1402 - Affordable Care Act (Historical View)

** Effective: 1/26/2022 10:37:55 AM - 5/6/2022 5:38:16 PM **

Status: Active

Change Notes

Updated to remove unnecessary PMLs and update contact info.

Category

Benefits and Insurance

Audience List

Synopsis

This policy:

Introduction

The ACA, known as the federal health care law, was enacted in March 2010 to ensure all Americans have access to quality and affordable health care.  It includes several employer-administered provisions that impact the State of California, such as:

The state may be subject to penalties for failure to comply with the ACA’s employer-administered provisions.

Statement

Employer Notification Requirements

Health Insurance Marketplace Coverage Options and Employee Health Coverage Notice-

Beginning October 1, 2013, the state is required to issue a Health Insurance Marketplace Coverage Options and Employee Health Coverage Notice to new employees (new employees to the state, department, or agency), regardless of their health plan status or part-time or full-time employment status, within 14 days of the start of their employment.

The Notice provides information about the Health Insurance Marketplace created under the ACA to help individuals and small businesses shop for, select, and enroll in high-quality, affordable health plans and also assists eligible individuals in receiving premium tax credits or coverage through other federal or state health care programs.  The Marketplace in California is known as “Covered California,” operated by the California Health Benefit Exchange.

Departments may distribute the Notice to employees by interoffice mail, first-class mail, or electronically.  For electronic distribution, employees must use a computer as part of their daily, normal job function or have consented to electronic delivery in a manner that demonstrates that they can effectively receive the Notice via electronic delivery, per the Department of Labor electronic disclosure safe harbor (ref. 29 CFR 2520.104b-1(c)).

The Notice may also be included with new hire packets, health enrollment materials, or other existing communications, provided that the Notice and the other materials are delivered in the manner and timeframe required.

There are several sections within the Notice that need to be completed prior to distribution.  It is important that this information be accurate and complete, as it will be used by employees to complete applications for obtaining coverage through Covered California and for Covered California to validate information provided on applications.

Two editable versions of the Notice can be found in the HR Net section of the California Department of Human Resources’ (CalHR) website.

Within the Notice, departments will need to:

  1. Copy and paste their departmental letterhead into the empty header space provided in the NoticeThe Notice should not be copied and pasted into a blank copy of their departmental letterhead, as this may alter document formatting;
  2. Complete “Part B - Information about Health Coverage Offered by Your Employer,” which includes information such as:

The Notice specifies which employees are eligible for health benefits through the California Public Employees Retirement System (CalPERS).  Although not a required element of the Notice, it bears revisiting, for your information, that the following employees and dependents are not eligible for health benefits.

Employees not eligible for health benefits:

Dependents not eligible for health benefits:

It is incumbent on departments to ensure that ineligible employees or dependents are not placed or maintained on the health benefits roll.

Summary of Benefits and Coverage Notice-

The state is required to issue a Summary of Benefits and Coverage Notice to employees newly eligible for health coverage with information on the health plan options available to them so they can make informed decisions about the health plan they choose.

The Notice is to be provided no later than the first day the employee is eligible to enroll in health coverage.  For example, if a health benefit-eligible employee is hired on August 12, departments must provide the Notice, along with the Health Benefits Enrollment Form (CalPERS HBD-12) to the employee no later than September 1 (the earliest effective date of coverage).

The Summary of Benefits and Coverage Notice can be found in the HR Net section of the CalHR website.  Departments should copy and paste their departmental letterhead into the empty header of the Notice before distributing to employees.

ACA Notification Checklist-

To ensure the timely distribution of the Health Insurance Marketplace Coverage Options and Summary of Benefits and Coverage notices, CalHR has developed the ACA Notification Checklist (CalHR Form 782).  Departments must use the Checklist to document the distribution of these notices.  The two-part Checklist includes the following:

Departmental HR staff must review and sign the Checklist to certify that the notices were issued to employees within the specified time frames.  Departments shall retain this document in the employee’s Official Personnel File.

Employer Shared Responsibility Provisions

Beginning January 1, 2015, the state is subject to the ACA’s Employer Shared Responsibility provisions (also known as employer mandate) which requires large employers to offer minimum essential health coverage (MEC) to at least 95 percent (70 percent in 2015) of its full-time employees and their dependents to avoid a penalty assessment.  The health coverage offered must meet the ACA’s affordability and minimum value standards.

Failure to comply with the ACA’s Employer Shared Responsibility provisions could result in significant penalties to the state if at least one full-time employee receives a premium tax credit for purchasing individual coverage through Covered California.

Annual Information Reporting to the IRS and Full-Time Employees

To demonstrate compliance with the ACA’s Employer Shared Responsibility provisions, the state is required to file annual reports with the IRS and furnish a statement, IRS Form 1095-C, to full-time employees with information about the health coverage offered, if any, to the employee, their spouse, and dependents for each month during the preceding calendar year.

IRS Form 1095-C: Employer-Provided Health Insurance Offer and Coverage-

Annually, by January 31, the state will issue a Form 1095-C statement (via the SCO) to all federally qualified full-time employees with information about the health coverage offered, if any, to the employee, their spouse, and dependents during the preceding calendar year.

The ACA defines a full-time employee as any employee who averages 130 or more hours of service per month or during an employer’s respective measurement period of between three to twelve months. The state is using a 6-month measurement period to average an employee’s hours of service to determine their full-time status for ACA reporting purposes.

