The Obama Administration continues to release details on the Patient Protection and Affordable Care Act (PPACA), including recent updates on the employer mandate section and health insurance exchanges.
The Internal Revenue Service recently released regulations and a Q&A document providing guidance on the new health care law’s employer mandate, including good news for affected employers in a small allowance for a “margin for error” in providing coverage.
In addition, HHS conditionally approved eight more health insurance exchanges and provided additional guidance on the operation of state-federal exchange partnerships.
Employer Mandate
Under the PPACA’s employer mandate, beginning in 2014, employers with 50 or more employees are required to offer coverage to all full-time employees. “Full-time employees” are calculated from the sum of the number of hours worked, therefore part-time employee hours also count.
If an employer does not offer coverage and has at least one employee who qualifies for a premium tax credit, the employer will face a fine of $2,000 per employee, excluding the first 30 employees. If an employer provides insurance but has at least one full-time employee that receives a premium tax credit, the employer will pay the lesser of $3,000 for each employee receiving a tax credit or $2,000 for each full-time employee, excluding the first 30.
The recently released IRS regulations provide some relief by allowing employers with 50 or more employees to offer coverage to 95% of their employees and still be in compliance with the mandate. This softens the mandate slightly because language in the PPACA, if read literally, stipulates that coverage must be offered to all employees for affected employers.
In addition, the new regulations stipulate that spouses need not be offered coverage, but dependents up to age 26 must be offered coverage.
Health Insurance Exchanges
In other PPACA news, last week HHS conditionally approved eight more states to run health insurance exchanges: California, Hawaii, Idaho, Nevada, New Mexico, Vermont and Utah will run their own state exchanges, and Arkansas was conditionally approved to run a partnership exchange with the federal government. This brings the total number of states conditionally approved to run either state-based or partnership exchanges to 20.
HHS also released further guidance on the partnership model of exchange operation. States wishing to enter into a partnership to run their exchange have until Feb. 15, 2013, to submit an application for approval. The partnership guidance delves into a few issues concerning agents (page 14) and navigators (pages 12-16).
The document says states have the authority to permit agents and brokers to enroll consumers through exchanges no matter what type of exchange exists in the state, whether it’s a state-based, partnership or federally facilitated exchange (FFE) model.
As in past guidance, this document reiterates that all states will retain their traditional role in licensing and overseeing producers. Additionally, in any state that has a federal presence in its exchange (whether a partnership or FFE), producers will use an FFE agent and broker Web portal and must sign an agreement with the exchange. Lastly, as was explained in previous guidance, agents can be navigators but cannot receive compensation from insurers for this service.
Regarding navigator programs, the document says states are responsible for the day-to-day management of navigators, but HHS is solely responsible for funding navigators and awarding grants. HHS will also be responsible for establishing training standards for navigators in both FFEs and partnerships. States may also develop their own training programs and require navigators to complete these in addition to the HHS training.
Ryan Young is Big “I” senior director of federal government affairs.