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.