The Employer Cheat Sheet to Health Care Reform

By Tobias Kennedy | Posted: August 16, 2017

An Executive Summary on the Top 14 Health Care Reform Requirements

  • The Pay or Play penalty requires employers of more than 50 full time employees to offer insurance coverage.  The fine for not offering coverage is $2,000 per worker per year and begins 1-1-2014.
  • Unaffordable Coverage – Companies with more than 50 employees who do offer insurance also face a potential fine if the coverage is deemed “unaffordable.”  Coverage is considered unaffordable if the cheapest option an employee can get costs 9.5% of their income or more OR if the plan doesn’t offer coverage robust enough that if a general population was on the plan, at least 60% of the bills would be covered by the insurance carrier.  The fine here is $3,000 per worker that falls into this unaffordable class (not to exceed the penalty the employer would have faced for not offering coverage at all) and begins 1-1-2014.
  • SBC – You are now required to make sure your employees get an official “Summary of Benefits and Coverage.”  If you’re self funded you need to make and distribute the SBC, if you’re fully insured, the carrier will make it for you, you just need to be sure it’s given to the employees.  The fine for failing to comply is $1,000 per enrollee who isn’t given an SBC and begins 9-23-2012.
  • W-2 – Employers must now report the cost of medical coverage on the form W-2.  The fine for failing to comply is $200 per W-2, up to a maximum of $3 million.  For employers issuing more than 250 W-2’s, this begins with the forms furnished 2013.  For smaller employers, the requirement begins “upon further notice.”
  • Discrimination – Employers no longer have the ability (on non-grandfathered plans) to discriminate in favor of highly compensated individuals for things like eligibility or premium co-share for a plan.  The fine here is $100 per day per individual discriminated against and also begins “upon further notice.”
  • MLR – The carriers now have to comply with margins of profitability known as “medical loss ratios” or MLRs.  Basically, if the carrier spends more than 20% in individual/small group plans or 15% in large group plans on anything not directly related to medical care, they need to issue policy holders a rebate.  If your company gets a rebate, you may have responsibilities to redistribute the money to your employees.  Rebates began getting issued 8-1-2012.
  • Exchanges – All employers will be required to inform their employees about the newly (soon to be) formed exchanges as an option for their health insurance coverage.  This goes into effect March 1, 2013.
  • Children up to age 26 regardless of marital or student status are eligible for any medical plan that offers insurance to dependents.  This is in effect now.
  • Preventative Care – Non-grandfathered plans may not impose cost-sharing requirements (such as deductibles or co-pays) on preventive care services and immunizations that are recommended by governmental agencies. This is in effect now.
  • Breastfeeding – Employers must provide breastfeeding workers with “reasonable break time” and a private, non-bathroom place to express breast milk during the workday. This is in effect now.
  • FSA – Non-prescribed over-the-counter drugs will no longer be eligible for reimbursement under flexible spending accounts, health reimbursement arrangements or health savings accounts as of January 1, 2011 and contributions to medical flexible spending accounts will be limited to $2,500 effective January 1, 2013.
  • Waiting period for enrollment into the insurance plans may not exceed 90 days.  This begins in 2014.
  • Automatic Enroll – If you have more than 200 employees, you have to automatically enroll the employees into an insurance plan.  This begins in 2014.
  • Small Business Tax Credit: to incentivize small business to get group plans.  If you have less than 10 employees AND average less than $25,000 annual salary, you qualify for the full credit.  Partial credit is available up to 25 employees and up to $50,000 average salary.  This is available now.  For or a better understanding of the small business tax credit, visit:,,id=252899,00.html

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