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Learn how vaccine mandates and surcharges for the unvaccinated could potentially affect the affordability of your healthcare plan under the Affordable Care Act.
The Workforce Wise™ Podcast from Equifax Workforce Solutions helps employers save time, reduce risk and increase profits. Our experts and industry leaders reveal insightful human capital solutions for HR, payroll, tax and compliance needs. Listen now and get empowered to deliver immediate value to your organization. Learn more and listen to other episodes at workforce.equifax.com
- [Announcer] You're listening
to the Workforce Wise
Podcast from Equifax.
Where we help you better
manage your workforce
by saving time, reducing risk,
and focusing on increasing profits.
(upbeat music)
- Hello and welcome to the
Workforce Wise Podcast.
I'm your host, Jason Fry.
This is a continuation of our series
on how vaccination mandates
might affect HR operations.
We're hearing more and more
about how vaccination mandates
for COVID-19 at various
levels of the government
and how those vaccination mandates
may impact HR professionals
as they're rolled out
across either your state or the country.
Many of our clients are
evaluating different options
to comply with these mandates,
and we're working through
how these mandates might impact
their ongoing HR operations.
Today, we're gonna focus on
how those mandates might've,
may impact ACA and ACA compliance.
Christy Abend is with us
today and will be walking us
through key points for employers
to better understand
possible ramifications
for vaccine mandates on
your individual ACA program.
Christy is our Product
Manager for our ACA service,
she's responsible for
the strategic development
of our ACA offerings.
And honestly, she's written some
really great pieces recently
on how vaccine mandates
may impact ACA operations.
Thank you for joining us today Christie.
- Thanks so much for having
me Jason, happy to be here.
- So Christie, I'm gonna
start with the same question
that I'm gonna start each of these with,
to mandate or not to mandate?
That's the question that we're getting
from our clients right now.
So what are you hearing from
clients or what are you seeing
in the marketplace when
you see that question?
- When I see that question,
it is such a heated question.
I think it's really going to be dependent
on the employer's appetite
to handle mass fallout
from employees who are not interested
in receiving the vaccination.
I think that's one of the
biggest concerns is when
an employer implements a
requirement to be vaccinated,
there are many reasons why
employees may not be interested
in complying with that mandate
and are absolutely willing
to look elsewhere for employment.
So you know, as far as what we're hearing
it's really all over the place.
Employers have a responsibility
to protect their workforce,
but they also need to be
concerned with high rates
of turnover in order to
operate their business.
So it really is just going to depend
on how that employer can rebound
from any kind of loss of staff
as a result of a mandate.
- No, and that makes 100% sense.
And I mean, we've seen
a lot in the marketplace
and honestly, just even on the news
about how different
employers are looking at,
or reacting to vaccines
and vaccine mandates.
One of the things that I've seen recently
is employers charging their
employees more for benefits
if they're not vaccinated.
Now I don't admittedly
know a ton about ACA
but it sounds like something
that may impact ACA,
does it impact?
And how would that type of a philosophy
from the employer impact ACA?
- Sure, and I think
that this is another one
of those answers that
it's always, it depends.
The concern for Affordable
Care Act compliance
when it comes to these
vaccination mandates
is really those that are
considering adding some kind of
a premium surcharge to
their employee cost sharing,
employee cost sharing.
If an employer is already
riding the line when it comes
to affordability of their plans,
adding any kind of a surcharge
to those employee costs
for those premiums could render
their plans unaffordable.
You know, we've got an example
from one of our customers
who was truly looking to
implement some kind of a surcharge
to help offset the costs
that are related to hospitalizations,
that are resulting from their
unvaccinated populations.
Similar to what we saw in the
news at the end of August,
one of the largest employers
in our country has declared
that they are going to be
implementing a premium surcharge
of $200 per month
to their unvaccinated employees
effective November 1st.
In addition to implementing a surcharge
they're also going to be
rolling out the requirement
of all of their employees
to wear a mask indoors
who are unvaccinated.
