The Affordable Care Act – Employer Challenges in 2015. Is Your Business On Track?

Posted by Donna Craig in Mar, 2015

This week marks five years since the Affordable Care Act (“ACA”) was passed.   Over the last five years some ACA provisions impacting employers have been implemented, while future changes affecting employers are on the horizon. Since January 1, 2015, employers with 100 or more employees are required to either provide affordable and qualified health insurance coverage to at least 75 percent of their full-time employees or pay a penalty.

Pay or Play — Currently if an employer provides health insurance coverage that is not affordable to some of its full-time employees, those employees may go to the Insurance Exchange and purchase their own health insurance and possibly receive a tax credit. If those employees do receive tax credits, the employers would be penalized. That may change in Michigan and 33 other states after the case of King v. Burwell is decided by the United States Supreme Court in June 2015. If the Court rules against the government, then individuals will not receive tax credits in Michigan because Michigan’s Insurance Exchange is not a “state” sponsored insurance Exchange, but is a federally partnered Insurance Exchange. This distinction is at issue in the King v. Burwell case. The end result, if employees don’t receive tax credits, there is no trigger to penalize their employers.

Reporting Obligations – Employers are required to track certain employee information in 2015. While the following information is to be tracked on a monthly basis in 2015, the information will not be reported until February 2016.

• Name, address, and employer identification number of the applicable large employer, the name and telephone number of the applicable large employer’s contact person, and the calendar year for which the information is reported;
• Number of full-time employees for each month during the calendar year;
• Certification as to whether the applicable large employer offered to its full-time employees and their dependents the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan by calendar month;
• Those full-time employees and dependents who were offer insurance coverage but refused it;
• For each full-time employee, the months during the calendar year for which coverage under the plan was available;
• For each full-time employee, the employee’s share of the lowest cost monthly premium for coverage providing minimum value offered to that full-time employee under an eligible employer-sponsored plan, by calendar month; and
• Name, address, and taxpayer identification number of each full-time employee during the calendar year and the months, if any, during which the employee was covered under an eligible employer-sponsored plan.

The challenge to employers in tracking this information could be daunting as most employers do not have a centralized system for gathering this information. Such information may be contained in an employer’s payroll system, benefits administration system or other system, none of which may interface with each other. There may be the need to manually track information or discuss solutions with their vendors.

Wellness Programs – It is estimated that 25 percent of large employers that have employee wellness programs provide financial incentives to their employees. Employers may reward employees up to 30 percent of the cost of coverage for achieving wellness goals (e.g. decreasing weight, or lowering cholesterol), or up to a 50 percent reward for reducing tobacco use.   Implementation of these wellness programs must not be discriminatory, in which employees otherwise eligible to participate in the wellness programs are unable to do so because of health status or other discriminatory criteria (obesity, disability issues, etc.). In the past several months, the Equal Employment Opportunity Commission (“EEOC”) has challenged a number of wellness programs for violation of the American with Disabilities act (“ADA”).   Employers would be wise to carefully examine the structure and implementation of their wellness programs.

Cadillac Tax – Beginning in 2018, employers that provide high cost health plans to their full-time employees (plans costing more than $10,200 for employee only and $27,500 for family coverage, adjusted for inflation after 2018) will pay a 40 percent excise tax, known as the “Cadillac Tax”. While the excise tax does not go into effect for three years, it is important that employers examine and adjust their current health plans, employee deductibles and cost sharing options in order to avoid an excise tax in 2018.

 Automatic Enrollment In Group Health Plans — While the ACA requires employers with 200 or more full-time employees that offer health plan coverage to automatically enroll new employees in their health plans, this provision’s implementation has been delayed until final regulations are released. As of this date no final regulations are on the horizon. Employers should know that when these final regulations are published, it may impact employers’ current ACA compliance, requiring changes in employee enrollment and opt out procedures.

 Is your company on track with current and future ACA compliance provisions? Contact The Health Law Center if you have questions regarding your obligations and compliance with the Affordable Care Act.