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As first appeared in the Daily Herald.

Has your business prepared for the Patient Protection and Affordable Care Act (PPACA), only to find that it was delayed? Get ready to prepare again. Compliance with final regulations released last month could save your business time and money.

Almost no other piece of legislation has been subjected to as many delays as the PPACA.  This time last year, employers were digesting then-recently proposed regulations on PPACA's shared responsibility obligations (also known as the "employer penalty" or "pay-or-play" provisions) in anticipation of potential penalties that would begin in 2014.  However, those plans were delayed until 2015.  Since then, health plan sponsors and their advisors have been waiting for final regulations to tell them how to prepare for and implement the delayed provisions.

Potential penalties for employers

Under the new final regulations, PPACA's shared responsibility provisions apply to employers with at least 50 full-time employees, including full-time equivalents.  These "applicable large employers" will be required to pay penalties if: 

  • they do not provide minimum essential health coverage to substantially all of their full-time employees (and their children under age 26); and
  • at least one of their full-time employees receives a premium tax credit or cost sharing reduction (known as a "subsidy") for purchasing individual coverage through a Health Insurance Marketplace. 
An employer might also face a penalty if a full-time employee receives a subsidy on a Marketplace if the coverage offered to the employee is not "affordable" or does not provide "minimum value." For these purposes, a "full-time employee" is one who is employed on average at least 30 hours week. How are "affordable" and "minimum value" defined?  Generally, coverage is "affordable" if the employee's share of single-only coverage does not exceed 9.5 percent of his or her household income. A group health plan provides "minimum value" if it is designed to pay at least 60 percent of the costs incurred under the plan.

Avoid penalties by preparing for compliance - again

Your business can avoid penalties by preparing for compliance – again. In addition to these new regulations, employers should also ensure compliance with other aspects of PPACA, such as:

  • the payment of transitional reinsurance fees and Patient Centered Outcomes Research Institute fees,
  • amendment of health plan documents to comply with PPACA's coverage mandates (e.g., coverage of clinical trials and preventive care, elimination of waiting periods longer than 90 days, and elimination of preexisting condition exclusions, etc.),
  • providing plan participants with summaries of benefits and coverage, and other PPACA obligations. 
PPACA continues to be a challenging compliance project for employers, and employers that have not
considered its impacts should do so immediately.  While the federal government's extensions of PPACA's deadlines seem to have become commonplace, relying on the possibility of future extensions may leave your business paying potentially avoidable penalties.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.

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