The Patient Protection and Affordable Care Act and the Healthcare and Education Reconciliation Act of 2010 (PPACA), collectively the Affordable Care Act or Obama Care, were signed into law in 2010. The PPACA has brought many changes to the world of health benefits. It mandates more Americans be insured and makes insurance benefits easier to get. It also expands the range of benefits for everyone. These features of the PPACA apply to all health benefits providers, including districts that self-insure.
There are also significant challenges in managing the transition from how and to whom insurance has been offered and provided to how and to whom insurance must be offered in the near future. The intent of this summary is to provide charter school districts, community colleges, educational services providers (ESDs), and school districts critical information needed to manage this transition.
The small group market reforms of PPACA apply differently to different types of health benefit providers. Starting in 2014, insurance carriers will be required to rate all their small groups in one pool.
Those districts that provide its employees with a self-insured plan may continue to self-insure, however, those districts will have additional changes that must be considered as the insurance provider as well as the employer. Those other districts who are not receiving benefits through the Oregon Education Benefits Board (OEBB) may continue to do so; however, the district will be included in the providers’ small group pool. Districts receiving their insurance benefits through OEBB will continue to receive insurance benefits through OEBB and will only be responsible for those changes required of employers, whether a small or large employer.
Most of the major provisions in the PPACA, such as employer and employee reporting requirements and penalties for large employers who either do not offer insurance to employees or require employees to pay greater than nine point five percent (9.5%) of their gross annual wages towards the costs of employee only insurance, were scheduled to take effect beginning January 1, 2014 or October 1, 2014 for those districts buying insurance through OEBB; however, the implementation of most of those provisions have been delayed until at least January 1, 2015. The date has now been changed to January 1, 2016 for those employers with between 50 and 100 full-time or full-time equivalent employees. Individuals are still required to have healthcare by March 31, 2014 or at least have started the process through the federal exchange. In Oregon, the Governor has not yet extended the deadline for those individuals who have started the process of acquiring insurance through Cover Oregon, the state’s exchange. For those who have not already signed up for insurance and want to access the exchange, they will now need to contact the federal exchange because Cover Oregon will no longer be available. Other PPACA provisions are already in place, with others phased in over the next few years.
One aspect of the PPACA of great importance to school districts is the potential penalties for those school districts considered to be “large employers.” A “large employer” is an employer that employs at least 50 full-time (an average of 30 hours or more a week) employees or a combination of full-time and part-time employees that equals at least 50, the computation of which is explained in greater detail below.
Summary of the penalty provisions of the PPACA as it applies Oregon public schools
NO PENALTIES will apply if:
The district is not a large employer; OR
The district is a large employer, AND
- It offers health insurance coverage to your employees, AND
- An offered insurance plan pays for at least 60% of covered health care expenses for a typical population, AND
- No full-time employee has to pay more than 9.5% of household income for the offered self-only coverage.
PENALTIES MAY apply if:
The district is a large employer and ANY of the follow circumstances exist:
- The 5%/5 standard:
- The District does not offer health insurance coverage to the greater of 5% of its full-time employees (and their dependents) or 5 full-time (and their dependents) AND at least 1 employee receives a premium tax credit or cost sharing subsidy in the exchange.
- Penalty: $2,000 per year (prorated on a monthly basis) per full- time (average of 30 hours per week) employee with an exemption from the penalty for the first 30 employees of the large employer.
- The District offers health insurance coverage to its employees under the 5%/5 standard BUT the insurance does not pay for at least 60% of the covered health care expenses for a typical population AND employee(s) buy coverage through an exchange and receive a premium tax credit:
- The penalty: $3,000 per year (prorated on a monthly basis) for each individual full-time (average of 30 hours per week) employee who buys coverage through an exchange and receives a premium tax credit.
- The District offers health insurance coverage to your full-time (average of 30 hours per week) employees AND the insurance pays for at least 60% of the covered health care expenses for a typical population BUT any individual employee has to pay more than 9.5% of household income for the self-only coverage AND employee(s) buy coverage through an exchange and receive a premium tax credit.
- The penalty will be $3,000 per year (prorated on a monthly basis) for each individual full-time (average of 30 hours per week) employee who buys insurance coverage through an exchange and receives a premium tax credit.
The Employer Shared Responsibility provisions (summarized above) go into effect January 1, 2015 (or September 1, 2015 for those school districts who offer health plans on a different plan year).
Small employers (those with less than 50 full-time employees in 2014 and less than 100 in 2016) will be able to purchase insurance products from the Exchange in 2014.
For additional information about the PPACA and its impact on Oregon public schools, please refer to the FAQs.
The information contained on this website is intended as a guide to help districts and community colleges navigate through the complexities of the PPACA. This is a “work in progress” and will be updated/refined as further questions arise, as further guidance becomes available, and as further regulations are implemented.