How the Affordable Care Act Affects Your Business

The Affordable Care Act was designed with three overarching goals: to make affordable healthcare accessible to a larger segment of the US population, expand the Medicaid program’s reach, and find innovative ways to lower healthcare costs. Since the Affordable Care Act came into effect, it has brought 20 million uninsured people into its fold. Many of these are self-employed entrepreneurs or small business owners.  

Given the many changes the act has brought about, it is critical to understand Affordable Care Act employer requirements and newer rules and regulations for business owners. With different Affordable Care Act employer mandates for different types of companies, it has become essential for businesses to become ACA-compliant to avoid penalties.  

The Affordable Care Act’s (ACA) Impact on Business Health Plans in Nevada 

1. Guaranteed Issue and Pre-existing Conditions: 

Under the Affordable Care Act (ACA), everyone is guaranteed insurance coverage. This means that everyone, regardless of pre-existing health conditions, has access to insurance. Insurance companies can no longer deny coverage or charge higher rates based on an individual’s health status. The ACA also ensures that women are not charged higher rates than men. With the implementation of ACA, insurers are required to provide coverage regardless of health status or gender. This has enabled more small business owners to provide health insurance for themselves and their employees.  

Directly linked to this is one of the most fundamental concepts of insurance – risk pooling. Risk pooling refers to a practice where the medical costs of individuals with varying health statuses are combined to calculate premiums. Doing so allows the higher costs of those with pre-existing medical conditions and who are less healthy to be offset by those who are healthy and less likely to need medical care. The Affordable Care Act requires insurers and insurance companies to use a single risk pool when establishing premiums. Insurers must group their market enrollees in a single risk pool while setting the product’s price. By doing this, the costs of the at-risk enrollees get spread across all participants.  

 

2. Essential Health Benefits: 

The ACA categorizes ten essential health benefits and mandates that all individual and small group health plans offer them. It is also significant that the ACA requires these essential health benefits to be covered without annual dollar caps, providing recipients with more comprehensive health benefits at a lesser cost.  

The ten essential health benefits categories are: 

1. Emergency services 
2. Ambulatory services or outpatient care that you receive without being admitted to a hospital 
3. Hospitalization, including overnight stay at the hospital and surgery 
4. Pregnancy, maternity, and newborn care; before and after birth 
5. Mental health and substance use disorder services, which include behavioral health treatment such as counseling and psychotherapy 
6. Prescription drugs 
7. Laboratory services 
8. Preventive and wellness services and chronic disease management 
9. Rehabilitative and habilitative services and devices for people with injuries, disabilities, or chronic conditions.  
10. Pediatric services, including pediatric oral and vision care
    
     

3. Employer Health Insurance Mandate: 

The Affordable Care Act employer mandate sets down specific rules and responsibilities for employers based on the number of full-time employees.  

• If the employer has fewer than 25 full-time employees (this also includes full-time equivalent employees), it may be eligible for a Small Business Health Care Tax Credit to help cover the cost of providing insurance coverage. 
• If the employer has 50 or fewer employees, they may be eligible for insurance coverage through the Small Business Health Options Program or SHOP Marketplace. 
• Employers with 50 or more full-time employees are considered Large Employers and must provide affordable insurance to their employees. 
• Large employers are required to offer insurance coverage to at least 95% of their full-time workers and their dependent children. 
• Large employers must provide a plan that provides “minimum value,” meaning it needs to cover at least 60% of the cost of covered services, including deductibles, copays, and coinsurance.  
• Large employers that do not offer affordable coverage that provides minimum value, as defined by the ACA, may need to pay a penalty called the Employed Shared Responsibility payment.  
• The Employer Shared Responsibility provision, also known as the Employer Mandate, was first put into effect in 2015 but only applied to businesses with 100 or more full-time employees. It was amended to include businesses with 50 or more full-time employees in 2016.  
  
  
  

Affordable Health Care’s (ACA) Impact on Health Plan Costs in Nevada
 

1. Rating Factors: 

According to the Affordable Care Act, health insurance companies can set or vary healthcare premiums based only on five factors:  

1. Age: Premium rates can vary based on age, but there is a cap on how much more an insurance company can charge an older person for the same plan compared to a younger individual. 
2. Location: Different states have different healthcare costs, and companies can adjust premiums accordingly.  
3. Tobacco use: The ACA allows insurers to impose a premium surcharge on tobacco users. 
4. Individual vs. Family plan: Rates must be calculated per family member to determine a combined rate for the insured family. 
5. Plan category: This refers to how the cost of healthcare is split with the insurance provider. The levels typically include:  
   
   • Bronze – Lowest monthly premium, highest copay highest deductible.
   • Silver – Moderate monthly premium, moderate copay. Moderate out-of-pocket costs that are lower than bronze plans.
   • Gold – Highly monthly premium, low deductible, lower out-of-pocket costs that are lower than bronze plans.
   • Platinum – Highest monthly premiums, minimal deductibles, lower out-of-pocket costs.
   • Catastrophic – Low monthly premium, high deductibles. Routine medical expenses are out of pocket.
     
     

2. Wellness Programs and Incentives: 

Although wellness programs are popular, especially among companies with 200 employees or more, their efficacy, whether in improving overall employee health or reducing health costs for employers, is not always measurable. Also, there were concerns that many health programs inadvertently discriminated against employees with disabilities or severe medical conditions. To address these issues, the ACA has incorporated various rules and regulations to impact the programs’ effectiveness positively.  

Under the Affordable Care Act, wellness programs are categorized broadly into two types:
 

1. Participatory wellness programs: These programs reward employees for participating in the program. The ACA does not limit the incentives an employer can offer employees. 
   
2. Health contingent wellness programs: These programs require more active participation from employees. This could be either in the form of participation in some activity, such as walking a certain number of steps every day or in the form of achieving a particular health goal, such as lowering body fat percentage. Employers must offer reasonable alternatives to employees who are unable to complete the program due to disabilities or other medical conditions. Unlike a participatory wellness program, health-contingent programs come with a cap on how much an employee can be rewarded; the maximum reward is 30% of the total cost of health coverage. 
   
    

Nevada Health Link Marketplace 

Nevada-based businesses can explore affordable health insurance plans at the Nevada Health Link. Employers and employees can compare and purchase health insurance plans with applicable tax credits and subsidies through the website. 

AdvanStaff HR: Your Partner in ACA Compliance 

When you outsource your employee health benefits administration to us, you gain access to Advanstaff HR’s in-depth expertise. Our direct collaboration with the best health insurance providers allows us to offer your business customized health insurance options at competitive rates. Our team is trained to navigate ACA regulations and offers services such as eligibility tracking, annual open enrollment, plan selection, cost analysis, and ACA reporting. Ready to take the next step? Find out more about our HR services and get a quote.