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The Affordable Care Act Virginia Association of Counties June 5, 2013. Jessica Rogers, Esquire. Uninsured in Virginia. Nearly 15 percent of Virginians under age 65 are without medical insurance (14.6%). The majority of uninsured (69.6%) are part of working families.
Jessica Rogers, Esquire
Marketplace Reforms: Provide more access to private insurance.
Medicaid Expansion: Increase eligibility to 138% of federal poverty level for men, women, and children. *Now OPTIONAL because of U.S. Supreme Court decision.
Innovation and Reform: Improve health care delivery system, find alternatives to fee for service payment system.
The General Assembly, in the 2013 Budget Bill, created the Medicaid Innovation and Reform Commission.
This group will determine if certain requested Medicaid reforms have been approved and implemented; if so, Virginia will expand Medicaid.
Under the Act, new Medicaid enrollees will be 100% federally funded through 2016. The federal funding then gradually decreases to 90% by 2020.
Categories that must be covered in qualified health plans:
Maternity & Newborn Care
Mental Health Services and Substance Use Disorder Services
Prescription Drug Coverage
Rehabilitation & Habilitation Services
Preventative & Wellness Care & Management of Chronic Diseases
Pediatric Care, Including Oral and Vision Care
To be subject to penalties, an employer must have at least 50 full-time employees, or the equivalent thereof.
A full-time employee works, on average, 30 or more hours a week, for the previous calendar year.
The Act uses the common-law definition of “employee.”
Seasonal employees who work less than 120 days a year are not counted.
Part-time employees’ hours are aggregated in the calculation of full-time equivalent positions (FTEs).
Each month, the hours of all part-time employees (but no more than 120 hours per part-time employee) are added together and divided by 120. This gives the number of FTEs for the month.
If the number of full-time employees, plus the number of FTEs for the year, divided by 12 is 50 or more, penalties apply.
There are special transition rules for 2013.
The Act says that any employer treated as one employer under IRC § 414(b)(c)(m) or (o) will be treated as one employer for purposes of the Act.
IRC § 414 has not been applied to local governments before; the proposed regulations say that guidance is forthcoming. In the meantime, local governments should use a good faith interpretation of the statute.
This section deals with controlled groups and affiliated service groups.
Both definitions are generally applied to private entities, and have to do with common ownership and control.
Since local governments aren’t “owned,” it’s hard to see how this provision will translate.
“Control” is more familiar.
Until further guidance is issued, local governments will not be penalized for a good faith determination of who constitutes a single employer.
Each member of a controlled group is penalized separately.
The 30 employees disregarded for penalty purposes are split among controlled-group members.
To avoid penalties, employers must offer minimum essential coverage that is affordable and meets minimum value requirements to all full-time employees and their dependents.
“Dependents” means children up to age 26, but not spouses.
Most employer sponsored plans will qualify as minimum essential coverage – dental only plans, for example, will not.
“Affordable” means no more than 9.5% of an employee’s household income for employee-only coverage.
Since most employers won’t know their employees’ household incomes, they may use the gross pay from W-2s.
Note that employers must offer coverage to dependents (children up to age 26, but not spouses), but family coverage need not be affordable.
The plan offered must have the same minimum value as the bronze level plans offered through the exchange.
The plan must cover 60% of the costs of health care, with the employee paying the rest through co-pays, co-insurance and deductibles.
Premium costs are not included in this calculation.
A full-time employee has 30 or more hours of service a week (or 130 hours a month).
Hours of service include paid leave.
Seasonal employees: employers may use a good faith interpretation until the definition is clarified (note: the 120 day rule does not apply here).
No penalty for not offering coverage to employees working less than 30 hours a week.
There are special rules for employees of educational institutions who work on an academic year schedule.
If it cannot be determined, at date of hire, if an employee will regularly work 30 or more hours a week: variable hour analysis applies.
If a new employee is expected to work 30 or more hours a week, he must be offered coverage within 90 days (or penalties apply).
Employees hired for a limited duration do not have to be considered full-time.
Employers may choose a Standard Measurement Period (SMP) between 3 and 12 months.
Employers may use different SMPs for different classes of employees (hourly vs. salaried, collectively bargained vs. not).
During the SMP, employers track hours of variable hour employees. If average for SMP is 30 or more hours/week, the employee is deemed full-time for following Stability Period.
Employers choose a Stability Period (SP), which must be at least 6 months AND at least as long as the SMP.
Employees found to be full-time during the SMP must be treated as full-time (offered coverage) throughout SP, regardless of how many hours they actually work during the SP.
Employees found NOT to be full-time during SMP, do not need to be offered coverage for entire SP (unless they cease to be variable hour employees and become full-time).
Employees found not to be full-time are not eligible for employer-coverage; they will be eligible for subsidies through the exchange during this period, if they meet other criteria.
Employers may also use an Administrative Period (AP) for purposes of tabulating hours and enrolling employees.
AP can be up to 90 days, and must overlap with the Stability Period. In other words, anyone previously found to be full-time must retain coverage during the AP.
New variable hour employees’ hours will be measured during an Initial Measurement Period (IMP).
If found to be full-time, they must be treated as such throughout an Initial Stability Period (ISP).
New employees’ hours will also be measured beginning the first SMP of employment, regardless of whether that period overlaps with the IMP or ISP.
The IMP plus an Administrative Period must end by the end of the month following the new employee’s one year anniversary (just over 13 months).
Employers with a fiscal year plan (as of December 27, 2012) do not need to comply with the coverage requirements until the first day of their plan year in 2014.
If you plan to use a 12 month SMP and 12 month SP, you can use a SMP as short as 6 months in 2013, but it must begin by July 1, 2013 (and can be followed by a 90 day administrative period).
Small Business Health Options Program: a marketplace for small businesses to purchase health insurance for their employees.
SHOP exchanges will eventually offer small businesses a choice of plans, from which their employees may choose, all administered through the exchange.
Full implementation has been delayed until 2015.
In order to qualify for subsidies, applicants will need an income between 100 – 400% of the federal poverty level.
In 2013, 400% of the federal poverty level for a family of four is $94,200.
Subsidies are available in advance, to help make premium payments.
They are calculated on a sliding scale, with more assistance for lower-income earners.
One online application, to see if individuals qualify for Medicaid, SCHIP, or subsidies for health plans available through the health benefits exchange.
Medicaid application must be simplified: based only on Modified Adjusted Gross Income (MAGI).
In-person assistance will be available for applications.
Individuals will be able to begin enrolling in plans on October 1, 2013, for coverage beginning January 1, 2014.
Sands Anderson, PC