Warsaw Schools Discuss Obamacare Changes
July 28, 2016 at 4:25 p.m.
By David [email protected]
Tuesday afternoon during the school board’s public work session, Chief Financial Officer Kevin Scott reported on Obamacare and how it will affect the school district.
“It’s a federal program. All employers must comply. And for us, we have to avoid the big penalty. There’s a lot of penalties tied with this law. So you choose: Are you offering coverage or are you going to pay penalties? There’s a chance you could run a big risk,” Scott said.
“Why can’t we offer insurance to all? We certainly value all of our employees. It’s a tough call, for any employer. The costs are dramatic.”
Scott explained the law was enacted in March 2010. It has more than 1,000 pages of legislation, and guidance on the law is still rolling out, he said. Scott has attended many sessions on Obamacare and listened to many different people speak about it with different perspectives.
“Rules are still being developed,” he said.
The cornerstone year for the legislation is 2014, he said, because that’s when exchanges have to be launched. Exchanges are places for people to go to secure insurance who aren’t insured through their employer.
“States were asked to build these state exchanges and Indiana declined. Indiana and 24 other states were waiting to see will it be repealed, will the Supreme Court take action. Well, the Supreme Court came back and said Congress can pass this because it’s a tax and Congress can take. So it survived,” Scott stated.
Coverage is guaranteed, even with people with pre-existing conditions and there is no individual underwriting.
“Individual mandate includes tax credit for folks who might need help. You must obtain minimum essential coverage or a penalty will be assessed when you do your income tax,” Scott said.
The tax credit is available to certain individuals with a household income up to 400 percent of the federal poverty level, which makes 68 percent of the population eligible for the federal tax credit, he said. For a family of four, that threshold is approximately $92,200.
Scott said the caveat is that the credit is not available if they are eligible for adequate and affordable employer coverage.
As part of Obamacare, Scott said, “There are measurement periods where it requires that (employers) have to look at all the hours reported by (their) employees.” For WCS, it’s tricky because employee hours would have to include not only teachers’ time in the classroom, but also coaching time, time taking tickets at a basketball game, substitute teachers, maintenance employees’ time, etc., he said. Scott has already started the conversation with Athletic Director Dave Anson on how they’re going to track some of the hours and what WCS’s exposure is.
“So there’s going to be this measurement period, and that would follow our stability period of the folks that were eligible, that were more than 30 hours. If they average more than 30 hours, you’re going to have to offer them insurance and they go on the plan ... If they are eligible to go on the plan, they have to stay on during the stability period,” Scott continued.
He said WCS schools will have six-month transition periods each so the district will have its first measurement period from October through March. Anybody that averages 30 hours a week or more “we have to offer insurance,” he said. They can then get on the school corporation’s insurance plan July 1 because that’s when their stability period begins and the district’s insurance plan renews. In future years, the stability and measurement periods will be 12 months each.
As for the “rider penalty,” Scott said WCS has to treat employees as credited with hours for employment breaks. It’s specific guidance that came out for schools.
“You can’t say, ‘I’m going to take the hours they worked in nine months and average it over 12.’ Schools have to take what they worked, their average during the nine months, and apply it to the months that they’re off in the summer. So if they average 32 hours a week, you can’t water it down through the summer,” Scott explained.
If WCS doesn’t offer insurance to an employee who works 30 hours or more a week, Scott said, and WCS can’t prove it offered that employee insurance, the government would charge the corporation $2,000 for every employee it has. Scott said that could be a $2 million or more penalty.
“We certainly can’t put ourselves in the position where we run the risk of getting a big penalty,” he continued.
There’s also a penalty if the coverage is inadequate or unaffordable. That $3,000 penalty is just specific to the individual. It’s inadequate if the plan pays less than 60 percent of allowable costs. WCS’s plan pays 89 percent. It’s unaffordable if an employee pays more than 9.5 percent of their household income.
“The law is only measured on the single coverage plan. How much does the employer pay towards on a single plan. It doesn’t measure on a family plan,” he said.
Scott added there are other taxes and fees related to this. There’s the Comparative Effectiveness Research Fee ($1 per person in first year, $2 in year two); the Exchange Reinsurance Fee, charged to the employer to stabilize the exchanges, estimated to be $75,000; the Cadillac Tax effective in 2018; and the Medicare Tax, an additional 0.9 percent on Medicare tax on wages.
Scott said WCS determined that it couldn’t reduce everyone’s hours below 30 a week after reviewing all employee groups from food service to technology. There will be about 133 employees who work 30 to 39 hours a week.
He said they met with all the building leaders who were provided with a total hours allocation, an employee list of staff names and hours that remain at 30 or more, and a generic letter of assurance that building leaders completed with name and hours assigned for 2013-14.
As Scott budgets for 2014, he said there will be a six-month impact on it next year. Employees who are eligible for the insurance come on the plan July 1, 2014. All employees not in the 30- to 39-hour group will be required to work 27.5 hours per week or less. The standard procedure will be that there will not be any overtime for staff members working less than 30 hours per week. Exceptions will be limited, and administrators must personally review and sign time sheets. Timesheets will be audited.
Scott said insurance can’t be offered to everyone because the cost is “dramatic.” A while back, Scott calculated that if WCS offered its insurance plan to all hourly employees, it would cost an additional approximate $2.5 million.
The estimated cost for WCS to offer insurance to the 133 employees who will work 30 to 39 hours weekly will be $744,800, spread across all funds in the corporation’s budget.
