Ask The Experts

Ask The Experts

Timely answers regarding the latest in health care reform.

Questions not answered during our live June 19 webinar are addressed below by Julie Bunde of HealthPartners, Greg Thurston of Doherty Employer Services, and Ed Wegerson of Lindquist & Vennum.

Q&A with Julie Bunde, director of product management and product and market solutions at Bloomington-based HealthPartners:

Q: ­Our group health insurance renews October 1, 2013, and we have more than 50 full-time equivalents. When do these rules affect us?
A: The employer-responsibility rules (now delayed) would have affected you on January 1, 2014, but if you met the criteria of the transition rule, you would have been able to postpone the impact until October 1, 2014. Based on recent federal action, the employer-responsibility provision of the ACA has been delayed until January 1, 2015. We are anticipating future guidance from the federal government.
Q: ­As a small employer, if we offer insurance, do we have to offer to employees working more than 30 hours per week, or can we continue to offer only to employees working 40 hours per week?
A: There is no mandate for small employers to offer coverage to any employees. You may continue to offer coverage as you currently do now. There are no penalties in the small employer market. However, the method for counting employees to determine whether the “play or pay” rules apply is different than counting employees to determine small group status under state law.  Again—the “play or pay” penalties for large employers (50 or more full-time equivalents) has been delayed until 2015.

Q: ­Are employer contributions toward premiums still going to be pre-tax if they have a group plan? Can employers still offer pre-tax dollars via a cafeteria plan for individuals to purchase coverage through the marketplace?­
A: There is no change to the available pre-tax treatment of employee contributions toward premiums in the large group market. Employers may not use a cafeteria plan for their employees to purchase individual coverage on the exchange.
Q: ­What is the anticipated premium cost percentage increase for the addition of the autism mandate? (The mandate dictates that certain plans must cover the diagnosis, evaluation, and treatment of autism for children under the age of 18.)
A: This will vary across carriers and plans, depending on underlying benefit design. As it only applies to fully-insured large group employers, it will have some impact but not as significant as it would have been in the individual market, where adverse selection would have been a greater concern.
Q: ­Does the “out-of-pocket max” include employee-paid premium costs?­ (Out of pocket refers to expenses paid beyond a monthly premium.)
A: The out-of-pocket maximum does not include employee-paid premium costs. It only includes dollars spent on care through such things as coinsurance, copayments, and deductibles.
Q&A with Greg Thurston, director of benefits at Edina-based Doherty Employer Services:

Q: ­Employers will not have to offer coverage to seasonal employees, but will they still be counted when calculating the 50 or more full-time or full-time equivalents?
A: Employers need to be very careful when looking at seasonal employees. There is a seasonal exception, which applies to whether an employer is considered a large group subject to the pay or play penalties of the Affordable Care Act. If an employer only exceeds 50 employees due to the fact that for 120 or fewer days they employ seasonal workers, then the employer would not be considered a large employer and would not be subject to the pay or play penalties. However, if it is determined that an employer is a large group subject to the pay or play penalties, then any full-time employee (30+ hours per week) should be offered coverage by the 90th day of employment. 
(Extra input from Ed Wegerson of Lindquist & Vennum, LLP): Newly hired seasonal employees can be treated as new variable-hour employees whose hours are calculated during the measurement period for new employees to determine if they work an average of 30 or more hours per week. No coverage need be provided during the measurement period, but if the seasonal employee averages 30 or more hours per week, then that employee must be offered coverage during the stability period.
Q: ­As a small employer, if we offer insurance, do we have to offer to employees working more than 30 hours per week, or can we continue to offer only to employees working 40 hours per week?
A (back to Thurston): Employers with fewer than 50 full-time equivalent employees are not subject to the pay or play penalties of the Affordable Care Act. Therefore, such an employer could continue to offer coverage only to employees working 40 hours per week and not be subject to any penalties.

