Tribal Employer Opportunities &
Requirements under the
Affordable Care Act (ACA)
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Disclaimer
This training material is for informational purposes only and is
not intended as tax or legal advice. Please talk with your
attorney or tax professional for specific questions related to your
Tribe or Tribal entity as an employer.
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Tribal Employer Opportunities &
Requirements under the Affordable Care Act
• The Affordable Care Act & Your Employees
• ACA Employer Provisions
• Small Tribal Employer Opportunity
• Small Tribal Non-Profit Employer Opportunity
• Large Tribal Employer Requirements
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The Affordable Care Act &
Your Employees
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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 now have
access to health coverage.
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The Affordable Care Act
• There are several strategies under the ACA to
ensure that everyone has access to the
affordable health care.
• 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
What it Means for Your Employees
• All Americans must have or enroll in minimum essential
coverage by March 31, 2014.
• Minimum essential coverage includes:
• Medicaid/Children’s Health Insurance Program (CHIP)
• Medicare
• Veteran’s Administration Program
• Tricare
• Employer Sponsored Coverage
• Other Private Health Insurance
• No coverage by this date could result in an employee’s
liability for an individual shared responsibility payment or
fine UNLESS an employee qualifies for an exemption.
Some Employees May Sign Up for Health
Insurance through the Marketplace
• Employees at or below certain federal poverty
level thresholds may qualify for Medicaid or
financial assistance to purchase insurance.
• Employees who are not offered affordable
coverage by an employer with minimum value,
may be eligible for tax credits or cost sharing
reductions through the Marketplace.
• Affordable = not more than 9.5% of employee’s
household income.
Medicaid & Financial Assistance Eligibility
• A state’s decision to expand or not expand
Medicaid determines income eligibility for tax
credits.
• Tax credits eligibility for Marketplace plans:
• States expanding Medicaid: 138%-400% FPL
• States not expanding: 100%-400% FPL
• Sliding scale (lower FPL, more tax credits)
• Cost sharing reductions eligibility:
• All states: <250% FPL
Did Your State Expand Medicaid?
Federal Poverty Levels
48 Contiguous States (2013)
# household
>100% FPL
Tax Credits in
State Not
Expanding
Medicaid
<138% FPL
Medicaid
Expansion
> 138% FPL
Tax Credits in
State
Expanding
Medicaid
<250% FPL
Cost Sharing
Reductions
<400% FPL
Tax Credits
1
2
3
4
5
$11,490
15,510
19,530
23,550
27,570
$15,856
21,404
26,951
32,499
38,047
$28,725
38,775
48,825
58,875
68,925
$45,960
62,040
78,120
94,200
110,280
What the ACA Means for Your American
Indian/Alaska Native Employees
• The mandate also applies to American Indians/Alaska
Natives.
• However, AI/AN may apply for an exemption from the shared
responsibility payment if:
• Member of a federally recognized tribe or Alaska Native Claims
Settlement Act (ANCSA) Corporation (“Tribal Member”)
• Eligible for services from an Indian health care provider.
• Special cost sharing protections for Tribal Members if
enrolled in coverage through the Marketplace
• Zero Cost Sharing Plan Variation < 300% FPL
• Limited Cost Sharing Plan Variation > 300% FPL
• Special monthly enrollment for Tribal members
• May change status in a health plan once per month.
How Much is the Fine for Not Having Insurance?
• Individuals who can afford health insurance but choose not
to buy it, must pay a fine known as an individual “shared
responsibility payment.”
• In 2014, the fine is $95 per person ($47.50 per child under
18) with maximum of up to $285 per family using this
method OR up to 1% of yearly household income,
whichever is higher. For 2014, the payment is made
through 2014 tax return filing in April 2015.
• In 2015, it is $325 per person or 2% of income; and in
2016, it is $695 per person or 2.5% of income.
Who Qualifies for an Exemption from the Fine?
 Members of federally recognized tribes or ANCSA Corporations;
or individuals eligible for services from an Indian health care
provider.
 Individuals/families where the lowest-priced coverage available
would cost more than 8% of the household income.
 Individuals uninsured for less than 3 months of the year.
