The Affordable Care Act (ACA) impacts the Anchorage School District (ASD) in a number of ways. A high-level summary of important information for 2016 is presented below (not comprehensive, nor inclusive of all exclusions).
1. The ACA requires that ASD offers health care coverage to substantially all full-time employees and that the coverage meets minimum essential coverage and affordability requirements.
ASD is subject to “Pay or Play,” also referred to as the Employer Shared Responsibility (ESR) penalty, unless we:
- Offer minimum essential coverage to substantially all (95%) of full-time employees,
- Coverage meets minimum value (the employer’s share of the cost is at least 60%),
- With full-time employees defined as any employee who works 130 hours or more per month, or an average of 30 hours or more per week.
Failing to comply will result in an annual tax of $2,000 for EVERY full-time employee, imposed by the IRS. This equates to approximately $12M for ASD.
In addition to meeting minimum value, the coverage must also be affordable (not more than 9.66% of household income),
Employers may use W-2 wages, rate of pay, or federal poverty line methods to calculate this value.
|Failing to comply will result in an annual tax of $3,000 for each full-time employee who declines coverage or is ineligible for coverage and gets subsidized coverage through an Exchange.|
2. ASD is also subject to the Cadillac Tax if our heath care plan exceeds certain thresholds.
ASD is subject to the “Cadillac Tax,” which is a tax on the excess benefit of high cost health coverage.
- A plan is considered a “Cadillac” plan if it provides a level of benefits that results in an annual premium of:
- $10,200 for individual coverage
- $27,500 for family coverage
Exceeding these thresholds will result in a 40% excise tax on the excess benefit (meaning, any portion of premiums that exceed these thresholds).
For 2016-17, ASD’s annual PPO premium is $20,760.
Current estimates place the annual Cadillac Tax for ASD at $5.4M for 2020 if no changes are made.