Home > Free Essays > Law > Health Law > The Effects of Healthcare Reforms on Organizations
Cite this

The Effects of Healthcare Reforms on Organizations Research Paper


Following the legislation of the Patient Protection and Affordable Care Act (PPACA), it is important for organizations to understand the adjustments that they need to make during the next two years so as to comply with the act. Having been signed into law in 2010, some of the provisions of the PPACA have already come into effect.

However, more radical changes in the healthcare sector, including the Individual mandate (which requires all citizens to obtain insurance), will take effect by 2014 (Dale, 2012). The Supreme Court has already made a ruling that the Individual Mandate in the PPACA is constitutional (Dale, 2012).

With an array of provisions that impact heavily on the role and mandate of organizations in providing healthcare to employees, as well as in complying with changes in tax obligations, it is fruitful for organizations to anticipate and plan for expected adjustments (Thorin, 2011).

Provisions of the Patient Protection and Affordable Act

Since the PPACA is a huge legislation with multiple provisions, I will only focus on some of its significant provisions. Among the most important provisions of the PPACA is the Individual mandate. Here, all the citizens of the United States, including legal immigrants, are required by law to obtain insurance (Dale, 2012).

Those who are uninsured but can afford to pay for insurance are expected to acquire insurance by 2014 (Dale, 2012). For those who cannot afford to pay for insurance due to their low incomes, the government will help them to pay for health insurance through the expansion of Medicaid (Thorin, 2011).

Families and individuals with low income (Individuals earning less than $14500 and a family of four that is earning less than $29300 qualify for the subsidies) will be offered subsidies to pay for insurance premiums (Dale, 2012). In contributing towards the requirement for public insurance, employers will thus be required to insure their workers.

As it has been laid out in the employer mandate of the PPACA, employers are required by law to provide some form of insurance to their workers. The employer mandate applies to organizations that have over 50 employees (Dale, 2012).

Among other important changes that are expected in healthcare following the legislation of the PPACA include a prohibition on insurance companies from imposing pre-existing conditions (Dale, 2012). As a result, insurance companies cannot refuse to give insurance, or even terminate the insurance cover of an individual due to pre-existing conditions (Thorin, 2011).

Moreover, the limit on lifetime expenditure has been removed (Kaiser, 2011). Thus, Insurance companies cannot refuse to pay for the medical expenditure of their clients because they have exceeded an established cap limit.

Another radical change that has been introduced in healthcare by the PPACA is the inclusion of children that are up to 26 years in the insurance program of their parents (SHRM, 2010). Such a direction deviates from the previous norm where insurance companies determined the age at which children can benefit under a parent’s cover (Dale, 2012).

The Impact of PPAC on Organizations from 2013 Onwards

The PPACA is designed to bring an array of incremental changes to healthcare during the coming years. Some of these changes will have a significant impact on organizations. Expected to come into law in 2014, the employer mandate makes it obligatory for large employers to provide an affordable and cost effective medical insurance, or they pay fines (Kaiser, 2011).

Large organizations (that have over 100 workers) will be required to automatically enroll their employees into the most affordable health benefit program that they provide (Dale, 2012). Those who fail to comply with the employer mandate will pay a penalty of $2000 for each of their uninsured employees (or for employees that are getting government subsidies to pay for their insurance premiums) (Dale, 2012).

However, organizations that fail to insure their employees and have over 100 workers will be exempted for up to 30 employees (Kaiser, 2011). Thus, organizations that have a difficulty in complying with the employer mandate can calculate the amount of penalties that they are due by subtracting 30 from the number of their uninsured workers, and then multiplying the result by $2000 (Kaiser, 2011).

There are also changes in the way healthcare benefits will be offered. Employers will be required to offer health benefits that are both affordable and not cost sharing (Kaiser, 2011). A limit on deductibles has been placed at $2000 for individuals and $4000 for families (Thorin, 2011). Besides, the PPACA does not allow employees to pay for healthcare benefits that are more than 9.5% of their family income (Dale, 2012).

In order to help employers ensure that the threshold of 9.5% is not surpassed, the IRS will require employers to use the W-2 income statement forms of employees (Dale, 2012). Employees that cannot afford the type of cover that is being provided by their employer can apply for government subsidies. The employer will then pay a penalty of $2000 (Dale, 2012).

The PPACA does not allow employers to discriminate their employees in providing health benefits. Initially, it was legal for organizations to provide cover for selected employees (Dale, 2012). The PPACA has now illegalized this kind of discrimination.

