What Does the PPACA Ask of Employers?

Pay or Play

Pay or play is another name for the Employer “Shared Responsibility” Mandate of the PPACA. This will require employers to offer “affordable” health insurance to full-time (30 or more hours per week) employees or risk penalties. Businesses that employ less than 50 full-time employees are exempt. “Affordable” health insurance has been broadly defined as not to exceed 9.5% of an employee’s W-2 wages.

Failure to comply and having an employee who receives a premium tax credit (see cost sharing article) will result in a penalty of $2,000 per full-time, excluding the first 30 employees.

90 Day Waiting Periods

Beginning in 2014, group health plans and health insurance issuers offering group health insurance coverage will be prohibited from applying any waiting period that exceeds 90 days. According to research done by Ed Fensholt, a compliance specialist at Lockton Companies L.L.C., this change could increase costs by 4% for employers with 6-month waiting period and 25% for employers that have a 12-month waiting period.

Any employers with employer health insurance plans are subject to this rule, and they must apply it to all full time employees who are eligible for employer sponsored plans.

Automatic Enrollment

All businesses that employ more than 200 employees must automatically enroll new employees if they offer health care plans. They must also automatically re-enroll current employees. The automatically-enrolled employees will be allowed to opt out of coverage.

Contraceptive Services

A mandate which states that employers with fifty or more employees are required to subsidize, provide, and/or facilitate sterilization, contraceptives, and abortion-inducing drugs regardless of their religious beliefs was issued by the Department of Health and Human Services (HHS) under authority given to it by the PPACA. Subsequently, the Roman Catholic Diocese of Fort Worth (TX) has sued Katheleen Sebelius, Hilda Solis, Timothy Geithner, in their official capacities at the Department of Health and Human Services, Department of Labor, and Department of the Treasury respectively, due to the mandate.

The Church contends that the mandate violates their first amendment right to religious freedom by requiring the church to offer its employees services that violate the Church’s beliefs. Specifically, the Catholic Church’s belief that contraception and abortion violate the sanctity of human life is directly opposed to the services that the mandate requires to be offered.

Institutions, such as schools, hospitals and charities, run by the church both employ and serve non-Catholics as well as Catholics. Because of this, they would not be exempted under the religious carve outs of the mandate, which are defined to include organizations meeting all of the following requirements:

  • “The inculcation of religious values is the purpose of the organization”
  • “The organization primarily employs persons who share the religious tenets of the organization”
  • “The organization primarily serves persons who share the religious tenets of the organization”
  • “The organization is a nonprofit organization as described in section 6033(a)(1) and section 6033(a)(3)(A)(i) or (iii) of the Internal Revenue Code of 1986, as amended.”

Additional Resources

Lockton Health Reform Advisory Practice: http://www.lockton.com/Resource_/InsightPublication/2650/02132012_PlayorPay_90DayWait.pdf

Life Health Pro Lockton Exec: PPACA Mandates Already Increase Costs 2% to 3%: http://www.lifehealthpro.com/2012/05/31/lockton-exec-ppaca-mandates-already-increase-costs

Plan Sponsor PPACA’s Waiting Period Limitation: http://www.plansponsor.com/print.aspx?id=6442479623

Roman Catholic Diocese of Fort Worth v. Katheleen Sebelius, Hilda Solis, Timothy Geithner, HHS, DOT, DOL: http://www.fwdioc.org/Documents/hhs_lawsuit/FW_Complaint.pdf


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