Health Care Reform-Group Health Insurance

ACA Changes Associated with Group Health Insurance

Click on each section below to learn how Health Care Reform affect these different segments of Group Health Insurance.

Grandfathered vs. Non-Grandfathered

If your plan was in place prior to March 23rd, 2010 and you have made no significant changes to benefits (decrease of more than 15%) or employee contributions (decrease more than 5%), your plan may be Grandfathered.

The Health Care Reform Law affect these two types of plans differently. As you read through the rest of the reforms, we will mention whether they apply to Grandfathered, Non-Grandfathered, or both types of plans.

Each reform provision applies differently, so we will break it down for you below.

Preventive Care

Applies to: Non-Grandfathered Plans Only

Effective: New or renewing policies on or after September 23rd, 2010.

General Preventive Provision

All non-grandfathered policies, group and individual, have 100% preventive coverage for defined services for plans written or renewing after September 23rd, 2010.

Services are defined by the United States Preventive Service Task Force’s A & B category services. (USPSTF List)

Examples of Services Classified as Preventive
  • Blood Pressure Screening
  • Cholesterol Screening
  • Colorectal Cancer Screening for adults over 50
  • Type 2 Diabetes screen for adults with high blood pressure
  • Immunization such as Flu shots, Pneumonia, tetanus and others
  • Obesity Screening
  • STD prevention and counseling for adults at high risk
  • Tobacco Use screening and cessation interventions


Children’s Preventive Services

Children have a separate list of preventive services. Below is a partial list of those services.

  • Autism screening for children at 18 months and 24 months
  • Behavioral assessment for children of all ages
  • Developmental screening for children under age 3
  • Depression screening for adolescents
  • Hearing screening for newborns
  • Immunizations including but not limited to Hepatitis A & B, Flue shot, Measles, Mumps, Rubella, Pneumonia
  • Obesity Screen
  • Vision Screening

To see a complete list of preventive services for children, please refer to the HHS website here.


Women’s Preventive Services: Added Effective August 1st, 2012

Included in women’s preventive coverage is…

  • Breast cancer screening every 1 to 2 year for women over 40
  • Breastfeeding support and counseling as well as access to breastfeeding supplies
  • Cervical cancer screen
  • Sexually Transmitted Infections counseling
  • Well Women’s visits
  • Certain contraceptive drugs and sterilization procedures no including abortifacient drugs.

To see a complete list of women’s preventive services, please refer to the HHS website here.

HSA & FSA Changes

Affects: All policy types, Grandfathered & Non-Grandfathered

Health Savings Account/HSA Changes

Effective January 1st, 2011

Effective January 1st, 2011, the following provision were changed in regards to Health Savings Bank Accounts.

  • Withdrawals from and HSA bank account for non-qualified medical expenses will face a 20% tax penalty as opposed to the 10% that was previously assessed
  • Over the counter medications were removed from the list of qualified medical expenses


Flexible Spending Account/FSA Changes

Effective January 1st, 2013

The limit for the medical expense portion of the FSA was set at $2,500 per employee. Before this limit was legally set, it was up to the employer to limit contributions.

Note: This does not limit the contribution to the Childcare or POP plans

Read more about both the HSA and FSA Changes here.

Employer Requirement to Provide Coverage

Effective: January 1st, 2015

Affects: Business with over 50 Full Time Equivalent Employees, Grandfathered & Non-Grandfathered

Employer Requirement to Provide Health Coverage

Employers with more than 50 Full Time Equivalent Employees must provide Essential Minimum Coverage to all Full Time employees working on average more than 30 hours a week. This provision goes into effect January 1st. 2015. It was originally scheduled to start January 1st, 2014, however, a released by the IRS in early July delayed this requirement.

In 2015, if an Employer who meets this standard chooses not to offer coverage, they will face the following fine, know as the Shared Responsibility Fine.

$2,000 per Full Time Employee, not counting the first 30 full time employees.


