BESD gets schooled on Affordable Care Act fiscal costs

Yvonne Burns, Board President
Yvonne Burns, Board President

BRAWLEY – On Tuesday, the Brawley Elementary School Board heard exactly how the Affordable Care Act will affect their bottom dollar and their employees from Keenen Insurance Senior Account Manager, Julie Revoir.


Revoir said she would try and take a dry, complicated subject and make it understandable to the board so there would be no surprises as the District comes under the ACA law.


Revoir spoke mainly on the Employer Mandate. By employing more than 50 employees, the District falls under the ACA Employer Mandate and must re-count full time workers according to the ACA regulations.


For non-compliance there are two penalties, Penalty A, which Revoir called “The Big Penalty” and could cost the District up to $940,000 for not insuring all employees considered full time by ACA and if those same employees go to Covered California Exchange and qualify for a subsidy.


Revoir said she wasn’t sure how the Federal Government came up with the penalty formula, but the penalty could be substantial.


Fortunately for the District, the school board passed the 95% threshold and would not fall under the penalty.


The second penalty, Penalty B, “The Small Penalty”, Revoir said the District did not meet those different standards. According to the way the District has ‘full time’ employees that aren’t covered, their penalty, if nothing is changed, would be $12,760 and that penalty would rise yearly.


Revoir said the district needed to look at the cost of covering their new ‘full time’ workers, the workers that help in the playground and during the lunch hour that aren’t presently covered, and the cost of the penalty, to see which is the most affordable for the district.


Moving from the Employer Mandate to the “Cadillac Tax”, Revoir explained another tax (penalty). Because the school offers a ‘rich’ plan for their employees, the federal government says those individuals are insulated from knowing the real cost of health care and abuse their privileges, having excessive tests run and over seeing their physician.


The “Cadillac Tax” will start in 2018 and is instituted to lower the overall health care costs.


According to Revoir, 40% of the cost in excess of the federally prescribed amounts will be taxed.


The example she gave said that the federal government dictates that $10,200 should be the prescribed amount for a single person.


If the single employee’s annual premium is $13,000, then the premium ($13,000) will have the prescribed amount deducted (-$10,200) for the remainder of $2,800.

$2,800 x 40% equals the excise tax of $1,120.


BESD would pay that tax times the employees qualifying for the Cadillac Tax. As of now, the District would be liable for $30,200 in more taxes.


The figures Revoir used for her firm’s calculations came from the District’s finance and human resource departments to be as accurate as possible.