Non-Discrimination Rules & the Pay or Play Penalty

Recently Eide Bailly facilitated a variety of Health Care Reform workshops for Minnesota School Districts. Of particular interest to this group were the proposed non-discrimination rules related to health insurance offerings and the pay or play penalty.

• Non Discrimination Rules: The non-discrimination rules have an important impact for school districts due to workforce arrangements around collectively and non-collectively bargained employees. For example, both superintendents and custodians are considered non-collectively bargained employees and are grouped together in looking at non-discrimination rules. As a result, superintendents might be offered a better insurance plan than custodians and the district could face non-discrimination penalties.

• Pay or Play Penalty: Utilizing the same example as above, and assuming insurance is offered, the superintendent would likely have affordable insurance and the custodian may find the insurance un-affordable and receive a subsidy upon going to the exchange; resulting in a penalty to the district.

Keeping up-to-date as the rules are finalized and understanding the affordability of your insurance will help businesses avoid penalties and make informed decisions.

The US Department of Health and Human Services created a Q & A related to Section 1557 of the Affordable Care Act.



Health Care Reform Basics

As of January 1, 2014, the Patient Protection and Affordable Care Act will require all individuals in the United States to have some form of health insurance. Integral to this reform, is the creation of state, regional and federal health care Exchanges, where individuals can purchase a variety of affordable health insurance plans and, if they fall within certain income levels, receive government-subsidized premiums.

This Act affects all businesses; however, large employers with 50 or more full-time equivalent employees will be required to:

A. Provide affordable health insurance coverage for all full-time employees,
B. Elect not to provide health insurance coverage, pay defined penalties, and send employees to a state, regional or federal Exchange to purchase insurance, or
C. Develop a new hybrid plan.

Employers who elect not to provide health insurance coverage will be assessed a penalty of $2,000 annually per full-time employees, minus the first 30 full-time employees if at least one employee receives an Exchange subsidy. Additionally, if an employer’s coverage is deemed unaffordable, the employer will be fined $3,000 for that employee.

What is an Exchange?

An Exchange is a marketplace for individuals and small businesses to shop for insurance. These exchanges will offer a choice of standardized health plans and allow consumers to compare plans based on price and needs. The Exchanges are intended to provide a more competitive health insurance marketplace and provide consumers with a neutral party to assist with plan enrollment, information, and eligibility determination for any subsidies.

Click the below link to view where States are at in the development of their Exchanges.