The Affordable Care Act for Large Business

The Affordable Care Act, ACA, will impact businesses differently depending on their size amongst many other factors. Business which employ 100 employees or more, are considered to be large employees and are considered to be the least affected as many already offer health care insurance. Along with the federal and state government, large businesses are determined to have a shared responsibility to improve quality and accessibility to affordable health care. Although large business are not required to provide coverage, employers will be required to pay a penalty if at least one full time employee receives a premium tax credit for purchasing insurance coverage. The penalty is set at $2,000 which is then multiplied by the total number of full time employees (minus 30). The definition of a full time employee is one who works 30 hours or more. Alternatively, if the employee receives coverage through the new health care exchange program with a subsidy, the penalty is increased to $3000 for each employee receiving the subsidy.

If the employer has 200 or more workers, they will be required to automatically enroll all full time employees within their plan each year, although workers may choose to opt out. Large companies may utilize the Medicare Modernization Act (MMA), which provides subsidy payments for retiree prescription drug benefits. This may be up to 28% of the original cost.

Ultimately, health care coverage may not change for large employees with 98% currently offering health insurance coverage. However, from 2017, large employees may also have access to SHOP options and employers may allow their employees to utilize health care coverage from this program. Costs may increase to due the higher uptake from employees. However, employers may begin to reduce contributions to minimize the change in total employer spending. Employees will also be required to follow regulations regarding prohibitions under the Affordable Care Act. For example, it is prohibited to drop health care due to preexisting conditions and programs are prohibited from employing annual and lifetime benefit limits. However the regulations regarding benefit minimums, limits on deductibles which apply to smaller business, do not apply.

Health care coverage is considered to be unaffordable if it is more than 9.5% of the household income or covers less than 60% of health care costs. Large employers are required to participate in the free-choice voucher program. If the worker is required to contribute between 8%-9.8% of the household income, the employer must provide the worker with a free-choice voucher. Here, the employee is free to choose a health care coverage plan outside of those offered by the employer, but the employer would continue to make the same contribution as if the employer where participating through their group plan. Many employees are choosing to outsource their HR department to ensure compliance with the rules and regulations set out by the Affordable Care Act, and to determine cost effective ways to administer health care coverage in the future.




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