Those of us who write about the Affordable Care Act seldom have the chance to use the phrase “overwhelming bipartisan support.” The Hire More Heroes Act of 2015 provides a welcome opportunity to do so. The Act, designed to encourage small businesses to hire veterans, has received bipartisan and bicameral support in Congress. If it becomes law – a prospect that looks increasingly likely – it will complement the administration’s recent push to encourage government contractors to employ more veterans. Although the Hire More Heroes Act would offer valuable benefits to businesses, this post flags a few unpleasant surprises that could arise in its implementation.
The Affordable Care Act (“ACA”) requires certain employers to either provide affordable health care to their employees or pay an excise tax. These shared responsibility provisions, commonly known as the “employer mandate,” generally apply to employers with at least 50 full-time employees. The Hire More Heroes Act would amend the ACA by allowing a business to exclude veterans from the head count that determines whether the business will be subject to the employer mandate. The House passed the Act unanimously on January 6, and the Senate Finance Committee voted likewise on January 28.
Problems could arise from the way the Hire More Heroes Act defines the relevant class of veterans. The Act provides that “an individual shall not be taken into account as an employee … if such individual has medical coverage … under” TRICARE or “a health care program” administered by the Department of Veterans Affairs (“VA”).
Employers might be tempted to think that this definition covers all veterans. It does not. TRICARE is the health care program for active duty military members and their families. TRICARE is also available to some non-active service members, but not all of them. For example, TRICARE entitlement extends automatically to retirees with twenty years of service and to veterans who are medically retired, a small fraction of the veteran population. Medical coverage through the VA is an entirely different program. Although most veterans are eligible for medical coverage through the VA, the Act only applies to a veteran who “has medical coverage” through the VA.
VA medical coverage is not automatic; a veteran must apply for it. Many veterans simply opt out of the cumbersome enrollment process, especially if they have access to coverage through a family member, school, or new employment. Although an older retiree with twenty years of service is more likely to be enrolled in TRICARE, employers should not assume that younger veterans necessarily have coverage through the VA.
The risk for an employer, then, is improperly excluding a veteran from the head count used for ACA compliance purposes. Under the plain text of the Act, a veteran who is ineligible for TRICARE and who does not have VA medical coverage must be included in the shared responsibility tally like any other employee. The cost of an error could be profound for a 50-person business, which could suddenly find itself subject to the employer mandate if its fiftieth employee turns out not to be an excludable VA-covered veteran.
Employers must also proceed carefully when determining whether a potential employee falls within the ambit of the Hire More Heroes Act. Employers can ask prospective hires about their veteran status; recent labor regulations actually require federal contractors and subcontractors to invite applicants to self-identify as veterans at the pre-offer stage. Those regulations do not, however, give employers carte blanche to inquire about health coverage status or to make hiring decisions based upon whether a veteran has decided to participate in VA health care programs.
Employers can be cautiously optimistic about the Hire More Heroes Act’s prospects for passage. We will continue to monitor the bill as it moves through Congress and to the President, and stand ready to help employers develop strategies to take advantage of this potential relief from the ACA’s employer mandate.