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Presented by Jenny Arthur, SPHR

HEALTH CARE REFORM &

ITS EFFECTS ON YOUR BUSINESS

(3)

AGENDA

Background/History

The Past: Previously Implemented HCR Provisions

The Present: Current/Pending HCR Provisions

The Near-Future: HCR Provisions on the Horizon

Cheat Sheets

Wrap Up/Questions and Answers

(4)

BACKGROUND & HISTORY

US History of

Healthcare

Reform

Patient Protection

and Affordable

Care Act

Education

Reconciliation Act

(5)

• Lactation Breaks

• Summary of Benefits and Coverage

• Notice of Exchanges and Subsidies

THE PAST:

PREVIOUSLY IMPLEMENTED PROVISIONS

(6)

• Requires almost all employers to provide

reasonable break times for an employee

to express breast milk for her nursing child

• Only applicable up to one year after the

birth of her child

• Exemptions for small employers (less than

50) if able to demonstrate undue hardship

• Amends the Fair Labor Standards Act (FLSA)

LACTATION BREAKS

(7)

• A uniform template pre-filled with the important provisions of a specific health insurance plan

• Creates an “apples to apples”

approach to comparing and contrasting health plans

• Must be included with open enrollment materials each year and to all new enrollees during the plan year

SUMMARY OF BENEFITS & COVERAGE

(8)

NOTICE OF EXCHANGES & SUBSIDIES

Purpose: To inform employees of the existence of Health

Insurance Exchanges (Health Insurance Marketplaces) and

potential federal subsidies available to them

• Applies to virtually all employers, regardless of size

• Must be provided to each new employee within 14 days of the

employee’s start date

(9)

• Federal Department of Labor has released two model notices

(one for organizations that sponsor a health plan, and one for

organizations that do not)

• No penalties for noncompliance at this time

NOTICE OF EXCHANGES & SUBSIDIES

(10)

THE PRESENT: CURRENT/PENDING HCR PROVISIONS

• 90-Day Waiting Period

• Small Business Tax Credits – 2014 Increase

• Health Insurance Exchanges

• New COBRA Notice Language

• Tax Treatment: Individual Plan Reimbursements

• W-2 Reporting – 2014 W-2s

(11)

90-DAY WAITING PERIOD

• As of 1/1/14, no more than a 90-day waiting period for coverage for new employees

• For all plans renewing on or after 1/1/14

• Applies to all group health plans, regardless of group size

• Applies to both Grandfathered and Non-Grandfathered Plans

• Current guidance does not allow “first of the month following 90-day” waiting period

(12)

SMALL BUSINESS TAX CREDITS

2014 and beyond:

Up to 50% Tax

Credit on Employer-

Paid Premiums

(35% for nonprofits)

Tax credit, not a

deduction

(13)

SMALL BUSINESS TAX CREDITS

To Be Eligible:

• Must contribute at least 50 percent of the cost of health care single coverage,

• Must pay average annual wages below $50,000,

• Must purchase coverage through the state SHOP exchange; and

• Must have less than the equivalent of 25 full-time employees

To Be Eligible for Full Amount:

• Must pay average annual wages below $25,000, and

• Must have less than the equivalent of 10 full-time employees

(14)

STATE HEALTH CARE EXCHANGES

Each state has one. Some set up by federal government, some by the

state and some are hybrids

Virtual/competitive marketplace offering

health plans

Individuals and small employers (fewer than 50

FTEs) may shop in exchanges – Some states currently allow groups of fewer than 100

Starting in 2016, all SHOPs will be open to employers with up to 100

full time equivalents

States have some flexibility regarding the set up of the exchange(s)

and participation requirements

(15)

STATE HEALTH CARE EXCHANGES

Two Parts to the State Health Care Exchange:

1) Marketplace – Individual health plans

2) SHOP – Small Group Health Plans

(Small Business Health Options Program)

(16)

STATE HEALTH CARE EXCHANGES:

THE MARKETPLACE

• Open Enrollment for 2014 is over

• Open Enrollment for 2015:

11/15/14 – 2/15/15

• Forfeit the employer health insurance contribution, but may be

eligible for federal premium subsidy

• No payroll deduction available for Marketplace Plans

(17)

STATE HEALTH CARE EXCHANGES: THE SHOP

• For groups with less than 50 employees

• May shop with or without a broker, cost is the same to the

employer

Small business tax credit only available for plans purchased

through the SHOP

(18)

• Employers may enroll at anytime during the year

• If the employer enrolls by the 15th of the month, coverage may begin as soon as the 1st of the next month

• Must offer plan to all full-time employees working 30+ hours/week

• In many states, at least 70% of the full-time employees must enroll in the SHOP plan to maintain eligibility. (Employers who apply for SHOP coverage from 11/15 - 12/15 can enroll without meeting this requirement.)

