It is hard to believe that employers are already five years into the task of complying with the requirements of the Affordable Care Act, but one of the law’s enduring features has been phased deadlines, many of which have also been subject to additional delay. So, even after 5 years, ACA compliance has yet to feel like settled territory, and may not for some time yet.
Here’s a survey of what is coming up soon and in the more distant future. But, as always, smaller employers should be alert to the possibility of regulatory adjustments, especially in the later years.
January 1, 2015 – Employers with 100 or more full time employees or full time equivalents must now offer compliant coverage to at least 70 percent of the full timers.
Compliant coverage must include certain services and procedures, outlined by the Department of Health and Human Services and which are too numerous to list here. One notable conflict of the last year, Hobby Lobby, focused on whether contraception was to be included. The answer was something of a resounding, "sort of, maybe, except."
However, it is now clear that dental or vision only, workers’ compensation and standalone health reimbursement accounts do not meet this standard. These have been offered by nearly 1 in 7 small employers who do not otherwise fall under the requirements of the ACA.
Secondly, compliant plans must meet a minimum value standard, which means that the plan must pay for 60 percent of the cost of benefits it provides. Finally, plans must be affordable, which means that that the employee’s contribution to the premium cannot exceed 9.5 percent of W-2 income.
Special state by state timetables exist for bringing pre existing plans that do not meet the ACA’s minimum standards into compliance. New York and several more proactive states already require full compliance. As of the beginning of 2015, California began to, as well.
May 1, 2015 – Earlier this month health insurers filed rate proposals with the DHHS. The 2016 rates will become final in the fall after several months of adjustment.
Rates have climbed steeply over the last few years, at nearly 9 percent per annum, much to employers’ distress. Data and projections from 2014 suggest that, absent some major disruption, the rate of increase may be slowing, even if no decline is in sight.
June 30, 2015 – Apropos of the potential for disruption, on or before the end of June, the Supreme Court is expected to hand down a decision in King v. Burwell.
The plaintiffs have challenged the federal tax credits and subsidies provided to individuals insured through federal, rather than state exchanges. A decision for the plaintiffs could eliminate those subsidies for more than 83 percent of the 4.2 million people who get insurance through the federal exchange. The economic and legal implications could be profound, with the ripples affecting even those not on the federal exchange, including employers who provide coverage and their covered employees.
July 1, 2015 – Small businesses that do not offer employees health insurance coverage, but who give tax free reimbursements either through standalone health reimbursement accounts or by writing it off as a business expense will no longer be able to do so without incurring significant penalties. The original effective date was January 1, 2015, but employers received a brief reprieve.
Employers may gross up wages to achieve the same result, but because the money is taxable, this alternative may be unattractive to many.
Employers may, however, continue tax free reimbursements for retirees or if the employer only reimburses one employee in this way.
November 1, 2015 – Open enrollment begins, to run through January 31, 2016.
January 1, 2016 – Employers with 50 or more full time or full time equivalent employees must offer compliant employee health insurance to at least 95 percent of full time employees and their dependents. This is an increase from the 2015 requirement of 70 percent of employees only. This fully implements the employer mandate provisions of the ACA.
Employers with fewer than 50 employees need not offer employee health insurance coverage. If they choose to do so, however, their plans must meet the full battery of ACA standards. Small, otherwise exempt, employers can offer no coverage, but they cannot offer limited coverage.
In 2016, employers may no longer offer pre existing non compliant plans in Idaho and Louisiana.
In addition, the Small Business Health Options Program, or SHOP exchanges, which were initially off to a faltering start, will open up to businesses with up to 100 employees. The goal of these exchanges is to offer smaller employers a better choice of high quality coverage at a lower cost through pooled risk. By 2016, the hope is that more states may be offering state SHOP exchanges.
Employer mandate tax reporting begins in 2016 with Forms 1094C and 1095C. These forms depend on monthly compilation of data, so employers may want to ensure that procedures are in place that will permit this.
The remaining two thirds of the states, including Texas and Florida, that have permitted employers to continue to offer pre existing plans that do not meet minimum standards will require compliance in 2017.
SHOP exchanges may open up to employers with 100 or more employees, depending on decisions yet to be made.
Federal Medicaid contributions for individuals who became newly eligible for assistance because of ACA changes will decline to 95 percent from the current rate of 100 percent. The states’ obligations will correspondingly rise by 5 percent, which may cause states to reduce other spending.
In 2018, a 40 percent excise tax will begin on high value health plans. High value health plans include individual only plans with a value greater than $10,200 or family plans worth more than $27,500. The so called “Cadillac tax” will be levied only on the difference between value of the plan and the $10,200 or $27,500 threshold.
Federal Medicaid contributions for individuals who became newly eligible for assistance because of ACA changes will decline to 94 percent, from the previous year’s rate of 95 percent.
Federal Medicaid contributions for individuals who became newly eligible for assistance because of ACA changes will decline to 93 percent, from the previous year’s rate of 94 percent.
Federal Medicaid contributions for individuals who became newly eligible for assistance because of ACA changes will decline to 90 percent, from the previous year’s rate of 93 percent.
Compliance with the requirements of the Affordable Care Act has been a heavy lift for many small employers. Although phased compliance deadlines and delays were intended to lighten this burden, they may have also created a measure of confusion.
If there is one constant in this situation, it is change. Even without the major overhaul promised by some on the political stage, and nearly certain to be rumored during the 2016 election, or the potential for Supreme Court disruption, small employers can expect continued tinkering around the edges of the health care law.
The smart money, at this point, is probably on small changes. The best way to be ready for those adjustments may be to plan compliance several years out rather than waiting to see what happens because something is sure to. It is easier to change plans if you have one, than it is to start from scratch because you have none.