How Does ACA Affect Self-Insured Benefits?

Written by benefitexpress | June 13, 2016

ACA and Self-Insured Benefits

Due to the ACA Employer Mandate, employers are looking for ways to adjust benefits to control costs while remaining compliant. Insurance premiums are increasing quickly, and they are expected to jump again with ACA, pushing more employers to go the self-funded route.

By switching to self-funded plans, employers are able to limit their exposure to premium-increasing Medical Loss Ratio Rules. Stop loss premiums, associated with self-funding, are not subject to ACA fees. Essential Health Benefits are not required with self-funded plans, and neither are state-mandated benefits. Self-funded plans also avoid Health Insurance Tax and most premium taxes due to ERISA law.

This sample table of fee estimates, taken from the Oliver Wyman Study, demonstrates the potential savings associated with avoiding HIT fees.

  1/1/2014 1/1/2015 1/1/2016 1/1/2017
Renewal Premium $2,887,500 $3,031,875 $3,183,469 $3,342,642
Estimated HIT Fees $66,412 $98,536 $103,463 $133,706
HIT % 2.3% 3.25% 3.25% 4.0%

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Topics: Affordable Care Act