Q: ­As a small employer, if we offer health insurance and an employee declines it, are they are ineligible for cost-sharing assistance/tax credits if they purchase through MNsure?
A: ­­If the employee is offered coverage that provides minimum essential coverage and minimum value and would cost no more than 9.5 percent of the employee’s income, then the employee will be ineligible for a subsidy on MNsure.
Q: ­How does offering to 95 percent work? Isnt it just that you must offer to all people working 30 or more hours? (The play or pay provision, now set to take effect in 2015, requires large employers to offer coverage to 95 percent of full-time workers or face monetary penalties.)
A: The 95 percent requirement builds in a little flexibility and margin for employers. Generally, you should offer coverage to all employees working 30 or more hours per week. Offering qualifying coverage to 95 percent of its employees frees a large employer from the $2,000-per-employee penalty. However, any employee working 30 or more hours per week who is not offered coverage and receives a subsidy for coverage on the marketplace would trigger a $3,000 penalty to the employer.
Q: ­For small employers: Can their employees receive a subsidy if the employer has a group health plan? 
A: ­Regardless of the size of the employer, an employee who is offered affordable coverage that provides minimum essential coverage and minimum value is not eligible for a subsidy. An employer with low-wage employees should consider the pros and cons of offering a plan that could result in many employees losing eligibility for a subsidy versus the burden that could be caused to its employees by not offering a plan.
Q: ­We are a staffing agency and we have 200-plus W-2 consultants. Will we count them as employees?­
A: Yes, they are your employees. You will need to determine whether they can be considered variable-hour employees. If they are variable-hour, then you will choose a measurement period to determine whether they worked enough hours to qualify for coverage. If they worked enough to qualify for coverage then you should offer coverage for the stability period. If they are reasonably expected to work 30 or more hours per week they should be offered coverage within 90 days of employment, or you could be subject to the $2,000 penalty per employee.

Q: ­Is it possible the model notice may change before October 1st or can employers feel comfortable that the May 8th notice is the final version? (Model notice refers to a form that employers can use for notifying employees of the existence of the MNsure exchange.) ­
A: It is unlikely that the model notice will be changed before October 1. Employers should feel comfortable that the May 8 notice will be sufficient to issue for October 1. It is a model notice. Employers are free to modify it as long as the required information is provided. However, most employers will likely use the model notice as it was presented.
Q: Health Reimbursement Accounts (­HRAs) would be considered self-funded, correct­?
A: ­An HRA is a self-funded medical plan and, therefore, is generally subject to the Patient-Centered Outcomes Research Institute (PCORI) fee. However, the fee only needs to be paid for employees covered by the HRA as opposed to employees and their dependents. If the HRA is part of a self-funded major medical plan, then the fee only needs to be paid for the self-funded medical plan, and no additional fee is required for the HRA.
Q&A with Ed Wegerson, a partner at Minneapolis-based law firm Lindquist & Vennum, LLP:

Q: ­How do we determine full-time status for: A) school employees working nine months per year, B) some weeks less than 30 hours, and C) most weeks 30-plus hours, and total annual hours—around 1,000 hours per year?­
A: There is a special rule for an educational organization that permits the organization to ignore the period of summer break from being counted as part of the measurement period.  So if school personnel average 30 or more hours during the school year (excluding any summer months otherwise includible in the measurement period), they would be included as full-time for the employer mandates.
Q: ­Are summer interns (June-August) included in the FTE calculation?­
A:  I am not aware of any exception that would allow an employer to exclude their hours in the calculation of full-time equivalent for purposes of determining if an employer has more than 50 FTEs. It would be risky to treat these as seasonal employees and exclude them on that basis.
Q: ­I have a concern about employers who are willing to provide a minimum value plan and make it affordable; however, there is a concern about participation for employees who work 30 or more hours but are low on the wage scale . . . comments?­
A: There may be little an employer can do to avoid the penalty for affordability if it has low-wage employees. It may be possible to offer a further subsidy to these employees to bring the cost of their premiums to below 9.5 percent, which would not be discriminatory.  A high-deductible plan which has low premiums may be another way to make the plan affordable for low-wage employees, even though they will have greater out-of-pocket costs.
Q: ­If an employer currently offers coverage to full-time defined as 32 hours/week and they reduce hours of employees that typically work between 30 and 32 hours, will they be potentially subject to the Interference rules?­
A:  If the employee is not now eligible for health insurance, and reducing hours below 30 results in the employee not being eligible for coverage, that should not be interference.  It is unclear, however, if this statute, which was written in 1975, will be held by courts to cover interference with health insurance. I am not aware of any cases where this statute has been applied to situations where the employer’s conduct prevents eligibility for a benefit (vs. interfering with the vesting of an earned benefit).

Q: ­On the minimum value calculators, are you inputting the single deductible, out-of-pocket max, etc.? (Such calculators help determine if a plan meets minimum value, meaning it covers at least 60 percent of the total cost of benefits.)
A: The minimum value calculations are based only on the employee-only coverage.