Overview of Tribes and
Tribal Entities as Employers
under the Patient Protection
and Affordable Care Act
Version: August 2, 2013
1
This Training
• Four sections to this training:
– Overview of Tribes and Tribal Entities as
Employers under the ACA
– Small Business Health Options Program (SHOP)
– Small Business Tax Credit (Tax Credit)
– Employer Shared Responsibility
2
Overview of Tribes and Tribal
Entities as Employers
Topics
•
•
•
•
•
•
The Patient Protection and Affordable Care Act (ACA)
ACA Employer Provisions
Importance to Tribes and Tribal Entities
Small Businesses v. Large Businesses
Introduction to Counting Employees
Introduction to Determining Full-Time Employees
3
The Patient Protection and
Affordable Care Act (ACA)
4
The Affordable Care Act
• On March 23, 2010, President Obama signed into
law the Patient Protection and Affordable Care Act
(ACA).
• The ACA protects the right of all Americans, including
American Indians and Alaska Natives, to access
affordable health care.
• More than 32 million in this country who would
otherwise not have health insurance will have access
to health coverage.
5
The Affordable Care Act
• There are several strategies under the ACA to ensure
that everyone has access to the affordable health
care by January 1, 2014
• Medicaid Expansion
• Health care tax credits for individuals and small businesses
• Insurance Marketplaces in each state
• Major insurance reform
• No annual or lifetime limits allowed
• A person cannot be denied coverage for a pre-existing
condition
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ACA Employer Provisions
7
ACA Employer Provisions
• Provisions related to employers began to take effect
in 2010 while other provisions will be phased in
through 2018.
• Regulations issued by
– Department of Health and Human Services (HHS)
• Centers for Medicare & Medicaid Services (CMS)
– Department of Labor (DOL)
– Department of Treasury, Internal Revenue Service (IRS)
– U.S. Office of Personnel Management (OPM)
• Regulations will continue to be issued through 2014.
8
ACA Employer Provisions At-A-Glance
Number of employees
ACA Provisions
1 to 24
Small Business Health
Care Tax Credit
X
Small Business Health
Options Program (SHOP)
X
25 to 49
X
50 to 100
101-200
> 200
X
(may be
limited to
50)
IRS Assessable Payments
Automatic enrollment of
full-time employees in
employer health plan
X
X
X
X
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Importance to Tribes and
Tribal Entities
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Why is this Important for Tribes
and Tribal Entities?
• If a Tribe is considered a “large employer,” it
may incur an assessable payment for not
providing insurance.
• Tribes may be eligible to purchase health
insurance through the Small Business Health
Options Program (SHOP).
• Tribes can strategize to meet ACA employer
requirements in a cost effective manner.
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Importance for Tribes and Tribal
Entities
• Exemption from some plan rules for
employers with:
1. Self-funded plans
2. Large group market plans, and
3. Grandfathered plans
• Large tribal employers will likely have one of
these exempt plans.
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Provisions Apply to Tribes and
Tribal Entities as Employers
• Small Business Health Care Tax Credit
– Qualify if 1 to 24 full-time equivalent employees.
– Per IRS Guidance, an agency or instrumentality of
an Indian tribal government is not eligible for the
tax credits unless it is a 501(c)(3).
– Other Tribally owned entities may be eligible for
the tax credits (e.g., an entity organized under
State law).
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Provisions Apply to Tribes and
Tribal Entities (continued)
• Small Business Health Options Program
(SHOP)
– Qualify if up to ≤ 100 employees (may be limited
to ≤ 50 employees depending on State).
– Tribes and Tribal entities may be eligible to
purchase insurance for full-time employees
through the SHOP.
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Provisions Apply to Tribes and
Tribal Entities (continued)
• Employer Shared Responsibility provisions
(i.e., assessable payments):
– Applicable to employers with > 50 full-time
employees.
– Tribal governments and subdivisions of Tribal
governments are subject to the Employer Shared
Responsibility provisions.
– Other Tribal entities are also subject to these
provisions.
– Delayed until 2015.
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Provisions Apply to Tribes and
Tribal Entities (continued)
• Fair Labor Standards Act (FLSA), § 18ARequires automatic enrollment of full-time
employees in employer’s health plan:
– Applicable to employers with > 201 employees.
– Federal courts are divided as to the application of
FLSA to Tribal employers.
– Compliance not required until regulations are
issued.
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Small Businesses v. Large
Businesses
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Small Businesses v. Large Businesses
Summary
Tax Credits for premiums paid
for employee health insurance
Assessable Payments (taxes)
for not providing affordable
health coverage
Can purchase insurance on
SHOP
Health plans offered must have
Essential Health Benefits (EHB)
Small
Business
Yes
Large Business
No
Yes
Yes
No
Yes
Yes – for new plans.
