HomeMy WebLinkAbout2013/10/01 Item 06 �.:: - -
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. � , - ��� - AGENDA STATEMENT
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- - - . �.� ' "10~`CHULA VISTA
OCTOBER I. 2013. Item �
ITEDZ TITLE: ADOPTI\'G LOOK-BACK PERIODS TO IDENTIFY FUZL-
TIME En4PLOYEES PLRSUANT TO THE E�4PLOI'ER
SHAR.ED RESPO:�'SIBILITY PRO��ISIONS OF
AFFORDABLE CARE ACT (.ACA)
SUBilIITTED BP: DEPUTY CITY A4A\'AGER .���
REV'IE«'ED BI': CITY n4ANAGERr,�,�, � �p5
ASSISTAI�TT CITl}��\'AGER ��c�"
4hTHS VOTE: YES � NO �
SU��IIARY
Pursuant to the Employer Shared Responsibiliri� provisions under section 4980H of the
Intemal Revenue Code; also ]:nown as the Affordable Caze Act (ACA); the City is
oblieated to pro<<ide affordable and minimum essential medical benefits to "full-time�'
employees or pay a penalty. This mandate «�ill take effect Januan� 1; 2015. For purposes
of this mandate; "full-time�' employees aze salazied.and hourly emplo}�ees �vorkine 30 or
more creditable hours of service per week. In order to identifi� employees w�ho ��ill
qualifi� as "full-tune ' employees, the Cit}� must establish and adopt look-back
measurement periods in accordance �i ith the requuements of the Act.
ENVIRONAZENTAL REVIE�V
Not applicable.
RECOnZNIENDATION
That Council adopt the resolution establishin2 the City's look-back measurement periods
as mandated under the Patient Protection Affordable Care Act (.ACA).
BOARDS/C01ti�1ISSION RECOn�7ENDATION
Not applicable.
6-1
OC1'OBER 1, 20li, Item �
Page 2 of 5
BACKGROUND
The Patient Protection and Affordable Care Act commonly called the Affordable Caze
Act (ACA), is a federal statute signed into law by President Bazack Obama on March 23,
2010. Together with the Health Care and Education Reconciliation Act, it represents the
most significant government expansion and regulatory overhaul of the U.S. healthcaze
system since the passage of Medicare and Medicaid in 1965.
The ACA is aimed at increasing the rate of health insurance coverage for Americans and
reducing the overall costs of health care. It provides a number of inechanisms includina
mandates, subsidies, and tax credits to employees and individuals to increase the
coverage rate. Additional reforms aiin to improve healthcare outcomes and streamline
the delivery of healthcaze. The ACA requires insurance companies to cover all applicants
and offer the same rates regardless of pre-existing conditions or gender. The
Congressional Budget Office projected that the ACA will lower both future deficits and
Medicare spending.
The ACA includes numerous provisions that take effect over several years beeinning
back in 2010.
Effective January 1, 201�, the City as a large employer (one with 50 or more full-time
equivalent (FTE) employees) will be subject to an assessable payment if the City does �ot
do the following:
• Offer health coverage to our full-time employees, and their dependent children;
• Ensure that coverage is affordable; and
• Ensure that coverage provides the "minimum essential medical benefits"
A full-time employee for purposes of the ACA is a salaried or hourly employee working;
on average, 30 or more creditable hours of service per week.
Assessable Payments
Components of the proposed regulation on Employer Shared Responsibility aze
summarized below:
An assessable pa}�ment
a plies if the: AI�rD THEN
Employer DOES NOT offer
substantially all (95%) of its One or more full-time
full-time emplo}�ees and employees receives a The annual assessment is
their dependents the premium tax credit or cost- $2,000 for each full-time
opportunity to enroll in sharing reduction for employee(whether or not
minimum essential purchasing individual offered coverage), minus
coverage under an eligible coverage through a Health tbe first 30 employees.
employer-sponsored plan. Benefits Exchange
6-2
OCTOBER l, ?Oli, Item �i
Pase 3 of�
An assessable payment
a lies if the: AND THE?�T
Emplo}�er DOES offer The annual assessment is
coveraee to substantially all One or more full-time $3,000 for each full-time
(9�%) of its full-time emplo}�ees receives a employee «ho is not
employees and theu child Premium tax credit or cost- offered affordable coverage
dependents; BUT the sharina reduction for providine minimum value
coveraee is either not P�chasing individual and who recei��es a
affordable or does not co��eraee through a Health premium ta.� credit or cost-
rovide minimum value. Benefits Ezchanae sharine reduction.
