Employer Mandate Delay – Requirements Still in Effect
July 16, 2013 at 1:04 PM
The delay of the employer mandate brought not only shock and surprise but left business owners with more questions than before. Although large employers have a 12 month reprieve from paying penalties, insurance reforms still apply effective January 1, 2014.
The employer mandate states that all employers with 50 or more full time equivalent employees must offer affordable coverage at an acceptable minimum value or pay a penalty. The delay in the employer mandate will allow employers to begin implementing changes but not pay a penalty if they make a mistake, such as implementing a health plan that just misses the affordability requirement. What the delay did not do was stop the majority of PPACA from being implemented.
The following insurance reforms continue to apply to individuals, and employers both small and large:
- Individual Mandate and the penalties associated with it
- Purchasing coverage on the Exchange starting 10/1/13
- Federal premium subsidies
- Medicaid expansion
- Essential Health Benefits
- Prohibition on preexisting conditions exclusions
- 90 day waiting periods
- Uniform employer contributions (non-discrimination)
- 30 hour per week requirement to be considered full time
- Carrier and benefit taxes
- Medical Loss ratio
- Modified community rating
- Medical deductible and annual out of pocket maximum caps
- Minimum value health plans
- Affordable coverage
- Removal of Management carve outs
- Summary of Benefit and Coverage notices and the required notice of the availability of the exchange.
Basically, anything that is outside of the scope of the employer mandate is still in effect for 2014 however, as with all healthcare reform provisions, everything is subject to change.
Guidance as to how the mandate delay will affect transition relief will be coming. The main questions are; will transition relief, such as not having to update plans to full compliance until the 2014 renewal date, now push to the 2015 renewal date and how will the full time equivalent look back be affected. Will employers still get a 6 month look back to start, as they would have in 2013, or will it automatically move to a 12 month look back? This is essential to calculate business size and seasonal/variable hour employees.
Many questions have been raised about if and how employees will receive subsidies for coverage obtained on the exchange if employers are not required to comply with the mandate. When an employee applies for coverage on the exchange, Employers will still be asked to supply information about their current plan offering however, if it does not yet meet affordability or minimum value, the employee will receive the subsidy and employer will not be penalized in 2014. Keep in mind that employees who receive a subsidy in 2014 may or may not receive that subsidy in 2015; they must re-enroll for their subsidy every year. If it is determined that an employee misrepresented their wages or other information in order to be able to obtain a subsidy, they will be charged for the amount paid on their behalf. The White House administration is strongly encouraging employers to continue implementing their health plans for 2014 as if the employer mandate is still in place. This way, you are prepared for 2015 when penalties for non-compliance begin.
There are many areas of PPACA yet to be clarified and we expect more changes to come before the end of the year. We are watching developments closely and as changes and clarifications are released, you can count on TAG to bring you the latest news and advice.