Complying With the NewAffordable Health Care Act (“ACA” or “Obamacare”)

Southeastern California ConferenceTreasurer’s WorkshopNovember 10 , 2013

Joel D. Peterson, Attorney at LawLaw Offices of Joel D. Peterson

It’s coming whether we like it or not…

• Commonly known as “Obamacare.”• President Obama signed the Patient Protection and

Affordable Care Act on March 23, 2010, upheld by the U.S. Supreme Court in June 2012.

• Meant to be comprehensive health reform and focuses on provisions to expand coverage, control health care costs, and improve health care delivery system.

• Employer’s Concern: “Pay or Play” - If you have 50 or more full time employees, you have to provide mandated coverage or pay a penalty as of January 1, 2015.

What Is the Affordable Care Act?

Principal concerns for employers:•Labor cost increases resulting fromHigher benefits cost to meet minimum health plan requirements,Potentially more employees electing plan coverage because of individual mandate, andEmployer having to pay penalties if it does not comply with the law.•Evolving guidance and unanswered questions regarding compliance.

Employer Mandate (“Pay or Play”)

Employer Mandate (“Pay or Play”)

• Effective January 1, 2015.• Applies to employers with 50 or more

full-time employees• Beginning in 2015 (was 2014), Employer

pays penalty if it does not offer “minimum essential coverage” to at

least 95% of its full-time employees (and--subject to a transition rule for 2015--dependents); or

if the employee share of the premium exceeds 9.5% of employee’s income.

There is no requirement under ACA to offer health coverage to part-time employees.

•Standard Measurement Period / Stability Period "safe harbor" for determining whether Employee is a full-time employee

•“Standard Measurement Period” ▫is three to twelve months.▫examine whether an employee averaged at least 30 hours per week during the Standard Measurement Period

•"Stability Period”▫A Stability Period begins after the Standard Measurement Period. ▫The Stability Period must be at least 6 consecutive calendar months and must be at least as long as the Standard Measurement Period.▫The Stability Period for that Part-Time Employee cannot be longer than the Standard Measurement Period.

Calculating Full Time vs. Part time Employee

Calculating Hours of Service

Hours of Service:•Each hour for which an employee is paid, or entitled to payment, for work for the employer; and•Each hour for which an employee is paid for vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty, or leave of absence.

Determination:•Hourly employees. Based on actual hours worked and hours for which payment is due.•Non-hourly employees 3 alternatives:(i)Actual hours;(ii)Days-worked equivalency of 8 hours/day; or(iii)Weeks-worked equivalency of 40 hours/week.

•Hours of service used to determine benefit eligibility will include:

Paid Performance of DutiesPaid LeaveSick LeaveJury DutyFMLADisabilityLeave of AbsenceSummer Leave/Break

• The Conference will create a policy to address the determination and administration of benefits for compliance with the Affordable Health Care Act

• Employees must be offered choice of the Conference medical plans

• Medical benefits will be offered to the employee only, with the option to ‘buy in’ for the dependents

• Conference will take the lead in auditing timecards for benefit eligibility

• Conference will work in tandem with churches to review and monitor employment status of employees

SECC Policy

•Churches should review all paid positions currently being supported by the local giving and consider the financial impact of this Federal mandate

•Conference will reserve the right to make changes in employment status to maintain compliance with the Affordable Health Care Act

•Failure to comply would incur a penalty that could be assessed to all employees on the Conference payroll, for example:

1800 employees x 166.67/mo = $360,000

It is imperative that all employees are:

Supervised Completing accurate timecards reflecting all hours worked

Working within their assigned FTE Not volunteering for duties they are

paid to perform Appropriately classified (exempt vs.

non-exempt status and independent contractor vs. employee)

Proper Classifications:1. Part-time vs. Full-time2. Independent Contractor3. Volunteer

Classification Important:

•ACA hour tracking (IRS responsible - also decides who is an employee or not)

•Payroll taxes (IRS and EDD)•Work Comp Coverage•Compliance with Wage & Hour law -

minimum wages. Going up in July ‘14 ($9/hr) and January ‘16 ($10/hr)

•Liability Insurance

What is Part-time?

•Must make the actual calculation and track each hour worked

•ACA says under an average of 30 hours•Must have evidence to show that even a

full-time salaried employee is averaging 30 hours or more.

What is an Independent Contractor? Is there a valid, written independent contractor agreement? Y Do you instruct or supervise the person while he or she is working? N Can the worker quit or be discharged (fired) at any time? N Is the work being performed part of your regular business? N Does the worker have a separately established business? Y Is the worker free to make business decisions that affect his or her ability to profit

from the work? Y Does the individual have a substantial investment that would subject him or her to a

financial risk of loss? Y Do you have employees who do the same type of work? N Do you furnish the tools, equipment or supplies used to perform the work? N Is the worker paid a fixed salary, an hourly wage or based on a piece rate basis? N Did the worker previously perform the same or similar services for you as an

employee? N

What is a Volunteer?

•Can’t volunteer doing same job or duties•Must do work without pay

▫No expected remuneration▫No barter

• Under California Labor Code, a volunteer is defined as someone who works for free. Such work may be performed for a charitable or civic purpose.

An Affordable Care Act Policy and further guidance from your SECC HR Department to come.

“Please be patient…the Government is not finished with this yet…”

Thank You.

Q&A