Affordable Care Act

The Basic Facts

The Basic Facts

Pursuant to the ACA, the federal government, state governments, insurers, employers and individuals share responsibility to reform and improve the availability, quality and affordability of health insurance coverage in the United States. ACA involves many very complex regulations, which can be broken down to three requirements. Each requirement works together, much like the three wheels on a tricycle.

  • First wheel: Americans are subject to the “Individual Mandate,” which requires them to have at least Minimum Essential Coverage (“MEC”) by January 1, 2014 or risk modest tax penalties. Where are Americans to get this minimum essential coverage?
  • Second wheel: Employers with at least 50 full-time or full-time equivalent employees (collectively “FTEs”) in their controlled group are subject to the Employer Shared Responsibility aka “Employer Mandate” and must offer MEC that is adequate and affordable to their Full-time employees and dependents, or risk tax penalties. In other words, “Play or Pay.” This will go into effect January 1, 2015 for “large employers’, and January 1, 2016 for “mid-sized employers”.
  • Third wheel: Each state is required to establish a health insurance “marketplace” (AKA “exchange”), to facilitate the purchase of MEC by individuals who do not receive an offer of adequate and affordable MEC from an employer.

The information provided here primarily focuses on the Employer Mandate (the second wheel).