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The Affordable Care Act (ACA) Just Turned 15 Years Old!
The ACA has had a tumultuous ride but has solidified itself as a permanent fixture in American health care as we know it. Since some Human Resource professionals may not even know what life was like before the ACA, here are some major outcomes of this legislation with respect to employee health plans:
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Children must remain eligible to stay enrolled through age 26
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Plans cannot impose pre-existing condition limits or exclusions
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Plans cannot impose annual or lifetime dollar limits on essential health benefits
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The vast majority of plans cannot ask employees to pay more than annually indexed out-of-pocket cost sharing limits for essential health benefits
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The vast majority of plans must cover a sizeable list of preventive care services and drugs without cost sharing (with exceptions available for employers with an objection to one or more contraceptives or sterilization)
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Other medical benefits an employer wants to sponsor (such as telehealth, fertility care benefits, a health reimbursement arrangement or HRA, or other carved out/bolted on benefits) must be integrated with the employer’s medical plan down to the family member level (meaning only those actually enrolled in the medical plan can access these extra benefits)
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Fully insured plans are subject to minimum loss ratios
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Public health insurance marketplaces and plans were created and Medicaid was expanded to cut in half how many Americans must go uninsured each year (when the ACA passed, 16% of Americans were uninsured, but it’s been around or below 10% since all of the ACA’s major provisions took effect in 2014)
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Those marketplaces also provide people losing coverage more options to compare against their expensive COBRA continuation options, and opened up a new alternative for employers to help pay for individual health plans via QSEHRAs or ICHRAs if they would prefer to not sponsor their own major medical plans
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Large employers must offer “affordable” coverage providing “minimum value” to all employees with 30+ hours of service per week (and their dependents to age 26) to avoid potential penalties, and must self-report compliance each year (forms 1094-C/1095-C)
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Small employers cannot be denied a plan (guaranteed availability and renewability)
To comply with this requirement, employers must rely heavily on their claims administrators because these service providers possess the required data.
Any gaps in submissions should be addressed by either the employer submitting themselves in the government’s HIOS system or engaging with a third-party vendor to assist with coordinating submissions.
Typically, the claims administrator or carrier will facilitate the full reporting but will ask the employer for key information needed two to three months before the June 1 annual deadline.
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They primarily need to know how much the employer paid vs. how much participants paid (including COBRA participants) for the previous calendar year’s medical/Rx coverage (even if the plan does not operate on a calendar year).
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If self-funded, the premium “equivalent” for this will be actual fixed costs plus actual claims (choose either incurred claims or paid claims for the calendar year, and stick with that choice every year), less stop loss rebates and pharmacy rebates retained by the plan.
Employer plan sponsors, especially self-funded health plan sponsors, should continue to take necessary steps to prepare for the June 1 deadline. Helpful information can be found on CMS’s RxDC webpage.
🔗 CMS RxDC Reporting
Recent Fiduciary Breach Lawsuits
Large employers like JP Morgan Chase, Johnson & Johnson, Wells Fargo and others have recently faced lawsuits for breaching their fiduciary responsibilities to properly manage their benefit plans. Plaintiff complaints allege plan sponsors are not paying attention to massively overpriced benefits and are ignoring conflicts of interest, thus breaching their fiduciary obligations to the detriment of employees and former employees.
Applies to:
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All employers sponsoring employee benefits.
Plaintiffs are identifying numerous examples where the plan sponsor allegedly allowed egregious overspending on prescription drugs that can potentially be purchased for a tiny fraction of what the plan is actually paying. In some cases, the plaintiffs are able to call into question whether some of that egregious overspending is profiting a service provider engaged with the plan, which could be a conflict of interest.
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Plan sponsors are fiduciaries of their benefit plans and must act with the skill, prudence, diligence and care to always operate in the sole interest of participants and beneficiaries. Yet, plan sponsors may not always know or understand the detailed inner-workings of price negotiations for covered services and drugs, and some employees are calling employers out for failing to obtain the knowledge necessary to appropriately oversee the plan and its service providers. They argue this is costing the plan, employer, participants, and beneficiaries exceedingly more money than is reasonable to pay. They are also arguing that overspending on health benefits is translating to suppressed wage growth and to exorbitant costs for COBRA and retiree participant premiums.
So far, the J&J and Wells Fargo lawsuits have been dismissed due to the court finding the plaintiffs lack standing, which is the legal argument that they cannot prove they have suffered a concrete injury as a result of the plan fiduciary’s actions (or alleged lack of prudent actions). However, these dismissals are without prejudice, meaning the cases could be reopened. If the plaintiffs choose to reopen the case, they will have to show they suffered a concrete injury in order to avoid a dismissal based on lack of standing. This has in fact just happened with the J&J case, with a complaint filed to reopen the case almost a year after it was initially filed.
Practical Implications to Employers:
Employers should document fiduciary decisions, review service provider contracts, consider alternative funding options, and ensure benefit structures meet modern workforce needs.
Executive Order: Make America Healthy Again Commission
Applies to:
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All employers with group health plans.
Signed on February 13, 2025, the Executive Order forms the Commission under HHS to address the root causes of America’s health crisis, particularly childhood chronic disease.
Policy Directives:
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Empower Americans through open-source health research and transparency.
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Ensure government-funded research prioritizes why Americans are getting sick.
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Collaborate with farmers to provide healthy, abundant, and affordable food.
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Expand treatment options and insurance coverage for preventive care and lifestyle improvements.
Deadlines:
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100 Days – Report assessing current data and international comparisons.
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180 Days – Strategic plan based on findings.
Employer Impact:
Could expand coverage options for non-traditional wellness benefits (e.g., fitness programs, supplements) and reduce reliance on pharmaceuticals.
FAQ: How to Remedy Missed ACA Reporting
If an employer has failed to submit Forms 1095-B or 1095-C:
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The IRS imposes separate penalties for not filing to the IRS and not furnishing to employees.
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Penalties can be reduced or removed for reasonable cause.
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Correcting mistakes voluntarily is strongly encouraged.
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If the employer’s current vendor can’t file prior years, third-party vendors are available.
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Most employers must file electronically.
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Without employee consent, forms must be mailed to the last known address.