Affordable Care Act continues in complexity, attorneys say

By Cynthia Price Legal News In light of the fact that it took three attorneys approximately two hours on Tuesday, June 11, to explain just the Shared Responsibility Rules of the Affordable Care Act (ACA), it is fair to say that the complexity of the regulations associated with the act is somewhat overwhelming. Not only should companies seek good legal advice, but they also clearly will require expertise in many other areas as well: accounting, Human Resources, and -- as Dickinson Wright attorneys Deborah Grace, Roberta Granadier and Cynthia Moore emphasized -- recordkeeping. The three attorneys from Dickinson Wright's Troy office presented at a "Sunrise Seminar" in Grand Rapids at a venue next door to the firm's location near the Kent County Courthouse. The well-established employee benefits lawyers tag-teamed presenting the regulations, which will take effect Jan. 1, 2014. At one point, Moore said that there are over 20,000 pages of regulations so far related to the ACA, a number which is difficult to measure with exactitude, but gives an idea of the magnitude of the implementation. Deborah L. Grace attended nearby Kalamazoo College for her B.A., and received her J.D. from Wayne State University Law School. Active in bar association employee benefits committees at the local, state, and national levels, Grace specializes in advising on medical, dental, and other insurance plans including design, implementation and administration. She referred to herself during the seminar as a "math person." An expert in ERISA (Employee Retirement Income Security Act), executive compensation, and retirement planning, Robert P. Granadier is currently Of Counsel to Dickinson Wright. She received her J.D. from Boston University School of Law after graduating from the University of Michigan with high distinction. Cynthia A. Moore, who is the manager of the Practice Department of Domestic Relations, Employee Benefits, Estate Planning, Gaming and Immigration, graduated from Alma College, from Western Michigan University for a masters' degree, and from the University of Texas at Austin, from which she received her J.D. She advises on all aspects of employee benefits as well as required corporate reporting such as Sarbanes-Oxley Act compliance. All three attorneys are listed in Michigan Super Lawyers for Employee Benefits/ERISA, along with other distinctions and honors. As most employers likely know, ACA responsibility provisions chiefly concern "large employers," which is defined as those with over 50 full-time-equivalent (FTE) employees. Naturally, this is no problem for either the large corporation with hundreds of employees nor the small mom-and-pop business that employees in the single digits. But where the number is close, things get complicated. The rules designated a full-time employee as someone who works an average of 30 hours per week. Hours of service are calculated based on existing Department of Labor standards. And the determination of how many FTEs the company employs is a pretty straightforward average. Any employee who works 40 hours or more per week is left out of the total and considered a full time employee. Then a company must add up the number of hours worked each month by all other employees and divide it by 120 for a monthly total, maintaining all fractions, and then add all those monthly totals up and divide by 12 for the total per year. Well, almost all other employees. If a company's personnel roster swells to over 50 only during some months of the year which can legitimately be attributed to seasonal work, such as an increase in retail employees during the month of December, there is no requirement for that company to consider itself a large employer. Employees outside the U.S. also do not count for ACA, though they do for some other benefits calculations. In addition, for 2013 only, an employer can use a six-month period rather than the entire year to determine these totals. After those calculations, the company must figure out to which employees the ACA mandates that it offer insurance. This entails keeping detailed records with a lot of variables. There are different sets of penalties for a failure to offer coverage to all employees who are eligible (or, actually, 95% of them), versus failing to offer them "minimum essential coverage," which requires that it be affordable and provide minimum value (in turn is defined as "if the plan's share of the total allowed cost of benefits provided under the plan is at least 60% of such costs"). Since figuring out affordability may involve factors unknown to the employer, such as family size and other wage-earners, there are safe harbors such as the provision that coverage is deemed affordable if the required contribution is not more than 9.5% of the employee's W-2 form wages. Granadier noted that the failure-to-offer-coverage penalty kicks in only if one of those full time or FTE employees goes to the health care exchange/marketplace and qualifies for a premium subsidy based on income. "If your employees are all well enough paid that they will never qualify for the subsidy, you're not likely to be subject to the penalty," she said. However, if only one employee does receive the subsidy, the broad penalty applies. New variable-hour employees present challenges. "There's going to be a lot of tracking going on here," warns Grace. "Companies need to set some processes in place." The seminar went on to cover fees, reporting requirements and miscellaneous associated topics, all of them complicated in their own right. The women rode together to Grand Rapids from Troy, and joked about the nature of their ACA-focused conversation. "We were just discussing that point on the way here," said Moore in answer to a question, and all three laughed. Published: Thu, Jun 27, 2013

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