 Individuals who do not have to file a tax return because their
income is too low.
 Individuals who fall under other hardship exemptions. See
healthcare.gov/exemptions/ for other exemptions.
Key Points to Remember
• Only employees within certain income limits are
eligible for the tax credits and cost sharing reductions.
• For large employers, receipt of a tax credit or cost
sharing reduction by a full-time employee triggers the
shared responsibility payment.
• Employees eligible for exemptions are still counted by
the employer in their employee counts related to ACA
provisions.
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Tribal Employer ACA
Opportunities &
Requirements
Tribal Employer ACA Opportunities & Requirements
Small Tribal Employer
SHOP
< 50 employees
Small Tribal Non-Profit Employer
Small Business Tax Credit
< 25 employees
ACA
Large Tribal Employer
Shared Responsibility Mandate
≥ 50 employees
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
50 to 99
100-200
> 200
X
(up to 50)
IRS Assessable
Payments & Reporting
FLSA Automatic
Enrollment
X
X
X
(transition relief
in 2015)
X
Why is this Important for Tribes?
• If a Tribe is considered a “large employer,” it
may incur an assessable payment for not
offering health 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.
Small Tribal Employer Opportunity
Small Tribal Employer
SHOP
< 50 employees
Small Tribal Non-Profit Employer
Small Business Tax Credit
< 25 employees
ACA
Large Tribal Employer
Shared Responsibility Mandate
≥ 50 employees
What is SHOP?
• SHOP = Small Business Health Options Program
• A Marketplace for small businesses
• Designed to help small businesses purchase health insurance for
employees.
• Allows an employer to compare plans based on price, coverage
and quality.
• Employers eligible if ≤ 50 employees (see next slide).
• In 2016, will increase to ≤ 100 employees.
• Tribes and Tribal entities are eligible to participate.
• To find our more about the Marketplace in your State, visit:
https://www.healthcare.gov/marketplace/shop/.
Employer Eligibility Criteria
Generally, an employer is eligible to participate in
SHOP if the employer:
(1) Is a small employer on business days during the prior calendar
year and who employs at least one employee on first day of the
plan year;
(2)Elects to offer all full-time employees coverage in a plan
through a SHOP; and
(3)Has its principal place of business address in the Exchange and
offers coverage to all full-time employees through that SHOP; OR
offers coverage to each eligible employee through the SHOP
serving that employee’s primary worksite (in this case, the
employer participates in multiple SHOPs).
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Application Process
• An employer may apply through the SHOP website, a
Navigator, an insurance broker, or a call center
• Single SHOP application (on line & paper)
• Separate applications for employer & employee
• The SHOP will:
• Verify information in applications
• Determine employer’s eligibility to participate
• Notify employer as to denial or approval of application
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SHOP Plans
• Different actuarial values
(AV) in plans are described
using “metallic” descriptors.
• All plans in the SHOP will
have the same EHB.
• Plans may have different:
• Network of providers
Metallic Plan
Actuarial
Value
Bronze (lowest premium, 60%
least beneficial)
Silver (Benchmark)
70%
Gold
80%
Platinum (highest
premium, most
beneficial)
90%
• Premiums & cost sharing
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Essential Health Benefits
The plans in SHOP will include Essential Health Benefits (EHB):
Ambulatory patient service
2. Emergency services
3. Hospitalization
4. Maternity and newborn care
5. Mental health and substance use disorder services, including
behavioral health treatment
6. Prescription drugs
7. Rehabilitative and habilitative services and devices
8. Laboratory services
9. Preventive and wellness services and chronic disease management
10. Pediatric services, including oral and vision care
1.
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Employer & Employee Choices
Year
State-based SHOP
2014
FF-SHOP
Employer selects one plan
Transition (or more, depending on
Period
State) which will be made
available to employees.
Employer selects one plan
which will be made available to
employees.
2015
Employer may select:
(1) a level of coverage and
employee may select any plan
in that metallic level; or
(2) one plan to offer
employees.
Employer may select:
(1) a level of coverage and
employee may select any
plan in that metallic level; or
(2) other options to offer
employees.
