Affordable Care Act (ACA): July 2013 Update

The Affordable Care Act (or ACA) is back in the news again with further changes to an already complex and dynamic piece of legislation. On July 2, the Obama administration announced it would delay implementation of the ACA’s employer “shared responsibility” or “Pay-Or-Play” provision which was originally scheduled to take effect in January 2014, but has now been pushed back to January 2015.

First, an Employer Primer…

When the ACA was passed in 2010, it imposed a 2-tiered obligation on employers referred to as the “employer shared responsibility” provision (otherwise known as the “Pay or Play” mandate).  Under this provision, employers could either:

  1. Pay: Employers with 50 or more full-time employees would be required to start offering health insurance coverage or pay annual penalties of $2,000 for every full-time employee except for the first 30 full-time employees.  A full-time employee is defined as  anyone who works 30 or more hours per week; or
  2. Play: Employers who opt to “play” versus “pay” would be required to enhance the benefit offering and satisfy a minimum 60% actuarial value standard and an “affordability” standard, or the full-time employee would be free to shop for coverage in any of the public health insurance exchanges. However,
    • For each full-time employee who enrolls and receives a premium tax credit to purchase in coverage through a health insurance exchange would trigger an additional $3,000 employer penalty per employee per year.

For employers who employ large numbers of full-time employees who are more modestly paid (e.g., Retail, Fast-food, Manufacturing, etc.,) may have challenges affording this expense either way.

What’s Up Next?

To further complicate matters, additional legislation has recently been introduced for consideration and could continue to re-shape the ACA:

  • A new bipartisan bill has been introduced to redefine full-time as 40 hours week versus 30 hours a week.
  • Another bill has been introduced to postpone by one year the mandate that requires all U.S. citizens to have basic health coverage or be penalized.

While this one-year delay may come as a relief for employers, it is still important to note that the remainder of the ACA’s 2013 and 2014 requirements is still on schedule to take effect.  These include, but are not limited to the following:

  1. The individual mandate that requires almost every U.S. citizen to have basic health coverage or pay a penalty.
  2. The implementation of health insurance exchanges.
  3. The Patient-Centered Outcomes Research Institute (PCORI) filing and fees due from insurers and self-insured employers on July 31, 2013 and annually thereafter.
  4. The requirement that by October 1, 2013, employers must notify their employees of their coverage/enrollment options and the existence of the health insurance exchanges.
  5. The elimination of pre-existing condition exclusions, limits on waiting periods and annual dollar limits, and other design rules scheduled to take effect in 2014.

For now, employers should continue to focus on the following:

  • Make  sure your health plans are, or will be, in compliance with all of the ACA requirements other than “Pay or Play” and employer reporting requirements by the above noted compliance dates;
  • Watch for additional guidance that will continue to evolve over this next few months; and
  • Seek the advice from labor and employment of employee benefits counsel regarding the ACA requirements and any future changes with its provisions.

Resourceful HR will continue to keep our clients and readers informed through this blog as the ACA continues to be refined.

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