Tag Archives: Health care reform

Employer Mandates Delayed Until 2015!

Contributed by Rebecca Dobbs Bush

On July 2, 2013, the White House announced that it would delay enforcement of the Employer Mandate Provisions in Health Care Reform from January 1, 2014 to January 1, 2015.  Par for the course with Health Care Reform, we are again faced with last minute delays rewarding those who were doing nothing to prepare and frustrating those trying to be proactive to stay compliant.

The Executive Branch is charged with enforcement of the laws so the idea is that they have the ability to simply refuse to enforce a piece of legislation or delay enforcement of it.  However, some are arguing that the White House does not have this type of unilateral authority.  The question becomes whether there is anyone out there that would actually bring litigation challenging the current administration and seeking to enforce the confusing, costly and burdensome employer mandate provisions.

The individual mandate and other provisions of Health Care Reform remain in effect and are proceeding as scheduled.  The employer mandate is so far the only part of the legislation impacted by the White House’s recent announcement.

Under the prior deadlines, many employers were learning that it was too late to make decisions about restructuring their workforce to minimize obligations under the employer mandates.  This delay will allow those employers time to reconsider whether doing so is an appropriate strategy.

Will Your Employees be More Interested in Health Insurance Subsidies than Your Group Health Plan?

Contributed by Rebecca Dobbs Bush

While most of us have had just about enough when it comes to discussing Health Care Reform, the discussions aren’t even close to being over.  The most anticipated provisions, the individual and employer mandates, are scheduled to take effect January 1, 2014. 

Many employers are focused on more of an internal analysis – evaluating whether they need to implement a group health plan or change the structure of their current benefit offerings to manage their exposure to penalties under the employer mandate provisions.  At the same time, it is critical to understand the options for individuals to receive subsidies and the availability of individual plans for purchase on state/federal insurance exchanges.  Along with the mandate provisions, insurance exchanges and individual subsidies also become available as of January 1, 2014.  As an employer, have you determined how many in your workforce might be eligible for subsidies in the event you didn’t offer insurance or in the event your group health plan offering is not “affordable” and of “minimum value?”  Not only should you be looking at this to be able to evaluate compensation and benefits offerings to employees, whether an individual is eligible for a subsidy can determine whether you have any penalty exposure for that particular individual.

Citizens and legal residents with household incomes between 100% and 400% of the federal poverty level (who purchase coverage through a health insurance exchange and do not have access to an “affordable” health plan of “minimum value” through their employer) are eligible to receive a monthly advance tax credit to reduce the cost of their coverage.  The amount a person can receive is based on the premium for the second lowest cost plan available on the exchange (i.e., a silver plan) and varies based on their income. 

For example, a household of 4 earning approximately $46,100 is at 200% of the federal poverty level.  This family would not have to pay more than 6.3% of their income ($2,904.30) if they decide to purchase coverage on the exchange at a benchmark level of silver or lower.  For the sake of example, if you assume the annual cost of family coverage in a silver plan is around $10,000, this family would receive monthly tax credits in advance totaling approximately $7,000 annually.  The amount they receive in subsidies is tied to the cost of the silver plan.  However, they are free to access the same amount of subsidy and use it to purchase the cheaper bronze plan. 

For those between 100% to 250% of the federal poverty level, they would also be eligible for subsidies to assist with out-of-pocket costs at the point of service, such as deductibles, copayments and coinsurance.  In the above example, if the family purchased a silver plan (which will have an actuarial value of 70%), they would receive additional subsidies to essentially improve the actuarial value of their coverage to 87%.

But remember, access to all of these subsidies for the family in the example above disappears where an employer offers “affordable coverage” at a “minimum value.”  Based on IRS clarification, an employer’s coverage is “affordable” and of “minimum value” if the cost of covering the employee only is no more than 9.5% of that employee’s income and the actuarial value of the plan is at least 60%.  The test for affordability is not based on the cost of family coverage in an employer’s health plan.

It is estimated that approximately 68% of the population is at or below 400% of the federal poverty level.  Have you evaluated how many employees in your workforce might be eligible to receive a subsidy and how your anticipated benefit offerings compare?  The Kaiser Family Foundation has published a subsidy calculator to use in examining the impact of the subsidy at different income levels, ages, family sizes, and regional costs.  It can be found here:  http://healthreform.kff.org/subsidycalculator.aspx

The New Year is a Reminder of the Imminence of the Mandates of Health Care Reform

Contributed by Rebecca Dobbs Bush

With the ringing in of the New Year, we are now officially on the eve of the employer mandate provisions within Health Care Reform. The employer mandate provisions require those employers with 50 or more “full-time equivalent” employees to offer “minimum value” coverage to employees that work 30 or more hours per week. Where two or more companies have a common owner, or are otherwise related, they are combined for purposes of determining whether they employ enough employees. The coverage offered by the company must be “affordable” for employees. Where an employer does not do this, and at least one full-time employee receives a premium tax credit to help pay for coverage on an Exchange, the employer will be subject to penalties or a “tax” of $2,000 per full-time employee – with the first 30 full-time employees “free.”

