WHAT THE ISSUE IS
The passage of the Affordable Care Act (ACA) in 2010 changed healthcare
coverage for the 180M Americans who participate in employer-provided plans and
profoundly impacted the administration of these healthcare plans for most
businesses. What was once a fairly straightforward process that was easily
handled by insurance brokers and third-party administrators (TPA) became too
complicated for most small businesses to administer, and the role of the
brokers and TPAs increased in time and cost to their clients, frequently
having to also enlist their accountants to provide new services.
Some of the provisions of that ACA that have already increased healthcare
premiums (or would have) are the Health Insurance Tax (HIT) that taxes the
large insurance providers (which is passed through by increased premiums) and
an excise tax on premium plans (Cadillac Tax). On the administrative side, the
change in the definition of full-time employees from 40 hours a week to 30
hours, with formulas to determine full-time equivalents, and the ACA reporting
requirements to the IRS regarding your employee coverage, quickly became
overly burdensome and necessitated those increased costs to administering
employee health plans.
Additionally, in 2020, several states introduced legislation for a state
Health Insurance Tax. They have not yet passed in any of legislatures.
A large majority of member businesses provide healthcare as a necessary
benefit, and are continuously working with their brokers and providers to
continue to do so. This benefit remains viable as long as employers can afford
to provide coverage without jeopardizing their own financial well-being. The
association has lobbied against the HIT and the Cadillac Tax with a coalition
of employer associations and businesses that succeeded in having both repealed
at the end of 2019. The Auto Care Association, as a founding member the
Partnership for Employer-Sponsored Coverage, continues to lobby for a return
to the 40-hours a week definition of a full-time employee, and simplified,
reduced reporting requirements.
HOW THIS IMPACTS YOU
Before the repeal of the HIT, businesses saw their healthcare premiums
increase by several hundred dollars a year for a family plan. The Cadillac Tax
would have imposed a 40% tax on higher-end health plans. A change back to a
40-hour week as the full-time definition and a reduction and simplification in
healthcare reporting would reduce administrative costs for all businesses.