The Affordable Care Act: An Overview 

For those of you who may be new to the Affordable Care Act, or could use a refresher, it was originally signed into law in March 2010 by President Barack Obama. The ACA didn’t always have a smooth sail. This groundbreaking Act was periodically challenged and advanced several times, all the way to the U.S. Supreme Court, where it was largely upheld in 2012, 2015, and in 2021. 

When the ACA was first released, it was widely understood that this was a big undertaking for most states. While folks in Massachusetts had previously experienced significant healthcare reform a few years before the ACA came into being, to the rest of the country, the ACA was brand new—and it was huge!  

Consequently, because the ACA was such a broad sweeping act (providing a number of major benefits to individuals that weren’t previously available), the ACA was implemented gradually so that states had a reasonable amount of time to address its reforms and meet compliance.  

What the ACA Provides 

Several noteworthy benefits of the Affordable Care Act include:  

• Guaranteed insurance coverage for individuals with pre-existing conditions 
• Automatic coverage for children up to age 26, on a family health plan 
• Lactation breaks for nursing mothers 
• No lifetime coverage limits on a health insurance plan 
• Free preventative care screenings, annual physicals, etc., with no out-of-pocket costs   
• For group health plans, the waiting period for eligible new hires cannot exceed 90 days 

But All Was Not Rosy… 

But even with the ACA providing huge benefits to individuals, all was not rosy. For the first nine years the ACA was in existence, people were penalized by the Federal Government if they did not have health insurance. This was known as the Federal ACA “Individual Mandate.” The Mandate stated that if an individual did not have health insurance, when they filed their personal income taxes, they would be penalized and fined.  

But there’s good news! Four years ago, the Federal Government did away with the Individual Mandate.  

The Federal Government’s “Individual Mandate” No Longer Exists 

In 2019, the Individual Mandate was repealed, and there is no longer a federal penalty for individuals who choose not to partake in health insurance.  

That said, it’s important to note there still are some states that do have individual mandates. 

Which brings us to “affordable” coverage.  

Offering Affordable Care for Plan Year 2024 Could Get Challenging 

As an employer, you are responsible for offering your employees affordable coverage. One item to anticipate for 2024, (especially if you’re starting to plan your open enrollment), is that there’s a fairly dramatic decrease in the allowable measure of affordability for health plans. This means it’s going to be harder for companies to be in compliance with the Affordable Care Act. 

As it stands for this year, 2023, the employee out-of-pocket expenses for the lowest eligible plan cannot exceed 9.12 percent of an employee’s income. 

The Employee Affordability Marker Will be Decreasing in 2024 

For 2024, the employee affordability marker is going to drop down to 8.39 percent of an employee’s income. What makes this even more significant is this—if the only health plan you’re going to offer exceeds 8.39 percent of an employee’s income (technically considered unaffordable), you’re going to be out of compliance. 

If you’ve shopped rates this year, or you’ve been taking a look at 2024 rates, you know the cost to employers is going up fairly significantly. Unfortunately, the affordability marker measure is moving in the opposite direction. This presents a double whammy for employers—they face increased health insurance costs as the affordability threshold goes down. 

Important 2024 Due Dates for Filing ACA Forms 

For 2024, it’s important to note that the Federal Government is changing how and when companies need to file ACA forms. Previously, companies filing fewer than 250 forms had been allowed to file via paper rather than electronically. That no longer is the case. 

As of the upcoming filing in 2024, filing via paper is no longer allowed—unless you’re filing less than 10 forms. In most cases, companies will need to file electronically. Note that the 2024 due date for filing electronic forms with the IRS is April 1, 2024.  

Sending out Form 1095 to full-employees must be received by March 1, 2024.  

Note: Employers with employees in California and Rhode Island: must furnish Form 1095 to full-time employees by January 31, 2024.  

Form 1095-C is used by larger companies with 50 or more full-time or full-time equivalent employees (FTEs), and shows the coverage offered to the individual from their employer.  

Employers with fewer than 50 full-time employees that offer health coverage, as well as health care insurance providers, send Form 1095-B to members of their health insurance plans. 

Note: MP takes care of electronic filings for its clients on the ISL platform. If you’re doing your own filings, or using another provider, it’s vital you file electronically in a timely manner to avoid any unnecessary penalties. 

The “Good Faith” Standard is Officially Dead 

From 2015 to 2020, the Federal Government designated that employers could receive relief from penalties under IRC 6721/6722 for incorrectly filing, or failing to file, on time.  

Unfortunately, this is no longer the case. The IRS expects everyone to be in full compliance, and the IRS has the right to penalize employers to the maximum published rates and amounts if there is a violation. 

Family Healthcare.gov Marketplace Rules Have Been “De-glitched” 

For several years, some of the Marketplace rules involving family healthcare have been somewhat glitchy. This glitch specifically occurred when a member of a household received an offer of coverage from their employer. When this happened, all other family members would not be eligible to receive subsidized Federal healthcare.gov Marketplace coverage. Thankfully things have changed. Now, if one family member is offered coverage from their employer, the other family members still have the opportunity to choose healthcare.gov Marketplace coverage. 

This is one of the ways the Federal Government is trying to encourage individuals to view the Federal Marketplace as a viable way to find affordable healthcare options. Needless to say, enrollment is way up. 

Record-breaking Marketplace Enrollment in 2023 

Healthcare.gov Marketplace open enrollment began November 1, 2023. Last year, 16.3 million people obtained healthcare coverage through the Marketplace.  

This November, during the first week of open enrollment for 2024, the White House reported that 1.6 million people had already enrolled (300,000 new enrollees). This number is a 50 percent increase in the number of people who enrolled during the first week of open enrollment last year. Additionally, the White House said that 4 out of 5 shoppers can find a plan that would cost less than $10 per month per person. And what of Medicaid recipients? While a number of individuals receiving Medicaid during the COVID Health Emergency lost that coverage, they still have until July 24, 2024 to enroll in coverage through the marketplace. 

The Takeaway 

• The Affordable Care Act was groundbreaking for its time, offering affordable benefits to millions of individuals who previously didn’t have health insurance. 
• Since its inception it’s been challenged at the Supreme Court level and modified. 
• Employers, especially those with 50 more full-time employees or full-time equivalent employees must be diligent in keeping up with compliance, or face stringent IRS penalties. 

There’s a lot more to the Affordable Care Act, and we’ve just touched on a small part of it. Read more about the ACA and what you need to do to be on top of compliance. 

We’ll continue to bring you essential information, valuable insights, and actionable steps to help you understand new regulations, processes, forms, and information to help you maintain compliance and enhance your recruitment strategies.

Dealing with the ACA can be confusing and frustrating. Contact us today with any questions or concerns. 

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