What the Affordable Care Act Means to You

While working in Governor Beebe’s administration, I focused a lot of my time on the Patient Protection and Affordable Care Act, what it really does (there are a lot of misconceptions), how best to implement it, and how it affects Arkansas insurance carriers and plans. Regardless of whether you agree or disagree with the Act itself, it will affect you, whether you’re a school district board member, administrator, teacher, or other employee, so it’s always best to be prepared.

All school district employees are eligible for health insurance through the state-wide self-insured Public School Employee Health Insurance Pool, as governed by the Employee Benefits Division of the Arkansas Department of Finance and Administration. The state contributes $50 million per year to the public school employee pool, and school districts are required by statute to contribute at least $131 (some districts choose to contribute more) per enrolled employee towards the premium of the insurance plan chosen by the employee.

The ACA doesn’t change any of this. What it does change is how employees are enrolled. Currently, employees must opt in for health insurance coverage. That means if you work for a school district and want to take advantage of the health insurance option available, you must take the affirmative step to sign up. Under the ACA, starting in January 2014, every individual is required to have health insurance or face a tax penalty when filing their federal income taxes. In order to help individuals comply with this individual mandate, the ACA requires all employers with over 200 employees to automatically enroll their employees in their employer-sponsored health insurance. If an employee does not want to be covered under their employer-sponsored insurance, such as when he/she is covered by insurance offered by their spouse’s employer, the employee must opt out. This means that employers will be essentially responsible, at least somewhat, to ensure that their employees are covered.

Does this auto-enroll provision apply to all school districts, or only those with over 200 employees? Under the State’s current understanding of the law, it applies to all districts, and here’s why: all districts are a part of the state-wide insurance pool mentioned above, and under federal regulations (or the current interpretation thereof), this pool is seen as one large group employer-based plan. As such, all school district employees will be automatically enrolled. What does this mean? It means that more than likely, more school employees will be taking advantage of public school employee health insurance pool. Currently, roughly 65% of all school district employees are enrolled in the public school plans. Some of the other 35% are covered elsewhere, such as in plans offered by their spouse’s employer, but some, particularly lower income employees, are currently choosing to be uninsured. This will have to change under the ACA. These employees will be automatically enrolled in the least expensive plan offered in the health insurance pool (I’m told the “Bronze” plan will only cost school employees $10 per month), and school districts will have to pay $131 at a minimum for each of these newly enrolled employees.

One final note: I’ve heard questions about the ability of school districts to choose not to provide any insurance to their employees, thus allowing their employees to purchase insurance through the health insurance exchange, the online marketplace created by the ACA that allows families with incomes up to 400% of the federal poverty level to purchase insurance and receive a tax subsidy to help pay for premiums. Employers with over 50 employees must offer health insurance to their employees or face a tax penalty under the ACA. However, for some employers, the tax penalty will be less expensive than providing insurance coverage, and as such, some employers will choose this route and send their employees to the health insurance exchange for coverage. It’s the State’s interpretation, at least for now, that this will not be an option for Arkansas school districts because districts by statute cannot choose to not participate in the Public School Employee Health Insurance Pool (though this interpretation may be in dispute in the coming months). School employees can still choose to purchase insurance through the exchange, but they will not be eligible for a tax subsidy because an employer-based option is available to them.

The State is still waiting on further federal regulations to help flush out some of these details, but if anyone has any questions about this, feel free to contact me and I’ll try to answer them.