Reform Q&A

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There are no federal laws requiring plans to provide the same benefit coverage to all employees.  The Patient Protection and Affordable Care Act (PPACA) requires employers with 50 or more employees to either offer employees health care coverage or pay a fee, but the law does not apply to part-time workers.  In addition, under the PPACA, fully insured plans providing more generous premium subsidy levels to highly compensated employees will be in violation of PPACA nondiscrimination rules once final regulations are issued and enforced on this provision.  Until such time, employers are advised to consult with legal counsel and/or their health insurance carrier for clarification regarding the practice of providing different premium subsidies for different groups of employees. 
 
Therefore, employers have discretion when structuring their benefits plans and are able to make distinctions among employee populations regarding access to and the level of benefits offered.  Plans may differ among employees only on “bona fide employment-based classifications” consistent with the employer’s usual business practice.  For example, part-time and full-time employees, employees working in different geographic locations, and employees with different dates of hire or lengths of service can be treated as different groups of similarly situated individuals.  
 
A plan may draw a distinction between employees and their dependents.  A plan also can make distinctions between beneficiaries themselves if the distinction is not based on a health factor.  A plan can distinguish between spouses and dependent children, or between dependent children based on their age.  However, under the PPACA, adult dependents must be covered to age 26, and employers must offer them the same level of coverage at the same price as currently offered to other similarly situated dependents in order to avoid fees.
 
The key is to make sure that benefits plan decisions are nondiscriminatory, keeping in mind the adverse impact on protected groups and any unintentional discrimination that may result from those decisions.  The EEOC Compliance Manual of Employee Benefits, Section 3 provides this helpful guidance:
This Section addresses discrimination in life and health insurance benefits; long-term and short-term disability benefits; severance benefits; pension or other retirement benefits; and early retirement incentives.  Under the ADEA, the ADA, and Title VII, charges involving these types of benefits may raise unique issues that require special analysis.  This Section discusses that analysis in detail.  At bottom, however, the fundamental principle of the anti-discrimination laws applies in this context as in all others: if an employer provides a lower level of benefits to an individual based on a prohibited factor, it must make out a defense.  If it cannot do so, its conduct will be unlawful, and cause should be found.
 
In addition, the Health Insurance Portability and Accountability Act (HIPAA) makes it illegal to assess health insurance premiums based on health factors.  It is not permissible to charge some employees more than any other similarly situated individuals based on medical conditions, claims experience, receipt of health care services, genetic information or disability.  HIPAA does allow an employer to make distinctions in benefits that are offered and in the cost of benefits when those distinctions are not discriminatory. 
 
Human resource professionals should also be concerned with giving highly compensated employees special perks.  Certain welfare plans (including self-insured medical and group term life insurance plans) will create taxable income for those employees if they receive a disproportionate amount of tax-advantaged benefits and could cause a company plan to fail its nondiscrimination testing.
 
In summary, it is not necessary under federal laws to give equal benefits to all employees, but an employer should base benefit eligibility on tenure, full- or part-time status, exempt/nonexempt status, job group or even department.  An employer must exercise due diligence to ensure its benefits are not discriminatory.

Please note, a self-funded medical plan would be subject to the Section 105H Non-Discrimination rules.

Question:

Please advise the proper answer to  4980H Affordability Safe Harbor. At the moment the coverage was offered the lowest pay in our company was $ 19,780.00 per year and the cheapest insurance plan we offer is set at $ 36.358 per week or $ 1,890.62 per year.

According to guidelines listed on the form it should be not more than 9.5% of FPL (which is $ 1,118.15 per year) or 9.5% of annual pay (which is $1,879.10). As it shows our charge for the cheapest insurance plan exceeds the max limit of affordability by $ 11.52 therefore we do not qualify for 4980H Affordability Safe Harbor.

Please advise if my calculations and understanding of this matter is correct.

Answer:

Your calculations and understanding are correct.  You will not meet affordability guidelines.  

That is incorrect.  Texas did not expand Medicaid Eligibility; therefore, Texas’ threshold is 15%.

Texas Medicaid and CHIP Eligibility Levels

To view the modified adjusted gross income (MAGI)-based eligibility levels, expressed as a percentage of the federal poverty level (FPL) and by monthly dollar amount and family size for Medicaid and CHIP, visit the National Medicaid and CHIP Eligibility Levels page for more information.

The answer to your question is yes.  The report is based on a calendar year, therefore, if the group is 50 or more in size, then the employer will report on the first 11 months with the grandmother plan, then one month of the new ACA compliant plan.  If the employer is under 50 in size, then the insurer will report for the group, unless the employer is self-funded then the employer will report.

Below shows how to determine if the employer is a Applicable Large Employer (ALE). https://www.irs.gov/Affordable-Care-Act/Employers/Determining-if-an-Empl...

 

Basic Information

  • Two provisions of the Affordable Care Act apply only to applicable large employers (ALEs): 
  • The employer shared responsibility provisions; and
  • The employer information reporting provisions for offers of minimum essential coverage
  • Whether an employer is an ALE is determined each calendar year, and generally depends on the average size of an employer’s workforce during the prior year. If an employer has fewer than 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is not an ALE for the current calendar year. Therefore, the employer is not subject to the employer shared responsibility provisions or the employer information reporting provisions for the current year. Employers who are not ALEs may be eligible for the Small Business Health Care Tax Credit.
  • If an employer has at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is an ALE for the current calendar year, and is therefore subject to the employer shared responsibility provisions and the employer information reporting provisions.
  • To determine its workforce size for a year an employer adds its total number of full-time employees for each month of the prior calendar year to the total number of full-time equivalent employees for each calendar month of the prior calendar year and divides that total number by 12.
 

Yes, churches must comply with the employer mandate if they are an Applicable Large Employer (ALE), which means they have 50 or more full-time employees and/or full-time equivalents (FTEs). 

No, this rule has nothing to do with the ACA, nor does it have anything to do with the insured’s age.  Generally, if the group has less than 20 employees, Medicare is primary.  Therefore, Anthem can carve-out what Medicare B would have paid and pay as the secondary carrier.