With at least 30 individual penalty triggers to worry about, some ACA compliance requirements are bound to take precedence over others. And there’s at least one ACA reg employers shouldn’t really worry about at all.
At the SHRM 2016 Conference and Exposition in Washington DC, David Lindgren, a compliance officerwith Flexible Benefit Service Corporation, went through 30 separate requirements that could trigger ACA compliance penalties.
While a few of the ACA regs have their own specific non-compliance penalties (e.g., the Shared-Responsibility penalties), most violations carry fines of $100 per participant per day, up to a $500,000 max.
During his presentation, Lindgren reminded employers that they don’t have to comply with the onerous ACA compliance requirements. In many cases, firms could — and in some cases, probably should — determine their financial and risk tolerance and decide whether taking a penalty would make more than sense than their them dumping the time and resources into complying with the provision in question.
What are the stakes?
In one telling section of his presentation, Lindgren showed how important it was for HR pros to know what’s at stake when non-compliance occurs.
One glaring example was the ACA reg that requires employers to provide written notice to new hires of the ACA Marketplace within 14 days of their start date — a requirement that applies even to ineligible employees or if your firm doesn’t offer benefits. The one exception to this reg: Employers that aren’t subject to the FLSA don’t have to comply.
Complying with this reg can prove to be an administrative burden for time-strapped employers, and choosing not to comply is a very appealing strategy. Reason: There’s currently no penalty for violating this provision, according to Lindgren.
When Lindgren flashed the slide informing SHRM attendees there was no penalty for this ACA requirement, there was a collective laugh in the room.
“Pfff, we DEFINITELY aren’t sending that notice then,” a woman exclaimed.
A host of additional triggers
While the non-penalty for the Marketplace Notice reg is a nice break for HR pros who have been frantically trying to comply with every tiny requirement under the massive ACA since its passage, there are still plenty of regs firms have to worry about.
- Violating Obamacare’s limits restrictions. As benefits pros are well aware, group health plans may not establish any annual or lifetime dollar limits on essential health benefits — as of Jan. 1, 2014. Doing so will trigger the non-compliance penalty.
- Not extending coverage to dependents up to the age of 26. Coverage of dependents up to the age of 26 was among the first wave of Obamacare provisions to kick in for companies sponsoring health plans, and failing to comply triggers a $100-per day penalty for each individual affected by the violation.
- Retroactive rescission of benefits. Health plans can’t cancel or discontinue coverage retroactively except in cases where premiums/contributions aren’t paid.
- Not covering the preventive care required under the law. Obamacare includes a host of preventative services that plans must cover without imposing co-pays or cost-sharing on participants — and failing to do so subjects firms to the non-compliance penalty.
- Failing to have a revised appeal process (including external appeals). The requirement to provide an appeal process was detailed in the Obamacare regs and was created to protect patients whose insurance claims were denied by their healthcare providers.