Scott said discussions on a new medical plan are ongoing. Total hours available are not reduced, and collectively WCS must be diligent.[[In-content Ad]]
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Tuesday afternoon during the school board’s public work session, Chief Financial Officer Kevin Scott reported on Obamacare and how it will affect the school district.
“It’s a federal program. All employers must comply. And for us, we have to avoid the big penalty. There’s a lot of penalties tied with this law. So you choose: Are you offering coverage or are you going to pay penalties? There’s a chance you could run a big risk,” Scott said.
“Why can’t we offer insurance to all? We certainly value all of our employees. It’s a tough call, for any employer. The costs are dramatic.”
Scott explained the law was enacted in March 2010. It has more than 1,000 pages of legislation, and guidance on the law is still rolling out, he said. Scott has attended many sessions on Obamacare and listened to many different people speak about it with different perspectives.
“Rules are still being developed,” he said.
The cornerstone year for the legislation is 2014, he said, because that’s when exchanges have to be launched. Exchanges are places for people to go to secure insurance who aren’t insured through their employer.
“States were asked to build these state exchanges and Indiana declined. Indiana and 24 other states were waiting to see will it be repealed, will the Supreme Court take action. Well, the Supreme Court came back and said Congress can pass this because it’s a tax and Congress can take. So it survived,” Scott stated.
Coverage is guaranteed, even with people with pre-existing conditions and there is no individual underwriting.
“Individual mandate includes tax credit for folks who might need help. You must obtain minimum essential coverage or a penalty will be assessed when you do your income tax,” Scott said.
The tax credit is available to certain individuals with a household income up to 400 percent of the federal poverty level, which makes 68 percent of the population eligible for the federal tax credit, he said. For a family of four, that threshold is approximately $92,200.
Scott said the caveat is that the credit is not available if they are eligible for adequate and affordable employer coverage.
As part of Obamacare, Scott said, “There are measurement periods where it requires that (employers) have to look at all the hours reported by (their) employees.” For WCS, it’s tricky because employee hours would have to include not only teachers’ time in the classroom, but also coaching time, time taking tickets at a basketball game, substitute teachers, maintenance employees’ time, etc., he said. Scott has already started the conversation with Athletic Director Dave Anson on how they’re going to track some of the hours and what WCS’s exposure is.
“So there’s going to be this measurement period, and that would follow our stability period of the folks that were eligible, that were more than 30 hours. If they average more than 30 hours, you’re going to have to offer them insurance and they go on the plan ... If they are eligible to go on the plan, they have to stay on during the stability period,” Scott continued.
He said WCS schools will have six-month transition periods each so the district will have its first measurement period from October through March. Anybody that averages 30 hours a week or more “we have to offer insurance,” he said. They can then get on the school corporation’s insurance plan July 1 because that’s when their stability period begins and the district’s insurance plan renews. In future years, the stability and measurement periods will be 12 months each.
As for the “rider penalty,” Scott said WCS has to treat employees as credited with hours for employment breaks. It’s specific guidance that came out for schools.
“You can’t say, ‘I’m going to take the hours they worked in nine months and average it over 12.’ Schools have to take what they worked, their average during the nine months, and apply it to the months that they’re off in the summer. So if they average 32 hours a week, you can’t water it down through the summer,” Scott explained.
If WCS doesn’t offer insurance to an employee who works 30 hours or more a week, Scott said, and WCS can’t prove it offered that employee insurance, the government would charge the corporation $2,000 for every employee it has. Scott said that could be a $2 million or more penalty.
“We certainly can’t put ourselves in the position where we run the risk of getting a big penalty,” he continued.
There’s also a penalty if the coverage is inadequate or unaffordable. That $3,000 penalty is just specific to the individual. It’s inadequate if the plan pays less than 60 percent of allowable costs. WCS’s plan pays 89 percent. It’s unaffordable if an employee pays more than 9.5 percent of their household income.
“The law is only measured on the single coverage plan. How much does the employer pay towards on a single plan. It doesn’t measure on a family plan,” he said.
Scott added there are other taxes and fees related to this. There’s the Comparative Effectiveness Research Fee ($1 per person in first year, $2 in year two); the Exchange Reinsurance Fee, charged to the employer to stabilize the exchanges, estimated to be $75,000; the Cadillac Tax effective in 2018; and the Medicare Tax, an additional 0.9 percent on Medicare tax on wages.
Scott said WCS determined that it couldn’t reduce everyone’s hours below 30 a week after reviewing all employee groups from food service to technology. There will be about 133 employees who work 30 to 39 hours a week.
He said they met with all the building leaders who were provided with a total hours allocation, an employee list of staff names and hours that remain at 30 or more, and a generic letter of assurance that building leaders completed with name and hours assigned for 2013-14.
As Scott budgets for 2014, he said there will be a six-month impact on it next year. Employees who are eligible for the insurance come on the plan July 1, 2014. All employees not in the 30- to 39-hour group will be required to work 27.5 hours per week or less. The standard procedure will be that there will not be any overtime for staff members working less than 30 hours per week. Exceptions will be limited, and administrators must personally review and sign time sheets. Timesheets will be audited.
Scott said insurance can’t be offered to everyone because the cost is “dramatic.” A while back, Scott calculated that if WCS offered its insurance plan to all hourly employees, it would cost an additional approximate $2.5 million.
The estimated cost for WCS to offer insurance to the 133 employees who will work 30 to 39 hours weekly will be $744,800, spread across all funds in the corporation’s budget.
Scott said discussions on a new medical plan are ongoing. Total hours available are not reduced, and collectively WCS must be diligent.[[In-content Ad]]
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