Central Intermediate Unit # 10

Patient Protection and Affordable Care Act

Presented by Erick Johnston 11-13-13

Affordable Care Act The patient Protection and Affordable Care Act (PPACA), also

known as Affordable Care Act (ACA), or Obamacare was signed into law on March 23, 2010

Requires that all plans cover a comprehensive set of benefits.

Plans must treat everyone fairly with no discrimination against pre-existing conditions.

Allows children to stay on parents health plans until age 26.

What is the Health Insurance Exchange/Marketplace ?

• The Exchange/Marketplace is designed to help families find health insurance that meets their needs and fits their budget.

• The Exchange/Marketplace offers "one-stop shopping" to find and compare private health insurance options.

• Families may also be eligible for a new kind of tax credit that lowers their monthly premium immediately.

• Open enrollment for health insurance coverage through the Exchange/Marketplace begins in October 2013 for coverage starting as early as January 1, 2014.

So what’s offered at the Marketplace?

• All plans cover a comprehensive set of benefits; these are your Essential Health Benefits.

• Plans are put into four categories: bronze, silver, gold and platinum.

• The category you choose will determine your monthly premium payments and your out of pocket expenses.

Marketplace Quick Facts:

• One stop shopping for health coverage.

• Accurate information in easy to understand language.

• You can make apples to apples comparisons on insurance plans.

• Provides comprehensive information about benefits and quality.

• A side by side look with facts about the price.

Employer Requirements1. Federal Marketplace Notice2. Notice of Summary of Benefits and Coverage (SBC)

Grid3. Recordkeeping of thirty hour rule for eligibility

requirements4. Offer health care to all eligible employees5. Offer “Affordable” Health Care to all eligible

employees

Federal Exchange/Marketplace Notice

• Under the Patient Protection and Affordable Care Act (PPACA), the health benefit Exchange/ Marketplace will be operational on Jan. 1, 2014.

• Requires employers to provide a notice regarding Exchange/Marketplace to all employees. – Provide the notice of the Exchange/Marketplace to each new employee at the time of hire

beginning Oct. 1, 2013.• Note: this is not limited to just those enrolled in health insurance. ALL of your employees

must be notified, even those opting out of coverage. The only exceptions are listed below: • A notice does not need to be issued to:

– Spouse and dependent – COBRA participants – Retirees

The notice is required to be provided automatically, free of charge.

What Must Be Included in the Notice:

• The notice must include: – Information about the existence of the new

Exchange/Marketplace. – A description of Exchange/Marketplace services. – Contact information for the

Exchange/Marketplace (i.e. www.HealthCare.gov).

Delivery of Notification

• Two options: – First Class Mail and/or; – Electronic Distribution

• You may choose one option for all employees or a combination of both (depending on your employee population).

Requirements of the Law (Open Enrollment)

• For group health plan coverage, the regulations provide that, for disclosures with respect to participants and beneficiaries who enroll or re-enroll through an open enrollment period (including late enrollees and re-enrollees), the Summary of Benefits and Coverage (SBC) must be provided beginning on the first day of the first open enrollment period that begins on or after September 23, 2012. For disclosures with respect to participants and beneficiaries who enroll in coverage other than through an open enrollment period (including individuals who are newly eligible for coverage and special enrollees), the SBC must be provided beginning on the first day of the first plan year that begins on or after September 23, 2012.

Open Enrollment

Open Enrollment - Period of time when your eligible employees and their eligible dependents have the opportunity to enroll or make changes to their existing coverage.

During Open Enrollment employees will have the ability to take the following actions: • Current eligible employees can enroll (if not currently enrolled) • Add/Remove Dependents (Requires Documentation) • Change plans, if applicable • Opt out of a plan

Laws/Uncertainties

• The laws and guidance have been changing on a routine basis, and there is no reason to think that change won’t continue

Uncertainties • 30 hour rule (losing union membership, losing hours,

returning to 40 hour work week). • Doomsday Tax• Cadillac Tax

Thirty Hour Rule = Full Time Employee (?)

- Originally Effective July 1, 2014 - Under the Central Intermediate Unit # 10 Insurance Consortium the effective date for offering coverage to 30 plus hour employees would be effective January 1, 2015

Determination of Full-Time Employee

Purposes of Law a Full-Time Employee:• Defined as an employee who is employed an

average of at least thirty (30) hours of service per week.

• One hundred and thirty (130) hours a month is equivalent of 30 hours of service per week.

