Patient Protection and Affordable Care Act. November 6, 2013

Transcription

1 Patient Protection and Affordable Care Act November 6, 2013

2 History On March 23, 2010, the Patient Protection and Affordable Care Act (PPACA), more commonly referred to as the Affordable Care Act (ACA), was enacted into law. Portions of the legislation were scheduled to be phased in over several years beginning September 23, 2010.

3 History cont d. From 2010 to 2014, health care reform required group health plans provide certain coverage requirements (i.e., dependent coverage up to age 26, removal of annual limits, removal of preexisting conditions coverage for children). On October 1, 2013, employers were required to provide notification to their employees of the availability of the Affordable Insurance Exchange (the Exchange), now being referred to as the Marketplace.

4 History cont d. January 2, 2013, the Department of Treasury and the Internal Revenue Service issued proposed regulations regarding the Act s employer shared responsibility provisions, commonly referred to as the Pay or Play mandate of the Act. The Pay or Play mandate requires large employers offer affordable health coverage to full-time employees and their dependents (play) or be subject to a possible penalty (pay). There are also extensive IRS reporting requirements which accompany this act.

5 History cont d. Originally, the affordable care provisions of the Act which would have had tremendous impact on employers were scheduled to become effective in July 2, 2013, the White House and the US Treasury announced they would delay implementation of the Pay or Play mandate and the IRS reporting requirements until 2015.

6 Basic Principle Applicable large employers are required to offer their full time employees and their dependents minimum essential health benefit coverage that is affordable and provides minimum value, no later than three months after the start of employment.

7 Definitions Large Employer Generally those with 50 or more full time equivalent employees Full Time Employee An employee who works on average thirty (30) or more hours per week (130 hours per month) Minimum Essential Coverage Coverage under an employer sponsored plan Affordable Employee contributions not to exceed 9.5% of an employee s household income Minimum Value Annual out-of-pocket expenses do not exceed 40% (60% plan coverage)

8 Determining Eligibility Full Time Employee Employee hired with an expectation they will work 30 hours per week for a school year. We do not need to use a measurement period to determine eligibility. Variable Hour Employee On the employee s start date, it can not reasonably be determined whether the employee is expected to work an average of 30 hours per week.

9 Safe Harbor Method Voluntary safe harbor method that employers may use to determine whether employees must be treated as full-time under the Act. Employers are safe-harbored from penalties during this time period.

10 Measurement/Safe Harbor Method Initial Measurement/Look-Back The period to identify the status of a new variable hour employee. Can be 3-12 months in duration. Standard Measurement Period The look back period for ongoing employees. Administrative Period The period of time between the standard/initial measurement period and the stability period. No longer than 90 days. Stability Period The period of time following the standard/initial measurement period that the employee must be offered coverage. Must be at least six calendar months.

11 Safe Harbor cont d. Employers may use measurement and stability periods that differ in length or in their starting and ending dates for the following categories of employees: Each group of collectively bargained employees covered under a separate collective bargaining agreement Collectively bargained employees and noncollectively bargained employees Salaried employees and hourly employees

12 Safe Harbor cont d. Our attorney has advised that the government has not determined if the safe harbors and transition rules will change due to the fact the shared responsibility penalties have been delayed. It is anticipated that final regulations will address these issues. At this time measurement periods should be established in accordance with the proposed regulations.

13 Look-Back Calculation Illustration of Full-Time Employee Time Periods In this example, assume Employer uses a 12-Month, November 1, 2013 based Standard Measurement Period. Employer also uses a 12-Month Stability Period and 61 day Administrative Period (November 1, 2014-December 31, 2014). Assume Employer hired the Employe 11/1/ /31/ /31/2014 1/1/ /31/2015 Standard Measurement Period - Employee's hours during this time are measured. Administrative Period - Employer checks to see if Employee is still full-time If so, Employer offers coverage to Employee. Stability Period - If Employee enrolls for coverage, Employee continues to be covered during this time. The above chart is based upon a chart contained in a monograph prepared by Quarles & Brady LLP entitled "Health Care Reform Pay or Play Guide" dated January 28, 2013.

14 Preparation for 2015 In order to avoid possible penalties, it is imperative that we evaluate and plan for the implementation of provisions of the Affordable Care Act legislation: Review collective bargaining agreements to validate which employees are currently offered insurance Determine which employees work on average near, at or above 30 hours per week (130 hours per month) Identify any employee who works in several part-time capacities (i.e., coach and teacher sub)

15 Preparation cont d. Choose the measurement, stability and administrative period. Consultant firms are available to oversee compliance. ACA rules for determining eligibility are complex, and thorough analysis of historical data will assist in determining the measurement periods to avoid liability.

16 Preparation cont d. Determine whether our plan is affordable Initial calculations indicate that our plan is affordable for all full time collectively bargained employees Confirm our health insurance plan has minimum value NYSHIP has provided confirmation that the Empire Plan provides minimum value

17 Penalties for Non-Compliance 95% Penalty The number of full-time employees employed during the year minus 30, multiplied by $2,000 (e.g. a school district with 600 full-time employees would pay 570 x $2,000 = $1,140,000). The payment is calculated on a monthly basis. Affordability Penalty Based on affordability of individual plans only. The amount of the payment for the month equals the number of full-time employees who receive a premium tax credit for that month multiplied by 1/12 of $3,000.

18 Non-Discrimination Rules A section of the Internal Revenue Code prohibits discrimination in group health plans in favor of highly compensated individuals. It is unclear how these provisions will be applied to group health plans under the ACA. There are monetary penalties assessed on the employer for non-compliance with this code. Compliance with this section of the revenue code has been delayed indefinitely.

19 Reporting Requirements Originally, beginning January 1, 2014, the ACA required large employers to file a return with the IRS that reports the terms and conditions of the health care coverage provided to full time employees for the year. The return requires certification of specific information with respects to coverage offered and certain information about each full time employee. The first information returns were originally required to be filed in 2015, but have been postponed.

20 Affordable Care Act Beginning in 2018, an excise tax on high-cost health insurance plans goes in to effect. Premiums in excess of $10,200 for individual coverage or $27,500 for all other coverage will be charged a 40% excise tax on the difference between the threshold and the premium. NYSHIP has indicated that districts will be required to absorb that fee if the premium triggers the tax.

21 Ongoing Activities Work with Personnel Office to determine which employees are considered full time employees. Review W-2 wages to confirm affordability. Consider flexibility in staffing arrangements to minimize impact to district. Develop business office process for work flow and data collection. Communicate and train administrators to educate them about the particulars of the legislation.

22 Decisions To Be Made Establish measurement periods. This is accomplished by Board resolution. Organize list of consultants to assist with compliance Regulations are complex and evolving Oversight of work being performed Significant penalty for non-compliance Establish process to become independent

23 Questions and Answers