2) Employer Sponsored Coverage

  • Question 1

    If an American Indian/Alaska Native (AI/AN) is getting insurance from their employer and has an income less than 300 percent of the federal poverty level, does the individual need to pay copayments and deductibles?


    Yes, if the employer plan charges co-payments and deductibles.  The protections from cost-sharing for AI/ANs that are included in the Affordable Care Act (ACA) are only available with health insurance coverage through a Marketplace.  However, AI/ANs with employer-sponsored health insurance should not have to pay copayments or deductibles if they get their care at an IHS or tribal facility because the IHS and tribal facilities do not charge cost-sharing to eligible AI/ANs.  (The employer-sponsored plan would notbe required to reimburse the Indian health care facility for the cost-sharing amount not paid by the AI/AN patient.)

    Individuals who are offered employer-sponsored insurance are not eligible for premium tax credits (PTCs) unless: 1) the employer-offered coverage is “unaffordable”; 2) they decline the employer-sponsored coverage; and, 3) they enroll in health insurance coverage through a Marketplace.  In 2015, “unaffordable” is defined as the premium for the employee’s coverage costing more than 9.56 percent of the employee’s total household income.  (In 2014, the threshold was 9.5 percent of total household income.)

    In general, an individual is not eligible for cost-sharing reductions through a Marketplace unless the individual is eligible for PTCs.  There is an exception to this rule for AI/ANs meeting the definition of Indian under the ACA.  An AI/AN of any income level who meets the definition of Indian under the ACA is eligible for the “limited” cost-sharing protections when enrolled in Marketplace coverage, without regard to whether the individual is eligible for PTCs.  (“Limited” cost-sharing protections eliminate cost-sharing for an eligible AI/AN when served by an Indian health care provider or when referred for care through contract health services to a non-Indian health care provider.)

    Spouses and dependents are also prevented from PTCs (and any cost-sharing reductions) even if enrolled in Marketplace coverage if: 1) they are offered coverage from the employer of a family member: and, 2) the employee’s insurance is considered affordable.  For spouses and dependents, affordable is defined as the premium for the employee’s coverage (not the spouse or dependents coverage) costs less than 9.56 percent of the total household income.

  • Question 2

    Does eligibility for Consolidated Omnibus Budget Reconciliation Act (COBRA) Continuation Coverage block access to federal assistance when purchasing health insurance coverage through a Marketplace?


    No.  The federal Department of Health and Human Services (HHS) has issued a guidance document describing how eligibility for COBRA Continuation Coverage from a former employer (or employer of a spouse) impacts an individual’s eligibility for federal assistance (premium tax credits and cost-sharing reductions) through a Marketplace.  The full text of the HHS guidance document can be accessed here.

    In brief, COBRA gives group health plan participants and beneficiaries the right to choose to continue their group health plan benefits for limited periods of time under certain circumstances, such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events.

    The Affordable Care Act (ACA) provides special enrollment periods for qualified health plans (QHPs) in the Marketplace to persons eligible for COBRA when:  (1) such persons initially are eligible for COBRA due to a loss of other minimum essential coverage; and, (2) when such persons’ COBRA coverage is exhausted.  In addition, COBRA beneficiaries are able to choose QHPs in the Marketplace during the annual open enrollment period and, if they are determined eligible, during any other special enrollment periods outside of the open enrollment period.

    As such, once losing employer coverage–even if eligible for COBRA Continuation Coverage–an individual can secure coverage through a Marketplace.  But if an individual elects to enroll in COBRA Continuation Coverage, the individual would not be eligible for federal assistance through a Marketplace until (1) the next open enrollment period, or (2) the individual is eligible for a special enrollment period.  Because American Indians and Alaska Natives (AI/ANs) meeting the definition of Indian under the ACA are eligible for monthly special enrollment periods (MSEPs), an AI/AN can exit COBRA Continuation Coverage at any time during the year and enroll through a Marketplace and potentially be eligible for federal financial assistance.  (And because family members of an AI/AN can apply for coverage during a monthly special enrollment period along with the MSEP-eligible person, all family members can enroll through a Marketplace at that time, assuming the family members are otherwise eligible for Marketplace coverage.)

  • Question 3

    What is the maximum length of time an employer can impose a waiting period on new full-time employees? Is it 90 days or up to 4 months?


    Strictly defined, the maximum length of a waiting period under group health insurance (both insured and self-insured group health plans) can be no longer than 90 days.

    However, a second provision of federal law impacts how the waiting period is applied.  Employers are permitted to apply an “employment-based orientation period” (that can last up to, but no longer than, one month) before the start of the waiting period.  In effect, the waiting period begins at the point an employee is otherwise eligible for employer-provided health insurance coverage.

    During an orientation period, an employer and employee could evaluate whether the employment situation was satisfactory for each party, and standard orientation and training processes would begin.  If a group health plan conditions eligibility on an employee having completed a reasonable and bona fide employment-based orientation period, the eligibility condition would not be considered to be designed to avoid compliance with the 90-day waiting period limitation if the orientation period did not exceed one month and the maximum 90-day waiting period would begin on the first day after the orientation period.

