THE PATIENT PROTECTION AND
AFFORDABLE CARE ACT
Affordable Care Act Basics
• Signed into law by President Obama on March 23, 2010.
• The Supreme Court rendered a final decision to uphold the
law on June 28, 2012.
• Aims to increase the quality and affordability of health
insurance, lower the uninsured rate by expanding public
and private insurance coverage, and reduce the costs of
healthcare for individuals and the government.
Affordable Care Act Basics
• There are ten Titles or Sections of the Affordable Care Act.
• The official, certified, full text of the law can be found at:
http://www.hhs.gov/healthcare/rights/law/patientprotection.pdf
Affordable Care Act Timeline
Affordable Care Act Timeline
2010
• Patient Bill of Rights in goes into affect:
• Prohibits Denying Coverage of Children Based on Pre-Existing
Conditions.
• Prohibits Insurance Companies from Rescinding Coverage.
• Eliminating Lifetime Limits on Insurance Coverage.
• Extending Coverage for Young Adults: Adult children allowed
to stay on parent’s plan until 26 years old.
Affordable Care Act Timeline
2011
• Tax on Prescription Drug Manufacturers: Brand name
prescription drug manufacturers must pay an annual fee
based on their prescription drug sales.
• Comparative Effectiveness Research Fee: Plan
sponsors of self-funded health plans must pay a fee to
help fund the Patient-Centered Outcomes Research
Institute based on the average number of lives covered in
the plan. The fee is $1 per individual for the first plan or
policy year ending after September 30, 2012 and $2 per
plan participant for the next plan or policy year. Fee
increases every plan year thereafter until 2019.
Affordable Care Act Timeline
2012
• W-2 Reporting of Employer Sponsored Health
Coverage: Employers must report the cost of employerprovided health coverage on employees' W-2 Forms. The
reporting does not make the coverage taxable to
employees.
• Summary of Benefits and Coverage and Uniform
Glossary: Plan sponsors for self-funded plans and
insurers for fully insured plans must provide a Summary of
Benefits and Coverage (SBC) and Uniform Glossary to
plan participants.
Affordable Care Act Timeline
2013
• Additional Medicare Tax: Employers must withhold
additional 0.9% Medicare tax on wages paid to employees
in excess of $200,000. No employer matching.
• First Comparative Effectiveness Research Fee Due:
The fee applies for plan years ending after 9/29/2012 until
expiring 9/20/2019. Form 720 is due by 7/31 following the
end of the plan year for which a fee is due.
• Department of Labor Exchange Notice: Employers
required to provide notice to all employees by October 1,
2013, and upon hire for new employees after October 1,
2013.
Affordable Care Act Timeline
2014
• Exchange Coverage for Individuals and Small Employers.
• Individual Mandate to Obtain Health Coverage:
Effective January 1, 2014, all individuals must obtain
minimum essential coverage or pay a tax. The penalty is
applied for each month during which an individual does not
have minimum essential coverage. The penalty for any
month is 1/12th the greater of a flat dollar amount ($95 in
2014 phased up to $695 in 2016).
• Federal Premium Tax Credit to Purchase Exchange
Coverage.
Affordable Care Act Timeline
2014
• Free Rider Penalty: An employer with 50+ full-time
equivalent employees that does not offer health coverage
to substantially all full-time employees (30+ hours per
week) and their dependent children, or offers coverage
that is either unaffordable (the premium contribution to
receive employee-only health coverage from the employer
costs the employee more than 9.5% of household income)
or inadequate (the coverage has an actuarial value of less
than 60%). The employer will only owe a Free Rider
Penalty if at least one employee enrolls in Exchange
coverage and qualifies for a premium tax credit.
Affordable Care Act Timeline
2014
• Health Insurance Company Annual Fee: Insurance
companies must pay an annual fee based on the amount
of premiums they receive. Costs are likely to be passed on
to plan sponsors in the form of increased premiums.
• Automatic Enrollment: Plan sponsors with 200+ full-time
employees must automatically enroll their full-time
employees in employer-sponsored health coverage. If an
employee wants different or no health coverage, they will
be able to change or opt out of the employer's plan. The
employer will be required to send notices to employees
regarding the automatic enrollment process.
Affordable Care Act Timeline
2014
• Exchange Reinsurance Fee: For three years beginning in
2014, health insurers of fully-insured and plan sponsors of
self-funded non-grandfathered group health plans will be
required pay reinsurance fees to United States
Department of Health and Human Services.
• The reinsurance fee will be as high as $63 per covered life
(plan sponsors and issuers must report covered life
information by November 15, 2014; HHS will send invoices
by December 15, 2014; and invoices will be payable in 30
days).
Affordable Care Act Timeline
2015
• *Free Rider Penalty.
• *Automatic Enrollment.
Affordable Care Act Timeline
2018
• Cadillac Tax:
40% nondeductible excise tax will be imposed to the
extent the aggregate value of specified employersponsored health coverage exceeds certain threshold
amounts – generally, $10,200 for individual coverage and
$27,500 for family coverage. Although the excise tax
generally will be paid by insurers and/or third party
administrators, the amount of the tax is expected to be
passed through to the employer sponsoring the high cost
plan(s).