Since the passage of the Affordable Care Act (ACA), the word “mandate” has been tossed around quite a bit – often in a negative way. Americans are mandated to have health insurance or they face a penalty on their taxes. Employers of a certain size are mandated to offer health insurance to their staff. Unfortunately, due to the negative connotation, some Americans and businesses may not totally understand what the health care mandate means for them as outlined under the ACA.
Understanding the Employer Mandate
The requirement that employers with 100 or more full time equivalent (FTE) staff offer affordable, minimum essential health insurance coverage to full-time staff went into effect on January 1, 2015. The same requirement for businesses with 50 to 99 FTEs goes into effect on January 1, 2016. Some employers have been scrambling to find coverage that works for the company and meets ACA guidelines.
In order to be affordable, the cheapest employee-only option of the plan has to cost no more than 9.5 percent of the income of the employee. In addition, it has to offer minimum essential coverage, which means the plan pays, on average, 60 percent of expenses and offers required preventive care benefits cost-free to the patient.
Some businesses are pushing this offer even further by requiring that employees enroll in health coverage.
Employer Requirements to Enroll in Coverage
Nothing in the ACA says that employers have to require staff to purchase health insurance – it simply says that insurance has to be offered. Some businesses are misunderstanding this, and are reconsidering whether their business is required to participate.
The ACA does allow companies with 100 FTEs or more to automatically enroll staff in coverage with no opt-out if the coverage is affordable and adequate, however. Yet, businesses subject to the mandate must make all calculations required by the ACA regardless of whether they offer voluntary enrollment or auto-enrollment.
Other employers are simply being assumptive and offer an opt-out if the employee wants it. This has been done in companies for years, and is a way to make sure employees have coverage as a default. Those that opt-out generally have another source of coverage, like a spouse’s insurance policy, and don’t want to pay for two plans.
Regardless, many employees are very frustrated with feeling strong-armed into enrolling in work-based coverage. Those who are unhappy with their employer’s rules can contact the Department of Labor if they wish, but it’s unclear whether they would be successful in causing a change.
Businesses face a great deal of regulation, with significant fines if they don’t comply. In the case of health insurance, some of them decide to make it easier on the company by automatically enrolling full-time staff in health coverage with no opt-out choice. Unfortunately, this can anger staff and cause turnover. Businesses can comply with the law by offering affordable, adequate coverage without forcing employees to enroll.
For more information on the ACA’s requirements for employers, read Employer Mandate Takes Effect.