The Affordable Care Act changed employers’ role in the U.S. health care system. The ACA fundamentally altered the employer-based system by making the provision of health benefits mandatory rather than voluntary for employers with more than 50 employees and establishing minimum criteria for affordability and coverage. In addition, a “play or pay” model was created, providing employers with an exit: employees would no longer become uninsured if their employers dropped benefits but could instead purchase guaranteed and potentially subsidized insurance through public exchanges.
Two financial milestones are leading employers to evaluate whether they want to play or pay. In 2015, employers with more than 100 employees became subject to a shared-responsibility penalty for coverage that didn’t meet federal standards; further down the road, a 40% excise tax on coverage over a maximum dollar value (the so-called Cadillac tax) is due to go into effect (implementation was originally set for 2018, but Congress recently voted to delay it by 2 years). Although it’s still early in the game, employers are making key decisions that affect patients, health care providers, and insurers.