Questions abound about the Affordable Care Act’s exchanges that launched this week. If an employer handed out the exchanges notices as required, they have provided employees with the information necessary to go to the exchanges and price coverage.
I don’t recommend that employers should try to answer specific questions about the exchanges, but they should share information about their employer-sponsored plans if asked. When the dust settles, I also recommend that employers check out the exchanges themselves to see what the rates and options are in their geographic areas just to get a feel for what employees are seeing. Information like this can be very valuable when developing a business plan for dealing with the 2015 mandate.
Some think they can wait to act with the extension of the Affordable Care Act employer mandate until Jan. 1, 2015. This is a wrong assumption. To prepare for 2015, you still have to do your measuring to determine eligibility.
We know that applicable large employers — those with more than 50 full-time equivalent employees — have to comply. We know that the measurement to be an applicable large employer also includes members of the control group of the employer. So if we have more than 50 FTEs in our control group, what happens next? We measure to see who it is we will have to give coverage to in 2015. This allows employers to figure out their potential covered population, and it also gives them the chance to manage their population during the measurement period to make sure they only provide coverage to those intended to be full-time employees. Since employers will have to offer coverage to full-time employees — those working 30 or more hours per week — employers should use 2013 and 2104 to start their measurement period analysis.
The “measurement period” is the period of not less than three but no more than 12 months where an employer figures out the average hours worked per week by an employee during that time. For example, an employer who establishes a 12-month measurement period averages the employee’s hours over those 52 weeks to see if they are 30 or above.
An employee who worked 1,800 hours over the course of the measurement period would average 34.6 hours per week, and would thus be eligible for coverage. The “administrative period,” which can be up to 90 days, is the period where you enroll these eligible employees. The “stability period,” which has to be at least as long as the measurement period, defines how long they will have coverage.
The interaction works something like this (assuming a 12 month measurement period and a three month administrative period):
- Measurement period 1: Oct. 1, 2013 through Sept. 30, 2014
- Administrative period 1: Oct. 1, 2014 through Dec. 31, 2014
- Stability period 1: Jan. 1, 2015 through Dec. 31, 2015
- Measurement period 2: Oct. 1, 2014 through Sept. 30, 2015
- Administrative period 2: Oct. 1, 2015 through Dec. 31, 2015
- Stability period 2: Jan. 1, 2016 through Dec. 31, 2016
- Measurement period 3: Oct. 1, 2015 through Sept. 30, 2016
- Administrative period 2: Oct. 1, 2016 through Dec. 31, 2016
- Stability period 2: Jan. 1, 2017 through Dec. 31, 2017
- And so on and so forth
Of course, employers can choose their own period lengths (as long as they comply with the law) so not all employers will be the same, but you can understand how each period flows logically into the next, even while overlapping. Just remember that, starting in 2015, employees always have to be in a stability period for full compliance. So employers should not wait until October of next year to start planning. Even though the mandate is delayed, employers still have to prepare. Figure out whether you are an applicable large employer and if you are, start measuring. Otherwise, you could be left scrambling at the end of next year to sort this out.
Used with permission from Fox Rothschild LLP. Keith R. McMurdy is an employee benefits attorney at the firm’s New York City office. To contact the author:
