What happens if the ACA employer mandate is repealed?
The Affordable Care Act (ACA) requires applicable large employers (ALEs) to offer affordable, minimum value health coverage to their full-time employees in order to avoid possible penalties. Because this employer mandate has been criticized as burdensome for employers and an impediment to business growth, its repeal has been a central part of Republican plans to repeal and replace the ACA.
If the employer mandate is repealed, many ALEs will likely want to modify their plan designs to go back to pre-ACA eligibility rules (for example, requiring employees to have a 40-hour work week schedule to be eligible for benefits).
Employers may also consider increasing the amount that employees are required to contribute for group health plan coverage.
Current Status of the Employer Mandate
At this time, the ACA, including its employer mandate rules, remains intact as a federal law. Proposed legislation to repeal and replace the ACA is currently making its way through the federal legislative process.
Senate Releases Draft ACA Replacement Bill
On June 22, 2017, Republicans in the U.S. Senate released a draft of their proposal to repeal and replace the ACA, called the Better Care Reconciliation Act (BCRA). The Senate bill closely mirrors the proposal passed in the House of Representatives—the American Health Care Act (AHCA)—with some differences. For example, unlike the AHCA, the BCRA:
- Would enhance the ACA’s Section 1332 State Innovation Waiver program; and
- Would not allow issuers to impose a surcharge for individuals who do not maintain continuous coverage, but would make them wait six months before they could obtain individual coverage.
Impact on Employers
The Senate has not voted on any ACA repeal or replacement proposal at this time. The proposal would need a simple majority vote in the Senate to pass. However, amendments may be made before a Senate vote is taken. Republicans were pushing for a vote prior to the Senate’s July 4 recess, but have now indicated that they need more time. If the BCRA passes the Senate, it would need to go back to the House for approval before being signed into law by President Donald Trump.
ACA Provisions Not Impacted
Both the AHCA and the BCRA are budget reconciliation bills rather than full repeal bills, and as such, they would not affect the majority of the ACA. A number of key ACA provisions would remain in place, including, but not exclusively:
- Cost-sharing limits on essential health benefits (EHBs) for non-grandfathered plans (currently $7,150 for self-only coverage and $14,300 for family coverage);
- Prohibition on lifetime and annual limits for EHBs;
- Requirements to cover pre-existing conditions;
- Coverage for adult children up to age 26;
- Guaranteed availability and renewability of coverage;
- Nondiscrimination rules (on the basis of race, nationality, disability, age or sex); and
- Prohibition on health status underwriting.
New York Paid Family Leave
On April 4, 2016, New York Governor Andrew Cuomo signed a bill that will require employers to provide paid family leave benefits to eligible employees as part of the state’s disability insurance program. New York’s Paid Family Leave Benefits Law (NYPFL Law), the most comprehensive paid family leave program in the nation, goes into effect January 1, 2018. Starting on that date, employees will be eligible for up to eight weeks of compensation, benefits and job-protected leave in any 52-week period, and the duration and benefit amounts of the paid family leave (PFL) are set to increase annually, effective January 1 of each year through 2021. Paid family leave benefits will be phased in over a four-year period, beginning January 1, 2018. When the law is fully implemented in 2021, employees may be eligible for up to 12 weeks of paid family leave.
The NYPFL Law is an extension of the state’s Disability Benefits Law (DBL) (commonly referred to as short-term disability), and thus operates in a similar manner as other legally-required insurances. (Short-term disability policies will be required to include paid family leave coverage in the policy.) Critically, PFL compensation will be funded exclusively through employee contributions deducted from payroll, which can begin July 1, 2017. Employers must purchase a paid family leave insurance policy from their preferred New York Disability Benefits carrier or arrange for self-insurance that will take effect beginning January 1, 2018. Under the new law, employers are not responsible for contributing to or funding paid family leave benefits.
Refer to the state of New York's Paid Family Leave webpage for a visual of the timeline and more information.
Do you keep your employee handbook up to date?
Employee handbooks provide important company information that is valuable to both new and seasoned employees, ensure that all individuals are treated consistently with regard to company policies and procedures and can protect the company from potential lawsuits. An effective handbook is thorough, up to date, legally compliant, readily available and easy to understand.
However, unless employees know what policies and rules are included in their company’s handbook, and these policies are updated regularly to reflect legislation changes, it will not be nearly as effective. Failing to keep a handbook updated is consistently one of the top mistakes employers make with their handbooks. Particularly, we regularly see employers fail to have a formal “unpaid leave policy” for employees with leave that extends past FMLA or for employers not subject to FMLA.
Contact Higginbotham today for suggestions on how to update or create your company’s employee handbook.
Sources: Zywave and www.ny.gov