Generally, a Form 1095-C will be issued to employees who, for any month during the preceding calendar year, were appointed to a time-base of 3/4 or more; and those who were appointed to an intermittent time base who averaged 130 or more hours of service per month during one of the state’s 6-month measurement periods, regardless of whether they were eligible for state-sponsored health coverage.  New employees appointed to a time base of 3/4 or more are treated as full-time for ACA reporting purposes beginning the first of the month following their appointment.

To see how the state applies the 6-month measurement periods to determine an employee’s full-time status for ACA reporting purposes, please refer to the Standard Measurement Periods for Ongoing Employees and Initial Measurement Period for “New” Intermittent and Part-Time Employees documents available in the HR Net section of CalHR’s website.

Form 1095-C will report the following information:

Note:  Employees who are offered MEC that is affordable and provides minimum value are not eligible to receive a premium tax credit for purchasing individual coverage through Covered California.

The IRS will use the information reported on Line 16 to determine if the state is subject to a penalty assessment.

Frequently Asked Questions (FAQs) regarding IRS Forms 1095-C and 1095-B were developed for employees and departmental HR staff.  The FAQs for employees are available on CalHR’s website (under the “State Employees” tab) and FAQs for departmental HR staff can be found in the HR Net section of CalHR’ s website.

Affordable Care Act System (ACAS) Database for Tracking Employee Health Benefit Status Information-

To capture the necessary data the state is required to report to the IRS to demonstrate compliance under the ACA’s Employer Shared Responsibility provisions, the SCO has developed the ACAS database that departmental HR staff must use to capture the necessary health benefit status information on employees (e.g., offer of health coverage, whether health coverage was accepted, declined, etc.).

The SCO will use the data that departments enter in the ACAS database to report information to the IRS and employees (via the IRS 1095-C statement) about the health coverage offered, if any, to the employee and whether the employee was enrolled in health coverage.

Accurate and timely entry of an employee’s health benefit status information in the ACAS database is critical to the state’s ability to verify compliance. As such, departments are responsible for entering relative health benefit status information for employees in the ACAS database in the pay period in which they are effective.

Failure to file correct information returns with the IRS or statements to employees could result in penalties to the state:

These penalties are subject to annual inflation adjustment.

Refer to SCO Personnel Letters #14-021, #15-001, #16-005, #17-015, 17-027, and #18-017 for more information on the ACAS database and health benefit status information.

ACA Training Modules-

Two web-based training modules on the ACA’s Employer Shared Responsibility provisions and the ACAS database and a training toolkit are available on CalHR’s website (Affordable Care Act Training under “State HR Professionals” tab) to departmental HR staff responsible for entering employees’ health benefit status information in the ACAS database:

Departmental HR staff that have “update” or “inquiry” access to the ACAS database are required to complete these two web-based training modules prior to obtaining access.  Departments are also required to maintain a current list of staff that have completed the mandatory ACA training modules on file for audit purposes.

Affordable Care Act Compliance Program-

Monthly Departmental ACA Compliance Review

To ensure accurate and timely entry of data in the ACAS database, CalHR, with the help of SCO, has mandated training for departmental HR staff responsible for entering employees’ health benefit status information into the ACAS database and developed the ACA Compliance Program which requires departments to self-monitor their ACA compliance.

Although the ACAS database has some audits, edits and error messages built-in to the system to prevent many types of data entry errors, it does not capture all possible errors, such as no ACAS transaction code entered.  To identify these errors, the SCO has created a series of ACAS Compliance Reports that departments can use to proactively monitor their compliance.

The ACAS Compliance Reports are accessible via the SCO’s Personnel/Payroll Services Division’s ViewDirect database and are updated monthly.  Departments are expected to review their monthly ACAS Compliance Reports and take appropriate action to correct all errors identified within 30 days of receipt of the reports and before the state reports information to the IRS.

Refer to SCO’s Personnel Letters #15-009, #15-013, #17-031, #18-016, #18-017, #19-006 and #21-002 for more information about the monthly departmental compliance reports.

Quarterly ACA Compliance Review

CalHR, as the state employer, has primary responsibility to ensure that the state’s human resources practices and processes align with provisions of the ACA and that the state fulfills its reporting obligations under the Employer Shared Responsibility provisions.  CalHR, in conjunction with the SCO, is responsible for providing oversight of departmental ACA compliance monitoring activities to ensure accurate and timely entry of the health benefit status information on employees in the ACAS database.

Beginning in May 2015, the SCO produced quarterly reports for CalHR to monitor departments’ ACA compliance efforts.  These reports reflect transaction errors and discrepancies in the ACAS database that are over 90 days old.  CalHR will review these reports and notice departments, via the Quarterly ACA Compliance Review Notification document of their outstanding transaction errors and discrepancies.

Departments are required to take action to correct all outstanding transaction errors and discrepancies in the ACAS database within 30 days of receipt of the Quarterly ACA Compliance Review Notification document from CalHR.  Additionally, departmental Personnel Officers are required to complete and return the Quarterly ACA Compliance Review Notification document to CalHR at ACA.Policy@calhr.ca.gov certifying that all transaction errors and discrepancies have been corrected.

For departments that do not take action to correct the outstanding errors and discrepancies in the ACAS database, CalHR will contact their Administrative Chief for resolution.

Application

Not Applicable.

Authorities

Resources

FAQs

Forms

Web Pages

Authorized By

Benefits Division
CalHR, Benefits Division

Contact Person

Affordable Care Act
CalHR,
Phone: 916-322-0300
Email: ACA.policy@calhr.ca.gov

Superseded Policies

Not Applicable.