The Intemal Revenue Service ���ill inform the City of potentiai liabilih� and pro��ide an
opportunity to respond before an�= liabilin� is assessed or notice and demand for pavment
is made.
Look-back A4easurement �4ethod
Instead of requirin� a monthl}� calculation of hours worked; the proposed regulations
provide for a look-back measurement method for emplo��ers to determine if their
variable-hour employees aze ���orkine full-time. Under the proposed rule; as a laree
employer the Cin� must offer vaziable —hour employees, includine seasonal, temporary;
and permanent intermittent: health co��eraee if �vorkine an a��eraee of 30= hours per
week.
The look-back measurement method invol��es the use of:
• A "measurement period" of three to 12 months for determinine the hours of
service.
• A "stabilin� period ' of at least six months but no shorter than the measurement
period, during which the coverage must be provided if the employee �i�orks 30+
hours per���eek durine the "measurement period' , and
• An optional "administration period" of; in eeneral; up to 60 davs beeinnine
immediately after the measurement period and endin� immediately prior to the
stabilit� period to allo�v time for enrollment and disenrollment.
The look-back requirements vary based on �i�hether emplo��ees are new or ongoine, and
in the case of neH emplovees, whether they are full-time or variable-hour emplo��ees.
For ne�� variable-hour employees; under the look-back method employers must use an
initial measurement period be2inning any date bet�veen the emplo}°ee's stan date and the
first day of the follo«�ing month.
6-3
OCTOBER 1. 20li. Item 6
Page 4 of�
DI5CUSS10N
In order to determine which employees meet the definition of"full-time", the City must
adopt three measurement periods: Initial, Standard and Stability for both On-going and
New employees. A graphic illustration of the recommended period definitions is
included as Attachment 1 to this report. Following are staff's recommended period
definitions:
On-QOin2 Emplovee — An employee �uho has been employed for at least one complete
Standard Measurement Period
1. Standard Measurement Period (12 consecutive months)
• November through October (The Standard Measurement period for Year 1
will be I�'ovember I, 2013 througli October 31, 2014)
■ If an employee averages at least 30 hours perweek during this Standard
Measurement Period, they will be treated as a "full-time" employee during
the subsequent StabiliTy Period, so long as they remained employed.
2. Administration Period (2 consecutive months)
• November through December following the Standard Measurement
Period (The Administration Period for Year 1 will be November 1, 2014 -
December 31, 2014)
■ The purpose of this period is to allow the City to determine which on-
going employees are eligible for coverage and to notify and enroll eligible
employees.
3. Stability Period (12 consecutive months)
• Januazy through December immediately following Administration Period
(The Stability Period for Year 1 will be January 1; 2015 throu�h
December 31, 2015)
• This is the period of inedical coverage for ongoing employees.
New Emnlovee-An employee who has not completed one complete Standard
Measurement Period
1. Initial Mcasurement Period (11 consecutive months)
• First of the month following hire date through 11`h month
• If an employee averages at least 30 hours per week during the Initial
Measurement Period, the employee will be treated as a full-time einployee
during a subsequent Stability Period, so long they remain an employee.
2. Administration Period (2 consecutive months)
• Two months inunediately following the Initial Measurement Period
• Used to determine which new employees are eligible for coverage, and to
notify and enroll eligible employees.
6-4
OCTOBER 1. 2013. Itzm b
Paee � of�
3. Stability Period (12 consecutive months)
• T�ielve months immediatel�� follo��ine Administration Period
■ This is the period of inedical coverage for new hires.
