Obamacare: What You Don't Know Can Hurt You

OBAMACARE: What You Don’t Know CAN Hurt You Harding & Shultz (402) 434-3000 H & S School Law khaase@hslegalfirm.com

@KarenHaase btruhe@hslegalfirm.com

@btruhe

Policy Behind the ACA  It is important to keep in mind that the ACA’s policy purpose is to insure more people  When you think about insuring as many people as possible, the shared responsibility tax payments and requirements make more sense

General Structure of ACA  Large Employers must either • Make affordable, qualifying coverage available to all full time employees • Pay a “shared responsibility tax” to supplement the cost of those employees obtaining insurance on the exchange

 Small employers affected too

Are You a Large Employer?

“Large Employer”  Large Employer = 50 FT + FTE / yr.

• FT: EEs > 30 hours per week avg. / mo.

• FTE: EEs < 30 hours per week avg. / mo.

 Computing FTE • Add all monthly FTE “hours of service” and divide by 120 • “Hour of service” means paid or entitled to payment (vacation, holiday)

Dealing with Part-Time Staff  Three Options for Salaried Staff • Track hours • Daily equivalent if one hour worked • Weekly equivalent if one hour worked

 Also the rule for calculating eligibility for employer or exchange insurance

FTE Computation Ex.  Moles School District • 4 paras work 25 hours (25) • 3 cooks work 27 hours (81) • 6 bus drivers work 15 hours (90)

 100 + 81 + 90 = 271 weekly FTE hrs.  271 x 4 = 1096 monthly FTE hrs.  1096 / 120 = 9.13 FTE for month • Keep decimal point

FT Computation Ex.  Moles School District (Para Sara) • • • •

Week 1: 33 hours Week 2: 28 hours Week 3: 31 hours Week 4: 29 hours

 33 + 28 + 31 + 29 = 121  121 / 4 = 30.25  NOTE: different for individuals

Are you covered?

An employer’s status as an applicable large employer for a calendar year is determined by taking the sum of the total number of full-time employees…for each calendar month in the preceding calendar year and the total number of FTEs…for each calendar month in the preceding calendar year, and dividing by 12.

- 26 CFR §54.4980H-2 (proposed reg)

Counting to 50  MONTHLY computation  Each month will have “x” FT and “y” FTE  Add up the 12 x’s and 12 y’s then divide by 12

Large Employer Ex. Moles School Dist.

Sep: 42, 9.3 Oct: 42, 8.7 Nov: 42, 7.8 Dec: 42, 7.5 Jan: 42, 9.2 Feb: 42, 9.9

Mar: 42, 8.6 Apr: 42, 8.7 May: 42, 8.7 Jun: 42, 8.7 Jul: 42, 8.7 Aug: 42, 8.7

Large Employer Ex.  42+42+42+42+42+42+42+42+42+42 +42+42 = 504 FT  9.3+8.7+7.8+7.5+9.2+9.9+8.6+8.7 +8.7+8.7+8.7+8.7 = 104.5 FTE  504 + 104.5 = 608.5  608.5 / 12 = 50.71  Round down: 50 EEs

Letâ&#x20AC;&#x2122;s Practice!

Shared Responsibility Tax  Shared Responsibility “TAX,” • Board stigmas if called “penalty”

 2 Types of Tax • Offering NO insurance • Offering UNAFFORDABLE or no MINIMUM ESSENTIAL COVERAGE (MEC) insurance

 Assume EHA plans meet MEC

Premium Credit  In play for BOTH Tax Assessments  Qualifications: • AGI less than 400% of poverty • No Medicaid or CHIP • Non-complying employer plan

Persons in family/HH

Poverty guideline

For families/households with more than 8 persons, add $4,020 for each additional person.

FOR 2013 1

$11,490

2

15,510

3

19,530

4

23,550

5

27,570

6

31,590

7

35,610

8

39,630

Premium Credit

Offering NO Insurance  What we don’t know: subgroups?  What we know: • Takes one FT EE to obtain premium credit AND insurance on exchange • 95% safe haven: if you offer insurance to all but lesser of 5 or 5% of FT EEs • Tax is (FT – 30) x $2,000 • Ex.: 75 FT – 30 = 45 x $2,000 = $90,000

Unaffordable Insurance  What we know: • Must “offer” insurance to at least 95% of FT EEs • EE can’t pay more than 9.5% of AGI • W2 safe harbor • Tax is $3,000 x each EE who gets insurance on exchange plus a premium credit, unless that is more than the “NO insurance” tax

If District Pays Tax ď&#x201A;§ No shaming

If District Pays Tax ď&#x201A;§ No shaming

To Avoid Tax  Must “offer” insurance to at least 95% of FT EEs  EE can’t pay more than 9.5% of AGI  W2 safe harbor

If District Pays Tax  Tax is $3,000 x each EE who gets insurance on exchange plus a premium credit, unless that is more than the “NO insurance” tax  Employee doesn’t get this money

Unaffordable Ins. Ex.  Moles School District • 40 Certificated • 35 Classified • We “offer” insurance to all FT EEs

 20 classified staff go to exchange and obtain the credit • 20 x $3000 = $60,000 (assessed monthly)

Effects of EHA  What we know: • EHA Board looking at cheaper options • Will be bronze level (60% of medical costs covered, minimum) • Can create 2+ subgroups • 5% premium savings assessed in each subgroup—saves for teachers • Can offer different plans to different subgroups

13-14 EHA Rates

Counting to 30 The term full-time employee means, with respect to a calendar month, an employee who is employed at least 30 hours of service per week, or 130 hours of service in a calendar month.

Counting to 30  Three Options for Salaried Staff • Track hours • Daily equivalent if one hour worked • Weekly equivalent if one hour worked

Counting to 30  Standard Measurement Period • 3-12 month lookback • Gather data for “hours of service” in each of the weeks of the measurement period • Divide by the number of weeks in the measurement period (can use pay per.)

• Be wary of equivalencies for monthly and yearly calculations

What does this mean?  Option #1: pay for insurance • EHA may have low-premium plan • Don’t have to use current EHA plan • If 95% of FT employees are provided insurance, no tax assessment • Affordability calculation and 50% EHA underwriting rule only apply to a single plan

What does this mean?  Option #2: “offer” unaffordable ins.

• Subject to tax assessment of $3,000 per employee who obtains insurance and a credit on the exchange • Have to be willing to pay ½ of the single premium if anyone takes ins.

• 5% surcharge determined separately for each EHA subgroup • Offer date for 9/1/14 enrollment

What does this mean?  Option #3: don’t offer insurance to classified staff at all for 14-15 • $2,000 x (all FT EEs – 30) • Only pay this tax if one FT person obtains insurance and credit on the exchange • Possible staff survey: (1) Do you have insurance? (2) How do you get it?

What does this mean?  Option #4: cut hours / cut staff • Look back window can be as short as 4th quarter for 13-14 • Employment at will • Contracts for 13-14 • No RIF process for classified staff • Shared and part-time teachers: consider carefully…

What does this mean?  SIT. TIGHT.  DO NOT offer current EHA plan (unless you want to)  Take a deep breath, the ACA is a monthly process, and you can always make adjustments around yearly EHA enrollment periods

OBAMACARE: What You Donâ&#x20AC;&#x2122;t Know CAN Hurt You Harding & Shultz (402) 434-3000 H & S School Law khaase@hslegalfirm.com

@KarenHaase btruhe@hslegalfirm.com

@btruhe