Employer Shared Responsibility Fine

Effective January 1st, 2015 (Delayed from January 1st, 2014) Grandfathered and Non-Grandfathered Group Plans over 50 Full Time Equivalents

If an employer who is over 50 Full Time Equivalent employees provides coverage, and the employee only portion of premium exceed 9.5% of that employee’s annual household income, that employee is then eligible for an Individual Health Insurance Premium Tax Subsidy. If that employee chooses to use that subsidy, the employer will face a fine.

The fine is $3,000 for every employee receiving a tax credit


$2,000 per Full Time Employee, not counting the first 30 Full Time Employees

Whichever is less.

To read more on the Employer Requirements for Large Employers visit the SHRM website here.


Auto Enrolloment

Groups with over 200 full time employees must automatically enroll these employees in the health plan. There is an opt out provision for employees wishing not to enroll. Employers must provide adequate time for those employees to opt-out if they wish to do so.

To see the government release on Automatic Enrollment, visit the SHRM website here:

Maximum 90 Day Waiting Period

Effective: January 1st, 2014

Affects: Non-Grandfathered & Grandfathered Groups


Under the Health Care Reform Law (PPACA, ACA, Obamacare) groups are restricted from having a waiting period longer than 90 calendar days.

This change applies to both Grandfathered and Non-Grandfathered groups and goes into effect upon renewal for in-force groups.

Refer to IRS Notice 2012-59 for more information.


Essential Heatlh Benefits

Effective: New plans or plans renewing on or after January 1st, 2014

Affects: Non-Grandfathered Plans

Every non-grandfathered policy must include coverage for the following 10 Essential Health Benefits.

  1. Ambulatory Patient Service
  2. Emergency Services
  3. Hospitalization
  4. Maternity and Newborn Care
  5. Mental Health and substance use disorder services, including behavioral health
  6. Prescription Durgs
  7. Rehabilitative and habilitative services and devices
  8. Laboratory Services
  9. Preventive and Wellness Services
  10. Pediatric services, Include Dental and Vision Care

While a majority of these Essential Health Benefits are already included on group policies, for some individual policies, this could be a significant increase in benefits.

To read more about EHB’s, visit the CMS webpage here.

Guaranteed Issue No Pre-Existing Waiting Period

Effective: January 1st, 2014

Affects: Non-Grandfathered Plans

All Non-Grandfathered policies will be guaranteed issue starting January 1st, 2014.

This means….

  • An individual cannot be denied a policy based on health conditions
  • They will have no pre-existing waiting periods
  • Individual policies will have no exclusion riders or declination

Metal Plans- Actuarial Value

Effective: January 1st, 2014

Affects: Non-Grandfathered Plans

All Non-Grandfathered plans will fall into four “Metal” tiers based on the plan’s Actuarial Value.

  • The Actuarial Value of a plan is defined as the total average cost of covered benefits, not including premium, that a plan will cover.
  • Individual Premium Tax Subsidies and Cost Sharing Subsidies only apply to the Silver Level Plan.

These classifications were created to make it easier for consumers to compare plans across carriers. Comparing plans within the same Metal Plan would help the consumer know what type of insurance they are buying.

Metal Plans by Percentage

Metal Plans Actuarial Value

Community Rating

Effective: New and Renewing Policies on or after January 1st, 2014

Affects: Non-grandfathered Group plans under 50 lives

Staring in 2014, insurance carriers can no longer rate on health conditions, industry codes, gender rating, or any other factors. They are only allowed to rate policies on the following four factors.



  • Age (Max 3:1 Ratio): The largest differential in rates from the youngest (0-20 years of age) to oldest (64+) tier can be no more than three. For example, if the 0-20 age bracket was charged $100, the most the 64+ bracket could be charged is $300. This may cause a squeezing of rating and actually increase prices for younger individuals and decrease prices for older individuals. See the graphic below.Age Rating ACA


  • Family Size: Each person on the policy will receive their own rate. The maximum amount of people rated on in the 0-20 age bracket will be three. Everyone else will receive their own rate. For example, if you have four children under 20 years of age, you will be charged for three.This will change the way small groups are rated as most are currently composite rated, meaning every employee receives the same rate and age factors are averaged out over the entire group. This will no longer be allowed upon renewal for small group non-grandfathered plans in 2014.


