Q: Since the Obama administration has postponed the employer “pay or play” until 2015, are there health care reform changes I need to worry about, or is there nothing I need to focus on until next year?
A: The only portion of the Affordable Care Act that is postponed is the employer penalty. What this means is, if you do not offer health care to employees who work at least 30 hours per week or you do offer health insurance but it isn’t considered affordable (I’ll clarify how the government is defining “affordable” in just a minute), you will not be charged a penalty—until 2015. But, even though the penalty deadline has been extended, there are still deadlines that your school will need to be prepared for. Let’s break this down.
While the penalty has been postponed for a year, you, as the employer, must (1) notify your faculty and staff of your state’s exchange, and (2) decide what your measurement period will be and what your administrative period will be. It is important to note that you can have standard measurement periods that differ in length or in starting and ending dates for salaried and hourly employees, as well as for employees of different entities. ISM recommends that you have your measurement period already determined and scheduled.
Measurement Period Example—an employer may designate October 1 through December 31 as the standard measurement period. Employee A had 80 hours of service for the month of October, 150 in November, and 180 in December. Employee A had on average 136.67 hours per month (i.e., (80+150+180)/3=136.67). Employee A is full-time for purposes of health care eligibility because she averaged more than 130 hours per month during the standard measurement period.
For more information about what a standard measurement period is under the Patient Protection and Affordable Care Act, click here to read the Society for Human Resource Management’s recent question and answer article.
OK, now let me get back to how the government is defining what is affordable and what isn’t. The basic rule is that your offered health care plan can not be more than 9.5% of your lowest paid employee’s family’s total income. As an employer, you have a safe harbor. There is no way you can actually know your employee’s overall family situations. To be compliant, you’ll want to offer a plan that is less than 9.5% of your lowest paid employee’s annual income.
The closest deadline is quickly approaching—October 1, 2013. By then, you must give your employees notice of the exchange(s) (marketplace) available to them. Here is a link to the Department of Labor's commonly used forms.
In summary, the good news is that, for 2014, you, as the employer, do not have to worry about being penalized for not offering all full-time employees health insurance that is defined as affordable. However, you DO have to comply with other portions of the Affordable Care Act, such as the approaching October 1 deadline.
Submit your health care reform questions to ISM’s Health Care Reform Specialist at linda@isminc.com. If published, your question will remain anonymous.
Looking for different benefit options to meet your school’s unique budget? ISM Insurance has worked closely with private-independent schools for nearly four decades, helping them build benefit packages that promise long-term, sustained success. Since the health care reform changes have begun implementation, we have been working with schools and special health care consortiums that help to keep costs predictable and manageable. To see if your school qualifies for one of our state health care consortium programs, or to see what creative insurance solutions we have to help your school’s bottom line, contact us at martin@isminc.com.
Additional ISM articles of interest
Private School News Vol. 11 No. 6 Health Care Reform Deadline: October 1, 2013
Private School News Vol. 11 No. 5 Health Care Reform and the Effect on Health Flexible Spending Accounts and Health Reimbursement Arrangements
ISM Monthly Update for Business Officers Vol. 11 No. 9 Preparing for the Health Care Reform Changes
ISM Monthly Update for Risk Managers Vol. 3 No. 8 Understanding the Affordable Care Act (ACA)
ISM Monthly Update for Human Resources Vol. 11 No. 9 Health Care Reform, Exchanges, and School Culture
Additional ISM articles of interest for Gold Consortium members
I&P Vol. 37 No. 12 Key Advice on Shaping Your Employee Health Benefits Plans
