Affordable Care Act

1. Implementation Issues for Kentucky School Districts Affordable Care Act

2. Presenters • Melissa Sullivan Melissa.Sullivan@education.ky.gov 502-564-3930 extension 4415 • Susan Barkley Susan.Barkley@education.ky.gov 502-564-3930 extension 4437

3. Resources • KDE website: Health and Life Insurance Benefits and Flexible Spending Accounts page • http://education.ky.gov/districts/FinRept/Pages/Health-and-Life-Insurance-Benefits-and-Flexible-Spending-Accounts.aspx • Implementation Guide • Timekeeping documentation • KEHP FAQs and Responsibility Chart

4. Disclaimer • The Guide is only one of many resources • IRS continues to issue regulations on ACA • Information in the Guide could become inaccurate • Not comprehensive of all aspects of ACA • Consult legal counsel

5. Whose Responsibility? • Districts: • Eligibility and offers of coverage (Play or Pay) • Nondiscrimination • Marketplace Notice • Employer Reporting • KEHP: • Affordable coverage • Adequate coverage • Plan details and options

7. Failure to comply = PENALTY

8. The ACA seems like a mountain

9. But KEHP is taking care of compliance with affordability and adequacy requirements

10. And MOST employees are already receiving health benefits, including bus drivers

11. And we know many variable hour employees won’t work enough separate days at 8 hours a day to change their eligibility status – therefore we don’t need to track their actual time

12. So the work we have to do for ACA isn’t as big a mountain as we expected

13. What do we have to deal with? • Establish policies relating to ACA • Track actual time for employees close to the eligibility break point and part-timers • Calculate eligibility for all variable hour employees • Document offers of coverage • Provide marketplace notice to new hires • Ensure nondiscrimination • Employer reporting to IRS

14. Who Do We Need to Worry About?

15. Expectations • If employee is expected to work full-time must offer coverage at the time of hire • If it is unknown if the employee will have an average of 30 service hrs/week or 130 service hrs/month, use the measurement period

16. Action Steps Repeat Annually

17. Who are Employees? An employee relationship exists when the employer has the right to control and direct the individual who performs the services and the details and means by which the result is accomplished.

18. Who are employees?

19. “Large” Employer • 2015 = 100 or more FT & FTEs • 2016 = 50 or more FT & FTEs • Most KY school districts are large

20. “Hours of Service” • Hours actually worked (or equivalency) • Hours paid or entitled to be paid • Vacation • Holiday • Sick leave • Disability • Jury duty • Military duty

21. Equivalency Hours

22. Employment Breaks • Breaks at least 4 consecutive weeks in length • Cannot count zero hours worked • Exclude from average hours of service Examples: summer break, FMLA leave

23. Eligibility Break Point • Step 1 – calculate number of days excluding breaks of > 4 weeks • Step 2 – multiply 5.997 by the number of days from Step 1 and then divide by 8 5.997 * 207 / 8 = 154 days

24. Do I need to track actual time? • To limit the number of employees tracking actual time worked: • Limit number of days/year • Limit number of days/week • Use equivalency of 8 hrs/day

25. Board Action • Measurement, administrative, and stability periods • Limitation of days worked • Track actual hours or use equivalency • Terminate subs that refuse assignments

26. Full-time Employees for ACA Employees who average 30 hours of service per week or 130 hours of service per month

27. Who is Full-time? Average hours of service over measurement period • Max 12 months • Recommended: October 3, 2013 – October 2, 2014 • Don’t forget to exclude breaks >4 weeks

29. Recommended Measurement Periods Continually measuring

30. What About Mid-Year Hires? • InitialMeasurement Period • Begins the first day of the month after hired • Max 12 months • Transitions to standard measurement period

31. Initial Measurement Period Note that the standard measurement period begins during the initial measurement period; both periods occur simultaneously

32. Offering Coverage • ACA requires coverage for full-time employees and dependent children – not spouses • Coverage must begin Jan 1, 2015 for districts with 100 or more full time & FTEs • Coverage must begin Jan 1, 2016 for districts with 50 or more full time & FTEs • Offer must be made, employee can decline • Maintain documentation • Annual requirement

33. Offering Coverage • Full-time during Measurement Period = Coverage during Stability Period regardless of hours of service during Stability • NOT full-time during Measurement Period = NO coverage during Stability Period regardless of hours of service during Stability

34. COBRA

35. Funding • State funds non-federal employee premiums • If health insurance appropriation is inadequate, unexpended SEEK funds may be used • Avoid a blanket policy to offer coverage to all employees

36. Penalty • If no Substantial Compliance • For 2015 - 70% of full-time employees • Starting in 2016 - 95% or no more than 5 full-time employees • Penalty is • Number of full-time employees minus 30 • Multiplied by $167 per month

37. Nondiscrimination • Cannot provide more for highly compensated employees • Example: paying the superintendent’s employee premiums • Penalty is • Number of employees minus the superintendent • Multiplied by $100 per day until in compliance • Solution: tax the additional benefit

38. Employer Reporting • Will be required • First report due March 2016 for 2015 plan year data • IRS guidance not finalized • More information forthcoming

39. Your Good Questions