Determination of Enrollment and Coverage: Tracking of Hours

During Measurement Period:- How many Employees worked over 30 hours?

- How many of those employees received benefits? -Which employees do you offer coverage? -Which employees did you not offer coverage & why?

Tracking Timeframes

Measurement Period:-3 month OR-6 month OR-12 month

Administrative Period: -Up to ninety (90) days

Stability Period:-Same as Measurement Period, but at least six

months

Establish “look-back” Measurement Period

• Period of time when an employer tracks employee’s hours of service.

• Cannot be less than three (3) months or more than twelve (12) months in duration.

• For new hires the period will be based on employees hire date.

• Standard Measurement period should be a uniform period of time set by the employer.

Establish an Administrative Period

• Employer looks back at the employee’s hours of service.

• Did the employee work an average of 30 hours per week during the measurement period? – If yes, then the employee is considered Full-Time. – If no, the employee is not considered full-time

Establish a Stability Period

• Period of time for which the employer must offer health insurance coverage to the full-time employee.

• Must be at least as long as the measurement period but no less than six months.

Employer Best Practices

1. Comprehension and avoidance of Doomsday Penalties

2. Comprehension and avoidance of Cadillac Tax3. Health insurance indemnification clauses and

inclusion of language that the CONTRACTING AGENCY is the employer of record for the Free Rider Penalty under the Affordable Care Act

4. Have employees sign a form during enrollment that they were offered coverage.

Be Cognizant of the following ACA Penalties1. “Doomsday” Penalty: -$2,000 fine per FTE (less a factor of 30 employees)-If an employer does not offer coverage to ALL full-time employees. -If one employee enrolls in qualified Health Plan and receives a premium tax credit or cost sharing reduction.

2. “Unaffordable” health care-Offering coverage that is not good enough, inadequate, unaffordable, employee pays greater than 9.5% of W-2 Box 1 Income.-Penalty is $3,000 per employee that was not offered “affordable” healthcare

-If the employee is eligible for Medicare or Medicaid or on spouse’s coverage or eligible for spouses or declines coverage they will not trigger the penalty.

3. Cadillac Tax-Commencing in 2018 if an individual health-insurance policy costs more than $10,200, the employer has to pay a 40% excise tax for any amount above that $10,200 threshold. For family policies, the corresponding threshold is $27,500.

Example of Doomsday Penalty

• The CIU # 10 does not offer health care coverage to ALL eligible employees

• The CIU # 10 can be fined up to:– $2,000 x 95 (125-30) (FTE) = $190,000 (per year of

non-compliance)

Example of Not Offering “Affordable” Health Care

• The CIU # 10 allows employees to pay health care premiums based upon the employee’s full-time percentage status– Employee A works within an employee classification that requires 35 hours of work

per work to qualify for full time– Employee A works 28 hours per week– Employee A does not average 30 hours per week during the measurement period– Employee A is considered an 80% full-time equivalent employee (28/35)– The CIU # 10 pays a yearly premium of $19,000 for family coverage – Employee A pays the CIU 20% of the cost of family coverage, or $3,800– Employee A earns $20,000 during the Stability Period

• For ACA purposes Earnings equals Box 1 of the employee’s W-2– 9.5% of $20,000 is $1,900, thus making this coverage option “unaffordable”– Request guidance from solicitor to determine if offering coverage to employees

that do not meet the 30 hour rule sets up school for failing to meet “affordable” coverage provision

Example of Cadillac Tax

In 2018 the CIU # 10 offers to pays a premium of $15,000 for single coverage. • A Cadillac tax will be calculated on this plan in the following manner:• $15,000 - $10,200 (ACA threshold) = $4,800• $4,800 x 40% Excise Tax = $1,920• The $1,920 tax is a tax assessed on each contract that is paid by the employer over the

threshold amount• Total cost of the $15,000 coverage increases to $16,920

• Some have argued that LEAs will not be subject to this “tax”• Please seek the advice of your solicitor to determine the exposure that your district may have

Best Practice with Independent Contractors / Staffing Agencies

• Include in your contracts with any staffing services that they are "the employer of record for the Free Rider Penalty under the Affordable Care Act". This would indemnify the organization.

-Kelly Services already implemented this practice.

• Amendment to any contracts to ensure the agency assumes the responsibilities with the Affordable Care Act (indemnifications).

-Bus Drivers -Food Services