Minnesota Cities Magazine

Sidebar: One City’s Health Care Reform Journey

Note: This is a sidebar to the feature article, Navigating Health Care Reform.

Apple Valley is a large employer under PPACA, and city leaders have been getting ready to comply with the new law for some time. Minnesota Cities chatted with Human Resources Manager Melissa Haas about their experience.

How long ago did you start working on federal health care reform and what were some of the
first steps you took?

JUL13AppleValleyFlagWhile we’ve been working on implementing various components of health care reform for several years, most recently we’ve been concerned with the employer shared responsibility provisions of PPACA [Patient Protection and Affordable Care Act]. Our first goal was to understand as thoroughly as possible the requirements and liabilities for our city. We took advantage of training opportunities through our insurance brokers, professional associations, and LMC [League of Minnesota Cities] to educate ourselves.

Next, we looked at employees’ average hours over a 12-month period to determine which employees could likely be defined as “full-time” (averaging 30 hours per week) by the PPACA, but who are not currently eligible for our full-time benefits. We will meet with department heads and review this data in order to plan for workforce changes in the event we limit hours to fewer than 30 for employees who are not in benefit-eligible positions.

How close are you to completing your work to prepare for federal health care reform?
We continue to await final regulations on certain aspects of federal health care reform such as automatic enrollment, fully insured non-discrimination requirement, and exchange notice requirements. In terms of the employer shared responsibility provision, we are in the final stages of planning. We will review options and estimated costs with the city’s management team and make a recommendation to the City Council. We will ask the Council to adopt a policy describing our measurement periods under the stability and look-back period safe harbors.

What will your final “plan” look like? Will it contain various options for the council to consider? Can you give us any general idea of what those options might look like?
We will review various options and costs and will present that analysis to the Council with a recommendation. At this time, we expect to change our health plan eligibility to include employees who meet the definition of full-time under the PPACA. However, we don’t anticipate budgeting to expand health insurance coverage to employees in part-time or temporary/seasonal positions that are not currently eligible for benefits. Rather, we will utilize look-back and stability measurement period safe harbors. We will closely monitor and report on employee hours to ensure that employees in positions that are not intended to be benefit-eligible will not meet the 30-hour average threshold during the measurement period.

What was the most difficult part of your preparations?
Health care reform is expansive and multi-faceted. Regulatory guidance on many pieces of health care reform is continually changing or, in some cases, still pending. It can be difficult to get a firm grasp on all the implications. Additionally, actual premiums for health insurance marketplace/exchanges are still unknown. That makes it difficult to estimate the likelihood that employees will seek coverage through a marketplace/exchange and possibly get a subsidy, triggering potential penalties for the employer. Finally, we expect disappointment and frustration in employees if their hours are reduced.

What would you recommend to other cities that are just now getting started on this?
Take advantage of training resources and guidance available through LMC and other sources. Talk with your counterparts in other cities to share ideas. Involve your stakeholders, such as department heads, managers, union leadership, and council in the discussion as soon as possible, especially if you think you might have to make big changes. Determine whether you are a large employer, and document your process. Review your current workforce demographics and employee types to determine who is “fulltime” as defined by the PPACA. Review current relevant language in health plan documents, policies, collective bargaining agreements, etc. Think about health coverage eligibility requirements and costsharing agreements. Take a few potential options and run the numbers.

Do you think federal health care reform will end up having a big impact on your city’s budget?
We foresee budget impacts through higher health plan premiums when insurers pass through Patient-Centered Outcome Research Institute (PCORI) and Transitional Reinsurance Program fees. We’ll be responsible for paying the PCORI fees on our self-funded HRA [health reimbursement account]. Also, if we limit hours for part-time and temporary/ seasonal employees, we may need to hire more employees, increasing our recruitment and staffing costs.

What are some of the positive aspects of implementing federal health care reform for your city?
There is always value in reviewing staffing priorities and strategies. Planning for health care reform can be a good opportunity to do that. Another positive is the increase in allowable wellness program incentives of up to 30 percent of total plan premium.

What aspect of federal health care reform worries you most for your city?
Increasing administrative burdens and costs that will strain resources, which have already faced budget and staffing cuts in recent years. Also, the long-term effect of the health insurance marketplace/ exchange on employer-sponsored plans is unclear at this point.

Anything else we didn’t ask that you think is important for cities to think about?
Regardless of their strategy, most cities will likely have to consistently track employee hours, relying on solid data to document those hours. Work with your payroll department to be sure you have the systems in place to collect and disseminate that data in a useful manner.

Read the July-August issue of Minnesota Cities magazine

* By posting you are agreeing to the LMC Comment Policy.