About the ACA
The passing of the Affordable Care Act (ACA) included new laws for insurance providers in addition to those for individuals and employers. Since everyone is required to have insurance, and ALEs are required to offer it, providers will see the biggest changes in the insurance they can provide and their IRS reportings.
Self-Insured Coverage
With self-insured plans, employers often contract with an insurance company to administer these plans. Large employers tend to offer different types of self-insured plans to different types of employees, with the benefits varying depending on level of management, labor, or work hours. In these cases, the employer is essentially acting as its own insurer, with insurance providers providing the plan options.
Fully Insured Coverage
With fully insured plans, employers pay a per-employee premium to insurance companies. This means that the insurance company assumes the risk for providing coverage for insured events. Premiums vary for the employers in fully insured plans, as they’re based on the employer size, health care use, and employee population characteristics. As the demographics of an employed group change, the premiums may also change.
Employer Sponsored Coverage
Employer sponsored coverage is just what it sounds like, and it’s the most common type of health insurance among Americans. Employer sponsored coverage is provided either as fully insured or self-insured, and most ALEs opt for self-insured plans to bear the ultimate risk for claims costs. While employers may offer self-insured and fully insured plans through insurance providers, any insurance offered to employees by employers is considered employer sponsored coverage.
Provider Sponsored Coverage
Similar to the employer sponsored coverage, health insurance that is offered to individuals by an insurance carrier is called provider sponsored coverage. Since the ACA’s introduction of the health insurance marketplace for individuals, many insurance providers are working to expand their health plans to match the MEC and MV to compete with marketplace plans. If you’re an individual who sought coverage from an insurance carrier rather than the marketplace or your employer, your coverage is considered provider sponsored.
Covered individuals
Covered individuals are those who individuals who have gotten health insurance coverage that meets the Minimum Essential Coverage requirements at the Minimum Value as set by the Affordable Care Act. To avoid any penalties from the IRS, covered individuals must make sure everyone in their household has insurance that meets these ACA standards every month during the year.