ACA Employer Mandate Penalty Delay: What School Districts, Cities, Towns And Counties Need To Know

The IRS delayed the 2014 ACA Employer Mandate Penalties but what does that mean for school district employers and other local governmental organizations? Below is a summary of which provisions are delayed and not delayed:

What should school districts and other local governmental employers do now?
It is unclear how the delay is going to impact guidance that has already been issued. For example, the transitional relief for non-calendar year plans may or may not apply in 2015. It is quite possible that all employers will be required to be compliant on January 1, 2015. Because the ACA full-time employee definition involves a “look back period,” whether or not you are required to offer coverage will be based on what hours your employees are working now and into 2014.

Due to this unknown, it is imperative that all employers take the time now to determine the amount of employees working 30 hours or more for 120 days per year. Once this is determined, you can begin to calculate the extra costs for covering these employees in 2015 and formulate any changes in employment practices that may mitigate these increased costs.

It is important to note that Section 1558 of PPACA amends and extends anti-retaliation provisions of the Fair Labor Standards Act. In plain English, this section prohibits employers from taking adverse actions, such as reducing employee hours, as retaliation against the employee for the triggering a penalty by qualifying for a government subsidy through the Insurance Marketplace/Exchange. At this time, it is unclear whether courts will apply these prohibitions to reducing hours in anticipation of the ACA mandate. This is why the timing of any employment changes should occur as soon as possible.

Next on your to-do list: Employer Notice of Exchange
On May 8, 2013, the U.S. Department of Labor (DOL) issued Technical Release No. 2013-02, announcing the long-awaited guidance and a Model Notice to Employees of Coverage Options regarding the Insurance Marketplaces (formerly known as Exchanges). Employers must provide notice by October 1, 2013 to all employees written in a style that the average employee can understand.

The document must notify employees about the Insurance Marketplace (Exchanges). It also explains that if an employee purchases coverage from the Marketplace, they may be eligible for tax credits if the employer-sponsored plan is not “affordable” or provides “minimum value”. It warns employees that choosing the Insurance Marketplace plan means that they will not receive any employer contributions.

The notice must be provided to the employee by first-class mail or electronically (follow the DOL’s electronic disclosure safe harbor requirements).  All new employees, beginning no later than October 1, 2013, must also be provided with the notice within 14 days of his/her start date.

The DOL has provided a simple, fill-in-the-blank form you can use which we have included below. You can modify this form to meet your needs.

Exchange Notice With Health Plans 

For more information:

• Hour Management Considerations
• Substitute Teachers
• Guidelines for identifying other full-time employees
• Legislative Brief: IRS Guidance on Delay of Employer Mandate Penalties and Reporting Requirements