Small Tribal Non-Profit Employer Opportunity
Small Tribal Employer
SHOP
<50 employees
Small Tribal Non-Profit Employer
Small Business Tax Credit
<25 employees
ACA
Large Tribal Employer
Shared Responsibility Mandate
≥ 50 employees
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 credit
unless it is a 501(c)(3).
• Other Tribally owned entities may be eligible
for the tax credit (e.g., an entity organized
under State law).
Eligibility for the Tax Credit
A small employer may qualify for a tax credit if the
small employer meets all of these requirements:
1. Fewer than 25 full-time equivalent employees
(FTEs);
2. Pays an average annual wage of less than
$50,000 per year per FTE; and
3. Pays for at least 50% of the cost of health
insurance coverage for each of its employees.
About the Tax Credit
• The tax credit is a percentage of premiums paid by employer.
• Percent is sliding scale based on employer size and average
wage.
• Beginning January 1, 2014, maximum credit is:
• 50% for small business employers
• 35% for small tax-exempt employers
• The maximum credit is available to employers with ≤ 10 FTE
employees and average annual wages of $25,000.
• In 2014, the credit will only be available for employers that
purchase insurance coverage through a SHOP.
• The employer can only receive the credit for 2 consecutive
years (beginning in 2014).
For more information on SHOP and Small
Business Health Care Tax Credit
• Visit http://business.usa.gov/healthcare for options related to
your business or non-profit.
• IRS Small Business Health Care Tax Credit for Small Employers
http://www.irs.gov/uac/Small-Business-Health-Care-Tax-Creditfor-Small-Employers
• Determine your eligibility at: http://tribalhealthcare.org/tribalemployers/determine-your-responsibility/.
Large Tribal Employer Requirements
Small Tribal Employer
SHOP
< 50 employees
Small Tribal Non-Profit Employer
Small Business Tax Credit
< 25 employees
ACA
Large Tribal Employer
Shared Responsibility Mandate
≥ 50 employees
Employer Shared Responsibility Mandate
• Employer Shared Responsibility Mandate provisions
(i.e., assessable payments):
• Applicable to employers with > 50 full-time
employees, including full-time equivalent
employees.
• In 2015, transition relief for employers with 50 to 99 full-
time employees (certification required).
• Final regulations issued on February 12, 2014.
• Delayed to 2015 (IRS Notice 2013-45).
What is the Mandate?
• The Employer Shared Responsibility mandate
means that an employer will be subject to an
“Assessable Payment” or “Shared
Responsibility Payment” for not offering
health insurance coverage that is affordable or
that does not provide minimum value to its
full-time employees and their dependents.
How the Mandate Applies to Tribes
• Tribal governments and subdivisions of Tribal
governments are not exempt.
• The rules specific to governmental entities (which includes
Tribal governments and subdivisions of Tribal governments)
have not been issued by the IRS.
• All Tribal entities will have to comply with these
provisions to avoid Assessable Payments.
• Tribal businesses, organizations and all other entities such as
casinos, retail businesses, health centers, nursing homes and
non-profit organizations.
• See 26 U.S.C. § 4980H, 78 Fed. Reg. 218, and 79 Fed
Reg. 8544.
Determining Large Employer Status
• Many employers will know they are a large employer
without having to count their full-time employees.
• Number of full-time employees (average of 30 hours
of service per week) and full-time equivalent
employees (FTEs) are counted.
• A specific method must be used to count hours of service for hourly and
non-hourly employees.
• Large employer status determined in current year for
following calendar year.
• Transition Relief in 2015: Employers close to threshold may use a one-
time period of six consecutive months to determine large employer
status.
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Steps to Determine Large Employer Status
1.
2.
Calculate the number of full-time employees (including
seasonal workers) for each calendar month in the prior year.
Calculate the number of full-time equivalent employees
(including seasonal workers) for each calendar month in the
prior year.
• Full-time equivalent employees = Add the total number of hours of service of
part-time employees in a calendar month and divide by 120.
3.
4.
Add the number of full-time employees and full-time
equivalent employees for each month of the calendar year.
Add up the 12 monthly numbers and divide by 12.
