Health Care Reform

What is Health Care Reform?

Also known as “Health Care Reform,” the Patient Protection Affordable Care Act (PPACA) was signed into law in March, 2010. The PPACA law has several provisions that impact individuals as well as employers of all sizes, some of which are already in place. Two of the most controversial provisions are: (1) most U.S. citizens and legal residents are now required to have health insurance starting in 2014, and (2) most employers will be required to offer affordable group health insurance coverage to employees. In general, employers with less than 50 employees are not mandated to offer coverage, but the employer could be eligible for tax credits by choosing to offer coverage. Employers of all sizes are subject to the PPACA law, including penalties starting in 2015 if the employer has 50 or more full time equivalent employees and doesn’t offer coverage.

What are the Penalties?


The “Individual Responsibility” penalties for individuals who do not have health coverage are the greater of a flat fee or taxable percent of income: 

$95 or 1% ;  2015: $325 or 2%; 2016: $695 or 2.5%.


Employers could be facing “Shared Responsibility” penalties of up to $2,000 or $3,000 per employee starting in January 2015 if they have 50 or more full time equivalent employees, they do not offer affordable health care AND one or more employees receives assistance for coverage through a Public Exchange.

What are my Next Steps?


  • To avoid the penalty/tax described above, individuals should enroll in available employer-sponsored health plans, or purchase health insurance from one of the new Exchanges starting in the Fall of 2013. Coverage cannot be declined, limited, or rated up for pre-existing conditions.
  • If your income is less than 4x the Federal Poverty Level (FPL), you may be eligible for tax assistance to purchase coverage through one of the public Exchanges.
  • Visit for more information about healthcare reform and Exchanges.


  • Notify Employees About Exchanges (new requirement in October 2013 for employers of all sizes; TLC provides a general notice to new employees for clients)
  • Report Value of Benefits on W2 (already effective for employers issuing 250+ W2’s; may apply to employers of all sizes in the future; TLC handles for clients)
  • Determine if Eligible for Tax Credits (already effective for employers with less than 25 employees)
  • Determine if Shared Responsibility Requirement Applies (employer penalties; starts January 2015)
  • Watch for Non-Discrimination Testing (must offer equal benefits for 95% of employees; guidelines expected in 2014)
  • Offer a Plan for Employees (apply for a group plan through a private or public exchange, PEO or association plan, or keep a grandfathered plan)

Frequently Asked Questions

Healthcare Reform and Defined Contribution Plans Whitepaper