ACA AND THE PHCA
BY: TINA LEGER AND STELLA CABANA,
ATLAS INSURANCE AGENCY
Don’t Overlook Compliance:
Affordable Care Act On Hawaii Employers
I
f you are a small employer who has not
given much thought to the Affordable
Care Act (ACA) lately, you may be out
of compliance with federal law. Many
companies have mistakenly assumed
that with the inauguration of President
Trump, his repeated attempts to weaken
the ACA, and the Republican tax bill passed
in December, that complying with the ACA
is not as important as it once was under
President Obama.
This is simply not true. The basic tenets
of the ACA have not changed, including
coverage requirements for individuals with
pre-existing conditions, premium subsidies
for lower-income earners, and expanded
coverage through Medicaid. The only real
difference is the removal of the individual
mandate to purchase a health insurance
policy at all. President Trump has chipped
away at the ACA in other ways too, such as
by expanding the availability of healthcare
plans through outside associations,
including targeted industry, trade, and
business groups.
When it comes to the ACA, however, Hawaii
is in a slightly different situation than the
mainland. Because we have to comply
with our own state regulations under the
Prepaid Health Care Act (PHCA), companies
sometimes have to do a complicated
juggling act to figure out whether they are in
compliance with both sets of regulations.
Although small employers with fewer than
fifty employees are not subject to the ACA’s
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Employer Mandate, they must comply with
all laws that apply to the ACA’s Individual
Mandate, which has created additional
burdens for Hawaii’s small employers.
Small employers must now provide medical
and drug coverage to all employees, whereas
only medical coverage was required prior
to the ACA. Small employers are now also
subject to Age-Rating versus the traditional
3-Tier model, which can negatively impact
small businesses with a mature employee
base.
For employers with 50–100 employees,
however, the situation becomes somewhat
more complex. Each company must
evaluate policies for compliance within
both sets of regulations—state and federal.
For example, eligibility under state law
begins when employees work twenty hours
per week, while under federal law, it begins
at thirty hours per week. Therefore, in this
case, the employer must follow state law.
By contrast, state law only allows for $1
million of lifetime coverage, while federal
law has no limitation. Here, federal law
must be followed. These comparisons need
to be made and coverage chosen for dozens
of individual criteria.
Many smaller companies cannot afford
to hire employees whose sole function is
monitoring compliance, so it’s easy for some
requirements—such as regular distribution
of notices and other information—to fall by
the wayside. While larger companies may
have compliance employees on staff, they
must be extra vigilant since penalties are
tied to revenues and can therefore escalate
quickly.
Hawaii is limited by its small insurance
marketplace, so a comparison of various
plans to ensure compliance with both
the ACA and PHCA can be difficult. An
insurance expert like Atlas can help
navigate these waters, identifying policies
compliant with both sets of laws, ensuring
that contributions are accurate, making
sure all federal notices are distributed
timely, and assuming responsibility for all
other compliance requirements. Visit us
online at atlasinsurance.com or call us at
(808)-628-5320 to learn more about our
benefits consulting services. +
Tina Leger began her career in benefit
consulting in 2004 and joined Atlas Insurance
Agency in 2009 as a Senior Benefit Analyst.
Tina works with small to large employer groups
in a variety of industries, including nonprofit,
hospitality, education, retail, restaurant, and
transportation.
Stella Cabana joined Atlas Insurance Agency
as a Benefit Consultant in 2016. She is
responsible for servicing clients in our small
business market. Stella has over twenty years of
experience in dental and healthcare insurance
and corporate benefits. Prior to Atlas, Stella
was an Account Executive at Hawaii Dental
Service where she was responsible for new
business sales, service, and retention of her
client book of business.