  • Smoker Status: An insurance company is able to add a 50% surcharge to premiums for those individual who use tobacco.


No Health or Gender Rating: This change in rating has cause what is referred to as the ACA Teeter-Totter. The sick individuals will most likely see a decrease in rates and the healthy an increase in rates as the medical rating is removed to bring everyone to an equal rating factor. See the Graphic Below.

ACA Health Rating Change

For more information on rating rules, you can visit the Federal Register’s Release on ACA Rating.

Deductible Limits Small Group

Effective: Plan Years Starting January 1st, 2014

Affects: Non-Grandfathered Group Health Plans

The Health Care Reform Law states that small group plans (less than 50 employees) cannot have a deductible that exceeds $2,000 for an individual or $4,000 for a family, however, there’s a catch!

The insurance companies can have deductibles that exceed this limit if the plan is unable to meet the Metal Plan Levels (Actuarial Values of 60%, 70%, 80% or 90%) without increasing the deductibles above that limit.

Conclusion: There will be plans available with most carriers in the small group market that exceed the $2,000 deductible limit.

Health Care Reform Fees & Taxes

2012 Health Care Reform Fees

PCORI Fee (Patient Center Outreach Research Institute): Effective October 1st, 2012 Grandfathered & Non-Grandfathered Plans Group Health and Self-Insured Plans.

PCORI is a non-for-profit center to promote the use of evidence-based medicine.

The fees are as follows:

  • Charge is $1 per covered life starting with effective date October 1st. 2012
  • Charge will increase to $2 per covered life per policy year renewing or starting October 1st, 2013
  • The program will end on October 1st, 2019

Fees are built into billed premiums.


2014 Health Care Reform Fees

Health Insurer Fee: Effective January 1st, 2014 for Group & Individual plans (Excludes Fully Self-Insured Plans)

Health Insurers will be assessed new federal taxes in the form of an annual fee. These fees were put in place to subsidize the cost of the Health Care Reform’s many provisions.

  • Fee will be approximately $8 billion in 2014 increase to $14.3 billion in 2018
  • The amount that each insurer owes will be determined by it’s average net premiums written in that market. Simply put, as an insurer’s market share rises, so too will it’s portion of the new fee.
  • In May 2011, the Joint Commission on Taxation estimated that premiums will increase between 2.0%-2.5%

To learn more about the Health Insurer Fee you can visit the IRS’ release here or the Government Printing Office’s report here.

Transitional Reinsurance Fee: Effective January 1st, 2014 for Group Health Plans

The Reinsurance Fee is a tax on group health plans to help subsidize the individual guaranteed issue products. This tax will end in 2016.

  • In 2014, expected revenues from this fee are predicted to be $12 billion
  • Fees will be phased out over three years, ending in 2016
  • HHS estimates that the cost will be $63 per covered life per year or $5.25 per month, however, this is just an estimate.


How will Carriers bill these 2014 Fees?

Blue Cross Blue Shield of Illinois: BCBS will start charging the Health Insurer Fee and Reinsurance Fee for all policies starting January 1st, 2014. This charge is expected to be added to the total premium with a breakout of how much the fees account for on a separate line of the bill. BCBS has stated they expect the fees to total around 3.8%-4.0% of total premium.

Humana: Humana started charging the 2014 fees in a prorated fashion on groups starting with February 2013 effective dates. For example, if a policy renewed in June of 2013, 6 months of the 2014 ACA fees (Accounting for January 1st, 2014- May 31st, 2014) were prorated monthly each bill. They did not break out the fees as a separate amount on the bill. The fee changes were stated in each renewal and estimated to be around 3.8% of premium.

United HealthCare: UHC also started charging 2014 fees starting with February 2013 renewals. Again, fees are prorated for the number of months the policy is in effect for 2014. They also did not break out the fees as a separate line item on the bill.


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