January 31, 2017
President Trump and the Republicans have made it clear that changes are coming to the Affordable Care Act (ACA). Congress has already taken preliminary, complicated steps through budgetary reconciliation to repeal key parts of the ACA and President Trump signed an executive order calling for a prompt repeal of the ACA. While neither action impacts an employer’s obligation to file the Forms 1094-C and 1095-C in 2016, all indications are significant changes are coming to the ACA in the future. On the surface, a repeal of the ACA appears to provide employers relief from complicated, burdensome regulations. However, examining recent benefit trends and the pre-ACA landscape, employers could be in store for a flood of complicated State and local laws if the ACA is repealed.
Prior to the ACA, Hawaii and Massachusetts had laws in place requiring employers to provide certain health benefits to employees. Hawaii was the first State to require employers who had one or more regular employees to offer health insurance or risk paying a penalty or, worse yet, be enjoined from conducting their business if coverage was not being offered to “regular employees.” The statute defines a “regular employee” as any employee who works at least 20 hours per week with some exceptions.
While not the first, the State of Massachusetts had perhaps the most impactful pre-ACA law and it served as the framework for the ACA. In Massachusetts employers with 11 or more full-time equivalent employees were required to have a certain percentage of full-time employees accept coverage or pay an amount under the fair share contribution requirement. Under the Massachusetts law, a full-time employee was defined as an employee working 35 hours per week with a few exceptions. After the ACA passed, Massachusetts repealed the fair share contribution requirement to prevent duplicate penalties along with the ACA’s employer mandate. However, the fair share contribution requirement would likely be reinstated if the ACA’s employer mandate was repealed.
San Francisco was the trailblazer for municipalities passing legislation to attempt to solve the uninsured crisis for its residents. The San Francisco ordinance requires an employer who has at least 20 employees operating within the city limits to spend a minimum amount on employee health care based on a per hour rate. Alternatively, an employer may elect to pay into an account set up for the San Francisco ordinance to provide health benefits to individuals who are not covered by their employer. In general, an employer has to spend the minimum amount on health care or make a contribution to the San Francisco ordinance account for employees working eight or more hours per week.
The passage of the ACA stopped the trend of States and municipalities passing legislation requiring employers to offer health insurance. The issues State and local pre-ACA laws were trying to solve were largely addressed by the ACA. If the ACA is repealed, States and municipalities will assuredly become involved at trying to solve the uninsured crisis in their respective territories with new employer mandate-like provisions. This could be burdensome to employers. As demonstrated by the brief examination above, each set of rules is likely to have different definitions with which employers must comply, a different set of employees who must be covered (or funded), and different reports and forms to be completed. Employers have already seen this occur in areas such as paid sick leave. Almost every week some State or municipality passes a new law as it relates to an employer’s obligation to pay for sick leave.
Hawaii, Massachusetts, and the City of San Francisco all took different approaches in requiring employers to assist insuring the State’s or city’s people. If the ACA’s employer mandate is repealed, States and municipalities will quickly fill the void with new rules and regulations. This could be a compliance nightmare for an employer who operates in multiple locations. In a post-ACA repeal world, an employer operating in multiple locations may have to worry about thirty or more different State and local laws with employer mandate-like provisions. While many believe repealing the ACA would lessen the burden on employers, the opposite may be true particularly for employers who operate in blue States and municipalities.
The software for the ACA employer mandate is already in place and continues to improve. An onslaught of new rules and regulations at the State and local level would add additional challenges for software developers. Accord’s software has great flexibility to respond to this very real possibility and we are closely monitoring the developments. Hopefully, the repeal effort is being thought through thoroughly and the potential onslaught of State and local rules are regulations are being considered.
About the author – Ryan Moulder serves as General Counsel at Accord Systems, LLC and is a Partner at Health Care Attorney's P.C. Ryan received his LL.M. from Georgetown University Law Center and his J.D. from Saint Louis University School of Law. He has distinguished himself as a leader in the newly created Affordable Care Act arena and has written and spoken on a variety of ACA topics as it relates to compliance for companies.
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