
What Our Clients Need to Know About the Affordable Care Act
What two years ago seemed like an event too far off to care about, the launch of the Affordable Care Act (ACA) this coming January 1st is now just around the corner. While there are still significant gaps in the clarity needed to fully comply with the 2700+ page law, we now know that most of the regulations that are going to be activated in January have been written. It’s now time for employers to make decisions about how they will comply with the key provisions of the Affordable Care Act. Because we are still hearing our client’s asking questions about the basic components of the law, we wanted to share information provided to us by our national trade association, the ASA (American Staffing Association), which we think does a good job of outlining the key elements of the ACA and what it means to our clients. Since the staffing industry is significantly impacted by ACA mandates, our industry worked closely with the DHSS throughout the writing of the ACA regs. Key ACA Definitions 1. (Eligible) Full Time Employee: Any employee who averages at least 30 hours per week (130 hours per month; 1560 hours per year). 2. Seasonal Employees: Employees working less than 120 days in a year. Generally excluded from ACA coverage because not considered full time. 3. Healthcare Plan—Minimum Essential Coverage (MEC): References the requirement that a compliant healthcare plan after January 1st must cover healthcare basics, “the diagnosis, cure, mitigation, treatment or prevention of disease.” Many of the so called “mini med”, wellness, and preventative plans will not meet the MEC requirement. 4. Healthcare Plan—Minimum Value: References the requirement that a compliant healthcare plan cover at least 60% of the overall costs associated with 1) physician and mid-level practitioner services, 2) hospital and emergency care, 3) pharmacy costs, and 4) laboratory/ imaging services. Many high deductible plans will not meet Minimum Value requirements.
- The IRS and DHSS are developing a Minimum Value Calculator and a safe harbor checklist that employers can use to see if their plan meets the Minimum Value test.
- 2014: $95 per person (up to 3 or $285) or 1% of household taxable income
- 2015: $325 per person (up to 3 or $975) or 2% of household taxable income
- 2016: $695 per person (up to 3 $2085) or 2.5% of household taxable income
- 2017 and beyond – same as 2016 with Cost of Living increases
- Provide a place for individuals or small employers to purchase of compliant healthcare insurance. Available plans will be categorized into one of four groupings: Bronze, Silver, Gold and Platinum, plus a catastrophic plan.
- Determine an employer’s or individual’s eligibility to purchase through the Exchange.
- Determine the affordability of a plan offered to an individual through their employer.
- Determine an individual’s eligibility for exemptions or subsidies.
- The regulations relating to the new discrimination provisions embedded in the ACA are not yet written and likely won’t be before 2015.
- 2014 will allow differentiation in the plans offered to different employees and will allow different levels of employer contributions to those plans. Tiered/pay up plans are allowable in 2014.
- Discriminations in favor of lower paid employees will remain permissible after 2014. Any employer can pay more for their lower paid employees to ensure what they offer meets “affordability” standards.
- Estimates are that only 10% of the current temporary and contract workforce will be benefit eligible.
- The ASA is advising its members that assignments targeted to last less than six months will not be challenged if classified as “variable.” Assignments intended to last longer than six months are subject to “common sense” interpretations of the requirement of “uncertainty.”
- Measurement Periods and the Look Back Rule: A look back/measurement period is a time period (ranging from 3 to 12 months as selected by the employer) during which a variable hour employee is determined to meet the test of full time status. To become eligible for coverage, an employee must average at least 30 hours per week during the measurement period.
- The cost of an affordable plan for 95% of eligible employees.
- Minus the costs that would otherwise be associated with employees who opt out because they have coverage elsewhere
- Plus the cost of penalties for any employees that receives subsidies because the plan offered is not affordable.
- A nondeductible monthly tax assessment of $166.67/month on all eligible employees (over the first 30). Penalties would be applied to ALL employees, covered or not.
- Expect 1-5% increase in bill rate
- Mini med plans no longer allowed. Fixed dollar indemnity plans—do not qualify as providing “minimum value;” preventive and wellness plans—won’t provide “Minimal Essential Coverage.”
- New plans are expected to be developed between now and January 1st but with unknown costs and coverage.