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Jul 1, 201308:54 AMOpen Mic

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Moving toward Affordable Care Act compliance

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One year ago I spoke to employers about the U.S. Supreme Court decision regarding the Affordable Care Act (ACA). My clients were, like me, surprised by the court’s decision to uphold the health care reform law. Yet employer groups in general were still hopeful that the November elections would lead to a repeal of the law and thus remove one more potential worry from their list.

That did not happen, and starting in January 2013, the view regarding ACA implementation for many employer groups morphed from moderate interest to outright panic. As 2013 continues to unfold, there are still more questions than answers as to how employers and employees will respond to the law’s various provisions.

One of the biggest questions relates to the cost of coverage that will be available in Wisconsin’s federally operated insurance marketplace. Speakers at a recent health insurance marketplace summit sponsored by the Wisconsin Institute for Public Policy and Service (WIPPS) assured the audience that at least one insurer would offer coverage in the marketplace in each region of Wisconsin. Yet speakers also warned of increased premium costs because of various ACA provisions. Speakers reminded the audience, however, that coverage offered in the marketplace will likely be more comprehensive that most current plans, which may help justify a premium spike.

Another question that still awaits an answer is whether the marketplaces will be fully functional and accessible to Wisconsin consumers. The federal government has assured us that the marketplace will be operational as of Oct. 1, 2013. However, speakers at the WIPPS summit repeatedly expressed expectations of marketplace “clunkiness” and “glitches.” Coupled with uncertainty about how informed Wisconsin consumers will be about the marketplace, it is difficult to predict its ultimate success.

All this uncertainty creates complications for employer groups in evaluating their role in providing employee health coverage. Despite these complications, employer groups can take steps to move toward compliance with the ACA. Here are some considerations by employer size:

Small employers (<50 FTE employees): There is no question that these organizations will be able to offer employees coverage in the health insurance marketplace. Wisconsin will have two “marketplaces”: the federally facilitated marketplace through which employees who have incomes between 100% to 400% of the federal poverty level can qualify for cost-sharing subsidies and premium assistance, and the marketplace outside the federally facilitated marketplace, which the Wisconsin insurance commissioner expects to be strong. Small employers should also determine whether their businesses qualify for tax credits for providing employee health coverage. The tax credit increases from 35% to 50% in 2014. More information about the tax credit is available at


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Jul 2, 2013 05:42 pm
 Posted by  Travis Weiss

1. The "minimum value test" has nothing to do with employer contributions. Rather, it speaks to the actuarial value of the health plan itself.
2. Employers > 50 cannot change their plan year, as suggested, to delay ACA implementation. It is specifically prohibited in the legislation. Small employers, however, may choose this tactic, often to their advantage.

Jul 10, 2013 12:19 pm
 Posted by  Barbara Zabawa

Travis, thank you for your comments. You are correct that larger (>50) cannot seek to change their plan year if the principal purpose to avoid ACA implementation. However, such employers may have another valid business purpose for seeking such a change. I apologize for not being more clear.
As to the minimum value requirement, the IRS states that "[t]o satisfy the minimum value requirement under § 36B(c)(2)(C)(ii), a plan’s share of the “total allowed costs of benefits provided under the plan” must equal or exceed 60 percent of such costs." IRS Notice 2012-31.
I hope this helps.

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