    A third, related employer provision (contained in section 4980H of the Internal Revenue Code and enacted as part of the Affordable Care Act) is that certain “large” employers are required to offer and/or pay for health insurance coverage for full-time employees no later than the first day of the fourth full calendar month after the full-time employee is hired or otherwise gains full-time status.  For example, a full-time employee hired on July 12 is to be offered coverage no later than the first day of November, assuming the employer imposes a one month orientation period.

    Altogether, if an employer that applies an orientation period offers and/or pays for health insurance coverage for a full-time employee no later than the first day of the fourth calendar month after the employee is hired or otherwise attains full-time status, the employer is in compliance with both the “waiting period” requirement and the “offer of coverage” requirement.  The Internal Revenue Service, the Department of Health and Human Services, and the Department of Labor issued a joint final rule (TD 9671; CMS-9952-F2; RIN 1210-AB61) on June 25, 2014, confirming this federal policy.

    Note:  Individuals who are subject to a waiting period and are without other health insurance coverage for three consecutive months or more (or two or more non-consecutive months) during a year may be subject to a penalty for not having health insurance coverage.  Individuals who are subject to a waiting period may apply through a Marketplace for coverage and for federal financial assistance for this period, assuming they are otherwise eligible for Marketplace coverage.

  • Question 4

    We have heard that starting next year individuals with health insurance though their employer will be taxed as earned income the amount of money that the employer contributes to the health insurance? Could you tell me a little more about this?


    This is not accurate. Health insurance coverage provided by employers will continue to be exempt from taxation in 2015, 2016 and subsequent years.

    In 2018, there will be an excise tax applied (referred to as the “Cadillac tax”) on high cost health insurance plans provided by employers, but this tax would apply only to the cost of the health plan above a threshold amount (above $10,200 for individual coverage; above $27,500 for family coverage in 2018). The Cadillac tax is expected to impact a relatively small percentage of employer plans.

  • Question 5

    Are Tribes subject to the Affordable Care Act employer reporting requirements, such as Forms 1094-C and 1095-C? Do the Tribes have to follow the IRS guidelines for submission of these forms?


    Yes, Tribal governments and other Tribal employers are subject to the Affordable Care Act requirements on employers.  Attached is a TSGAC document (Revised March 31, 2016) that provides information on the recent changes in due dates for employer reporting requirements under the Affordable Care Act.

    Also, the National Congress of American Indians (NCAI) has taken the lead on educating Tribes on employer requirements under the Affordable Care Act.  Check the NCAI website http://tribalhealthcare.org/  for additional information.

  • Question 6

    Q. I have insurance through my employer but the cost of insurance is expensive. If I apply through the Affordable Care Act do I have to drop my insurance through my employer?


    To purchase health insurance through a Marketplace, an individual has to (1) live in the Marketplace service area / state; (2) be legally in the country; and (3) not be incarcerated.  It is ok to have other health insurance coverage in addition to purchasing insurance on the Marketplace.

    But to receive a premium tax credit (which lowers the costs of the health insurance plan for the enrollee / you), a Marketplace enrollee cannot have an offer (or actual coverage) of “affordable” health insurance coverage, such as through an employer.  “Affordable” is defined as: the premium cost for the lowest cost plan option a person has available to them (for self-only coverage) is no more than 9.66% of the individual’s total household income.  (Not just the income of the individual but of the person’s total household income, such as the amount filed for a family in the federal income tax filing process.)  For instance, if the premium cost an employee would have to pay for the lowest cost plan offered by the individual’s employer is $250 per month ($3,000 per year), and the individual’s total household income (including their spouse’s income) is $28,000, the premium would be considered unaffordable ($3,000 is 11% of $28,000).  In this case, the individual could decline the offer of coverage and enroll in the Marketplace.  If the individual enrolled in the employer offer of coverage, the coverage is considered affordable and they would not be eligible for a premium tax credit.

  • Question 7

    Q. Are there currently any examples of Sponsorship "language" that can be included in the Title V compact agreements?


    A:  This question was asked by another participant as well.   While there is no single model language, here is one example.

    The following sample language is an example of language authorizing the expenditure of funds for the Sponsorship of Tribal members in Marketplace coverage  –

    “The Tribe intends to expend funds made available pursuant to the Annual Funding Agreement and program income, including Medicare and Medicaid income, received by the Tribe in carrying out the programs under the Compact, for the purpose of purchasing health benefits coverage, in accordance with 25 U.S.C. §1642, in furtherance of the general purposes of the Compact.”

  • Question 8

    Q. If a Tribe decides to sponsor members, is it recommended that they choose a marketplace insurance company, or can an outside insurance company be used. If an outside insurance company is used, do they also adhere to the special Native American provisions such as enrolling or dis-enrolling from month to month.


    A:  Tribes always have the option of purchasing insurance plans that are outside the Marketplace for sponsorship.  However, the Indian protections for cost sharing, the tax credits for premiums, and the special enrollment periods would not be required of a plan that is outside the Marketplace.