On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act (ACA). While it provided a number of positive changes to the insurance industry, it also brought with it a host of new requirements that have had a significant impact on the finances of most private clubs.
For the past five years, NCA and our allies in the small business community have been working to remove the law from the books or at least make some substantive changes to it. Unfortunately, the political realities in Washington have made those efforts hard to accomplish.
However, in an interesting political turn of events, we have now seen two major changes to the ACA pass Congress and be signed by the president. This has renewed hope that if the law cannot be repealed, then at least some variations can be made to have it work better for private clubs.
The Protecting Affordable Coverage for Employees Act
The first of these two recently passed ACA “fix-it” bills is the Protecting Affordable Coverage for Employees Act (PACE Act).
In a little known section of the ACA, there was a requirement that all clubs with 51-100 employees had to purchase their health insurance in the small group market—rather than the large group market where they had been purchasing insurance for years.
Under this mandate, clubs would have lost their current insurance policies plans and would have been forced to purchase new plans from the small group market—a market that traditionally has had fewer insurance providers. With fewer providers, the available plans would have certainly cost more.
Additionally, the law mandated that the small group market plans were to have far more health care benefits included when compared to the large group market plans. Naturally, the attendant cost for these new policies would have been dramatically higher than what these clubs had been paying.
The National Club Association and our allies on the 50-100 Coalition led the effort to repeal this ACA requirement. We were able to prove to both sides of the political aisle just how problematic this requirement was.
Not only was the PACE Act introduced by a bipartisan group of House members and Senators, but it passed the House by voice vote and it was agreed to by unanimous consent in the Senate—two things that very rarely happen in Congress (and never happen when dealing with the ACA).
When the president signed the bill into law in October, it was the first time in more than four years that a major change had taken place with the ACA. Then, it happened again.
Automatic Enrollment Repeal
Fresh off our victory with the PACE Act, NCA and the small business community took a look at another unnecessary provision of the ACA and began working toward repealing it. Under the law, clubs with more than 200 full-time employees were required to automatically enroll any new hire into their health insurance plan.
This “auto enrollment” provision meant that new employees could be placed on the club’s plan with no real say in the matter. It could even mean that an employee could be covered by his own plan and the club’s at the same time. This possibility of needless duplication as well as the duplicative costs borne by the employee for an unnecessary insurance policy made this measure extremely unpopular.
Under the ACA, the Department of Labor (DOL) was tasked with writing the regulations that detailed how this provision would work; however, DOL saw the inherent issues in the mandate and held off on issuing those regulations. The auto enrollment provision wasn’t implemented, but it was still on the books. That changed in November.
While negotiating the landmark debt ceiling increase and government budget bill, NCA and our allies convinced key lawmakers to include language that repealed the auto enrollment requirement. On Nov. 2, 2015, the president signed that legislation into law and the auto enrollment mandate was officially killed.
What is Next?
With two repeal bills making it to the president’s desk, our thoughts have now turned to the next bill that we believe can succeed—the Simplifying Technical Aspects Regarding Seasonality Act (STARS Act).
Under the ACA, there are two distinctly different exemptions that apply to seasonal staff. The first relates to how a club counts its seasonal hires when determining if it falls under the law. The second relates to whether a club must offer insurance to its seasonal staff if it does fall under the law. Under the “seasonal worker” exemption, a club that has seasonal staff may be entitled to remove those workers from the count when determining whether it has 50 or more full-time/full-time equivalent employees. If the seasonal hire is on property for four months or less, then he can be withdrawn from the computation if his inclusion pushes a club above the 50-employee threshold.
Naturally, smaller clubs that are just above that 50-employee level would like to get below it, so the seasonal worker exemption could be important to them. Unfortunately, it only applies to seasonal staff that work four months or less.
Under the “seasonal employee” exemption, a club that falls under the ACA will not have to offer insurance to seasonal hires if the position those employees work is available for six months or less. If the position is available for a longer time, then the club needs to treat the hires like any other full-time employee and offer insurance.
For many larger clubs, offering insurance to seasonal staff has not been something that they have ever done in the past. Thus, the seasonal employee exemption could be very important to their bottom line.
The problem, though, is clear: we have a “seasonal worker” exemption and we have a “seasonal employee” exemption. One is for staff on property for four months or less and one is for staff who work at a job that is available for six months or less. In short, we have two definitions with two exemption periods for the exact same worker.
Few club leaders see any distinction between a seasonal worker and seasonal employee. Furthermore, the different exemption periods can cause club leaders to confuse one exemption timeframe for another leading to unintentional violations of the ACA. Clearly, something needs to be done to clarify and streamline this drafting oversight.
In response, Rep. James Renacci (R-Ohio) and Rep. Kurt Schrader (D-Ore.) sponsored a bill to fix this problem. The STARS Act establishes one definition for seasonal workers and synchronizes the exemption periods at six months. So, one definition and one exemption period for a club’s seasonal workers—not a bad idea.
As a bipartisan, technical corrections bill, the STARS Act looks a lot like the PACE Act and the repeal of the auto enrollment requirement. It fixes an aspect of the ACA that is confusing, and it is done in a way that both Democrats and Republicans can find acceptable. Indeed, the six-month exemption period came directly from the president’s own regulations so it has his tacit blessing. We believe we have the next ACA fix-it bill that will make it through the process and get to the president’s desk.
A Fresh Look in 2016
When it comes to the ACA, there has been little support on either side to changing the law. Democrats have taken the position that the law needs to play out before any tweaks might be made. A majority of Republicans have been steadfastly opposed to fixing the ACA in any way and instead want only to repeal it. However, a slight breeze of change may be stirring through the halls of Congress.
While NCA still sees the law as more flawed than not, the political reality is that a full repeal bill will not pass Congress and be signed by the president. Amending it is the only course of action to make the law better for our industry.
With the success of the PACE Act and the repeal of the automatic enrollment provision, we may now actually be able to do just that. Since the STARS Act fits the same mold, the most important change to the ACA for clubs may soon become a reality, and NCA will do all it can to ensure that happens sooner rather than later.
Editor’s Note: Last December’s government funding bill also made critical changes to the ACA. See changes on page 22.