Health Care Reform Requirements by Company Size

The Patient Protection and Affordable Care Act (PPACA), aka health care reform, has different requirements depending on your company size and depending on what type of health benefits you offer.

For example, if you're a small business with 10 employees who offers a "pure" defined contribution plan, your requirements are different than a large business with 1,000 employees who offers a self-insured group health plan. Some of the requirements have already taken effect, but the biggest wave of the health care reform requirements are coming this year (2014) and 2015.

Here is a summary of health reform requirements beginning January 1, 2014 by company size.

Note: This list assumes compliance with health care reform requirements that went into effect 2010-2013 and is not necessarily a comprehensive list for all employers.

At Least One Employee

Companies with 1 or more employee/s may need to comply with the following provisions.

Effective Beginning in 2014

• 90-Day Limitation on Waiting Periods:  A group health plan may not use a waiting period that exceeds 90 days. A waiting period is the period of time that must pass before coverage for an employee or dependent who is otherwise eligible for the plan can become effective. Being eligible for coverage means having met the plan’s eligibility conditions (such as being in an eligible job classification). Read more on the 90-Day Waiting Period here.

• Coverage of Essential Health Benefits: Requires non-grandfathered plans offered in the individual and small group markets (both inside and outside of Health Insurance Marketplaces), to offer a core package of 10 items and services, known as "essential health benefits". Read more on Essential Health Benefits here.

• Dependent Coverage to Age 26: Requires both grandfathered and non-grandfathered group health plans that offer dependent coverage to make coverage available until a child reaches age 26, regardless of other coverage options.

• Prohibition on Annual Limits: Prohibits health insurance plans from imposing annual or lifetime limits on Essential Health Benefits (EHB). Read how these annual limit prohibitions impact stand-alone HRAs.

• Guaranteed Availability: Requires issuers offering non-grandfathered group plans to accept every employer that applies for coverage, with certain exceptions. 

• Limits on Cost-Sharing: Requires non-grandfathered group plans to ensure that cost-sharing under the plan does not exceed certain limitations, including limits on both out-of-pocket maximums and deductibles.

• No Preexisting Condition Exclusions: Prohibits health plans from excluding individuals from coverage or limiting or denying benefits on the basis of preexisting medical conditions. This includes individual health insurance plans.

• Nondiscrimination for Wellness Programs: Revises the nondiscrimination rules under HIPAA (the Health Insurance Portability and Accountability Act) for health-contingent wellness programs, which require an individual to satisfy a standard related to a health factor to obtain a reward

• Restrictions on Premium Variations: Requires issuers that offer non-grandfathered health insurance coverage in the individual or small group market to limit any variation in premiums with regard to a particular plan or coverage to age and tobacco use (within limits), family size, and location.

50+ Employees

Companies with 50+ employees also need to comply with the following provisions.

Effective Beginning in 2015 (Delayed from an original January 1, 2014 date)

• Employer Information Reporting on Health Insurance Coverage: Requires employers subject to "pay or play" to report certain information to the IRS and to their employees regarding compliance with the employer shared responsibility provisions and the health care coverage they have offered. However, for employers with 50-99 employees, the penalties for not offering health care coverage do not start until 2016.

Effective Beginning in 2016 (Delayed from an original January 1, 2014 date)

• "Pay or Play" (aka Employer Shared Responsibility or Employer Mandate): This provision requires large employers with 50 or more full-time equivalent (FTE) employees to either offer affordable health insurance that provides a minimum level of coverage to full-time employees, or possibly pay a penalty. The tax penalty goes into effect if any full-time employee purchases health coverage through the state Exchange and receive a premium tax subsidy or cost-sharing reduction. Read more about the delay for mid-sized employers.

100+ Employees

Companies with 100+ employees also need to comply with the following provisions.

Effective Beginning in 2015 (Delayed from an original January 1, 2014 date)

• "Pay or Play" (aka Employer Shared Responsibility or Employer Mandate): For employers with 100+ FTE employees, this provision takes effect in 2015.

• Employer Information Reporting on Health Insurance Coverage: Requires employers subject to "pay or play" to report certain information to the IRS and to their employees regarding compliance with the employer shared responsibility provisions and the health care coverage they have offered.

250+ Employees

Companies with 250+ employees also need to comply with the following provisions.

Effective as of 2012

• Form W-2 Reporting of Employer-Sponsored Health Coverage: Requires employers who must file 250 or more Forms W-2 for the preceding calendar year, and who sponsor a group health plan, to report the cost of coverage provided to each employee annually on the Form W-2 (provided to employees in January), with certain exceptions.

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