The Affordable Care Act (the ACA)

How it affects Individuals and Businesses.  Healthcare reform is legislation intended to better our healthcare system in the US. Recent healthcare reform, known as the Affordable Care Act (ACA), will continue to be implemented over the next several years. It imposes complex new rules and guidelines for insurance companies, individuals and employers.

Below you will find some (but certainly not all) highlights of the new law and how it may impact employers and individuals under 65.*

Tax Penalties

Employer Mandate

Employers who have more than 50 or more full-time equivalent employees must offer benefits that pays for 60% of the minimum essential benefits, as established by the ACA, or face a potential penalty.

The penalty applies when you have 50 or more full-time equivalent employees, and do not offer health coverage to at least 95% of those employees, and, or at least one employee receives a premium tax credit/cost sharing subsidy in the exchange.  The tax penalty is $2,970 (2024) and $2,880 (2023) annually multiplied by the number of full-time employees (excluding the first 30 employees).

Individual Mandate

Currently, most people are not required to purchase health insurance. The ACA “shared responsibility payment” and the individual mandate has been eliminated by the Trump Administration for 2019 and beyond. However, some states have established their own individual mandates, so you still may be subject to your specific state tax penalty, if any.  Texas does NOT currently have an individual mandate.


  • No pre-existing clause. Insurance companies can no longer increase rates or deny coverage because of a pre-existing condition.
  • Dependents up to age 26 may be added to an insurance policy for both individuals and employer coverage.
  • Gender is no longer a factor in determining rates.
  • Renewal rates are the same as new business rates.
  • Waiting period should not exceed 90 days.

Open Enrollment Period

Individuals must purchase their health insurance during the annual open enrollment period which runs from November 1st to December 15th of every year. Failure to do so may result in having to wait until the next open enrollment to purchase coverage. If you miss open enrollment you may qualify for special enrollment.  See next tab for more information on special enrollment.  You may also be interested in a short term health insurance policy.

Special Enrollment Period


You can still sign up for health insurance after the deadline if you meet any of the following qualifying events:

-change in legal marital status
-a change in the number of dependents
-a change in place of residence and the current carrier is not available
-significant cost or coverage change
-a change in coverage of a spouse or dependent
-a COBRA qualifying event
-legal judgements, decrees and orders
-entitlement to Medicare or Medicaid

Premium Discount/Tax Credits

Individuals and Small Businesses may be eligible for a tax credit under ACA healthcare reform laws.  Thus, the credit is applied as a discount on your monthly insurance premium. Accordingly, to see if you are eligible for a tax credit, please use the Subsidy Calculator provided by the Health Insurance Marketplace.  Or, if you are a business, use the Small Business Tax Credit Calculator provided by the Health Insurance Marketplace.  In any case, both businesses and individuals must purchase benefits through the Health Insurance Marketplace to secure their tax credit.  However, note that you must purchase benefits through the Health Insurance Marketplace to secure your premium discount.

Note:  Neither  LPL Financial, nor its registered representatives, offer tax or legal advice.  As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.

Minimum Essential Benefits

When you purchase your health insurance through the marketplace, you are guaranteed issue regardless of any pre-existing condition and you may be eligible for a subsidy (premium tax credit) to help off-set high premiums.  Following are the essential benefits that will be contained in your health plan:

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Prescription Drugs
  • Mental health and Substance Abuse disorder services
  • Rehabilitative and habilitative services and devices
  • Pediatric services, including oral and vision care
  • Preventive and wellness services, and chronic disease management

*To ensure you are compliance with the ACA, we recommend you call our office for assistance, as not everyone will interpret the law in the same manner.