DECISION DZ�R CO\`FLICT
Staff has reviewed the decision contemplated bti�this action and has determined that it is
not site specific and consequently; the �00-foot rule found in Califomia Code of
Regulations section 18704?(a)(1) is not applicable to this decision. Staff is not
independently awaze, nor has staff been informed b�� any Cit�- Councilmember, of an�
other fact that ma}- constitute a basis for a decision maker conflict of interest in this
marter.
CURRENT I'EAR FISCAL I��IPACT �
There is no fiscal impact created by establishine the Citys look-back periods. The look-
back periods «ill provide the City the information it needs to dztermine ���hich employees
aze "full-time ' and for whom the City must offer affordable health caze in order to
comply writh the ACA.
Cin's expense of compliance and potential liabilities for non-compliance �tiill not be
known until the number of"full-tune ' emplo��ees has been determined at the end of the
initial look-back period (October 31; 2014).
O\GOI1i TG FISCAI, I1'IP�CT
Sazne as above.
ATT�CHI7ENTS
1-Healthcaze �4andate-Measurzment. Administration and Stabilirv Periods Illustration
Prepared by: Edith Ouicho, Benefits Manager, Human Resources
6-5
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6�6
RESOLUTIO\'NO. 2013-
ADOPTIIVG LOOK-BACK PERIODS TO IDEI�'TIFY FULL-
TIME EMPLOl'EES PURSUA\'T TO THE EMPLOYER
SI-LARED RESPONSIBILITY PROVISIO\'S OF AFFORDABLE
CARE .ACT (ACA)
\VHEREAS, effective January 1; 201�, the Cit�� ���ill be oblieated to provide affordable
and minimum essential medical benefits to "full-time" emplo��ees defined as those salaried and
hourly employees �vorkine thirt} (30) or more creditable hours of service per ���eek or pay a
penalty pursuant to the Emplo��er Shared Responsibility provisions under Section 4980H of the
Intemal Revenue Code; also kno�;n as the Affordable Care Act (ACA); and
\4'HEREAS, the Citv has to establish and adopt "look-back measurement periods; in
accordance �ti�ith the Safe Harbor Provisions of the Intemal Reeenue Code; for the purpose of
identifying emplo��ees ���ho qualify as "full-time° employees; and
\'O\V. THEREFORE. BE IT RESOLV'ED that the Cin Council of the Citv of Chula
Vista does hereb�� establish and adopt the follo���ine look-back Measurement Periods; pursuant to
the Emplo�er Shared Responsibilin� provisions of the Affordable Care Act:
For On-eoine Emplo��ees the measurement periods "�ill be as follo�a:
• Standazd A4easurement Period (12 consecutive months) from November 15` through
' October 31�`. The initial period ��rill be 11/O1/2013 to 10/31/2014.
• Administration Period (2 consecutive months) from No�ember 1s` throueh December 31�'
immediateh= following the Standard A4easurement Period. The initial period H�ill be
ll/O1/2014 to 12/31/2014.
• Stability Period (12 consecutive months) from Januarv 15t throueh December 3151
immediatel�� follo���ine the Administration Period. The initial period ��ill be O1/O1/201�
to 12/31/201�.
For New Employees the measurement periods will be as follow:
• Initial Measurement Period (11 consecuti��e months) First of the month follo�i�ing hire
date throueh 11`� month
• Administration Period (2 consecuti��e months) T�vo months immediatel}� follo���ine the
Initial 1�9easurement Period
• Stabilitv Period (12 consecutive months) T�veh�e months immediateh� follo���ing
Administration Period.
Presented bv: Approved as to form b}�:
/W✓"�^ ��
Kellev Bacon Glen R. Gooeins
Deput�� City ManaQer Citv Attome}�
1:Wnomey�FINAL RESOS AND ORDII�'ANCES�013V 0 01 13\RESO-HR-Adopting Look Back Periods rev 09-?4-13.docs
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