchanges, have to cover essential health benefits to meet the qualified health plan requirements for those markets,” Bunde says. Large group plans aren’t required to cover essential health benefits, but if they do, they may not place annual or lifetime dollar limits on them, she adds.
Greg Thurston, director of benefits at Edina-based Doherty Employer Services, says a recent update from the Department of Labor (DOL) regarding the ACA may also lead to some misconceptions. In September, the DOL stated that while employers should provide notices to their employees regarding the existence of health insurance exchanges, they won’t be assessed any fines or penalties for failing to do so—contrary to the public’s general understanding before the announcement.
Thurston says that, while the potential administrative burden may make it tempting to forego providing notices, employers should assess the risk before deciding whether to send them.
“It might be risky to not provide the notices,” says Thurston. “Because if you don’t, and an employee doesn’t obtain insurance, then they may end up facing some sort of catastrophic medical expense and then they’d be looking for someone to pay for that. My opinion is that it’s still better to send the notice with any new hires—it’s pretty simple if you just make it part of your hiring practice.”
Click here to learn more about employee notifications under the ACA.