Implementation Issues for Kentucky School Districts

Presenters  Melissa Sullivan extension 4415  Susan Barkley extension 4437

Resources  KDE website: Health and Life Insurance Benefits and Flexible Spending Accounts page  es/Health-and-Life-Insurance-Benefits-and- Flexible-Spending-Accounts.aspx es/Health-and-Life-Insurance-Benefits-and- Flexible-Spending-Accounts.aspx  Implementation Guide  Timekeeping documentation  KEHP FAQs and Responsibility Chart

Disclaimer  The Guide is only one of many resources  IRS continues to issue regulations on ACA  Information in the Guide could become inaccurate  Not comprehensive of all aspects of ACA  Consult legal counsel

Whose Responsibility?  Districts:  Eligibility and offers of coverage (Play or Pay)  Nondiscrimination  Marketplace Notice  Employer Reporting  KEHP:  Affordable coverage  Adequate coverage  Plan details and options

Failure to comply = PENALTY

The ACA seems like a mountain

But KEHP is taking care of compliance with affordability and adequacy requirements

And MOST employees are already receiving health benefits, including bus drivers

And we know many variable hour employees won’t work enough separate days at 8 hours a day to change their eligibility status – therefore we don’t need to track their actual time

So the work we have to do for ACA isn’t as big a mountain as we expected

What do we have to deal with?  Establish policies relating to ACA  Track actual time for employees close to the eligibility break point and part-timers  Calculate eligibility for all variable hour employees  Document offers of coverage  Provide marketplace notice to new hires  Ensure nondiscrimination  Employer reporting to IRS

Who Do We Need to Worry About? Substitutes (classified and certified) Day care workers Student workers Retirees who return part- time or as subs Extended school services workers Part-time employees

Expectations  If employee is expected to work full-time must offer coverage at the time of hire  If it is unknown if the employee will have an average of 30 service hrs/week or 130 service hrs/month, use the measurement period

Action Steps Who are employees? Am I a “large” employer? Which hours count as “hours of service”? What action should be taken by the board? Which employees are full- time for ACA? How do I document offers of coverage? Repeat Annually

Who are Employees? An employee relationship exists when the employer has the right to control and direct the individual who performs the services and the details and means by which the result is accomplished.

Who are employees? Common Law Employees Independent Contractors All who perform work for the district

“Large” Employer  2015 = 100 or more FT & FTEs  2016 = 50 or more FT & FTEs  Most KY school districts are large

“Hours of Service”  Hours actually worked (or equivalency)  Hours paid or entitled to be paid  Vacation  Holiday  Sick leave  Disability  Jury duty  Military duty

Equivalency Hours If you don’t document actual time worked: 8 hours per day 40 hours per week

Employment Breaks  Breaks at least 4 consecutive weeks in length  Cannot count zero hours worked  Exclude from average hours of service Examples: summer break, FMLA leave

Eligibility Break Point  Step 1 – calculate number of days excluding breaks of > 4 weeks  Step 2 – multiply by the number of days from Step 1 and then divide by * 207 / 8 = 154 days

Do I need to track actual time?  To limit the number of employees tracking actual time worked:  Limit number of days/year  Limit number of days/week  Use equivalency of 8 hrs/day

Board Action  Measurement, administrative, and stability periods  Limitation of days worked  Track actual hours or use equivalency  Terminate subs that refuse assignments

Full-time Employees for ACA Employees who average 30 hours of service per week or 130 hours of service per month

Who is Full-time? Average hours of service over measurement period  Max 12 months  Recommended: October 3, 2013 – October 2, 2014  Don’t forget to exclude breaks >4 weeks

Measurement Period – collect hours of service data to be used in the calculation Administrative Period – perform eligibility calculations and make offers of coverage Stability Period – time period coverage is offered based on results of the measurement period

12 Months 90 days 9 Months 90 days 9 months 90 days Measurement 10/3/13-10/2/14 Admin 10/3/14- 12/31/14 Stability 1/1/15-12/31/15 Measurement 10/3/14-10/2/15 Admin 10/3/15- 12/31/15 Stability 1/1/16-12/31/16 Measurement 10/3/15-10/2/16 Admin 10/3/16- 12/31/16 Recommended Measurement Periods Continually measuring

What About Mid-Year Hires?  Initial Measurement Period  Begins the first day of the month after hired  Max 12 months  Transitions to standard measurement period

Initial Measurement Period INITIAL Measurement 4/1/14-3/31/15 INITIAL Admin 4/1 - 4/30/15 INITIAL Stability 5/1/15-4/30/16 Standard Measurement 10/3/14-10/2/15 Standard Admin 10/3/15- 12/31/15 Standard Stability 1/1/16-12/31/16 Note that the standard measurement period begins during the initial measurement period; both periods occur simultaneously

Offering Coverage  ACA requires coverage for full-time employees and dependent children – not spouses  Coverage must begin Jan 1, 2015 for districts with 100 or more full time & FTEs  Coverage must begin Jan 1, 2016 for districts with 50 or more full time & FTEs  Offer must be made, employee can decline  Maintain documentation  Annual requirement

Offering Coverage  Full-time during Measurement Period = Coverage during Stability Period regardless of hours of service during Stability  NOT full-time during Measurement Period = NO coverage during Stability Period regardless of hours of service during Stability

COBRA TerminationReduction in hours (no longer eligible)Failure to pay employee portion

Funding  State funds non-federal employee premiums  If health insurance appropriation is inadequate, unexpended SEEK funds may be used  Avoid a blanket policy to offer coverage to all employees

Penalty  If no Substantial Compliance  For % of full-time employees  Starting in % or no more than 5 full-time employees  Penalty is  Number of full-time employees minus 30  Multiplied by $167 per month

Nondiscrimination  Cannot provide more for highly compensated employees  Example: paying the superintendent’s employee premiums  Penalty is  Number of employees minus the superintendent  Multiplied by $100 per day until in compliance  Solution: tax the additional benefit

Employer Reporting  Will be required  First report due March 2016 for 2015 plan year data  IRS guidance not finalized  More information forthcoming

Your Good Questions