Implementing the ACA at Your Implementing the ACA at Your Community College Community College Association of California Community College Administrators Association of California Community College Administrators Annual Conference Annual Conference February 26, 2014 February 26, 2014
Presented by 1 School Services of California, Inc. Michelle McKay Underwood, Director, Legislative Services Sheila G. Vickers, Vice President Long Beach City College Long Beach City College Dr. Cindy Vyskocil, Associate Vice President, Human Resources Julie Kossick, Director, Human Resources Diane Bangs, Human Resources Manager, Academic
Affordable Care Act 2 Federal health care reform was enacted on March 23, 2010: House of Representatives (H.R.) 3590, The Patient Protection and Affordable Care Act (ACA) H.R. 4872,The Health Care and Education Affordability Reconciliation Act of 2010 Provisions are being phased in over a number of years Provisions are being phased in over a number of years The most significant changes become effective in 2014 and 2015: Individual mandate: January 1, 2014 Employer reporting requirements: January 1, 2015 (delayed from January 1, 2014) Employer shared responsibility payments: upon plan renewal in 2015 (delayed from 2014) Delayed to 2016 if 50 to 99 full-time employees
Affordable Care Act 3 Individual mandate: Individuals not provided health benefits by their employer must purchase through the Exchange or pay a penalty California’s Exchange is Covered California www.coveredca.com Employer reporting requirements: All employers must annually report certain information to the Internal Revenue Service (IRS) about employees, dependents, and their health Revenue Service (IRS) about employees, dependents, and their health benefits coverage Employers with 50 or more employees must report additional details to the IRS about the health benefit plans, coverage, and costs Employer shared responsibility payments: Employers with 50 or more employees will be required to provide health benefits to full-time (30 or more hours per week) employees or pay up to a $2,000 to $3,000 penalty per employee, depending on the situation
Employer Shared Responsibility Payments 4 Important definitions: “Applicable large employer” is defined as employing at least 50 “full-time” equivalent employees Where “full time” is defined as employed at least 30 hours per week Coverage of “minimum value” is defined as covering at least 60% of the total allowed cost of benefits that are expected to be incurred under the total allowed cost of benefits that are expected to be incurred under the plan “Affordable” means that the lowest cost “minimum value” plan offered does not exceed 9.5% of annual household income Safe harbor rules allow employers to use W-2 wages or other options
“Full Time” for Coverage Purposes 5 Assuming that your agency is an “applicable large employer” Then each “full-time” employee (and dependents) must be offered coverage of “minimum value” that is “affordable” or penalties may result “Full time” is defined as working, or hired and reasonably expected to work, at least 30 hours per week or 130 hours per month: (52 weeks x 30 hours)/12 months = 130 hours per month (52 weeks x 30 hours)/12 months = 130 hours per month
“Full Time” for Coverage Purposes 6 “All other employees” – part time, temporary, substitute, variable hour, seasonal – based on their hours of service during a “standard measurement period,” otherwise referred to as a “look back period” If employee’s hours of service averaged at least 30 per week or 130 per month during the standard measurement period Then the employee is eligible for benefits during the coming Then the employee is eligible for benefits during the coming “stability period”
“Full Time” for Coverage Purposes 7 Standard measurement period is determined by employer Can be anywhere from 3 to 12 consecutive months Stability period must be at least six months and no shorter than the standard measurement period In recognition of the administrative time required to look back and measure employee hours and then get eligible employees enrolled in benefits, an employee hours and then get eligible employees enrolled in benefits, an “administrative period” of up to 90 days is allowed In between the standard measurement period and the stability period
“Full Time” for Coverage Purposes 8 For new employees, the stability period must be at least as long as for ongoing employees But the measurement period and administrative period may be shorter for the first year – the initial measurement and administrative periods do not have to follow the calendar for ongoing employees Must be completed by the end of the month following the Must be completed by the end of the month following the one-year anniversary of the hire date Example: Hired on May 10 of year 1 – the combined initial measurement and administrative periods cannot go past June 30 of year 2 This is shorter than what is allowed for ongoing employees – up to 12 months for measurement and 90 days for administration
“Full Time” for Coverage Purposes 9 Special rules for educational institutions Employees are not “seasonal” due to school breaks Hours must be averaged over employment breaks Employment break is defined as a period of at least four consecutive weeks Adjunct faculty at community colleges: Adjunct faculty at community colleges: Must use a “reasonable method for crediting hours of service” relative to that of full-time faculty Must include not only credit hours of instruction but also other expected hours – office hours, preparation time, etc. Must credit at least 2¼ hours total for each hour of teaching, to represent preparation and grading time Plus additional time for office hours or other required activities
Potential Penalties 10 There are three potential penalties: A penalty for not offering coverage to more than 5% of employees (for smaller employers, more than five employees) that qualify as full time For 2015, if 100 or more employees, must offer to at least 70% A penalty for offering coverage that does not meet the “minimum value” test test A penalty for providing coverage that does not meet the “affordable” test Penalties only apply if at least one employee purchases coverage through the Exchange and receives a subsidy or tax credit To qualify for a subsidy, the employee’s household income cannot exceed 400% of the federal poverty level Depends on the size of the family
Potential Penalties 11 2014 Poverty Guidelines (48 Contiguous States) Number in Family Poverty Guideline 400% of Poverty Guideline 1 $11,670 $46,680 2 2 $15,730 $15,730 $62,920 $62,920 3 $19,790 $79,160 4 $23,850 $95,400 5 $27,910 $111,640 6 $31,970 $127,880 7 $36,030 $144,120 8 $40,090 $160,360 (add $4,060 for each additional person beyond 8)
Potential Penalties 12 Penalties are determined and assessed on a monthly basis:
Preparing for Implementation 13 Employers will need to do some analysis in order to prepare for the implementation of these provisions: Are you an “applicable large employer”? If not, then stop here Do you have 100 or more full-time equivalent employees? Are substantially all employees that qualify as “full time” offered coverage? Employer must determine standard measurement, administrative, and stability periods Implement a mechanism to track and measure employee work hours to determine whether they become eligible to be offered coverage
Preparing for Implementation 14 When counting hours of service, be sure to include all assignments for each individual employee Important to get this right because the penalty is assessed for all employees (minus the first 30) Are plans at least offering “minimum value” coverage, and is the employee’s contribution to the premium for individual coverage under the employee’s contribution to the premium for individual coverage under the lowest cost plan “affordable”? If not, then assess the cost/benefit of offering an affordable option versus paying potential penalties when an employee goes to the Exchange and qualifies for a subsidy
Collective Bargaining Implications 15 Review heath benefit language in collective bargaining contracts to ensure compliance with the ACA: Is coverage offered to employees working at least 30 hours per week or 130 per month? Is coverage also offered to dependents? Is there a plan offered that meets the “minimum value” test? Is there a plan offered that meets the “minimum value” test? And do employee contributions for individual coverage under that plan meet the “affordable” test?
Collective Bargaining Implications 16 Are the measurement, administrative, and stability periods negotiable? The regulations say that the employer decides How will this impact your strategy for staffing with part-time employees? The bottom line: Do the cost/benefit analysis of coming into compliance and develop your Do the cost/benefit analysis of coming into compliance and develop your strategy early Initial measurement periods are likely happening now!
Recommend
More recommend
