Group Coverage

The Impact on Employers

The Affordable Care Act has a significant impact on employer based insurance. The size and scope of the impact largely depends on the size of the company. Small employers are defined as having less than 50 full time equivalent (FTE) employees. A full-time employee is one that works 30 or more hours per week. Part time employees must be converted to a full-time equivalent (FTE) employee. To do so, you must add the total number of hours worked in a month by all part-time employees and divide by 120. Add this number to the total number of full-time employees to determine your FTE number.

Small Group Impact

Small group plans will see several changes to their plans. This is due to ACA requirements such as Essential Health Benefits, minimum value, no pre-existing limitations, no medical underwriting and community rating. Depending on certain circumstances, some employers may benefit from the ACA’s requirement while some may experience a negative impact. The impact will vary based on demographics, plan design and location of the company. The federal government has allowed some existing plans that were in place prior to 2014 to be continued through 2016 to delay any negative impact.

Large Group Impact

Large employers are defined as employing 50 or more full-time equivalent (FTE) employees. Part-time employees are used to determine the size of a company. If an employer is a controlled group with common ownership, all organizations within the controlled group are used to determine the size of the company.

The Affordable Care Act requires all employers with 50 or more employees (FTE) to offer health insurance that is affordable and meets minimum value to their employees or pay a penalty.

If an employer fails to provide coverage and at least 1 employee qualifies for a tax credit, the employer will pay a penalty as follows:
# of FT Employees minus 30 x $2,000

If an employer provides a plan that is NOT affordable or DOES NOT meet minimum value, the penalty is the lesser of the penalty above OR
# of FT Employees claiming a tax subsidy x $3,000

For groups of 50-99, the mandate was extended to 2016. For groups of 100+ FTE’s, the mandate begins in 2015 and the penalty was modified to the following until 2016:
# of FT Employees minus 80 x $2,000