ACA Developments

Did You Know? Hire More Heroes Law Includes Veterans’ Exemption from ACA

Sep 11, 2015
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Prior to adjourning for the August recess, Congress passed and President Barack Obama signed into law (on July 31, 2015) the Hire More Heroes Act as part of H.R. 3236, the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015. The law is focused on surface transportation programs but affects rules regarding how to count employees under the Affordable Care Act (ACA) as well as health savings account (HSA) eligibility for individuals receiving care through the Department of Veterans Affairs.

What Employers Need to Know

The Surface Transportation and Veterans Health Care Choice Improvement Act amends the Internal Revenue Code to exclude individuals covered for medical care under TRICARE or the Department of Veterans Affairs from the determination of whether an employer is an applicable large employer. In addition, the law allows eligible veterans to contribute to a health savings account, as long as they are receiving medical care under the Department of Veterans Affairs for a service-related disability.

Determining ALE Status

The ACA requires applicable large employers (ALEs) to offer their full-time employees health coverage or to pay one of two employer-shared-responsibility/play-or-pay penalties. ALEs are employers with 50 or more full-time employees or full-time equivalent employees. The Surface Transportation and Veterans Health Care Choice Improvement Act would allow employers (effective for months beginning after December 31, 2013), solely for purposes of determining ALE status, to disregard in any month an employee who has medical coverage for that month through TRICARE or under a federal health care program through the Department of Veterans Affairs.

Employers with employees that have TRICARE or health coverage through the Department of Veterans Affairs should anticipate guidance from federal agencies in the next few months on the practical process for disregarding the counting of these employees in their ACA obligations.

Employers that offer health coverage, regardless of their size, should offer health coverage to all eligible employees who have TRICARE or health coverage through the Department of Veterans Affairs. The Surface Transportation and Veterans Health Care Choice Improvement Act affects only the way an employer counts employees for determining ALE status under the ACA.

HSA Eligibility

To establish an HSA, an individual must be eligible to do so. Eligibility generally requires an individual to have a high-deductible health plan (HDHP) and prohibits him or her from having any other coverage for any benefit already covered by the HDHP. This includes TRICARE and previously included Department of Veterans Affairs medical benefits (during any month that the individual received Veterans Affairs medical benefits).

The Surface Transportation and Veterans Health Care Choice Improvement Act provides that individuals who receive hospital care or medical services under any law administered by the Secretary of Veterans Affairs for service-connected disability are still HSA-eligible for any months after December 31, 2015.
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