NEW ULM - The federal Affordable Care Act that became law March 23, 2010, could create previously unencountered issues for District 88, Superintendent Harold Remme told the School Board in a report last week.
The district could face penalties if it does not provide what the act defines as "affordable minimum essential coverage" to full-time employees and dependents, Remme said in his report.
The act, sometimes referred to as Obamacare, includes more than 2,000 pages of legislation and 13,000 pages of regulations. The effective dates for various provisions stretch out until 2020, and "many, many" details are not defined, Remme notes. IRS decisions have the potential for major impact on implementation of the act.
In implementing the provisions, the school district would need to consider several definitions, says Remme. They include: who is a large group employer; who is a full-time employee; what is "minimum essential coverage"; how is "affordable" defined; and when will the employer be impacted.
A large group employer is an organization that has more than 50 full-time employees, explains Remme. District 88 is a large-group employer.
A full-time employee is one that works more than 30 hours per week. This category, then, includes substitutes, which may entail penalties for the district in the absence of coverage. In this case, the eligibility period for coverage is nine months, but coverage must be for 12 months.
"Minimal essential coverage" must be provided to avoid a $2,000 penalty per employee, continues Remme. Coverage must be offered to the employee and dependents, up to age 26, excluding spouse. There is no penalty for the first 30 employees.
To avoid another, $3,000, penalty per each employee who enrolls in a forthcoming Minnesota Public Exchange, employers must provide insurance that is "affordable" and "provides minimum value," adds Remme. "Affordable" means that an employees' share of premiums may not exceed 9.5 percent of household income. "Minimum value" means that at least 60 percent of the claims must be paid by the plan.
There are more questions than answers associated with the law at this time, continues Remme. It is unclear how to calculate local impact and specifically what the impact on the budget will be in 2013-14, and beyond.
It is known that effective on Jan. 1, 2014, employers may not contribute to VEBA (or an unfunded health reimbursement account) for employees who do not enroll in group health plans.
Also, employers must treat unionized and non-unionized employees the same, or face an excise tax of $100 per day. District 88 already makes similar provisions for unionized and non-unionized employees, so it would be OK on this provision.
Another factor that will come into play is the Minnesota Public Exchange goes into effect on Jan. 1, 2014, continues Remme. Individuals who can afford it will be required to obtain basic health insurance. Minnesota is one of 18 states developing a state exchange. Enrollment and plan choice opens this October.
The following questions, then, need further clarification, sums up Remme:
Who will be eligible
What must the insurance plan must provide
How and when would the employer be liable
What will the connection be with collective bargaining agreements, personnel policies and employment contracts
What is the impact would be on post-employment benefits.
The district could consider some strategies to manage consequences of the law in the future, including: a potential change in eligibility; a review/adjustment of employee contributions; shifting employer contributions from family to single coverage; potentially paying 100 percent of the single coverage, etc., Remme suggests.