Setting the record straight about common ACA misconceptions
Now that the midterm elections are in the rearview mirror and a Democrat-controlled House has halted any imminent threats to the Affordable Care Act (ACA), it’s time to regroup and shed some light on common misconceptions about the health care law. If there’s one thing both sides of the aisle can agree on, it’s that the past nearly two years of the Trump Administration have been replete with health care confusion.
Let’s take a look at the top areas of misunderstanding and set the record straight on the ACA lores still permeating society.
Myth #1 — Last year’s repeal of the individual mandate also halted the employer mandate.
Another reporting season has passed since the individual mandate penalty was zeroed out, yet many employers, brokers, and payroll and HR professionals still believe the employer mandate was repealed and they no longer need to adhere to requirements for applicable large employers (ALEs).
While Congress eliminated the individual mandate penalty as part of last year's GOP tax overhaul, the employer side of the equation remains untouched. Though uninsured Americans won’t have to pay a penalty next year, non-compliant employers have been receiving ACA penalty letters (Letter 226-J) for the 2015 reporting year since November 2017. This is a clear sign that the employer mandate is being enforced, and the IRS has already started issuing penalties for 2016 filings, too.
Myth #2 — The ACA has caused premiums to rise.
While there have been several spikes in health plan premiums since the ACA exchanges opened in 2014, this year premiums are falling across the country. According to the Centers for Medicare & Medicaid Services (CMS), the average premium for benchmark silver plans in the individual market, which the government uses to set subsidies, will drop by 1.5 percent in 2019. In addition, more than half of the counties in the 39 states that rely on the HealthCare.gov exchange are seeing, on average, their cheapest ACA plan decrease in cost by 10 percent.
It’s no secret that Republicans dislike the ACA and have argued that the health care law is to blame for rising costs. However, industry leaders and reports indicate premiums would be even lower if not for the GOP’s expansion of short-term plans and repeal of the individual mandate penalty. In fact, the Congressional Budget Office (CBO) estimated that gutting the individual mandate requirement would contribute to rising premiums, causing healthier people to drop out of the marketplaces.
Myth #3 — Employer-sponsored health care plans only need to be affordable.
ALEs must offer health insurance to full-time equivalent employees and their dependents under the ACA, but they can’t provide just any plan. Employers need to ensure they’re offering the right level of coverage as specified by the ACA. That means health care plans must meet the minimum value and affordability standards.
However, many ALEs still question what actually qualifies as an ACA-compliant plan. For example, a company might offer a plan considered affordable based on safe harbor calculations, but that’s not enough — the coverage must also meet minimum essential coverage requirements (an affordable plan of minimum value).
An employer-sponsored plan provides minimum value if it covers at least 60 percent of the total allowed cost of benefits that are expected to be incurred under the plan. If the plan doesn’t meet both this and the safe harbor requirements, then the employer could be found liable for penalties down the road.
Why these misperceptions persist
The ACA has been the law of the land for over eight years, so what’s been the biggest factor influencing these misperceptions? Many employers have not taken the time to understand the ACA, ultimately believing it wasn’t going to stick around.
Luckily, there are many resources and solutions available to employers who need to catch up on where the ACA stands, how the law impacts them, and what the reporting requirements entail. With the recently extended 2018 reporting deadlines employers have more time to fully educate themselves on the ACA and understand the importance of tracking, documenting, and reporting full-time employees and offers of health care.