Health Insurance Laws for Employees

In 2010, Congress passed -- and the President signed -- the Patient Protection and Affordable Care Act, known generally as healthcare reform. This law makes a number of important changes to the way health insurance is provided and regulated in this country. And, because so many of us receive health insurance through our jobs, it will have a big impact on employers and employees alike. 

Many of the changes enacted by this law -- from required lactation breaks to required coverage of adult children up to the age of 26 -- are already in place. (You can read about many of them in Nolo's Health Care Reform: What Employers and Employees Need to Know.) In 2014, the employer mandate will kick in, which gives employees the right to health care coverage. Currently, no law gives employees this right; a handful of laws regulate other aspects of employee health insurance, however. 

The Employer Mandate

Starting in 2014, employers that have at least 50 employees will have to provide health insurance coverage or pay a fine. (That's why it's called "play or pay.") Here's some basic information on how it will work:

• An employer that doesn't offer coverage must pay a fine of $2,000 per full-time employee. However, the employer doesn't have to pay the fine for its first 30 employees. 
• Even if an employer provides coverage, it might have to pay a fine if the employer doesn't pay at least 60% of the actuarial benefits provided by the plan or the employee has to pay more than 9.5% of average household income for coverage. In this situation, the employee would be entitled to a voucher for government-subsidized coverage, and the employer would have to pay a fine of $3,000 per employee, to a limit. 
• Employers have to offer vouchers to certain employees who have low incomes or who want to enroll in a state insurance exchange plan instead. The voucher essentially requires the employer to pay what it would have had to pay for the employee's coverage on its own plan. 

This law represents the first time employers in the U.S. will be required to offer health insurance coverage; currently, no law requires this. It remains to be seen whether, and in what form, the health care law will go into effect. The Supreme Court recently agreed to decide whether it is constitutional. In the meantime, however, other laws impose some health insurance requirements on employers.

The Health Insurance Portability and Accountability Act (HIPAA)

HIPAA is probably best know as the law that requires health care providers, employers, and others to maintain the privacy of patient health care records. All those privacy forms we have to sign at the doctor's office every year? That's all related to HIPAA. 

HIPAA also made a couple of important changes to employer-provided healthcare plans. It doesn't require employers to offer health benefits, nor to pay any particular portion of their cost. However, it does change the rules for changing plans. First, a group health insurance plan can't deny coverage or set premiums based on someone's health status (for example, the person's disability or medical history). If, for example, you change jobs, your new employer's plan can't refuse to cover you for these reasons. 

Second, HIPAA puts some limits on pre-existing condition exclusions. Although they are still allowed, they can't last for more than 12 months. And, employees who were continuously covered under a previous plan for at least a year, without any break in coverage, will not face any exclusion. 

COBRA

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives employees the right to continue their group health benefits for a period of time after losing or leaving their jobs. COBRA doesn't give anyone the right to health care benefits in the first place. However, employees who have them on the day their employment terminates may continue them, at their own expense, for up to 18 months. Covered dependents may also continue their coverage, for up to 36 months in some situations. For more on COBRA, see our articles on Continuing Benefits.