ACA Compliance Requires Cooperation

March 27, 2014 ( – Speakers for a webinar hosted by ADP reminded plan sponsors that complying with the Patient Protection and Affordable Care Act (or ACA) is no simple task and requires coordination among a number of stakeholders.

According to John Haslinger, vice president of Benefits, Outsourcing and Consulting for ADP in Alpharetta, Georgia, the ACA will ultimately impact nearly one-quarter (20%) of the U.S. economy, ranging from employers and employees to health care providers and insurance companies. Haslinger says in order to incorporate changes needed for the ACA, several different specialty areas—both inside and outside of a company—will need to work together.

These areas include:

  • IT/systems – For security, data exchange and reporting;
  • Finance – For fee, fine and penalty assessment, as well as certifying the Annual Health Care Coverage Report 1095-B/C;
  • Tax – Receiving and reconciling Internal Revenue Service penalty estimates and handling appeals;
  • Legal – Interpreting changes to state and federal exchange laws, as well as ensuring compliance;
  • Human resources – Communications with employees;
  • Payroll and time – Calculating a look-back period, as well as affordability of coverage; and
  • Benefits – Compliance communication and multiemployer coordination.

Haslinger adds that plan sponsors need to factor payment of PCORI fees into their efforts. Patient-Centered Outcomes Research Trust Fund (PCORI) fees are fees on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans that help to fund the Patient-Centered Outcomes Research Institute.

Haslinger also reminded attendees of various regulatory updates related to the ACA, including:

  • Internal Revenue Code (IRC) Section 4980H, where penalties have been postponed until 2016 for employers with fewer than 100 full-time employees;
  • IRC 4980H(a), where penalties for 2015 have been revised for employers with 100 or more full-time employees;
  • The definition of “dependent children” being clarified and not required to include foster children, stepchildren or certain non-U.S. citizen children; and
  • There are no IRC Section 125 mid-year elections for non-calendar year plans.

He reminded attendees that the ACA’s employer mandate, the offering of minimum essential health care coverage, needs to be properly documented, otherwise companies may incur penalties and fines. The two penalties on which most employers are focusing have to do with: (1) IRC Section 4980H(a), which deals with large employers failing to offer minimum essential coverage to full-time employees and their dependents and at least one employee receives a tax credit or cost-sharing subsidy; and (2) IRC Section 4980H(b), which deals with large employers that offer the minimum essential coverage to full-time employees and their dependents, but an employee receives a tax credit or cost-sharing subsidy because the coverage is either not affordable or does not provide minimum value.

In terms of shared responsibility under the final ACA regulations, Brigen Winters, a principal with The Groom Law Group in Washington, D.C., highlighted the key issues addressed including:

  • How to determine who is a “large” employer;
  • How to determine who is a “full-time” employee; and
  • How to determine if coverage is “affordable.”

Winters also highlighted key changes brought about by the final regulations such as:

  • The adding of a new monthly measurement method for employers not using the look-back method;
  • No special rules for interns, high-turnover positions or short-term employees employed for more than three months;
  • The 26-week break in service rule being shortened to 13 weeks for most employers;
  • Keeping affordability safe harbors with some changes; and
  • Clarification of the “offers of coverage” rules.

With regard to measuring periods of service and who is considered a full-time employee, Haslinger pointed out areas for which employers may lack data include time spent on jury duty, time spent off per the Family Medical Leave Act, and time spent per the Uniformed Services Employment and Reemployment Rights Act.

William Sweetnam, a principal with Groom Law Group based in Washington, D.C., commented about several lawsuits relating to the ACA. He mentioned how two federal district courts ruled that the Internal Revenue Service has the regulatory authority to allow federally run exchanges to provide subsidies to low-income individuals. Those two cases were King v. Sebelius in Virginia (on February 18, 2014) and Halbig v. Sebelius in the District of Columbia (on January 15, 2014). He mentioned that both cases have been appealed.

Sweetnam also mentioned how the U.S. Supreme Court is reviewing the question of whether an employer can refuse, on religious grounds, to comply with the ACA requirement that insurers cover contraceptive coverage. The cases being reviewed are Sebelius v. Hobby Lobby Stores, Inc. and Conestoga Wood Specialties Corp v. Sebelius.

The speakers cautioned attendees that the webinar was meant as a discussion of the ACA, but was not intended as legal advice or as the final word on the ACA. They advised plan sponsors to review ACA-related materials with their own legal counsel.