Exempt: large group
plans, grandfathered, &
self-insured
No
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Small Businesses v. Large Businesses
Summary (continued)
Small Business
Large Business
Health plans offered must cover
dependents (not spouse)
No
Yes
Employer must pay portion of
premiums for dependents
No
No
Health plan offered must cover
spouse
No
No
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Introduction to Counting
Employees
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Counting Employees
• Different methods are used to count
employees for different provisions of the ACA,
including:
– Small Business Tax Credit
– SHOP
• State-based (state specific)
• Federally-facilitated (same as Employer Shared
Responsibility)
– Employer Shared Responsibility
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Counting Employees (continued)
Employer Provisions
Description of Method
Small Business Tax Credit (1 to 24 fulltime equivalent employees)
Count full-time and part-time employees to
determine number of full-time equivalent
employees. A specific method is required;
different than method for FF-SHOP and
Employer Shared Responsibility.
SHOP (≤ 100 employees or ≤ 50
employees per State election; ≤ 50
employees in FF)
For State-based SHOP: Follow State
method for counting employees.
For FF-SHOP: Count number of full-time
employees and full-time equivalent
employees (part-time employees). Same
method as Employer Shared Responsibility.
Employer Shared Responsibility (≥ 50
full-time employees)
Count number of full-time employees and
full-time equivalent employees (part-time
employees).
22
Introduction to
Determining Full-Time
Employees
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Determining Full-Time Employees
• Federal definition of full-time employee used
to identify full-time employees for:
– FF-SHOP eligibility (possibly, State SHOP)
– Small Business Tax Credit eligibility
– Shared Employer Responsibility provisions
applicability
• Large Employer Status
• Insurance coverage requirement
• Assessable payments
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Determining Full-Time Employees
(continued)
Full-Time Employee: An employee who is
employed an average of 30 hours of
service per week or 130 hours of service
per month.
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Full-Time Employees: Determining Hours of Service
• Hours of Service includes each hour an employee is
paid or entitled to payment:
1. For performance of duties for the employer; or
2. For a period of time during which no duties are
performed due to vacation, holiday, illness, incapacity
including disability, layoff, jury duty, military duty or
leave of absence.
– Applies to FF-SHOP, Small Business Tax Credit, and
Employer Shared Responsibility provisions, but not to
State-based SHOP until 2016.
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Full-Time Employees: Determining Hours of Service
(continued)
• For Hourly Employees:
– Calculate the actual hours of service by the employee.
• For Non-Hourly Employees:
– Calculate the actual hours of service by the employee.
– Days-worked equivalency: Credit the employee with 8
hours of service for each day the employee would be
credited with at least 1 hour of service.
– Weeks-worked equivalency: Credit the employee with 40
hours of service for each week.
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Full-Time Employees: Determining Hours of Service
(continued)
• Rules as to Use of Equivalencies:
– Prohibited use of equivalencies: Cannot be used to
substantially understate an employee’s hours of service.
– Different classifications of non-hourly employees:
Different equivalencies may be used for different
classifications of non-hourly employees provided that the
classifications are reasonable and consistently applied.
– Calendar Year Changes: An employer may also change the
method for calculating non-hourly employee each
calendar year. For example, for all non-hourly employees,
an employer may use the actual hours worked in 2014, but
may use the days-worked equivalency method for counting
hours of service in 2015.
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Example: Hourly Employee
Hours of Service
• Susan is a hostess at the Tribal Casino Buffet,
an hourly position.
• HR records reflect that in February she worked
an average of 35 hours of service per week (or
an average of 140 hours of service per
month).
• Susan is considered a full-time employee for
the month of February.
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Example: Application of Equivalencies on
Non-Hourly Employee Hours of Service
Mike is a Cage Manager at the Tribal Casino, a non-hourly position.
[Note: This example shows why the Days-worked equivalency cannot be used
for Mike. An employer is not required to use all three methods].
Methods
Hours of Service
Full-time?
Actual
Mike worked 10 hour days, 3 days a week
in February (30 hours of service per
week).
Yes.
Days-worked
equivalency
This equivalency cannot be used for Mike
because if he worked 3 days a week, the
days worked equivalency would result in
Mike working 24 hours of service per
week.
No. However, this
equivalency is prohibited
because it would
underestimate Mike’s hours
of service.
Weeks-worked
Equivalency
This equivalency can be used for Mike.
Using this equivalency, Mike is credited
with 40 hours of service in a week.
Yes.
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Section Review
• Explain why the employer provisions are
important to Tribes.
• Name one strategy under the ACA to get
people insured.
• Name one of the employer requirements
under the ACA.
• Describe one provision that is different for a
small business compared to a large business.
• Define full-time employee
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Questions
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