210 Park Ave., Ste. 302, Florham Park, NJ (973) 660-1095 Stephen E. Trimboli, Esq. A member of the...

210 Park Ave., Ste. 302, Florham Park, NJ

(973) 660-1095www.trimprulaw.com

Stephen E. Trimboli, Esq.A member of the Firm

HEALTHCARE LAW CHANGE

Presented At: GFOA of N.J. Spring Mini-Conference, April 19, 2013, New Brunswick, New Jersey

Presented By: Stephen E. Trimboli, Esq. Trimboli & Prusinowski, L.L.C.

This presentation is for informational purposes only and is not intended as a substitute for legal advice. Any employer confronted with a specific issue pertaining to the PPACA is strongly advised to obtain and consult with competent counsel experienced in this field.

Welcome to the PPACA

The Patient Protection and Affordable Care Act of 2010: A “complex scheme of new government regulations, mandates, subsidies, and agencies in an effort to achieve near-universal health insurance coverage.”

-- Jonathan H. Adler and Michael F. Cannon, quoted in Health Matrix: Journal of Law-Medicine, Spring 2013


"I just see a huge train wreck coming down."

-Senate Finance Committee Chairman Max Baucus, D-Mont., April 17, 2013


The “Three-Legged Stool”

1. Regulatory price controls on health insurers (community rating, no exclusion for pre-existing conditions).

2. Individual mandate to purchase minimum essential coverage.

3. Tax credits and subsidies for low-income households to purchase insurance.


Tax Credits and Subsidies

“Premium Assistance” tax credits for households with incomes between 100% and 400% of the federal poverty level.

“Cost-sharing subsidies” for households with incomes between 100% and 225% of federal poverty level to purchase insurance above the mandatory minimum at no cost to them.

Either is available only for purchases through Exchanges.


Exchanges

Government agencies that oversee health insurance purchases in a state, monitor carrier compliance with price controls, report to the IRS on compliance with individual and employer mandates, and distribute the subsidies directly to the insurance carriers.


“Shared Responsibility for Employers Regarding Health Insurance”


Employer Mandate

Employers must provide affordable health benefits of minimum value to all full-time employees and their dependents. Failure to do so may result in penalties.


Why an Employer Mandate?

1. Prevents employers from “dumping” employees onto the exchanges.

2. Reduces the cost of tax subsidies and credits to individuals.

3. Minimizes disruption to existing insurance arrangements.


How is the Employee Mandate Enforced?

Penalties will be imposed if, as a result of an employer’s failure to meet the mandate, employees and their dependents receive tax credits or subsidies as a result of their purchasing of health insurance from exchanges.


Who Has a Role in Enforcing the PPACA?

1. United States Department of the Treasury/IRS

2. United States Department of Labor

3. United States Department of Health and Human Services

4. The Occupational Safety and Health Administration

What Is the Law?

Effective January 1, 2014, “large employers” may be subject to penalty if they fail to offer each of their “full time employees” and their dependents “minimum essential coverage” for health costs that provides “minimum value” and is “affordable.”

What Is the Law?

“Minimum essential coverage”

Individual coverage under an eligible employer-sponsored plan that is either a group health plan or a group health insurance program AND is either

(a) a government plan,

(b) a plan or coverage offered in the small or large group market, or

(c) a grandfathered plan offered in the group market.

What Is the Law?

“Minimum value”

A plan is deemed to offer “minimum value” if the plan pays for 60% or more of the plan’s total allowed medical costs.

What Is the Law?

“Affordable”

A plan is deemed affordable if the employee’s required contribution for individual coverage does not exceed 9.5% of the modified adjusted gross income of the employee, the employee’s spouse and their dependents, taken together.

What Is the Law?

“Required Contribution”

The portion of the annual premium that would be paid by the individual for self-coverage only.

If an individual is eligible for coverage by reason of a relationship to an employee (i.e., a dependent), then “affordability” is determined based on the “required contribution” of the employee.

What Is the Law?

“Large Employer”

An employer who employed an average of at least fifty full-time employees on business days during the preceding calendar year.

What Is the Law?

“Full time employee”

An employee is deemed a full time employee for any month in which the employee is employed for an average of 30 “hours of service” per week.

The Secretary of Treasury, in consultation with the Secretary of Labor, is to define “hours of service” by regulation.

What Is the Law?

Proposed Treasury Regulations

1. “Hours of Service” means any hour for which the employee receives pay or is entitled to receive pay, regardless whether the employee actually worked.

2. 130 hours of service in a month will be deemed to equal 30 hours of service per week.

What Is the Law?

If you employ seasonal employees –

If the employment of seasonal employees would push you over the fifty full time employee threshold, you would NOT be considered a large employer unless the seasonal employee workforce pushes you over the fifty-full-time-employee threshold for at least 120 days in a given calendar year.

What Is the Law?

Penalty No. 1

If the employer fails to offer minimum value coverage, and at least one employee receives a premium tax credit or subsidy from an exchange…

The employer must pay a penalty of $2,000 times the number of employees it employs in excess of 30.

Example: 100 employees. The penalty is (100-30) times $2,000, or $140,000.

What Is the Law?

Penalty No. 2

If the employer fails to offer affordable coverage…

The employer must pay a penalty of $3,000 times the number of employees who receives a premium tax credit from an exchange, or the penalty for not offering “minimum value” coverage, whichever is less.

What Is the Law?

The employer must offer the mandatory coverage. It need not compel the employee to accept it.

An employee cannot receive a subsidy or tax credit from an exchange if the employer is offering the employee the mandatory coverage.

No subsidy or tax credit = no penalties for the employer.

What Is the Law?

Waiting Periods

No waiting period may be in excess of 90 days.

Three month maximum waiting period for new employees.

What Is the Law?

Rules, Regulations and Guidelines

Dep’t of Treasury has proposed detailed regulations on employer “shared responsibility.” Hearing scheduled for April 23, 2013.

Dep’ts of Treasury and Labor have issued various Notices, FAQs, Technical Releases, but no formal “Guidance.”

None of these have the force of law.

Automatic Enrollment

Employers with more than 200 full-time employees will be required to enroll new employees automatically and to keep current employees enrolled.

Must advise employees of opt-out procedures.

Requirement is subject to regulations adopted by the Secretary of Labor.

DOL takes the position that employers need not comply until implementing regulations are adopted.

Notice to Employees

Effective March 1, 2013, employers are required to issue to current employees and new hires information about the existence of an Exchange, and their rights and obligations with respect to the purchase of insurance through exchanges.

Requirement is subject to regulations adopted by the Secretary of Labor.

DOL takes the position that employers need not comply until implementing regulations are adopted.

Anti-Retaliation

It is unlawful to discharge or discriminate against any employee who:

1. Participates in a PPACA proceeding or reports what the employee reasonably believes to be a PPACA violation.

2. Refuses to participate in what the employee reasonably believes to be a PPACA violation.

3. Receives a tax credit or subsidy for the purchase of insurance through an exchange.

Anti-Retaliation

* Complaint must be filed with the Secretary of Labor within 180 days of the date of alleged retaliatory violation.

* The Occupational Safety and Health Administration is responsible for enforcement, investigation and hearing.

* Under certain circumstances, the claimant may seek de novo review in federal district court.

* Appeals are taken to the United States Courts of Appeals.

Anti-Retaliation

Remedies include:

* Reinstatement with back pay and benefits, with interest.

* Compensatory damages.

* In de novo court action, attorneys fees, litigation costs and expert witness fees.

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