Author: Megro

The employer-shared responsibility (“play or pay”) requirements do not apply to small employers and have been delayed until 2016 for most mid-sized employers. This raises the question – what exactly is included in the play or pay requirement, which a small employer may be able to ignore and that mid-size employer may not need to meet until later?

Employer-shared responsibility includes five basic requirements that must be met by a large employer to avoid penalties:

1. The employer must offer minimum essential coverage to at least 95% of its full-time employees (under a transition rule, for 2015 the requirement is to offer minimum essential coverage to 70% of full-time employees).
2. The employer must offer affordable, minimum value coverage to its full-time employees.
3. The employer must consider an employee as full-time for health coverage purposes if the employee averages 30 or more hours work per week.
4. The employer must offer minimum essential coverage to natural and adopted dependent children until the end of the month in which the child reaches age 26 (under a transition rule, this requirement is generally delayed to 2016).
5. The employer must offer employees the opportunity at least once a year to elect or decline coverage under the group health plan (with an exception to the required opportunity to decline coverage for particularly generous coverage).

Employers that are small enough that the play or pay requirements do not apply, or have been delayed, still must meet many requirements under the Patient Protection and Affordable Care Act, such as the limit on waiting periods, but they need not meet the criteria of the play or pay package to avoid penalties.  Caution: fully insured plans must meet both state and federal requirements, so small and mid-size employers with insured plans should make sure that their plans meet state insurance law requirements. For example, some states have adopted the 30-hour threshold for eligibility, and some require that coverage be offered to spouses and children.

Note: for purposes of this blog piece, “small” means that the employer had fewer than 50 full-time or full-time equivalent employees in its controlled group during the prior calendar year. “Mid-size” means the employer had 50 to 99 full-time or full-time equivalent employees in its controlled group during the 2014 calendar year and has not materially reduced benefits, eligibility or contributions from the level in effect on February 9, 2014. Mid-size employers will need to provide reporting on available coverage for 2015, even though the actual employer shared responsibility requirements generally will not be effective for mid-size employers until 2016.

To help employers understand the pay or play provisions of the PPACA, download UBA’s white paper, “The Employer’s Guide to Play or Pay”. For help further help making pay or play decisions under PPACA, request UBA’s compliance and decision guides for small and large employers.

Since 2005, United Benefit Advisors® (UBA) has surveyed thousands of employers across the nation regarding their health plan offerings, their ongoing plan decisions in the face of significant legislative and marketplace changes, and the impact of these changes on their employees and businesses. The UBA survey represents the nation’s largest health plan benchmarking survey and the most comprehensive source of reliable benchmarking data.

As always, the survey revealed several noteworthy trends and developments that bear scrutiny and the ongoing attention of employers interested in making the most informed health care plan decisions possible. For example, among the most striking trends revealed by the survey, employers have overwhelmingly opted for early renewals of their plans—a delay tactic that helped them avoid costly Patient Protection and Affordable Care Act (PPACA)-compliant plans and manage costs. Another cost management tactic employers are using is to increase out-of-pocket costs for employees, with a “new normal” emerging for these higher cost thresholds.

Employers typically continue to offer one preferred provider organization (PPO) health plan option to employees, while also still widely offering family coverage. In addition, wellness program adoption seems to be in a holding pattern, as pending litigation and regulatory changes swirl on these offerings. Among employers providing wellness programs, health risk assessments and incentives are increasingly common offerings.

Plans in the Northeast U.S. continue to be the richest—and most expensive—and are at risk of being subject to the looming Cadillac tax. Government employees have the most generous plans with the highest costs—and they pay the least toward their overall coverage costs. Conversely, construction industry employees cost the least to cover but those employees pay the most toward costs.

Regarding cost increases, the smallest employers (0 to 49 employees) saw the lowest increases, a surprising break for them due to an unusual option they had over larger employers to remain with non-PPACA-compliant plans. In short, this was a reprieve for a group that usually faces the highest increases. Self-funding of plans, particularly among small employers, has not yet surged, but is still anticipated to do so as employers run out of other avoidance strategies.

The prevalence of consumer-driven health plans (CDHPs) continues to grow, as does employee enrollment in these plans, despite lower contributions to health savings accounts (HSAs)
(which are often tied to CDHPs to entice participation). And, finally, prescription drug plans are increasingly offering four or more tiers, along with ever-increasing copays—a trend that might fall off as they must all eventually tie to out-of-pocket maximums under PPACA.

For more information to help you benchmark your health plan, download the 2014 UBA Health Plan Survey Executive Summary or contact a local UBA Partner for a customized benchmarking report.