They would no longer be
offering paid time off
to their employees who might be infected
with the COVID-19 virus
as long as those employees
have not been vaccinated.
So only their vaccinated
population will be able
to take advantage of that paid leave.
But when it comes to
the Affordable Care Act,
it really is that premium
surcharge that employers need
to be cognizant of.
Wellness programs have many
different governing bodies
with regulations that
need to be considered
including HIPAA, the ADA, GINA,
and of course the Internal Revenue Code.
These governing bodies have
legislation already existing
that indicate that an
employer cannot discriminate
against an individual's
eligibility to participate
in a health insurance
plan, as well as premiums
that can be charged and
coverage that can be offered
to those employees based
on a health-related factor.
And then in 2010 the Affordable Care Act
also further extended
those non-discrimination
considerations to include insurers
who can not charge higher
premiums based on health status,
gender, race, or disability.
An exception to this has been
the allowance of premium
discounts, rebates,
modifications to cost
sharing for employees
who adhere to a wellness
program that are created
to promote health and disease prevention.
There are limitations
to the dollar amounts
that can be offered to
employees, which is currently 30%
of the cost of coverage
or 50% when that program
is designed to prevent the use of tobacco.
And in addition, the
regulations clearly state
that reasonable
alternatives must be offered
in order to prevent discrimination.
But what's interesting here
is that wellness incentives
are considered not earned
when assessing affordability.
So any discounts that an
employee might receive
or a surcharge that might be
included in their premiums
can not be taken into consideration
when determining affordability
of the lowest cost health insurance plan.
So for example, if an
employer offers a plan
that includes cost sharing to
an employee of $100 a month,
but employees who participate
in a wellness incentive
program perhaps get a reduction
to $7 a month.
The ACA dictates that affordability
still must be calculated
on the $100 per month premium.
One exception to this has
been regarding surcharges
that are assessed to an
employer smoking population.
Under the ACA, insurance
providers are able
to legally charge higher premiums
in order to incentivize
smokers to quit smoking,
and employers can then pass on those costs
through premium surcharges that are added
to the smoking population.
Those premium surcharges can be excluded
when calculating affordability
of the lowest cost health plan.
So using the example I gave
above that $100 per month plan
that's being offered to employees.
If there's a surcharge
that's requiring smokers
to pay $150 per month, employers
are allowed to still use
the $100 per month plan costs.
So when the vaccination
mandate was announced,
there was a bit of
uncertainty on whether or not
that surcharge that could be assessed
to an unvaccinated employee
would be allowed to be excluded
from the affordability calculation.
But then recently here on October 4th,
there was an FAQ document
that was released
that included joint guidance
from the Department of Labor,
the Department of Health
and Human Services,
and the Treasury.
That confirmed that any surcharge
that's assessed to an
employee would not be able
to be excluded as it's
considered more like
the unearned benefit
in a wellness program.
- So I guess that's good for employers
who were thinking about surcharges.
But I know you mentioned discrimination
a couple of different
times when you are talking
about the surcharges.
Are there other concerns
around discrimination
or is it just kind of
carte blanche for employers
when you were talking about surcharges
for things like non-vaccinated employees?
- As well as offering
an alternative option
for those that are unable to participate
in a wellness program due
to a medical condition,
the same rules are going to need to apply
to a vaccine mandate that
employers roll out to an employee.
But most importantly, what's
important for employers
to keep in mind is that the
4980H rules that include
the affordability requirements
of an employer's health plan,
currently is set at 9.83% for 2021.
Some employers really do set
the cost of those plans
right along those lines
to ensure that those plans are affordable.
So the addition of any
kind of premium surcharge
would have to be added to that cost,
thus decreasing their ability to consider
their plans affordable.
(base guitar playing)
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- That seems like a
lot of really technical
and great advice, but are
there other implications
that employers should
think about ACA related
when they're thinking about surcharges,
or when they're thinking about compliance
with ACA just in general,
when we're talking about vaccine mandates?
