Jackson County Chamber of Commerce 517.782.8221 141 S. Jackson St. Jackson, MI 49201
Map the address
Home Home Home Home Home Home Home Home Home Home

Legislative News

« Return to the News Listings

ACA Impacts County Employees

Over the past several months, the Jackson County Administrator/Controller’s Office, Human Resource Department, Finance Department, and Consultants from McGraw Wentworth have been assessing the impact of federal and state health care reform from an employer’s perspective – one that remains committed to the prospect of continued sponsorship of a group medical plan to its employees and retirees.  The analysis encompassed a variety of moving parts, not the least of which was the “shared responsibility” requirement under the Affordable Care Act (ACA).  This provision of the law, which was to be in effect in 2014 and now delayed until 2015, required large employers like the County to maintain group benefits that were both affordable and of at least a minimal value as defined by the law.  Plans that fail to satisfy the standards set forth by the ACA face a penalty of $2,000 annually per full time employee (defined as averaging 30 or more hours per week).  Additionally, the County reviewed a multitude of mandates that were introduced by the law over the past three years, which included significant expansion of eligibility rules and benefits payable under the plan, thus increasing the number of individuals covered and the claims cost of the County.

Like most employers, the County struggles with identifying the true increase in County expense attributable to the ACA since its passage.  While there’s no question that County costs have increased due to the law, pinning down an exact figure is difficult given the complexity of ACA, as it has touched the County’s health plan in so many different ways.  What is known is that the County has been successful in mitigating some of this increase through aggressive plan management, negotiation with vendors, and adoption of a new wellness strategy designed to help keep employees and their families healthier.  In spite of these efforts, the County’s health care costs will increase approximately 14% in 2014. Much of the increase is inflation and usage driven, but approximately 5% is in due to the ACA.  The ACA cost increase is the result of new taxes and fees that the County will have to pay to the federal government to subsidize new programs and the public exchanges being launched in 2014.  The County estimates over $85,000 of new taxes and fees will be paid in 2014.  Looking forward to 2015 when the “shared responsibility” requirement kicks in, the County conservatively expects ACA to increase costs by as much as 7% to 8% annually, but once again these increases are in addition to normal expected increases of 8% to 9% per year.  Therefore, the cumulative three year increase in County costs – after employees pay their 20% share of premiums – could be as much as $1.4 million. 

Combatting this increase will be difficult, as much of the ACA requirement is effectively compulsory and unavoidable.  In an effort to reduce expenses, the County has already struck deals with its numerous bargaining units to step up premium cost-sharing to conform to Michigan’s Public Act 152 requirement, under which minimum cost-sharing thresholds are established by ‘hard caps’ on employer contributions, or maximum 80% funding of plan costs by the employer.  The County has also introduced a program through Blue Cross Blue Shield of Michigan called Healthy Blue Incentives through which employees and their spouses are encouraged – indeed rewarded - through the design of the plan to take a more active role in managing and improving their health.  Every cost managing step is crucial, not only from the standpoint of reducing current expenses, but also due to the looming “Cadillac Tax” provision of the ACA that begins to apply in 2018.  This provision applies a 40% excise tax on “high value” plans by instituting a maximum permissible single and family premium that can be incurred by the employer, over which the tax applies.  This new financial threat serves as an enormous motivator for all employers to get creative and aggressively manage expenses.  It is conceivable that the County may bump up against this tax in 2018 if recent increases in cost continue.  All things remaining equal, the County must anticipate as much as $500,000 of excise taxes for 2018 through 2020, unless it is successful in bending the cost curve from now until then.  The added pressure of other ACA mandates will make that job just that much more difficult. 

The County is currently moving forward with several important initiates aimed at reducing costs.  Aside from conforming to Michigan’s Public Act 152 cost-sharing requirement, the County is also looking at consolidation opportunities with its Department of Transportation, formerly the Jackson County Road Commission.  A crucial element of this process is a public marketing already underway of all of the County’s group benefit plans.  Expectations are that the combined group size will attract aggressive bidding within the competitive marketplace for such services and products offered by the County to employees.  Additionally, the County Commissioners recently approved changes to the retiree health benefits for most pre-65 retirees.  Such changes are anticipated to reduce claims paid by the County by introducing deductibles for certain types of services. 

The next few years will continue to pose an enormous cost management challenge for Jackson County.  Not unlike most other public and private organizations that provide comprehensive group benefits to their employees, the County will be facing the stress of continually escalating expenses that will require a multi-faceted and disciplined approach to manage this liability.  The County Commissioners and Administration have indicated that all options are on the table for consideration.  I believe in the current environment, that is exactly what is necessary.

Michael Overton,


« Return to the News Listings

Current Issues

  • Governor Snyder...

    Wednesday, Governor Rick Snyder, Lt. Governor Brian Calley and State Budget Director John Nixon presented the executive budget for the 2014 –...

  • 2012 Interior...

    In total, the bill includes $27.5 billion in spending – a reduction of $2.1 billion below last year’s level and $3.8 billion below the...

  • Planning tool helps...

    The Center for Healthcare Research & Transformation (CHRT) released a policy brief that explains the most significant effects of the...

Key Documents

Political Events