This document discusses how the Affordable Care Act affects employers. It outlines provisions such as the individual mandate requiring health insurance, insurance reforms prohibiting denying coverage for pre-existing conditions, and the creation of state health insurance exchanges for individuals and small businesses. It notes that most Americans currently receive insurance through an employer or public programs like Medicare and Medicaid, while about 15% of the population is uninsured. The document also discusses penalties for large employers not offering adequate coverage and subsidies available to small businesses to purchase insurance.

1. Employers and the ACA
John J. Sarno, Esq.
Employers Association of New Jersey
www.eanj.org
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2. Points to Cover:
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Personal Mandate
Insurance Reforms
Health Exchange
“Play or Pay”
Market Dynamics
Employer Options
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3. Patient Protection and Affordable Care Act
March 23, 2010
A New Era for America
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4. U.S. Supreme court heard oral argument on the constitutionality
of the Affordable Care Act on March 26-28, 2012
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5. Minimum Essential Coverage Requirement
(the Personal Mandate 2014)
A federal requirement that individuals
purchase health care insurance or pay
penalty up to 2.5% of income is
unprecedented.
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6. All five congressional committees reported
out a bill containing the Individual Mandate
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7. 6 lobbyists for every member of Congress
Insurance Industry - $100 million
Pharma - $110 million
Providers - $80 million
Hospitals - $90 million
Medical Device - $30 million
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8. The pharmaceutical industry alone spent
over $600,000 per day in lobbying
(2.3 lobbyists per member of Congress)
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9. The Health Insurance Exchange
Uninsured individuals not eligible for
Medicare or Medicaid will be permitted to
purchase insurance through state
Exchanges (purchasing pools).
Individuals will be eligible for subsidies.
Employers with fewer than 100 employees
will be permitted to enroll.
Employer eligibility may be expanded in
2017.
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10. Insurance Reform
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High-risk pool created (2010)
Dependent coverage to age 26 (2010)
Children with pre-existing conditions cannot be denied coverage (2010)
No denial for pre-existing conditions eliminated (2014)
No Charge for annual wellness visit (2014)
Guaranteed issue policy (2014)
Modified community ratio (2014)
80 – 85% medical loss ratio (2014)
Long-term insurance program (2014)
No pre-existing condition exclusions (2014)
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11. All Plans Must Provide Essential Health Benefits
“Essential Health Benefits” requires minimum set of
benefits, with no lifetime of annual coverage limits
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Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health and substance abuse coverage
Prescription drugs
Rehab services and medical devices
Preventative and wellness/chronic disease management
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12. “Free” Preventive Care
No Co-Pays
No Out-Of-Pockets
No Deductibles
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13. Hospitals, physicians, insurance
companies and others agree that without
the Individual Mandate the consumer
protection and benefits reforms would ruin
the health care market
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15. Exchange Enrollment
October – December, 2013
2.2 Million Americans
23% - 18 – 34
15% - 35 – 44
22% - 45 – 54
33% - 55 – 64
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16. Who is Insured?
Most people are insured through an employer-sponsored
plan (177 million Americans, 62% of people are under
age 65)
 99% of employers with 200 or more employees offer
health insurance
 78% - 10 to 24 employees
 49% - 3 to 9 employees
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17. Who is Insured
(continued)
About 70 million Americans are insured
under a “public plan”
 Medicare
 Medicaid
Government spends about 42% of every
dollar spent on health care
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18. The Uninsured
 Estimated 46 million Americans lack health
care insurance (15% of U.S. population)
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19. Who Are The Uninsured?
 27 million have personal income over $50,000
 66% of uninsured have family incomes of $45 $85,000
 14 million are eligible for Medicaid on the
Children‟s Health Insurance Program
 10 million „illegal‟ aliens
 1/3 are between 18 to 29 years of age
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20.  About 500,000 New Jerseyans are eligible to
purchase a healthcare plan on the Health
Insurance Marketplace
 Most work full-or part-time for a small
employer
 About 80% will be eligible for a subsidy
 525,000 undocumented workers in N.J. not
eligible
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21. Employer-Plan Crisis
 Premiums have grown 4-times faster than
wages since 1999.
 Average employee contribution has gone up
200% since 2000.
 Out-of-pocket and co-payments have gone
up 115% since 2000.
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22. Affordability
Full-time employee cannot pay more than 9.5% of
household income for his/her share of premium for
single coverage. Lowest cost plan.
Safeharbor: Employer may use W-2 income for
employee. (Box 1)
Rate of Pay Safeharbor – Hourly rate multiplied by 130
hrs/month. Determine affordability using monthly
premium based on monthly wage. For salaried
employee, monthly wage can be used. Does not apply
where wages were reduced during the year.
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23. The Marketplace, Prices and Subsidies- N.J.
29 plans within 4 categories
Platinum
Gold
Silver – benchmark plan (70% of healthcare costs)
Bronze
October – December, 2013
4 of 5 enrollments eligible for subsidy
54% - women
46% - men
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24. Delayed until January 1, 2015
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25. “Large” Employer Penalty
Employers with 50 or more “full-time” employees will be penalized for not
offering coverage or coverage that does not meet standards.
All employees counted in a calendar month (parttime, temporary, seasonal).
“Full-time” employee is someone who is employed to perform services on
average of 30-hrs per week or 120 hrs/month.
Part-time employees are grouped together to create “full-time” equivalents.
Aggregate number of hours worked by part-time workers in any month and
divide by 120 to determine number of full-time equivalents.
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26. Penalty for not offering insurance or to less
than 95% of full-time employees and at least
one FTE receives a subsidy to pay for
insurance on the Exchange
Penalty for not offering insurance or to less
than 95% of full-time employees and at least
one FTE receives a subsidy to pay for
insurance on the Exchange
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27. Auditing and Enforcement
 U.S. Department of Treasury (IRS)
 U.S. Department of HHS
 U.S. Department of Labor
Combined databases – Form W-2, Form
5500, Social Security Administration database.
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28. New Jersey Health Reform (1992)
Individual and Small Group Pools
Guaranteed – Issue
No-Preexisting Condition Exclusion
Modified Community Rating
Medical Loss Ratio (80%)
Standardized Plans/Coverages
75% Coverage (25 or more hours)
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29. Health Care Inflation
Employer-Sponsored Plans
(per employee)
2010
$7,300
2000
$15,000 (family)
$3,500
$6,200 (family)
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30. A Looming Challenge Health Care Inflation
1. Premiums have grown 4-times faster than wages since 1999. In NJ, 5
times faster.
2. Average employee contribution has gone up 200% since 2000.
3. Out-of-pocket and co-payments have gone up 115% since 2000.
4. NJ Public Interest Group estimates premiums for New Jersey employers
will double to $24,000 per year by 2016.
5. Premiums in N.J. are third highest in U.S.
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31. Tax Credits for Small Business
Sliding scale tax credit to employers with fewer than 25
employees.
 10 or fewer workers with average annual wages of less than $25,000,
up to 35% through 2013
Eligibility based on employer contributing at least 50% of total
premium.
2014 tax credit, up to 50% if insurance is purchased through
the Exchange.
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32. Affiliated Physicians & Employers Health Plan
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33. Questions?
Thank You
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