Early 2014 has brought some clarifications and changes to the Affordable Care Act (ACA) and its implementation. Read on for information about just a few of the changes employers should be aware of.
- You can keep your coverage…again. Last November, the Obama administration responded to pressure from employers and consumers and allowed people to keep existing plans that did not meet the minimum requirements of the Affordable Care Act. In March, the Obama administration issued another delay, which will apply to policies issued until October 1, 2015. Administration officials said the extension will give consumers more time to find the coverage that works best for them and their families.The delay applies to individual and small group plans, those with fewer than 50 employees. In 2016, it will also apply to employers with 50 to 99 employees, which will be redefined as small businesses in 2016 and may buy health coverage on the SHOP small business health exchanges. However, states must agree to let non-compliant policies continue; 28 states are allowing pre-2014 health plans to continue, reported Healthcare Payer News.
- You will get another year to “play or pay” if you have 50 to 99 full-time employees. While the employer shared responsibility provisions will generally apply starting in 2015, they will not apply until 2016 to these employers if they provide an appropriate certification.
- Large employers that must play or pay in 2015 will have to provide “affordable coverage” to fewer employees than originally scheduled: at least 70 percent of full-time employees, rather than 95 percent. The 95 percent baseline will begin in 2016.
- You do not have to include certain categories of workers in your count of full-time employees. These include:
- Volunteers for a government or tax-exempt entity.
- Seasonal employees whose customary annual employment is six months or less.
- Students in federal or state-sponsored work-study programs.
On the other hand, employers cannot treat teachers and other educational employees as part-time for the year simply because their school is closed or operating on a limited schedule during the summer.
- You’ll get another year to provide dependent coverage, as long as you prove you’re trying. The IRS extended “transition relief” for the 2015 plan year to employers whose plans (1) do not offer dependent coverage, (2) do not offer minimum essential coverage to dependents, or (3) cover some, but not all, dependents. The Affordable Care Act does not include spouses in the definition of dependents; final implementing rules clarified that stepchildren and foster children are also not considered dependents.
- Your penalties could be lower. Large employers (100+ employees) must provide qualifying health coverage to all full-time employees or face a possible penalty starting in 2015. Proposed regulations set the penalties at $2,000 times the number of full-time employees lacking qualifying affordable coverage, minus the first 30. Penalties apply if at least one full-time employee buys coverage on the exchange and qualifies for a subsidy.
For 2015 only, employers will get another 50 “freebies” before the penalty applies. The penalty will equal $2,000 x the number of full-time employees lacking health coverage, minus the first 80.
- You will get another month of open enrollment for 2015. The 2015 open enrollment season will start as scheduled on November 15, 2014. Instead of ending on January 15, 2015, it will extend through February 15, 2015.
- You will pay a Transitional Reinsurance Fee of $44 per enrollee (every covered employee and dependent) in 2015 if you have a self-funded plan. The fees equal $63 per enrollee this year, and phase out after 2016. The fees help fund coverage for high-risk people in the individual market and phase out after 2016. The Affordable Care Act included these fees to partially offset insurers’ risk of covering high-cost individuals, many of whom will presumably get coverage for the first time in the individual market.
USI conducted a comprehensive webinar series this month on the employer mandate and definition of “full-time employee” in terms of the ACA. For more information or to obtain the recorded version of the webinar(s), please contact USI at 212-842-3400.