Tennessee Education Association

Great Public Schools for All Students

            

ACA Does Not Require Major Changes for Educators

Your system has raised 2015 State Group Insurance Plan (SGIP) premiums for employees. Considerable work went into making sure SGIP premiums did not increase for 2015, and so most systems in Tennessee rightly did not raise employee insurance premiums. TEA is ready to work on possible solutions to unwind the damage done to both certified and classified employees. As a first step, it is important to clear up bad information and wrong assumptions in two key areas: full time status under the Affordable Care Act and anti-discrimination rules for self-insured plans.

FACT: USING ANNUAL LOOK BACK SHOWS MOST CLASSIFIED EMPLOYEES ARE NOT LIKELY FULL-TIME WORKERS UNDER THE AFFORDABLE CARE ACT.  

  • FALSE ASSUMPTION: Classified personnel working 30 hours or more a week must be counted as full-time for the ACA), and new health benefits must be offered to avoid crippling federal fines.

    FACT: Most Tennessee K-12 employees like nutrition workers, teacher aides, and transportation employees are not likely full time employees using the yearly look-back calculation method.[1] TEA has used yearly look-back calculations to show classified employees working 180 days at seven hours per day in a standard Tennessee school calendar are not full time employees under the ACA.
     
  • FALSE ASSUMPTION: If a certified employee has fixed working hours (like nutrition workers on a 6:30 to 1:30 schedule) the yearly look-back method is not allowed.

    FACT: U.S. Department of Treasury officials have stated unequivocally to TEA representatives the yearly look-back method is appropriate and legal to use to determine full-time status for certified personnel. TEA has also received expert legal counsel confirming systems may use yearly look-back for fixed schedule employees to determine if they are full time under the ACA.[2]
     
  • BOTTOM LINE—MOST CLASSIFIED PERSONNEL ARE NOT LIKELY FULL TIME EMPLOYEES UNDER OBAMACARE. New insurance costs that have been shifted onto employees were unnecessary if proper and legal yearly look-back calculations were made for classified employees. 

FACT: ANTI-DISCRIMINATION LAWS FOR SELF-INSURED PLANS HAVE BEEN ON THE BOOKS FOR DECADES. NO “HIGHLY-COMPENSATED” TENNESSSEE EDUCATOR HAS EVER PAID ADDITIONAL INCOME TAX ON BENEFITS AND NO PENALTY EXISTS FOR SCHOOL SYSTEMS.

  • FALSE ASSUMPTION: By offering different levels of health benefits to different classifications of employees, school systems are liable for fines under anti-discrimination provisions of a 35 year-old provision: 105(h).

    FACT: The U.S. Department of Treasury and the IRS have never promulgated rules to fine employers if different levels of benefits are found to be discriminatory. In current law and IRS rules, there are NO fines possible for school systems. Any “penalty” can only take the form of treating additional benefits for the top 25 percent of employees as taxable income.[3]
     
  • FALSE ASSUMPTION: Because of the “new regulatory environment” caused by the Affordable Care Act, the IRS will now enforce anti-discrimination rules differently for plans like the SGIP.

    FACT: For more than three decades, the IRS has never demanded additional income tax from any Tennessee educator in the SGIP based on anti-discrimination rules. It is pure speculation that the IRS will enforce these rules differently, and there has been no indication from Treasury they will do so.[4] There are also many hurdles to find “highly compensated” individuals are receiving discriminatory benefits, including disallowing rules for employee classification such as certified salaried versus classified.
     
  • BOTTOM LINE—SCHOOL SYSTEMS HAVE NO LIABILITY UNDER ANTI-DISCRIMINATION, MOST TEACHERS ARE NOT GOING TO BE “HIGHLY COMPENSATED” INDIVIDUALS LIABILE FOR ANY ADDITIONAL INCOME TAX, AND THOSE AT THE TOP SALARY MAY NEVER INCUR ANY ADDITIONAL INCOME TAX LIABILITY.  Lowering employer contributions to certified personnel to “equalize” benefits and avoid anti-discrimination hurts employees with no liabilities, and may economically damage “highly compensated” employees more than any possible increased tax liability.   

FACT: CLASSIFIED EMPLOYEES NOT FOUND TO BE FULL TIME CAN TAKE ADVANTAGE OF TAX CREDITS FOR LOW DEDUCTABLE HEALTH INSURANCE UNDER OBAMACARE. OPEN ENROLLMENT FOR THESE PLANS CONTINUES THROUGH FEBRUARY 15.    

  • FALSE ASSUMPTION: Any classified employee working for a school system has to take SGIP insurance offered from the LEA, and it is better to give these employees high deductible insurance with secondary gap insurance than to review other options afforded by the marketplace.

    FACT: Any classified employee not found to be full time using the yearly look back method can search for options offered by Blue Cross/Blue Shield and other companies using tax credits. No one can tell whether a classified employee could get more appropriate health insurance until they use the marketplace. Open enrollment for these plans began November 15, and continue to February 15, 2015.   

If your system made health insurance premium decisions based on the false assumptions outlined here, it is clear the economic damage to the employees and the system was unnecessary. Certified personnel should have seen no increase in premiums, and classified personnel should have been able to work with Blue Cross/Blue Shield or accessed the exchange to see if there were more economically viable options for insurance.

The question is what to do about it now. There are options, and TEA is ready to work with your system.

However, if you still believe in false assumptions then there is little basis to move forward. We have been diligent in asking the U.S Department of Treasury, state insurance officials, and legal counsel in one of Tennessee’s premier law firms to verify what the law is and is not. Whatever source you have received erroneous information from has not consulted with these primary expert sources.  

TEA staff members are ready to work with you to find the best possible solutions for your employees, your system and the taxpayers of your district.     




[1] TEA has a calculator to determine full-time status. To learn about how this method works please review the document: Step-by-Step Guide to Determining Full-Time Status.pdf

[2] Please see attached documents: BRADLEY ARANT - TEA Look-Back Measurement.pdf