Steps to Determine Large Employer Status
(continued)
• The Result
• If the result is less than 50, the employer is
not a large employer.
• If the result is 50 or more, the employer is a
large employer.
• Employer may not be considered a large employer if the Seasonal Worker
Exception applies.
Seasonal Worker Exception
An employer may not be considered a
large employer if:
• The employer’s work force only exceeds 50
full-time employees for 120 days or less
during the calendar year; and
• The employees in excess of 50 who were
employed during that 120 day period or less
were seasonal workers.
Definition of Seasonal Worker
• Seasonal worker = “…a worker who performs labor or services
on a seasonal basis as defined by the Secretary of Labor,
including (but not limited to) workers covered by 29 CFR
500.20(s)(1), and retail workers employed exclusively during
holiday seasons.” 79 Fed. Reg. 8581.
• Employers may use a good faith interpretation of seasonal
worker under DOL Regulations 29 CFR 500.20(s)(1).
• Per IRS guidance:
• The 120-period may be applied using four calendar months (whether or
not consecutive) or a period of 120 days (whether or not consecutive).
• Not limited to agricultural or retail workers.
Transition Relief for Employers with Fewer
than 100 Full-Time Employees in 2015
An employer must satisfy these conditions:
(1) Employs 50 to 99 full-time employees (including FTEs) on
business days during 2014.
(2) Does not reduce its workforce or overall hours of service of
its employees between 2/9/14 to 12/31/14 in order to satisfy the
workforce size condition (except if for a bona fide business
reason).
(3) During “coverage maintenance period,” does not eliminate or
materially reduce the health coverage it offered as of 2/9/14 .
(4) Certifies that it meets conditions (1) to (3) on a prescribed
form.
Two Ways to Identify Full-Time
Employees
• Two ways to identify full-time employees:
(1)
(2)
Monthly Measurement Method; or
Optional Look Back Measurement Method.
• Employers identify full-time employees in 2014
and offer coverage in 2015.
• Large Tribal Employers need to start planning
now to determine what method they will use.
Companies with a Common Owner
• Parent corporations and subsidiaries
• To determine large employer status, total the number
of all full-time employees (including full-time
equivalent employees) working at all companies.
• If the total number of employees is at least 50 fulltime employees, then each separate company is
considered a large employer.
• Even if each separate company employs less than 50 full-time
employees.
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To Avoid Assessable Payments
• A large employer must offer to its full-time employees
and their dependents the opportunity to enroll in
health insurance coverage:
• That provides Minimum Essential Coverage under an Eligible
Employer-Sponsored Plan;
• That is Affordable; and
• That provides Minimum Value.
• If offered, a full-time employee would not be eligible
for a premium tax credit or cost sharing reduction.
• The assessable payment is triggered by the
employee’s receipt of a tax credit or cost sharing
reduction.
Plan, Affordability & Minimum Value
Requirement
Explanation
Eligible
Employer
Sponsored
Plan
(1) Group health insurance coverage offered by, or on behalf of, an employer
to the employee that is either:
-- a governmental plan within the meaning of section 2791(d)(8) of the
Public Health Service Act (PHS Act) (42 U.S.C. 300gg–91(d)(8)) (e.g., FEHB
Program),
-- any other plan or coverage offered in the small or large group market
within a State, or
-- a grandfathered health plan, as defined in section 5000A(f)(1)(D),
offered in a group market;
(2) Self-insured group health plan under which coverage is offered by, or on
behalf of, an employer to the employee.
Affordable
“Employee only” contribution towards the premium is < 9.5% of the
employee’s household income. Note: Safe Harbors available.
Minimum
Value (MV)
Plan has to cover at least 60% of the total allowed cost of benefits that
are expected to be incurred under the plan. MV calculator at:
http://www.cciio.cms.gov/resources/regulations/index.html#pm. See
78 Fed. Reg. 25909 for other ways to determine MV.
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Affordability Safe Harbors
• Since an employer may be unable to ascertain an employee’s
household income, an employer may rely on an affordability
safe harbor to avoid the second type of assessable payment:
• W-2 Safe Harbor (next slide)
• Rate of Pay Safe Harbor
• Federal Poverty Line Safe Harbor
• An employer may only use a safe harbor if it offers its full-time
employees and their dependents the opportunity to enroll in
• minimum essential coverage under an eligible employer-sponsored
plan that provides minimum value as to the “employee only” coverage
offered to the employee
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W-2 Safe Harbor
• The “employee only” portion of the premium is deemed
affordable if the employer’s lowest cost plan does not exceed
9.5% of the employee’s W-2 wages.
