Group Reforms


California’s Small Employer Health Insurance Marketplace is largely ACA compliant because of the enactment of AB 1672 in 1992.   A Small Employer is defined as any business that has 50 or fewer full-time plus full-time equivalent employees (FTE). You can calculate your FTE here. The following are ACA related reforms that Small Employers who offer group health insurance plans need to know. Click here for your Small Group Compliance Checklist.

The 10 Essential Health Benefits – All ACA complaint plans must include the 10 essential health benefits.

The Minimum Medical Loss Ration (MLR) One of the many consumer friendly provisions of the ACA. The Minimum Medical Loss Ratio (MLR) requirements set minimum percentages of premium dollars that health plans must spend on health care (medical cost and activities that improve the quality of health care).

Tax-Credit: The ACA created a TAX CREDIT for certain qualified eligible groups – in general employers with under 25 full time equivalent employees (FTE), with average annual wages less than $50,000, who paid at least 50% of the employee only premium of a health plan that offers affordable minimum essential coverage, may be eligible for a tax credit. Health coverage must be purchased through Covered California for 2014 – 2015 tax-credits. Check here to see if you might be eligible. 

DOL State Exchange Notice: Small business employers are required to provide ALL Employees with written notice about the availability of the State Exchange (Covered California). The purpose of the notice is to inform those employees NOT eligible for group coverage (ex: part-time, seasonal employees) the opportunity to enroll in the State Exchange. The Department of Labor has provided a “model notice” which we have attached for your convenience. 

New ACA Age Based Rating Structure: All small group rates are now “actual age-based,” no more age-bands. This means that each employee and his/her dependents will have their own age-based rate. Dependents age 21 and over are rated as adults, the first 3 dependents age 1 to 20 are each rated as children, there is no charge for more than 3 children.  

Waiting Period: CA SB 1043  signed into law August 15th 2014 reverses California’s  mandated that employers must make health coverage available, if offered,  to employees within 60 days from the date of hire to conform with federal law.. Effective January 1st 2015, CA employers may offer waiting periods up to 90 days in conformance with the Affordable Care Act.  

Summary of Benefits and Coverage (SBC): Group health plans and health insurance issuers offering group or individual health insurance coverage are now required to provide a Uniform Glossary and an SBC that accurately describes the benefits and coverage under the applicable plan and coverage. The SBC needs to be distributed to each employee – hard copy or electronic file is ok. Your health insurance carrier is responsible for sending the SBC to the employer. If you haven’t received your SBC, give us a call we can help with that. 

Cobra and Cal-Cobra: Employers are still required to notify employees of their right to continue their health coverage should they or their dependents lose their group sponsored health plan.  COBRA and Cal-COBRA are still viable options under the ACA. Continuing Health Care Coverage Outline. 

Employer Payments of Employee Health Insurance: Under IRS Model Notice 2013-54 Employers may no longer reimburse employees for individual health insurance on a pre-tax basis for 2014, such an arrange does not conform to market reforms under the Affordable Care Act. Consequently, Employers practicing such an arrangement may be subject to a $100/day / applicable employee. 

Non-Discrimination – The Affordable Care Act bans employer-sponsor health plans from discriminating in favor of highly compensated individuals (HCI). Employers are prohibited for providing health coverage for management only, providing free coverage to HCIs, while requiring employee to pay for coverage. Benefits available to the dependents of  HCIs  must be available on the same terms to dependents of other employees in the health plan.

  • Group Health Insurance vs. Individual Health Insurance

Should I drop my group health plan in favor individual plans? The new health care law is transforming the way employers look at group health insurance. Retail giant Target announced that it will end health insurance for part-time employees, joining Trader Joe’s Co., Home Depot Inc. and other retailers that have scaled back benefits in response to changes brought about by the Affordable Care Act.

While these large employers are NOT dropping their group health plans, they are placing further restrictions on who is eligible for coverage, and believe it or not, that may be a good thing for those employees. So it begs the question – in this new health care reform environment, should you drop your group plan in favor of individual plans for your employees? 

That all depends, and like the Affordable Care Act, it’s complicated. Read on to find out, or just call us.