Category Personnel/Employment
Title Health Care Reform and What Still Exists 2018
Author/s Thomas J. Cathey, EdD
Preview Health Care Reform and What Still Exists 2018
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Health Care Reform and What Still Exists 2018
Thomas J. Cathey, EdD

The Patient Protection and Affordable Care Act (PPACA), more commonly known as the Affordable Care Act (ACA), was passed by Congress in 2010. Full implementation of the legislation was to take place on January 1, 2014. There have been a number of challenges to its success and some parts removed. However, major portions still exist today.

Health Exchanges (Health Insurance Marketplaces)

Under the law, some states have created health exchanges. These are places for individuals and families to get health insurance at affordable rates. The federal government has set up an exchange to cover citizens in states that did not want to set up their own exchange. The exchanges are open to both eligible individuals and some employers. For small employers, they are called Small Business Health Options Programs or SHOP exchanges. They are designed to be an open marketplace for comparative information about coverage options and to allow small businesses to create buying pools for purchasing health plans. The place for individuals or small businesses to start the process is www.HealthCare.gov. From there you will be directed to your state health exchange if the state offers one.

Individual Responsibility

Since January 1, 2014, all U.S. citizens and legal residents must purchase health insurance coverage. The individual mandate penalty is generally calculated as the cost of purchasing the lowest premium health care coverage available on the applicable Health Marketplace (Exchange) or, if less, a monthly flat dollar penalty amount. The Tax Cut and Jobs Act of 2017 removes the penalty for individuals beginning January 1, 2019. The elimination of the penalties does not technically remove the requirement to obtain health care coverage. But without penalties there will be no enforcement and, in effect, no practical mandate to obtain coverage for 2019 and later years.

Employer Responsibility (Play or Pay Provision)

This part of the law applies to employers with 50 or more full-time equivalents (FTEs). Therefore, employers must calculate how many FTEs to determine if the employer responsibility applies to them. Under the law, a full-time employee is one who works 30 or more hours per week. For example, if you have 45 people working 30 or more hours per week and you have 6 employees working only 10 hours per week, you would have an FTE of 47 (45+2).

The law requires an employer who has more than 50 full-time employees to pay $2,320 per employee if the employer fails to offer health care insurance coverage to at least 95% of its full-time employees and their dependents and has at least one full-time employee receiving premium assistance tax credit for purchase of insurance through the exchanges that will be created by the legislation. If an employer does not offer coverage and has one or more employees receiving tax subsidies for purchase of insurance through the exchanges, 30 workers would be allowed to be subtracted from the equation. Therefore, a school with 70 employees that fails to offer insurance would pay a penalty of $80,000. Schools with fewer than 50 employees will be exempt from penalties.

The law also states that if the employer offers health coverage but does not meet the requirements of being affordable and of minimum value could face a penalty of $3,480 per year for each full-time employee who buys coverage through an exchange and receives a subsidy. Affordable meas the employee's share of the premium cannon exceed 9.56% of his or her income for 2018 and 9.86% for 2019. To meed the minimum value requirement, the employer plan must pay 60% of the total costs of medical services for a standard population. The penalty would also apply if the employer offered coverage to at least 95% of its full-time employees but one of the 5% not offered coverage through the exchange and received a subsidy.

2017 Tax Act Implications

Even though the Individual Mandate will end in 2019, the employer mandate continues to exist. It still means employers must offer coverage meeting the minimum standards to avoid penalties. However, the repeal of the ACA individual mandate will probably have an impact on employer-sponsored plans. Since both the individual and employer mandates go hand in hand, there could be a push to remove the employer mandate in the future.

Breast-Feeding Breaks Required

The Patient Protection Act amends the Fair Labor Standards Act (FLSA) to require that employers provide reasonable unpaid break time for up to one year after the birth of an employee's child and a private place (other than a bathroom) to nursing mothers so they can express their breast milk Employers with fewer than 50 employees don't have to comply if doing so would create an undue hardship by causing the employer significant difficulty of expense. Although the act provides that such time can be unpaid, this provision is contrary to the general FLSA mandate that employers pay employees for breaks of less than 20 minutes. (So, employees may be able to use their regularly scheduled breaks for nursing breaks.) Also, state laws may limit an employer's ability to treat the time as unpaid. If your state already has such a law, you must abide by the law that provides employees with the most protection. The Department of Labor released a Fact Sheet #73: Break Time for Nursing Mothers under the FLSA and it can be found at http://www.dol.gov/whd/regs/compliance/whdfs73.htm.

Dependent Children

If plans offer dependent coverage, they must extend such coverage to children up to age 26. Plans which do not offer dependent coverage are not compliant with the requirements of the Employer Mandate; therefore, the Employer may be subject to penalties.

Lifetime Limits and Annual Limits

Group health plans and health insurers can no longer impose annual or lifetime dollar limits. To the extent authorized by law, annual or lifetime limits may be imposed on specific benefits that are not considered to be the minimum essential benefits.

