Obamacare Update: Good Things Come to Those Who Wait

Kelley Baker kbaker@hslegalfirm.com

Karen Haase khaase@hslegalfirm.com @KarenHaase

Steve Williams

Bobby Truhe

swilliams@hslegalfirm.com @SteveisEsteban

btruhe@hslegalfirm.com @btruhe

Obamacare Update: Good Things Come to Those Who Wait We continue to hear from H&S clients and friends who are fearful that they must act soon to deal with the various aspects of the Patient Protection and Affordable Care Act (PPACA). Once again, we feel compelled to tell you: slow down and calm down! We still do not know what the final PPACA regulations will say. More importantly, the Educators Health Alliance (EHA) and Blue Cross/Blue Shield are considering options to help school districts meet PPACA requirements. If you want to restructure your staff or make drastic changes to your school calendar for education reasons, by all means do so. But we cannot in good conscience advise you to make these changes in preparation for the PPACA when we do not know all of your options for compliance.

School Districts' Date for Implementing Obamacare. January 1, 2014 is the date when the PPACA "shared responsibility" tax payments (a.k.a. "pay or play") go into effect. However, because school districts run on a fiscal year, they have until the beginning of their next fiscal year (after January 1, 2014) to decide what they will do. In our case, that will be September 1, 2014.

If your district decides to provide affordable insurance to all full-time staff as of September 1, 2014, you will be fully compliant with the PPACA. However, if your district decides to pay the tax rather than provide affordable insurance, you will be assessed tax payments retroactively to January 1, 2014. Though you may owe more during the first year if you decide not to offer insurance, waiting until September 1, 2014 allows you to wait for additional guidance from EHA and the PPACA regulations.

EHA Looking into Less Expensive Options. At its most recent board meeting, the EHA approved a measure to look into some lower-premium insurance offerings and Health Savings Account options. What this means for districts is that by the September 1, 2014 enrollment period, there will very likely be cost-effective options for providing classified staff members insurance or

supplementing a balance of their premiums. With these premiums being less expensive than the current EHA plan offered to teachers, it may be most cost effective to offer this insurance and/or pay part of the premium for classified staff.

Consequences of a "Wrong Choice." Compliance with the PPACA is not a one-and-done decision. If you and your board do not like the course of action you choose in year 1 of implementation, you can change those decisions for year 2, and so on. For example, if your district ultimately decides to offer all classified staff a single health insurance policy at school district cost, you may do that in the 2015-16 school year and you will no longer pay the shared responsibility tax. If you decide to offer a single health insurance policy at school district expense now (at the current premium of $____), it will be very difficult to take that benefit away or to offer a less expensive plan or HSA if those options become available. We believe it makes much more financial sense to wait, even if the district faces the possibility of paying one of the two taxes under PPACA for part of the 2014 year.

With that said, it is imprudent to assume there are any "quick fixes" to the PPACA. There is no magic bullet that will allow you to comply with the PPACA at no cost to your district or its employees. A thorough and measured response is almost always best, and that is true for the PPACA. Conclusion. We believe school districts will ultimately have multiple economically rational ways to comply with the PPACA. Choosing a compliance option now may limit those options later. With so many unknown variables, we cannot advise districts to take immediate and drastic action. Districts should be looking at these issues, but sweeping changes may have significant long-term effects compared to addressing the PPACA requirements in a patient, yet thorough manner. If you have questions, we recommend that you consult with your school district’s attorney or call Kelley, Karen, Steve or Bobby.

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