The Health Care Reform Law
BRAD D. STEELE
VP of Gov’t Relations & General Counsel
National Club Association
1201 15th Street NW, Suite 450
Washington, DC 20005
202.822.9822
steele@nationalclub.org
www.nationalclub.org
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
National Club Association
• Our Mission:
“To defend, protect and advance the interests
and well-being of private social and
recreational clubs”
• NCA makes sure the private club industry’s
voice is heard
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On Capitol Hill,
In the agencies,
In the statehouses, and
In the courthouses
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
Congressional Action in 2010
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• Insurance reforms
– Insurers may not have annual limits on benefits
(2014)
• Insurers may not have lifetime limits or “unreasonable”
annual limit on benefits
– Insurers must accept everyone regardless of a
pre-existing condition (2014)
• Insurers must accept children 19 and younger with preexisting conditions
– Insurers must renew coverage on individuals
even if they suffer health problems during the
year (2014)
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• Insurance reforms
– Insurers must place a limit on annual out-ofpocket expenses – includes coinsurance costs
(2014)
• Deductibles for those in the small group market may
not be more than $2,000 for individual plan and $4,000
for family plan
– Insurers may not look at gender or past claims to
determine yearly rates (2014)
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• American Health Benefit Exchanges
– Each State must have an Exchange that offers
“qualified health plans”
– An Exchange must:
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Certify that offered plans meet gov’t requirements
Provide a comparative analysis of plans
Provide cost information for each plan
Assign a rating to each plan
– An Exchange may operate in more than one
State
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• American Health Benefit Exchanges
– Clubs with 100 or less employees may use the
Exchange to purchase ins. for their workers
• Small Bus. Health Options Program (SHOP Exchange)
• States may allow clubs with 100+ into SHOP in 2017
– An employer may select the level of coverage and
employees may select any plan within that level
– A health ins. provider in small group market must
consider all enrollees – those in the Exchange and
not – to be members of a single risk pool
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• American Health Benefit Exchanges
– Clubs must notify employees about Exchange:
(2013)
• What services it provides,
• How to contact it,
• That they may be eligible to get a tax credit or subsidy,
and
• That they may lose the employer’s contribution, but that
any payment they make for ins. will be tax exempt
• Each State’s Exchange must be up by 2014
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• Employer mandates on private clubs
– Clubs with 50+ employees must provide breaks for
a nursing employee to express milk (2010)
• As often as needed and for as long as needed
• For 1 yr. after the child’s birth
– Must provide a location that is shielded from view
and free from intrusion for the breaks
• A bathroom/locker room will not suffice
• Clubs don’t have to dedicate a specific room, but must
designate space to be made available when needed
– Clubs with less than 50 are exempt
• But must prove “undue hardship” – difficulty and expense
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• Employer mandates on private clubs
– Clubs must provide these breaks to non-exempt
employees (exempt employees not covered)
• Not required to pay the employee during these breaks
(usually breaks of less than 20 are paid)
– This federal law does not trump state laws
• If state law requires more or if state laws covers exempt
employees, then follow state law
– Enforced under the Fair Labor Standards Act
• Penalties could include injunction, possible $1,100 fine
and attorney’s fees
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• Employer mandates on private clubs
– Must disclose total health plan cost on employee’s
W-2 (delayed to taxable year 2012 - issued 2013)
– Must file with the IRS and send to each corp. a
1099 for payment of goods or services totaling
$600 or more throughout the year (2012)
• No filing needed if payment is to a tax exempt corp.
• Rep. Dan Lungren (R-Calif.) and Sen. Mike Johanns (RNeb.) filed companion bills to repeal the 1099 mandate
– Both chambers rejected the measure
– Sen. Mary Landrieu (D-La.) said it was a mistake to include
this mandate in the health care bill
– Pres. Obama may be more agreeable to the repeal
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• Employer mandates on private clubs
– Clubs with an average of 50 full-time employees
during the last year must offer insurance to their
full-time employees
– “Full-time employee” is one who is employed on
average at least 30 hours/week during any month
– Part-time employees are to be counted when
determining if your club has 50 full-timers
• Take the total hours worked by part-timers in a month
and divide by 120 then add that number to the number
of full-timers to see if you reach 50
• Part-timers are counted but you don’t have to offer ins.
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• Employer mandates on private clubs
– Clubs that meet the 50 full-time employee
threshold and don’t offer insurance will be fined
up to $2,000 per full-timer (less the first 30) if
• 1 employee enrolls in an Exchange plan and is entitled
to receive a tax credit or subsidy
– Clubs that meet the threshold and do offer
insurance can be fined up to $3,000 for each
employee who
• Enrolls in an Exchange plan and is entitled to receive a
tax credit or subsidy
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• Employee eligibility for tax credit or subsidy
– For clubs that don’t offer, eligibility is based on:
• Whether an employee’s household income is no more
than 400% of FPL ($88,200 for a family of 4)
– For clubs that do offer, eligibility is based on:
• Whether an employee’s household income is no more
than 400% of FPL ($88,200), and
• His premium cost is more than 9.5% of that household
income ($8,380) – “unaffordable” or
• The offered health plan pays less than 60% of health
care costs (not at least a Bronze plan)
• Any unused tax credit is refundable
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• Free Choice Voucher
– Clubs that offer must also provide a “Free Choice
Voucher” to certain employees:
• Those who have a household income of no more than
400% of FPL ($88,200), and
• Whose premium cost is between 8% and 9.8% of that
household income ($7,100-$8,600), and
• Who have turned down the club’s ins. plan
– The club still pays its premium contribution and
the employee may keep any excess after paying
for ins. from the Exchange
– No $3K penalty to the club
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• Free Choice Voucher example:
– Employees’ ins. contribution is $5K; club’s is $10K
– 1 makes $100K, stay-at-home spouse with 2 kids
• They make above 400% of FPL and the ins. cost is 5% of
household income
– 1 makes $40K, spouse makes $20K with 2 kids
• They make less than 400% of FPL and the ins. cost is
8.3% of household income
– Club must offer “Free Choice Voucher” if the 2nd
employee declines ins.