Preexisting Conditions

Non-grandfathered group health plans and health insurers are prohibited from imposing preexisting-condition exclusions on any enrollee.

Rescission of Coverage

Non-grandfathered group health plans and health insurers cannot rescind coverage except in some extreme cases (such as fraud).

Definition of Medical Expenses

Medical expenses that are eligible to be reimbursed by health FSAs (flexible spending accounts), HSAs (health savings accounts), and HRAs (health reimbursement arrangements) no longer include over-the-counter medicines, unless they are prescribed by a doctor.

Health FSA Contributions

Employee contributions to FSAs are limited to $2,650 in 2018. (This may be adjusted for inflation in the future.)

Summary of Benefits and Coverage (SBC)

Non-grandfathered group health plans, including self-insured plans, will have to simplify the presentation of any written material and provide an accurate summary of benefits and an explanation of coverage. A template can be found at https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/SBC-2017-Template-AI-AN-limited-6-7-16-clean-508-MM.PDF.

Preventive Services

The law requires non-grandfathered health care plans to cover most preventive medical care visits and procedures fully. The employee will not be responsible for co-pays or shared costs for these services. One service provided under the law was to include no-cost coverage of "all FDA-approved contraceptive services"—birth control pills, emergency contraceptives and IUDs (abortifacients), sterilization, and education about these matters. On October 6, 2017, the Departments of Health and Human Services, Treasury, and Labor announced new rules that provide conscience protections to Americans who have a religious or moral objection to paying for health insurance that covers contraceptive methods, including certain contraceptives that many may view as abortifacients, as well as sterilization procedures. This required coverage has now been dissolved for ministries that have a religious objection to providing these services. You can simply tell your insurance company that you do not want to provide these services to your employees.

Employer Reporting

Employers with 50 or more employees, referred to by the IRS as Applicable Large Employers (ALE) must annually report to the IRS information about health care coverage, if any, they offered to full-time employees. The IRS will use this information to administer the employer shared responsibility provisions and the premium tax credit.

ALEs must also furnish to employees a statement that includes the same information provided to the IRS. Employees may use this information to determine whether, for each month of the calendar year, they may claim the premium tax credit on their individual income tax returns. https://www.irs.gov/affordable-care-act/employers/information-reporting-by-applicable-large-employers.

Qualified Small Employer Health Reimbursement Arrangements Permitted

On December 13, 2016, President Obama signed the 21st Century Cures Act ("Act") into law. The Act allows qualified small employers to offer a new type of health reimbursement arrangement ("HRA") to help employees pay for their medical expenses, effective January 1, 2017. The new arrangement is called a "qualified small employer health reimbursement arrangement" (or a "QSEHRA"). QSEHRAs will not be considered "group health plans" under the Patient Protection and Affordable Care Act ("Affordable Care Act"), so market reform requirements will not apply to QSEHRAs.

Eligible qualified small emploters will be allowed to pay or reimburse employees' eligible medical care expenses through a QSEHRA on a pre-tax basis. Employers are eligible to offer QSEHRA if they (i) are not applicable large employers as defined under the Affordable Care Act, and (ii) do not offer a group health plan to any of their employees.

A QSEHRA must meet the following requirements:

  • All employees of the employer must be covered by the QSEHRA, unless they have not completed 90 days of employment, are under the age of 25, are part-time or seasonal employees, are covered under a collective bargaining agreement that does not provide for coverage under the QSEHRA, or are nonresident aliens with no U.S. source income.
  • The QSEHRA must be provided on the same terms to all eligible employees. An employee's permitted benefit under the QSEHRA is allowed to vary in accordance with the variation in the price of an insurance policy in the relevant individual health insurance market, based on the age of the eligible employee covered.
  • The QSEHRA must be funded solely by the eligible employer; no employee salary reduction contributions are allowed.
  • The QSEHRA must provide for the payment of, or reimbursement of, eligible medical care expenses (as described in section 213(d) of the Internal Revenue Code) incurred by the eligible employee or the eligible employee's family members (including premiums for individual health coverage), but only after the employee provides proof of health coverage or expense. The Act does not describe the types of proof that are considered acceptable.
  • The employer must ensure that, in 2017, annual payments or reimbursements from the QSEHRA to an eligible employee do not exceet $4,950 ($10,000 if family members are covered under the QSEHRA). If an individual is not covered under a QSEHRA for the entire year, this dollar limitation is prorated for the number of months the individual is covered by the QSEHRA.

For a complete review of QSEHRA, see the article Qualified Small Employer Health Reimbursement Arrangements Permitted, Beginning in 2017 at www.acsi.org/legal-resources.

Notice: This article is designed to provide accurate and authoritative information in regard to the subject matter covered. It has been provided to member schools with the understanding that ACSI is not engaged in rendering legal, accounting, tax, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Laws vary by jurisdiction, and the specific application of laws to particular facts requires the advice of an attorney.

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