ACA Compliance Issues and Unattended …...ACA Compliance Issues and Unattended Consequences...
Transcript of ACA Compliance Issues and Unattended …...ACA Compliance Issues and Unattended Consequences...
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ACA Compliance Issues and Unattended ConsequencesMANAGING LEAVES OF ABSENCE AND REDUCTIONS IN HOURS
Kat Lacy-Wilson, JD, LLMArea Asst. Vice President, Compliance Counsel
January 21, 2015
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ACA’s Employer Mandate Analysis
Is there an employer/employee
relationship?
Is this an applicable large employer
(ALE)?
Is this a 30 hour employee?
Has a minimum value offer of
coverage been made for this
month?
If an offer has been made, was it affordable?
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This is a very conservative view based upon written guidance. If you, as an employer, want to do something different, it would probably be prudent to get a written legal opinion that supports your position.
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ACA’s Impact of Existing Employer/Employee Relationship
If an applicable
large employer
If employee works at least 30
hours per week (FT)
Offer coverage or may be at risk for assessable
payment/penalty
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ACA’s Assessable Payments/Penalties for 2016
Failure to offer coverage = $2,160 annual maximum x (number of FT – 30
freebies)
Failure to offer affordable coverage
= $3,240 annual maximum
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Employer/Employee RelationshipIndicia of control in work conditions and end work product
Indicia can be actual – payroll records (maybe)
Indicia can be inferred – more in NLRB discussion
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What’s the problem?
Change in employment status does not always equal termination of employer/employee relationship
Leaves of absenceNon-work hours (e.g. time between FMLA
exhaustion and COBRA termination)
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Working example
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Working Example – ACME, Inc.
ACME, Inc. 115 FTEs (ALE status)
Lookback analysis -•Measurement – 11/1 to 10/31
•Admin – 11/1 to 12/31•Stability – 1/1 to 12/31
Leave of absence policy -•2 years of unpaid leave
•Cease benefits when go on leave (COBRA qualifying event)
•When return to work, allowed to elect new benefits
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Working Example - Jay
VHE hired in 2013
11/1/13 – 10/31/14 meas period – avg. at least 30 hours
Offered coverage for 2015 stability period
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Working Example – Jay’s LOA request
Date of request: September 15,
2015
Request LOA from 10/1/15 – 9/30/17• Anticipated return date – 10/1/17
Review of 11/1/14 – 10/31/15 meas period• Avg of about 35 hours• Most likely will be eligible for coverage for 2016 plan year
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Summary of What We Know – ACME/Jay
Is there an employer/employee relationship? - Yes
(even during the LOA)
Is this an applicable large employer (ALE)? – Yes
Is this a 30 hour employee? - Yes
Has a minimum value offer of coverage been made for this month? – For 9/15, yes. For
10/15 and onward, ????
If an offer has been made, was it
affordable? – For 9/15, assume yes.
For 10/15 and onward, ????
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This is a very conservative view based upon written guidance. If you, as an employer, want to do something different, it would probably be prudent to get a written legal opinion that supports your position.
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Working Example – ESR for 2015 plan year
ACME, Inc. Jan to Sept – offers of
coverage made
Oct to Dec – offers of coverage not made
ER may be at risk for failure to offer coverage for Oct to Dec
Jay Jan to Sept – received offers of coverage
Oct to Dec – did not receive offers of coverage
EE may be eligible to get subsidized coverage from the Marketplace from Oct to Dec
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Working Example – ESR for 2016 plan year
ACME, Inc. Jan to Dec – offers of
coverage not made
Still has an employer/employee relationship with Jay
ER may be at risk for failure to offer coverage for Jan to Dec
Jay Jan to Dec – did not receive offers of coverage
Still has an employer/employee relationship with ACME
EE may be eligible to get subsidized coverage from the Marketplace from Jan to Dec
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Working Example – ESR for 2017 plan year
ACME, Inc. Jan to Sept – offers of
coverage not made
Oct to Dec – offers of coverage made as Jay comes back to work
ER will more than likely not be at risk any month of the 2017 plan year
Jay Jan to Sept – did not receive offers of coverage but had zero hours of service for measurement period
Oct to Dec – offers of coverage made as Jay comes back to work
EE may be eligible to get subsidized coverage from the Marketplace from Jan to Sept but will cease eligibility in Oct.
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Possible solutions
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ACME’s Options – Option 1 (for FT hires only)
If Jay had been hired as a FT in
2013
If Jay had been offered ACME’s
group health plan coverage
within 90 days of date of hire
If Jay has a reduction in hours to less than 30
hours per week average
ACME could use a 3 month measurement period from date of
reduction in hours to confirm reduction and terminate coverage 1st day of the 4th month after the
date of reduction in hours
Hired FT in 2013
Offered coverage 1st of day after 60 day wait period
LOA changed to start 4/1 and is a reduction in hours
ACME monitors hours from 4/1/15 – 6/30/15
ACME can choose to terminate coverage effective 7/1/15
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COBRA qualifying event
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ACME’s Options – Option 2 (for FT and VHE hires)
If Jay had a reduction in
hours
If Jay is able to provide “reasonable
assurance” that either enrolled in or
in the process of becoming enrolled in other qualified
health plan
ACME could terminate Jay’s coverage upon receipt of Jay’s
request but only if the provision has been adopted
into ACME’s section 125 document
LOA effective 10/1/15
On 10/1/15, Jay provides reasonable assurance that
enrolled in spouse’s employer’s group health plan (e.g. copy of
membership card, affidavit, etc.)
ACME terminates coverage effective 10/1/15
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COBRA qualifying event
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ACME’s Options – Option 3 (for FT and VHE hires)
If ACME reduced its employer’s contribution
for employee’s
on LOA
Significant increase in cost
section 125 change in status
rule may be triggered
May allow for Jay to request termination of coverage if no other
group health plan options available from ACME
LOA effective 10/1/15
ACME amended LOA policy earlier in 2015 that employer contributions will
cease for LOA employees
Effective 10/1/15, Jay is responsible for 100% of employee premium
Jay requests termination of coverage due to significant cost increase and ACME
processes the request effective 10/1/15
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COBRA qualifying event
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Takeaways
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The employer mandate is in play as long as there is an
employer/employee relationship.
Leaves of absence do not equal termination of employment.
What is earned in the measurement period must be
given for the subsequent stability period.
Termination of coverage in a stability period does NOT negate the requirement to offer coverage for the next stability period if the employee has earned sufficient hours of service for coverage.
What does your employee handbook say?
What does your plan document/SPD say?
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What do your CBAs say?
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Questions?
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The intent of this presentation is to provide you with general information regardingthe status of, and/or potential concerns related to, your organization’s currentemployee benefits environment. It does not necessarily fully address all of yourorganization’s specific issues. It should not be construed as, nor is it intended toprovide, legal advice. Questions regarding specific issues should be addressed byyour organization’s general counsel or an attorney who specializes in this practicearea, as appropriate.
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