– Do you keep this or increase his contribution
above 9.8% & pay $3K or drop ins. & pay $2K?
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• Seasonal Workers
– If a club has 50 full-timers, then its full-time
seasonal workers must be offered insurance
– If a club has less than 50 full-timers, but
seasonal workers push it over the threshold,
then
• The club will have to offer insurance if it reaches the
threshold for more than 120 days
• The club will not have to offer insurance if it reaches
the threshold for 120 days or less
– “Seasonal worker” is one who performs labor or
services on a seasonal basis
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• Probationary Periods
– Clubs with 200 or less employees
• May have up to a 90 day probationary period for new fulltime employees before offering insurance
– Clubs with more than 200 full-time employees
• May not have a probationary period and must
automatically enroll new full-timers in its insurance plan
• All of these employer mandates begin 2014
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• Employer mandate example # 1:
– A club has 45 FT and 20 PT (working 15 hrs/wk)
– 20 x 15hrs/wk = 300hrs/wk; 300hrs/wk x 4 weeks
= 1,200hrs/month; 1,200/120 = 10
– So, 20 PT = 10 full-time equivalent (FTE) workers
– 10 FTE must be added to the 45 FT = 55
– With 55 FTE, the club must offer ins. to the 45 FT
or be fined $2,000/FT
• But, first 30 FT are excluded from the fine
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• Employer mandate example # 2:
– Same club with 45 FT and 20 PT (55 FTE)
– The club also employees 25 FT seasonal workers
• It does not matter how long the seasonal workers will be
at the club
– Since the club has more than 50 FTE, those 25
seasonal workers are treated as regular FT
– So, 45 FT + 25 FT = 70 FT and the club must
offer ins. to those 70 or be fined $2,000/FT
• But, the first 30 FT are excluded from the fine
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• Employer mandate example # 3:
– Club has 45 FT and 25 FT seasonal workers
– If the seasonal workers are at the club for more
than 120 days, then they are to be included in the
FT number
– So, 45 FT + 25 FT = 70 FT and club must offer ins.
to all 70 FT or be fined $2,000/FT
• But the first 30 are excluded from the fine
– If they are there for 120 days or less, then they
are not added to the 45 FT
• Since the club has 45 FT, then no ins. must be offered
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• New and increased taxes on club members
– A new 3.8% tax on interest, investment & dividend
income for those making $200K/$250K (2013)
• This is on top of capital gains tax and income tax
– Medicare payroll tax increased by .9% for those
making $200K/$250K (2013)
• Clubs need to budget for a potential decrease
in revenue
– With the payroll tax increase alone, a club with 50
families at $250K could lose over $100,000
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• Indirect fees and taxes on private clubs
– A fee on drug manufacturers for all items sold
(2011)
– A 2.9% tax on medical device makers for all
products sold (2013)
– An insurance comp. fee for all policies sold (2014)
• This alone is expected to cause a 3% premium increase
– A 40% tax on policies costing more than $10,200
or $27,500 (2018)
• All of these new costs will likely be added to
insurance policy premiums
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• “Grandfathered” health plan regulations
– A plan in existence & covering at least 1 employee
on 3/23/10 is a grandfathered health plan
– As long as it retains its grandfathered status, it is
exempt from compliance with the new law
• Sec. 105(h) of IRC
– To maintain that status, a club must ensure:
• The plan stays the same year in and year out;
• There is a statement describing it as “grandfathered” in
any and all plan materials distributed to employees; and
• There are records detailing the terms of the plan to verify,
explain or clarify its grandfathered status
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• A club will lose its grandfathered status if it:
– Eliminates some of a plan’s benefits
– Increases the coinsurance percentage
– Increases the deductible or out-of-pocket limit by
more than is allowed under a gov’t formula
– Increases the co-payment by more than is allowed
under the gov’t formula
– Decreases its premium contribution percentage by
more than is allowed under the gov’t formula
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• A major factor outside of a club’s control may
cause it to lose its grandfathered status
– Ins. providers will alter plans to conform with the
law so the same plan may not even be available
for renewal
• Sen. Michael Enzi (R-Wy.) filed a Resolution
of Disapproval to remove these regulations
– The Senate voted it down
• It will be hard to “keep the plan you like”
– HHS says 69% of all businesses and 80% of small
businesses will likely lose their insurance
ADVOCATE FOR CLUBS, ANSWERS FOR CLUB LEADERS
The Patient Protection
and Affordable Care Act
• A wild ride in DC
– On 12/24/09, the Senate passed it 60-39
• Last Christmas Eve vote – 1895
• Most time on a measure since Declaration of War - WWI
– On 3/21/10, the House passed it 219-212 (3/19…)
– The President signed it into law 3/23/10
• The slim margins of victory are telling
• Even with the Republican wins, no major
changes will be made but some small
victories now seem possible
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The National Club Association
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