- Sure, there's a lot
of things that employers
are going to need to consider,
if they're going to add
a surcharge to their health
insurance premium costs,
such as how much are they gonna charge?
And that really is going to depend on
what their current healthcare
cost sharing looks like.
Again, if they're really riding that line
along the 9.83% for 2021,
that is actually decreasing
to 9.61% for 2022.
This is going to be the second
year in the history of ACA
that the affordability
percentage decreases.
What that does is it leads to an employer
who is riding the line and
charging as much as they can
while still having their
plans deemed as affordable.
When that amount decreases
employers most often will have
to decrease the amount
that they're charging
to their employees.
So when you couple the decrease
of the affordability
percentage for 2022 to 9.61%,
plus the addition of a surcharge
for your unvaccinated population,
you really are towing the line,
potentially putting yourself
in a place where your coverage
won't be determined as affordable.
So the considerations that need to happen
during this discussion,
these conversations are
what are my current costs?
What is the current cost
of my lowest cost health
insurance plan that is available
to my employees?
And how much room do we have between that
and the maximum affordability percentage,
so that an amount can be
determined that would allow
an incentive for employees
to be vaccinated,
but also not put the employer
out of the affordability spectrum?
So when determining
those amounts you know,
take things into consideration,
like for instance,
smoking surcharges average
approximately 20 to $50
per month, per employee.
So an employer needs to look
at those amounts and make sure
that it's not going to deem
their plans unaffordable.
But then they also need to be
concerned with whether or not
they're going to assess
those surcharges just to their employees,
or if they're going to take
their family vaccinations
into consideration when
applying that surcharge.
That's going to be certainly
a logistical consideration
for employers to keep mindful of.
For instance, HIPAA has privacy
laws that are very specific
on record keeping and
information disclosure related
to health information.
So employers need to be
thinking about not only,
how much will this cost?
But how am I going to
administer this plan?
What am I going to require of my employees
to prove their vaccination status?
Or again, if I'm going to roll that out
to the family members that
are enrolled in my plan,
what documentation am
I going to be requiring
of my employees?
Who is going to manage that logistically?
And how am I going to keep
that information protected
to ensure that I'm in compliance
with HIPAA privacy laws,
in addition to Affordable Care Act,
affordability considerations as well?
- And Christy just because I
wanna know, what happens if
they run a foul of the
affordability standards?
- Sure, so what happens when
an employer offers a plan
that's not affordable?
They could very well get away with it.
This is one of the things that
I always like to emphasize
when considering what the true risks are.
An employer who offers a
plan that's not affordable
is going to be subjecting
themselves to potentially
the 4980H(b) penalty for any employee
who deems that coverage unaffordable
and then seeks coverage
through the exchange,
and is eligible for a subsidy.
So for each employee that
does that provided that
it is determined that that
coverage was unaffordable,
employers are going to be
looking at paying a penalty
which is also indexed
for inflation each year.
So we're looking at
roughly just over $4,000
for 2021 penalties, that
would be the implication
to an employer.
But those employees do
need to go to the exchange,
enroll in coverage through the exchange
and be determined to be
eligible for a subsidy.
In which case an employer
would likely be seeing
these employees listed on what they call
the Premium Tax Credit
notification that is received
through the 226-J notice.
Likely these come out roughly two years
after the reporting year,
so this is something
that could very well affect
employers for years to come
if they're not paying attention
to the affordability percentage
when they're considering these surcharges.
- Christy, honestly I think
this is some great information.
I'm sure our listeners
have learned a lot today.
And I'd like to thank
you for joining us today
on the Workforce Wise Podcast.
For listeners, we hope you
enjoyed today's discussion
and we hope you're walking
away with some best practices
that you can adopt at your organization.
And be on the look out for the next set
of vaccine mandate podcasts
to learn how those mandates
may affect other parts
of your HR operations.
(base guitar playing)
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