However, healthcare plans that were already operational before, or on 23rd march 2010 and have not been modified since can continue to exist, even if, under the new PPAC, they are considered illegal (Dale, 2012). However, as the insurance industry initiates adjustments to comply with the PPAC, it will be impossible for organizations to retain discriminatory benefits (Kaiser, 2011).

The non discriminatory provision of the PPACA is awaiting a draft of regulations on how it will be implemented (from relevant government departments) before it comes into effect (Thorin, 2011).

One of the components of the PPACA includes a cap of $2500 on the Flexible Saving Account (Dale, 2012). Thus, employees will no longer defer their untaxed income to the FSA according to what they have estimated to spend on medical procedures per annum (Dale, 2012).

However, employees will not be allowed to charge their FSA on non-prescribed medicine (Dale, 2012). There is therefore a need for employers to make necessary adjustments in their plan documents in accordance with the IRS guidelines (changes are expected to take effect by 2014) (Dale, 2012).

In the direction of complying with the provisions of the PPACA, organizations will be required to make changes in their administrative and reporting procedures (Kaiser, 2011). For Example, organizations are required to report about the cost of insurance for each of their employees through the W-2 forms (Dale, 2012).

Employers are also required by the PPACA to provide a summary of insurance cover, a four page document that highlights key features of the plan, cost sharing, deductibles, and a highlight of what the cover can fund for in three different scenarios of claim. The summary should also include benefits, a glossary of common terms and the address of a person who can be contacted for more information (Kaiser, 2011).

So as to comply with the PPACA provisions, organizations are finding it necessary to restructure in areas like administration, finance, management, among other areas. The management of various organizations in the country has been trying to understand how the PPACA will impact on their day to day activities.

During a poll that was conducted by the Society for Human Resource Management (SHRM) in early 2011, about 62% of HR professionals claimed to be familiar with the impact of PPACA provisions on their organizations (SHRM, 2010). Here, most of these HR professionals were relying on information from insurance brokers (SHRM, 2010).

Generally, many HR managers are aware of expected changes in the running of their organizations following the legislation of the PPACA. Such a direction is necessary in making plans for anticipated changes that will come in organizations once the remaining components of the PPACA area effected.


The PPACA has been designed to make radical changes in healthcare. Many of the provisions in the PPACA have been designed to align organizations with specific objectives that are intended to provide affordable healthcare for everyone. Indeed, in recognizing the contribution of organizations towards corporate social responsibility, the PPACA has placed multiple demands on organizations.

Among other obligations, The PPACA makes it obligatory for organizations to insure their employees. Organizations are also required to meet other responsibilities such as providing required data to the government. It is therefore fruitful for organizations to understand and plan for their expected roles as required by the PPACA.

Reference List

Dale, R. (2012). How changes to healthcare laws will impact business in the short and long term. The Employee Business Practice, 11(4), 67

Kaiser, J. (2012). Focus on healthcare reforms. California, US: Kaiser Foundation Publishers

SHRM, (2012) Health care reform poll: Where are organizations in the decision making? New York, US: SHRM Press

Thorin, K (2011). Effects of the new healthcare laws on individuals The Employee Business Practice 11(4), 112

This research paper on The Effects of Healthcare Reforms on Organizations was written and submitted by your fellow student. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly.

Need a custom Research Paper sample written from scratch by
professional specifically for you?

Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar

301 certified writers online

Cite This paper

Select a referencing style:


IvyPanda. (2019, December 25). The Effects of Healthcare Reforms on Organizations. Retrieved from https://ivypanda.com/essays/the-effects-of-healthcare-reforms-on-organizations/

Work Cited

"The Effects of Healthcare Reforms on Organizations." IvyPanda, 25 Dec. 2019, ivypanda.com/essays/the-effects-of-healthcare-reforms-on-organizations/.

1. IvyPanda. "The Effects of Healthcare Reforms on Organizations." December 25, 2019. https://ivypanda.com/essays/the-effects-of-healthcare-reforms-on-organizations/.


IvyPanda. "The Effects of Healthcare Reforms on Organizations." December 25, 2019. https://ivypanda.com/essays/the-effects-of-healthcare-reforms-on-organizations/.


IvyPanda. 2019. "The Effects of Healthcare Reforms on Organizations." December 25, 2019. https://ivypanda.com/essays/the-effects-of-healthcare-reforms-on-organizations/.


IvyPanda. (2019) 'The Effects of Healthcare Reforms on Organizations'. 25 December.

Related papers