Employer Mandates
The ACA established several new fees and taxes designed to generate revenue to help fund expanded programs and services. Employers will pay some of these fees while others will be paid by insurers.
Fees and taxes that apply to insurers or ASO employers
- Comparative Effectiveness Research Fee – Funds the Patient-Centered Outcomes Research Institute (PCORI), which conducts research to compare which of two or more treatments is most effective
- Health Insurance Industry Fee – Helps fund PPACA implementation
- Reinsurance Assessment – Reimburses companies that insure high-cost individuals in the individual insurance market
| Comparative Effectiveness Research Fee | Health Insurance Industry Fee | Reinsurance Assessment | |
| Applies to | Insured and self-insured medical plans | Insured medical, dental and vision plans | Insured and self-insured medical plans |
| Effective | Through 2019; Effective for plan years beginning on or after 10/2/11; First payment due for many plans 7/31/13 | Begins in 2014 | 2014 – 2016 |
| Cost impact | Annual fee of $1 per participant, increasing to $2, then indexed; Tax-deductible | 2% – 2.5% of premium in 2014; 3% – 4% of premium in future years; Tax deductible for employers as part of premium | $40 – $45 PMPY in 2015; $25 – $30 PMPY in 2016; Tax-deductible |
| Who pays | Insured” Insurer pays; built into rates ASO: Employer calculates and pays | Insurer pays; built into rates; partial load in 2014 | Insured: Insurer pays; built into rates; partial load in 2013 ASO: Employer is responsible; employer may choose to have administrator pay |
Other fees and taxes that may apply to employers
| Elimination of the Medicare Part D Employer Subsidy for Rx | Employer Mandate | Cadillac Tax | |
| Overview | Eliminates deduction for Medicare Part D employer subsidy for retiree prescription drug coverage | Fines employers with 50+ full-time employees (FTE) or full-time equivalents who do not provide coverage that is: Affordable (costs less than 9.5% of employee’s W-2 wages); Provides “minimum value” (covers 60%+ of costs) Penalties: No coverage: $2,000 per FTE (minus first 80 in 2015; minus first 30 in 2016 and later) Not affordable and/or not minimum value: Lesser of $3,000 per FTE receiving tax credit or $2,000 per FTE (minus first 80 in 2015; minus first 30 in 2016 and later) | A 40% excise tax on high cost health plans that exceed $10,200 for individual and $27,500 for family coverage |
| Effective | 2013 | 2015 for 100+ employers; 2016 for 50-99 employers | 2018 |
| Cost Impact | Varies by employer | Depends if employer needs to adjust plan to be compliant or is penalized | Actual impact TBD based on final regulations |