The ACA's Missing Pieces
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The framework for the Affordable Care Act is now largely in place – 2014 has already seen the release of many of the final rules needed by employers to comply with its various mandates. Having monitored the progress of the ACA since 2009, I’m in an odd place as a compliance guy – it feels like we’re “done,” but that’s not completely true (and as with any social program on this program, you’re never really done – the ACA is political and that means it’s always going to change). There are still three primary pieces of the law applicable to employers that haven’t been finalized.
The insured non-discrimination rules are probably the one missing piece that will have the greatest immediate impact on employers. Self-funded employers have been subject to employee benefit non-discrimination rules – which prohibit setting up and operating your plan in a way that unfairly benefits highly-compensated employees – for decades. Employers with fully-insured plans have enjoyed a reprieve from those requirements largely because of a loophole in the tax code. That loophole was closed in the ACA, but the IRS has yet to publish the new rules and isn’t enforcing the requirement (which went into effect in 2010, by the way). What effects will these rules have on fully-insured employers? Some common arrangements may have to change, such as management carve-out plans, charging employees different amounts based on their tenure with the company, and other ways that employers show preference to higher-paid employees. The goal is that everyone eligible for benefits is given equal access on the same terms as everyone else.
Next on the hit parade is the Cadillac Tax provision. Meant to encourage employers from offering excessively generous benefit plans, the Cadillac Tax sets a maximum amount that a plan can cost an employer. If the plan costs in excess of the cap, the employer pays a 40% excise tax on the excess amount. Conceptually, this will encourage employers to offer plans with higher deductibles and copays, which in turn will encourage employees to be more engaged with their health and the cost of their care. Unlike the non-discrimination rules, this rule doesn’t take effect until 2018, and since there will be a new administration, not to mention two new Congressional elections between now and then, it’s likely that the Cadillac Tax will be modified (done away with?) before it goes into effect.
Finally, there’s the automatic enrollment rule set. Like non-discrimination, this also technically went into effect in 2010 but isn’t being enforced. The idea here is that employers who have 200 or more full-time employees will need to automatically enroll their employees onto a plan if they fail to make an affirmative election during open enrollment. There are all sorts of potential issues here, exasperated by state laws that have different requirements regarding “forced” participation in employee benefits. This is another aspect of the ACA that’ll probably see significant tweaking before it sees the light of day.
Don’t miss out! If you still have questions that need answers, register for our Assurance University Last Minute – ACA Compliance Countdown Webinar and make sure you’re ready for 2015.
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