Title
Short- and Long-Term Impacts of the Affordable Care Act (ACA)
Recommended Action
City Manager Recommendation:
Briefing and discussion.
Report
Issue:
Presentation to understand the mandate and requirements of the ACA and the short and long-term impacts of the requirements as they pertain to the City
Staff Contact:
Stacy Hamilton, Accounting Services Supervisor, Administrative Services Department Finance Division, 360.753.8004
Presenter(s):
Stacy Hamilton, Accounting Services Supervisor and Stacie Tellers, Senior Accountant
Background and Analysis:
The mandate/requirement of the ACA for employers with more than 50 employees is that the employer must offer affordable, minimum value health insurance to at least 95% of full-time employees (FTEs) and their children within 90 days of hire. Minimum value means that the plan pays more than 60% of allowed costs.
Short-Term Impact to the City
There are two possible penalties that can be incurred if an employer does not comply with the above requirements of the ACA: 1) a no coverage penalty; and/or, 2) an insufficient coverage penalty. The penalties are as follows:
* No coverage penalty of $2,000/month for each FTE over 30 FTEs, imposed when:
o Employer does not offer coverage to at least 95% of FTEs and their children; and,
o When one or more FTEs receive a premium tax credit when obtaining coverage on the State exchange plan;
* Insufficient coverage penalty of $2,000 per FTE for each FTE over 30 FTEs...OR...$3,000 per FTE receiving tax credit, whichever is less, imposed when:
o Employer does not offer minimum value coverage to at least 95% of FTEs
o An employee receives a premium tax credit when obtaining coverage on the State exchange plan
Long-Term Impact to the City - Cadillac Tax
Beginning January 1, 2018, a 40% excise tax will be imposed on high cost employer coverage health insurance benefits exceeding certain thresholds, which are as follows:
* $10,200 limit fo...
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