5 steps to ACA compliance
2015 has dawned and, with it, the employer mandate of the Affordable Care Act (ACA).
By now, employers with more than 100 full-time equivalent employees have completed the implementation of their health plans and wrapped up their Jan. 1 enrollments.
How the employer mandate will affect you depends on the specifics of your company and facility, but all employers must take several steps to be in compliance. My colleagues and I use this list to walk companies through the process; each step builds on the last. Remember: Although the senior living sector has its unique aspects, the mandate applies fairly equally to all employers of all types.
“What is in the rules for us as a nursing home?” is a question we are asked frequently, and the answer is: Not much as far as the mandate goes. The agencies drafting the regulations have taken what amounts to a “one-size-fits-all” approach to the mandate, and at least for 2015, and that is how they intend to see it implemented.
Here are the five steps to take to ensure compliance.
1. Establish the ongoing employee measurement, administrative and stability periods.
Ongoing employees—those who have been employed through one full standard measurement period—are entitled to coverage during a stability period if they accumulate 1,560 hours of service in the preceding 12-month measurement period. Standard stability periods, therefore, are the period of time each year that eligible ongoing employees will be eligible to be in the plan. To avoid having multiple enrollment periods each year, set the stability period to match the insurance plan’s plan year.
Sandwiched in between the measurement and stability period is the ongoing employee administration period. This is the timeframe where the results of the measurement period are tabulated, the open enrollment is conducted and the enrollment finalized is so that coverage can begin on the first day of the stability period.
Note that the rules limit the length of measurement periods to 90 calendar days, which is not the same as three months. For instance, a plan year that started Jan. 1, 2015, would have had an administrative period that began no earlier than Oct. 3, 2014, which is 90 calendar days before Jan. 1, 2015.
2. Review all positions and label them as full-time, part-time, variable hour or seasonal.
As mentioned previously, once an employee is employed through a standard measurement period, he or she becomes an ongoing employee. Before that point, however, the employee will fall into one of the four “new employee” categories: full-time, part-time, variable or seasonal.
The ACA defines full-time employees as those who average 130 hours of service (an hour for which an employee is paid, regardless of whether he or she is performing work duties) per month. Part-time employees are those who do not meet that threshold.
In the real world, many people will be in positions that do not cleanly fit into either of those categories, and that is where variable and seasonal employees come in. Seasonal employees are more clearly defined; they are employees who normally are expected to work six months out of the year or less, and during the same six-month period year-over-year (some allowances exist for seasons that occasionally exceed this six-month period).
Variable employees, technically known as variable-hour employees, are those whom the employer cannot reasonably determine—at the date of hire—whether they will be full-time or part-time. If you have employees that fall into the variable category, pay very close attention to this definition, and seek expert guidance if you are not absolutely clear how these rules work. In an effort to make these rules work in a variety of scenarios, the agencies have come up with a rather complicated rule set for variable employees, including 10 different factors that employers can use to help determine variable status, measurement and stability period rules specific to variable employees and more. A full discussion is outside the scope of this article.
3. Prepare for reporting requirements
A frequent question is: “How will the government know if an employer is complying with the mandate?” The answer: Via self-reporting by the employer.
The ACA adds Sections 6055 and 6056 to the Internal Revenue Service Code, and those codes, in turn, add Forms 1094 and 1095 to the equation. In a nutshell, employers will be reporting their compliance to the government every year, including both a report on all full-time employees and a statement to each full-time employee (think of it as a “healthcare W-2”). Doing so will require employers to know each employee’s full-time status on a calendar-month basis, whether the employee was enrolled in a qualified plan offered by the employer and how much the employee would have had to pay for the lowest-cost qualified plan option.
4. Review all plan documentation and update accordingly
Group health plans come with all sorts of government-required documentation. Whenever government regulations require a change in how employers offer their plans, employers should review all plan documents and amend them as necessary. For groups that have insured plans, the carriers mainly take care of this task, but larger, self-funded groups will need to make sure they do the updates themselves. Also, watch out for cafeteria plan (pre-tax) documents as well.
5: Prepare for the future
2015 will present plenty of challenges, but compliance with the ACA does not end with the launch of the employer mandate. Three main provisions of the ACA have not yet been implemented: the fully insured, non-discrimination rules; auto-enrollment requirements for employers with 200 or more employees; and the so-called “Cadillac tax.” The first two items have not been assigned effective dates yet, and the latter one will become effective in 2018.
The aforementioned steps are just part of the overall compliance items you should be checking off your list now that the employer mandate has become a reality. Each employer’s circumstances are different, of course. You may have addressed everything in this article yet need help with other areas of the employer mandate. The government will continue to issue new regulations and, given the political nature of the ACA, the recent changes in Congress definitely will play a part in that process. Legal challenges to the ACA remain as well. All of these factors point to the importance of paying close attention to ACA developments and staying agile to make the changes as they are needed. Strap in; the fun has just begun!
Mark Lam is vice president of benefits compliance at Assurance, an independent insurance brokerage. The company is headquartered in Schaumburg, Ill., with centralized office locations in Chicago and St. Louis.