ACA Compliance Issues and Unattended Consequences

Transcription

1 ACA Compliance Issues and Unattended Consequences MANAGING LEAVES OF ABSENCE AND REDUCTIONS IN HOURS Kat Lacy-Wilson, JD, LLM Area Asst. Vice President, Compliance Counsel January 21, 2015

2 ACA s Employer Mandate Analysis Is there an employer/employee relationship? Is this a 30 hour employee? If an offer has been made, was it affordable? Is this an applicable large employer (ALE)? Has a minimum value offer of coverage been made for this month? This is a very conservative view based upon written guidance. If you, as an employer, want to do something different, it would probably be prudent to get a written legal opinion that supports your position. 2

3 ACA s Impact of Existing Employer/Employee Relationship If an applicable large employer If employee works at least 30 hours per week (FT) Offer coverage or may be at risk for assessable payment/penalty 3

4 ACA s Assessable Payments/Penalties for 2016 Failure to offer coverage = $2,160 annual maximum x (number of FT 30 freebies) Failure to offer affordable coverage = $3,240 annual maximum 4

5 Employer/Employee Relationship Indicia of control in work conditions and end work product Indicia can be actual payroll records (maybe) Indicia can be inferred more in NLRB discussion 5

6 What s the problem? Change in employment status does not always equal termination of employer/employee relationship Leaves of absence Non-work hours (e.g. time between FMLA exhaustion and COBRA termination) 6

7 Working example 7

8 Working Example ACME, Inc. ACME, Inc. 115 FTEs (ALE status) Lookback analysis - Measurement 11/1 to 10/31 Admin 11/1 to 12/31 Stability 1/1 to 12/31 Leave of absence policy - 2 years of unpaid leave Cease benefits when go on leave (COBRA qualifying event) When return to work, allowed to elect new benefits 8

9 Working Example - Jay VHE hired in /1/13 10/31/14 meas period avg. at least 30 hours Offered coverage for 2015 stability period 9

10 Working Example Jay s LOA request Date of request: September 15, 2015 Request LOA from 10/1/15 9/30/17 Anticipated return date 10/1/17 Review of 11/1/14 10/31/15 meas period Avg of about 35 hours Most likely will be eligible for coverage for 2016 plan year 10

11 Summary of What We Know ACME/Jay Is there an employer/employee relationship? - Yes (even during the LOA) Is this a 30 hour employee? - Yes If an offer has been made, was it affordable? For 9/15, assume yes. For 10/15 and onward,???? Is this an applicable large employer (ALE)? Yes Has a minimum value offer of coverage been made for this month? For 9/15, yes. For 10/15 and onward,???? This is a very conservative view based upon written guidance. If you, as an employer, want to do something different, it would probably be prudent to get a written legal opinion that supports your position. 11

12 Working Example ESR for 2015 plan year ACME, Inc. Jan to Sept offers of coverage made Jay Jan to Sept received offers of coverage Oct to Dec offers of coverage not made Oct to Dec did not receive offers of coverage ER may be at risk for failure to offer coverage for Oct to Dec EE may be eligible to get subsidized coverage from the Marketplace from Oct to Dec 12

13 Working Example ESR for 2016 plan year ACME, Inc. Jan to Dec offers of coverage not made Jay Jan to Dec did not receive offers of coverage Still has an employer/employee relationship with Jay Still has an employer/employee relationship with ACME ER may be at risk for failure to offer coverage for Jan to Dec EE may be eligible to get subsidized coverage from the Marketplace from Jan to Dec 13

14 Working Example ESR for 2017 plan year ACME, Inc. Jan to Sept offers of coverage not made Jay Jan to Sept did not receive offers of coverage but had zero hours of service for measurement period Oct to Dec offers of coverage made as Jay comes back to work Oct to Dec offers of coverage made as Jay comes back to work ER will more than likely not be at risk any month of the 2017 plan year EE may be eligible to get subsidized coverage from the Marketplace from Jan to Sept but will cease eligibility in Oct. 14

15 Possible solutions 15

16 ACME s Options Option 1 (for FT hires only) If Jay had been hired as a FT in 2013 If Jay had been offered ACME s group health plan coverage within 90 days of date of hire COBRA qualifying event Hired FT in 2013 Offered coverage 1 st of day after 60 day wait period LOA changed to start 4/1 and is a reduction in hours If Jay has a reduction in hours to less than 30 hours per week average ACME could use a 3 month measurement period from date of reduction in hours to confirm reduction and terminate coverage 1 st day of the 4 th month after the date of reduction in hours ACME monitors hours from 4/1/15 6/30/15 ACME can choose to terminate coverage effective 7/1/15 16

17 ACME s Options Option 2 (for FT and VHE hires) If Jay had a reduction in hours COBRA qualifying event LOA effective 10/1/15 If Jay is able to provide reasonable assurance that either enrolled in or in the process of becoming enrolled in other qualified health plan ACME could terminate Jay s coverage upon receipt of Jay s request but only if the provision has been adopted into ACME s section 125 document On 10/1/15, Jay provides reasonable assurance that enrolled in spouse s employer s group health plan (e.g. copy of membership card, affidavit, etc.) ACME terminates coverage effective 10/1/15 17

18 ACME s Options Option 3 (for FT and VHE hires) If ACME reduced its employer s contribution for employee s on LOA Significant increase in cost section 125 change in status rule may be triggered COBRA qualifying event LOA effective 10/1/15 ACME amended LOA policy earlier in 2015 that employer contributions will cease for LOA employees Effective 10/1/15, Jay is responsible for 100% of employee premium May allow for Jay to request termination of coverage if no other group health plan options available from ACME Jay requests termination of coverage due to significant cost increase and ACME processes the request effective 10/1/15 18

19 Takeaways What do your CBAs say? The employer mandate is in play as long as there is an employer/employee relationship. What does your plan document/spd say? Termination of coverage in a stability period does NOT negate the requirement to offer coverage for the next stability period if the employee has earned sufficient hours of service for coverage. Leaves of absence do not equal termination of employment. What does your employee handbook say? What is earned in the measurement period must be given for the subsequent stability period. 19

20 Questions? The intent of this presentation is to provide you with general information regarding the status of, and/or potential concerns related to, your organization s current employee benefits environment. It does not necessarily fully address all of your organization s specific issues. It should not be construed as, nor is it intended to provide, legal advice. Questions regarding specific issues should be addressed by your organization s general counsel or an attorney who specializes in this practice area, as appropriate. 20