ACA: Expect Flex, Delay, and Some Hassle in 2013

Implementation of the Affordable Care Act (ACA) involves a lot of moving parts, says Attorney Martin Simon. As the various pieces of the ACA come into play, we can expect some flexibility, some postponing of deadlines, and a delay of penalties, he adds.

In fact, the delays have already started, says Simon, Senior Legal Editor at BLR.
The health insurance exchange notice distribution requirement has been delayed.

Specifically, the U.S. Department of Labor (DOL) has stated that the March 1, 2013, deadline for employers to distribute notices about the availability of health insurance exchanges has been delayed until the late summer or fall of 2013, which will coordinate with the open enrollment period for exchanges.

The announcement came in the agency’s latest series of FAQs About Affordable Care Act Implementation.

Under this notice requirement, employers are to provide current employees and each employee at the time of hiring written notice informing the employee about the exchanges and how they work.

DOL says that it is delaying the exchange notice requirement for several reasons, including that the notice should be coordinated with the Department of Health and Human Services educational efforts and Internal Revenue Service guidance on minimum value, and that DOL is committed to a smooth implementation process, including providing employers with sufficient time to comply and selecting an applicability date that ensures that employees receive the information at a meaningful time.

DOL is considering providing model, generic language that could be used to satisfy the notice requirement. As a compliance alternative, the agency is also considering allowing employers to satisfy the notice requirement by providing employees with information using the employer coverage template, which will be available for download on insurance exchange websites as part of the streamlined application that will be used by exchanges, Medicaid, and CHIP.

Future guidance on complying with the exchange notice requirement is expected to provide flexibility and adequate time to comply.

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Employer Shared Responsibility

Meanwhile, what else is going on with the ACA? First of all, Employer Shared Responsibility (Play or Pay) provisions. Starting in 2014, employers employing at least a certain number of employees (generally 50 full-time employees and full-time equivalents, explained more fully below) will be subject to the Employer Shared Responsibility provisions under the ACA.

Under these provisions, if covered employers do not offer “affordable” health coverage that provides a “minimum level of coverage” to their full-time employees, they may be subject to an Employer Shared Responsibility payment if at least one of their full-time employees receives a premium tax credit for purchasing individual coverage on one of the new Affordable Insurance Exchanges.

In the case of most employers, the requirements will be simple to implement, Simon says. But in the case of employers that are on the borderline of being covered or on the borderline of providing minimum essential and affordable healthcare coverage, the requirements can become very technical.

When do the Employer Shared Responsibility provisions go into effect?

The Employer Shared Responsibility provisions generally go into effect on January 1, 2014. Employers will use information about the employees they employ during 2013 to determine whether they employ enough employees to be subject to these new provisions in 2014.

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How do you count employees?

To be a “large employer” subject to these Employer Shared Responsibility provisions, an employer must have at least 50 full-time employees or a combination of full-time and part-time employees that is equivalent to at least 50 full-time employees (for example, 100 half-time employees equals 50 full-time employees). As defined by the statute, a full-time employee is an individual employed on average at least 30 hours per week (so half-time would be 15 hours per week).

If the employer does not have at least 50 full-time employees, the employer is not subject to play or pay.

For purposes of determining whether an employer meets the 50 full-time employee (or equivalent) threshold, an employer will generally take into account only work performed in the United States.

If two or more companies have a common owner or are otherwise related, they are combined for purposes of determining whether they employ enough employees to be subject to the Employer Shared Responsibility provisions.

The rules apply to all employers, including for-profit, nonprofit, and government entity employers.

In tomorrow’s Advisor, more of Simon’s tips for ACA compliance, plus an introduction to the all-HR-in-one-place website,