• Application of this safe harbor is determined at the end of the
calendar year.
• Per Guidance: An employer could deduct 9.5%, or lower
percentage, from an employee’s W-2 wages each pay period.
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Offer of Coverage
• A large employer must:
• In 2015, make an offer of coverage to at least 70%
(in 2016, 95%) of its full-time employees and their
dependents.
• Provide the “effective” opportunity to enroll or
decline to enroll no less than once during the plan
year.
• Make the offer within three months of hire.
• A group health plan may not apply any waiting period that
exceeds 90 days.
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Dependents
• Offer of coverage to dependents of full-time
employees:
• Dependents includes children under 26 years of age,
but does not include spouses, step children or foster
children.
• Employer does not have to pay for dependent
coverage.
• Transition relief to offer coverage to dependents is
extended to plan years in 2015 under certain
conditions.
How Assessable Payments Can Be
Incurred
If a large employer:
(1) Does not offer coverage to at least 70% (in 2016,
95%) of its full-time employees (and their
dependents*), OR
(2) Offers coverage to at least 70% (in 2016, 95%) of its
full-time employees (and their dependents*) but the
coverage is not affordable or does not provide
minimum value;
AND at least one full-time employee receives a
premium tax credit or cost sharing reduction in the
Marketplace.
*If dependent coverage transition relief does not apply.
Assessable Payments in 2015
Types:
(1) Employer Does Not Offer
Coverage or Offers Coverage to Less
Than 70% (in 2016, 95%) of Full-Time
Employees*
(2) Employer Offers
Coverage to at least 70%
(in 2016, 95%) of Full-Time
Employees* but Coverage
is Not Affordable or Does
Not Provide Minimum
Value.
Calculation
1/12 of $2,000 per full-time employee,
not including the first 80 employees (in
2016, 30 employees)
1/12 of $3,000 per
employee
Approximately $166.67 per employee,
per month X number of employees > 80.
$250.00 per employee, per
month.
(1/12=assessed
monthly)
Dollar Amount
*Assessable payment triggered by a full-time employee receiving a premium tax credit or
cost sharing reduction in the Marketplace.
Assessable Payments in 2016 and
Forward
Types:
(1) Employer Does Not Offer
Coverage or Offers Coverage to
Less Than 95% of Full-Time
Employees*
(2) Employer Offers
Coverage to at least 95%
of Full-Time Employees*
but Coverage is Not
Affordable or Does Not
Provide Minimum Value.
Calculation
1/12 of $2,000 per full-time employee,
not including the first 30 employees
1/12 of $3,000 per
employee
Approximately $166.67 per employee,
per month X number of employees > 30
$250.00 per employee, per
month
(1/12=assessed
monthly)
Dollar Amount
*Assessable payment triggered by a full-time employee receiving a premium tax credit or
cost sharing reduction in the Marketplace.
Employees with Access to Coverage
• Employees with access to an eligible-
employer sponsored plan that is
affordable and that provides minimum
value cannot obtain a premium tax credit
or cost sharing reduction in a
Marketplace.
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IRS Reporting and Other Requirements
• IRS Requirements
• Section 6055 Reporting
• Section 6056 Reporting
• W-2 Form Reporting
• Other
• Fair Labor Standards Act, Section 18B Notice to Employees
Requirement
• ERISA, Summary of Benefits and Coverage Requirement
Key Points to Remember
• Tribal employers need to determine now whether they
are are a small or large employer.
• Employers with between 50-99 full-time employees
(including full-time equivalent employees) may be eligible
for transition relief in 2015.
• Large tribal employers need to determine now which
method they will use to identify their full-time employees.
• Planning now will ensure that large tribal employers
reduce the potential for employer shared responsibility
payments.