HomeMy WebLinkAbout03. Employer Shared Responsibility MandateCentral Contra Costa Sanitary District
March 28, 2016
TO: ADMINISTRATION COMMITTEE
VIA: ANN SASAKI, DEPUTY GENERAL MANAGER (517" -
FROM:
TEJI O'MALLEY, HUMAN RESOURCES MANAGER�(P
SUBJECT: EMPLOYER SHARED RESPONSIBILITY MANDATE ("PAY OR PLAY")
3,
Effective July 1, 2016, the District will be subject to the Employer Shared Responsibility
Mandate, also known as "Pay or Play," a provision of the Affordable Care Act (ACA).
The purpose of this memo is to provide the Committee with information on the mandate
and potential penalties for non-compliance, as well as a recommendation on how to
implement the mandate.
In summary, the Pay or Play mandate requires that all employers must provide medical
coverage that meets the following three criteria: is affordable; has minimum value;
and is offered to substantially all (at least 95 percent) of their employees who work
more than 30 hours per week.
Coverage is considered affordable if the health care premium contributions by the
employee, for self -only coverage for the employer's lowest cost medical plan, do not
exceed 9.5 percent of the employee's household income.
Because employers generally will not know their employees' household incomes,
employers can take advantage of one or more of the three affordability safe harbors set
forth in the final regulations. These safe harbors are based on information the employer
will have available. The three affordability safe harbors are as follows:
• Form W-2 Wages Safe Harbor
• Rate of Pay Safe Harbor
• Federal Poverty Line Safe Harbor.
Coverage is considered to have minimum value if the plan's share of the total allowed
cost of benefits is no less than 60 percent. All three of the District's healthcare plans
have been determined to meet this threshold, per the criteria set forth by the
Department of Health and Human Services.
Administration Committee
March 28, 2016
Page 2 of 3
The IRS defines "substantially all" as coverage being offered to a minimum of 95
percent of all full-time employees. Full-time employees, for purposes of the ACA, are
those employees who work, on average, more than 30 hours a week or 130 hours in
any given month, regardless of the duration of employment.
PENALTIES FOR NON-COMPLIANCE:
The table below reflects the conditions that have to be met as well as the penalties
that may be assessed if the District does not meet the mandates on all three of the
categories outlined above: coverage is affordable (Penalty B below); offers
minimum value (Penalty B below); and is offered to substantially all employees
(Penalty A below).
Penalty A
Penalty B
DISTRICT IMPACTS:
Condition
Coverage is not offered to
substantially all full-time
employees (FTE) and their
dependents.
Coverage offered to
substantially all FTEs but
coverage was either not
affordable or did not
provide minimum value.
Penalty
$166.67 x (# of FTEs
employed during that month
minus 30). As of the District
census today, this amount
would equate to
approximately $40,834 per
month.
$250.00 x (# of FT
employees receiving
subsidy during any given
month).
The District currently offers health insurance coverage to all regular, full-time
employees. However, all temporary employees (summer/seasonal students, co-ops,
and District temporary employees) are currently not offered benefits.
The regulations require an employer to make a good faith determination about the
number of hours it reasonably expects a new employee to work, unless the employee
is a classified as a "seasonal employee." The mandate does not require employers to
provide benefits to seasonal employees. Hence, the District's summer students are not
eligible under the mandate, as they have been categorized as "seasonal."
However, according to this regulation, both District temporaries and co-ops would be
eligible under the mandate. As such, staff is recommending that the District offer
coverage to all District temporaries, but that the full cost of the premiums be borne by
the employee.
Administration Committee
March 28, 2016
Page 3 of 3
This action ensures that the District is in compliance with all mandates set forth by the
Employer Shared Responsibility Mandate.
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