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HomeMy WebLinkAbout04. Consider list of future potential topics re the Affordable Care Act (ACA)12 Central Contra Costa Sanitary District February 11, 2014 TO: ADMINISTRATION COMMITTEE VIA: ROGER S. BAILEY, GENERAL MANAGERd N FROM: TEJI O'MALLEY, HUMAN RESOURCES MANAGER SUBJECT: AFFORDABLE CARE ACT TOPICS FOR FUTURE DISCUSSION As requested at the January 22, 2014 Administration Committee meeting, below is a list of topics that are components of the Affordable Care Act (ACA). Staff is requesting that the Committee prioritize the listed topics and provide any additional topics that require further elaboration and /or discussion. 1. ACA Fees and Taxes 2. Employer Shared Responsibility ( "Pay or Play ") 3. Employer Reporting Requirements 4. Summary of Benefits and Coverage (SBC's) 5. Changes to Flexible Spending Accounts due to ACA 6. Health Care Exchange (Covered California) 7. Cadillac Tax 8. ACA and Impacts on Retiree Health Care 9. Nondiscrimination Mandates Please note that the items highlighted in red have not yet been clarified by the issuing authorities and staff is awaiting clarification form the Internal Revenue Service, Department of Treasury, and the Department of Health and Human Services before determining the impact on the District. Additionally, I have attached a memo that was presented at the July 23, 2013 Human Resources Committee in order to provide a general and brief overview of the ACA and its impact on the District. I will be available to answer any questions during the meeting. Enc: Memo dated July 23, 2013 re: ACA Central Contra Costa Sanitary District July 23, 2013 TO: HUMAN RESOURCES COMMITTEE VIA: CURT W. SWANSON, PROVISIONAL GENERAL MANAGER FROM: VEJ1 O'MALLEY, HUMAN RESOURCES MANAGER SUBJECT: UPDATE ON THE PATIENT PROTECTION AND AFFORDABLE CARE ACT OF 2010 This memo is to provide an overview of the Patient Protection and Affordable Care Act (ACA), which was enacted into legislation in 2010 and its impact, current and future, to the District. HISTORY AND OVERVIEW The ACA was enacted into legislation in 2010 with many provisions being phased in over an 8 -year period. The table below reflects an overview of the changes for large businesses (more than 51 employees) beginning in 2010 through 2018: Provisions Effective 2010 • Dependent coverage increased up to age 26 • Early Retiree (under age 65) Reinsurance Program: Reimbursements to employers who cover early retirees • Nondiscrimination: Employers cannot have different eligibility periods, different contribution amounts, or more generous benefits package for management employees • Inclusion of preventive services at no cost to consumer • No rescission of benefits • No lifetime and annual dollar limits on essential health benefits • Access to emergency services Provisions Effective 2011 Medical Benefit Ratio: Insurers must spend between 80 -85% of premium dollars on medical care and services Provisions Effective 2012 f • Summary of Benefits and Coverage (SBC): All Employers must provide employees with clear and concise SEC's for anv health plans • Patient - Centered Outcomes Research Institute (PCORI) fee - insurers charged an annual fee through 2019 to fund medical research • Inclusion of women's preventive services at no cost to the consumer Provisions Effective 2013 • Flexible Spending Accounts: Annual limit decreased to $2,500 • W -2 Reporting: Cost of benefits must be reported on all W -2's • Exchange Notice: Employer must provide employees notice of healthcare exchange by October 1, 2013 Provisions Effective 2014 • Open Enrollment for Health Care Exchange ( "Covered California ") begins in October 2013 for coverage effective January 2014 Provisions Effective 2015 • Employer Shared Responsibility: IRS levies penalties against employers who do not offer coverage to substantially all of their full -time employees (working more than an average of 30 hours a week in any given month) and which is considered affordable Provisions Effective 2018 • Excise tax on high cost ( "Cadillac ") insurance plans: Insurers subject to a 40% excise tax on any employer- sponsored group health plan with costs that exceed a predetermined level PROVISIONS EFFECTIVE 2014 AND 2015 Health Care Exchange (Covered California) California will implement the Health Care exchange (referred to as Covered California) on October 1, 2013 in order to begin offering coverage on January 1, 2014. Individuals and families may be eligible to purchase a qualified healthcare plan through the exchange if their employer sponsored healthcare plans do not meet certain criteria (discussed in detail below) AND earn less than 400% of the federal poverty line. For 2013, this would equate to a two- person family with an income of up to $62,040 or a four - person family with an income of up to $94,200. Employer Shared Responsibility ( "Pay or Play ") The District is in compliance with all of the changes that the ACA has mandated thus far and has now begun the process of evaluating the impacts of the Employer Shared Responsibility mandate. This provision was to go into effect in January 2014; however, the Department of Treasury issued an alert on July 2, 2013 that delays the implementation of this provision until 2015 in order to clarify the current regulations and their impact to employers. Beginning in 2015, the Internal Revenue Service will begin assessing two types of monthly penalties on employers if the employer does not offer "affordable" coverage which provides "minimum value" to "substantially all" of its employees. These criteria are subject to change depending on the clarification issued by the Department of Treasury; however, for purposes of this memo and general information, these criteria are being utilized as defined currently. 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% of the employee's household income (IRS is allowing employers to utilize the current rate of pay for ease of calculating the cost). Coverage is considered to have minimum value if the plan's share of the total allowed cost of benefits is no less than 60 %. 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. The IRS is defining "substantially all" as coverage being offered to, at a minimum, 95% 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. 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 categories; coverage is affordable, offers minimum value, and is offered to substantially all employees. *Amount adjusts annually and this amount reflects the 2014 rate. Condition Penalty Penalty A Coverage is not offered to $166.67* x (# of FT substantially all full -time (FT) employees employed employees and their dependents. during that month minus 30). As of the District census today, this amount would equate to approximately $46,167 per month. Penalty B Coverage offered to substantially all FT $250.00 x # of FT employees but coverage was either not employees receiving affordable or did not provide minimum subsidy during any given value. I month. *Amount adjusts annually and this amount reflects the 2014 rate. At this time, the District offers medical insurance to all permanent employees working a minimum of 32 hours a week, which equates to 100% of District employees. Temporary employees (summer students, co -ops, and District temporaries) are not offered any medical coverage regardless of the number of hours worked. Since the District offers qualifying coverage to 100% of its permanent employees, the issue at hand is whether or not temporary employees will meet the definition of full -time employees under this provision. The current regulations require an employer to make a good faith determination about the number of hours it "reasonably" expects a new employee to work. If the District was to use this definition of full time, all temporary employees would qualify. At this time and historically at the District, all three categories of "temporary" employees have worked 40 hours a week with the duration being limited to three and half months for summer students, six months for co -ops and up to a year for District temporaries. The Treasury regulations that have been published thus far provide little guidance on how to determine if temporary employees will be considered full -time employees for purposes of this provision. We believe that the delay in the implementation of this provision, as set forth in the Treasury Alert issued on July 2, 2013, is partially due to this reason. Staff will be analyzing the regulations as they are issued and clarified by the Department of Treasury and will update the Board accordingly.