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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:

Delayed

Employer Responsibilities: The following requirements are delayed until 2015:

  • Large employers and those with self-insured plans will not have to report on the coverage they provide until 2015
  • Offer “minimum essential coverage” to substantially all full-time employees and dependents
  • Offer “affordable” coverage to employees who average 30 or more hours per week for 120+ days per year
  • Offer coverage that is of “minimum value”
Carrier/TPA Responsibilities:
  • Comply with ACA definition of “minimum essential coverage”

Not Delayed

Current ACA Provisions Already in Effect
Employer Responsibilities:
  • Additional Medicare Tax for high-wage earners
  • W-2 Reporting
  • Comprehensive benefits coverage
Future ACA Provisions
Employer Responsibilities: 2013:
  • Employee Notice of Exchange
2014:
  • Limits on cost-sharing
  • New requirements for wellness programs
  • 90-day waiting period limit
  • Reinsurance fee (This is the carrier’s responsibility for fully insured plans, but for self-funded plans, be sure to check with your TPA as the employer is responsible.)
  • Automatic enrollment for employers with 200+ employees
  • Non-discrimination rules for fully-insured plans (currently not being enforced)
2018:
  • Cadillac tax
Current ACA Provisions Already in Effect
Carrier/TPA Responsibilities:
  • Coverage for clinical trial participants
  • Prohibition on pre-existing condition exclusions for children, rescission and lifetime limits.
  • Appeals process and external review rules
  • Required preventative care coverage
  • Patient protections
  • OTC drug reimbursement limits
  • PCORI fees
  • Health FSA limits
  • Uniform summary of benefits and coverage
  • Dependent coverage up to age 26
  • Medical loss ratio rules
  • Increased tax from HSAs
Future ACA Provisions
Carrier/TPA Responsibilities: 2014:
  • Rating restrictions
  • Health Insurance provider fee and reinsurance fee (TPA may or may not address the reinsurance fees if your plan is self-funded. Be sure to discuss with your TPA.)
  • Guaranteed issue and renewability (no pre-existing condition exclusions)
Federal/State Government Responsibilities: 2014:
  • Establishment of Health Insurance Marketplaces (Exchanges)
  • Subsidies for low-income individuals for coverage in the Exchanges
Individual Responsibilities: 2014:
  • Individual coverage mandate


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:

 

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Erin Woulfe
Erin Woulfe
Erin Woulfe likes to write about things that matter. Keeping her finger on the pulse of what’s happening in the public sector world, she blogs about the latest legislative news and employee benefit trends that affect our school, city and county clients. She’s been with NIS since 2002. “I love connecting to our clients and providing them with the tools they need in order to administrate their plan,” says Erin. “Whether that be materials to educate their employees on certain benefits, how to effectively communicate change within an organization or just providing tips and how-to’s to help them make their job easier.”

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