The employer mandate provisions are now also being referred to as the “shared responsibility” provisions. The IRS has issued multiple Notices attempting to clarify the confusion over implementation and application. Most recently, the IRS issued proposed regulations and FAQ’s on December 28, 2012. The attempted clarification of the shared responsibility provisions have only served to confirm the confusing and complicated nature of the provisions.

What is imperative for every employer to understand is that the basis for determining how and whether the shared responsibility provisions apply to your business on January 1, 2014 depends upon the make-up and structure of your workforce during 2013. Accordingly, employers need to act now to understand whether and how the shared responsibility provisions of Health Care Reform will affect them come January 1, 2014.

Election 2012 Fallout

Contributed by Jeff Risch

Elections have consequences. Indeed, there is no question that over the course of 2013, what certain employee-side advocacy groups may not be able to accomplish through federal legislation, will likely be achieved through administrative rulemaking and judicial activism. Of significance, the National Labor Relations Board (NLRB), a 5-member administrative agency comprised of the President’s hand-picked appointees, is set to continue the push for more of a presence in the day-to-day operations of the non-union workforce; regardless of industry. For example, the NLRB is set on pushing through a mandated “Employee Rights Poster.” Although this mandate is currently enjoined by a federal court’s preliminary injunction, the legal battle is far from over. It is anticipated that the NLRB will continue to fight for this mandate which would essentially require most employers to conspicuously post to its workforce their ability to effectively form a labor union.

Additionally, the NLRB will continue to seek a quicker process to administer and hold a union election. Under current administrative processing and legal precedent, a secret ballot union election is typically commenced within 42 days from the time a labor union petitions for recognition. The NLRB seeks to dramatically reduce this time period by as much as 30 days thereby providing employers with a shorter window by which to effectively campaign against the labor organization in the run up to the election. Finally, the NLRB will continue the onslaught attack on an employer’s policies. From “employment at-will disclaimers” to “union access rules” to “social media restrictions,” the NLRB is proactively targeting employers and reviewing any policy that would have any tendency to “chill” the employees’ rights to form a labor union or complain about terms and conditions of employment. Now is the time to review handbooks and all policies with an eye on labor law even in non-union work environments.

The U.S. Department of Labor (DOL) will continue to be well-funded. The DOL has been consistently hiring auditors and investigators to crack down on:

  • The utilization of independent contractors;
  • Failure to pay overtime (especially in the context of exempt vs. non-exempt classification);
  • Non-compliance with mandated affirmative action for employers doing business with the federal government; and
  • Construction contractors’ failure to comply with federal prevailing wage requirements (Davis-Bacon & Related Acts).

Health care reform is here to stay! Mandatory compliance is already underway. Although the specifics will continue to trickle in as time passes and in the run up to January 1, 2014, employers must take note of new mandates. Of particular short-term and long-term significance is that the new full-time employee will be deemed anyone who regularly works thirty (30) hours or more per week. Employers may want to evaluate how they have defined full-time vs. part-time employment and the varying benefit plans that involve the full-time vs. part-time distinction.

The U.S. Supreme Court is set to weigh in on critical issues that will have a profound impact on harassment/discrimination issues as well as wage/hour controversies. The Supreme Court will also likely weigh in on continuous legal challenges and issues dealing with immigration and health care reform for the foreseeable future.

Be assured that SmithAmundsen’s labor and employment practice group will continue to be engaged on the frontline of such developments. In fact, our partners will soon be meeting with NLRB Chairman, Mark Pearce in Washington D.C. to gather additional perspective, and we will continue to participate in local, regional and national initiatives involving key administrative agencies.

Supreme Court Ruling Upholds Individual Mandate Provisions of Health Care Reform – What Does it mean for Employers?

Contributed by Rebecca Dobbs

On June 28, 2012, the Supreme Court issued its highly anticipated and long-awaited ruling on Health Care Reform.  Primarily, the court was reviewing two provisions in the Act: 1) the individual mandate and 2) Medicaid expansion.  Because the ruling with regard to the Medicaid expansion provision does not directly impact employers, this article will focus only on the ruling with regard to the individual mandate.

Justice Roberts wrote the decision for the majority.  In it, he acknowledged the individual mandate was a “penalty” for purposes of jurisdictional issues which allowed the court to render a ruling.  But, for purposes of determining Congress’ power to issue the mandate, the court held that the mandate was a “tax.”  For those of you who aren’t aware, Congress’ power to tax is much, much broader than the power granted to them under the commerce clause of the Constitution.  This reasoning allowed the court to uphold the individual mandate while determining at the same time that the individual mandate was outside Congress’ authority under the commerce clause. 

We have reiterated before that the employer mandates within Health Care Reform were not directly an issue before the court – a common misconception.  The employer mandates would have been indirectly affected had the court ruled the individual mandates were unconstitutional and then also went on to hold that they rendered the entire act unconstitutional because they could not be severed from the rest of the provisions within the act.

What does this mean for employers?  If you were within the category of employers that had been preparing for upcoming compliance requirements without regard to the outcome of today’s decision, your preparation efforts were not wasted activities.  If you were within the category of employers that was disregarding upcoming compliance requirements in the hope that the Supreme Court would save you from them, you need to immediately redesign your current strategy.