• States that set up their own Exchanges have some flexibility in the features

STATE HEALTH CARE EXCHANGES: THE SHOP

(19)

STATE HEALTH CARE EXCHANGES

• Plans Available in an Exchange:

Bronze – Enrollee pays 40% of health care costs

Silver – Enrollee pays 30% of health care costs

Gold – Enrollee pays 20% of health care costs

Platinum – Enrollee pays 10% of health care costs

• Costs are paid through deductibles, co-pays, and co-insurance

(20)

NEW COBRA NOTICE LANGUAGE

• Employers with 20+ employees who have a group health plans

must offer COBRA to qualified beneficiaries

• When a participant has a COBRA qualifying event, the

employer must mail the qualified COBRA beneficiary a COBRA

Notice & Election Form

• Now this Notice must contain verbiage regarding the

Marketplaces and federal premium subsidies

• DOL has published a new model (May 2014)

(21)

EMPLOYER REIMBURSEMENTS

FOR INDIVIDUAL HEALTH PLANS

• Per IRS Notice 2013-54, no longer favorable tax treatment for employer

reimbursements to employees for Individual or Marketplace plans

• The employer is generally unable to ensure that the individual plan meets

certain ACA market reforms to be eligible for pre-tax treatment

• Employer reimbursements for individual coverage must be taxed as

income/wages to the employee

• Penalty: $100 per employee per day

(22)

W-2 REPORTING

• Large employers (issuing more than 250 W-2s in the previous

tax year) must report the “aggregate cost” of employee-

sponsored health plans on the W-2

• Applies to both grandfathered and non-grandfathered plans

• Does not change tax treatment of plans

• For most plans, the “aggregate cost” includes both employee

and employer contributions

(23)

W-2 REPORTING

Who is required to report the cost of healthcare

on the 2014 W-2’s?

(24)

• Employer Mandate

• Employer Mandate Reporting

• Non-Discrimination

• Automatic Enrollment

THE NEAR FUTURE:

HCR PROVISIONS ON THE HORIZON

(25)

EMPLOYER MANDATE DELAYED

Employer must offer health insurance to full-time employees (30 hours/week) according to the following table:

** Delay to 2016 applies only if:

1. The employer did not reduce its workforce to get below the 99 employee threshold without a bona fide reason

2. The employer did not materially reduce its health care plan

Full Time Equivalents – Including Control Groups

Employer Mandate Penalties Begin

Margin of Error

100+ 1/1/2015 30% in 2015 and 5% thereafter

50 -99 1/1/2016** 5%

Less than 50 N/A N/A

(26)

EMPLOYER MANDATE:

FULL TIME EQUIVALENT EMPLOYEES (FTES)

• Formula:

• Look-back period

____ Part-time Employee Equivalents

(Total Monthly Part-Time Hours/120)

+ ____ Full-time Employees (30 hours/week or more)

Owners (Sole proprietors, Partners in a Partnership, Members of LLCs

- ____ Taxed as a Partnership, and Shareholders who own two percent or more in an S Corporation)

= ____ Full-time Equivalent Employees

(27)

EMPLOYER MANDATE: PENALTIES

A Penalty: $2,000 annually for each full-time employee, excluding the first 30 (80 in 2015) employees

Calculation: {the total number of employees in the firm (subsidized and unsubsidized) minus 30 or 80} x {$2,000}

B Penalty: Also penalty for large employers who offer unaffordable insurance, and have low-income full-time employees receiving a federal premium subsidy

Penalty: The lesser of $3000/employee receiving a subsidy or penalty calculation above

• Penalties are Calculated Monthly – Paid Annually

(28)

EMPLOYER MANDATE: IMMUNIZING THE PLAN

Minimum

Essential

Coverage

Affordable

Rate

All Full Time

Employees

(29)

MINIMUM ESSENTIAL COVERAGE

Health insurance plan design, not employer contribution to the

plan

• Health insurance carrier must pay for at least 60% of treatment

costs (60% actuarial minimum value)

• “Bronze level” plan

(30)

Exclusively refers to employee contribution to the plan

Misconception – Certain Contribution % Required

Coverage is considered “affordable” if employee contributions for employee only coverage do not exceed 9.5% of an employee’s household income

There are three safe harbor methods for determining affordability:

1. W-2 Wages - 9.5% of an employee’s W-2 wages (not reduced for salary reductions under a 401(k) plan or cafeteria plan)

2. Rate of Pay - 9.5% of an employee’s monthly wages (hourly rate x 130 hours per month) 3. Federal Poverty Level - 9.5% of the Federal Poverty Level for a single individual

AFFORDABLE RATE

(31)

• Minimum essential coverage at an affordable rate must be offered

to all full time employees regularly working at least 30 hours per

week following the 90-day waiting period

• Also, it must be offered to their dependent children, but not

spouses

• No requirement to offer insurance to part time employees – less

than 30 hours

FULL TIME EMPLOYEES

(32)

• Begins in 2015 tax year and only applies to employers with 50+ full-time equivalent employees

• The forms must be filed for first time in early 2016 for the 2015 calendar year.

• Just like W-2’s, copies of the forms must be provided to employees by

January 31st and filed with the IRS by February 28th (paper) or by March 31st (electronic)

• Electronic filing required unless the employer will be submitting fewer than 250 1095-C forms for the year

EMPLOYER MANDATE:

REPORTING REQUIREMENTS

(33)

Section 6056 of the Tax Code requires:

1. One Transmittal Form (IRS Form 1094-C)

2. Employee Statements (IRS Form 1095-C – top half only) It may help you to think of the 1094-C as similar to the W-3 (a

transmittal form) and the 1095-C as similar to the W-2 (a separate return for each employee)

*Self-funded plans require additional reporting under Section 6055 of the Tax Code

EMPLOYER MANDATE:

REPORTING REQUIREMENTS

(34)

Three Methods of Reporting:

1. General Method – Required method for all large employers unless they qualify for reporting relief provided by the two alternative methods. (See next two slides for data collection requirements)

2. Qualifying Offer Method – To use this method the employer must offer a bronze level or higher plan where the cost to the employee of employee-only coverage is less than about

$1,100 in 2015. Also, plan must be offered to all family members. Provides relief from reporting monthly, employee-specific health information.

3. 98% Offer Method – To use this method, the employer must offer a bronze level or

higher plan at an affordable rate to at least 98% of the company’s full time employees. Provides relief from identifying which employees regularly work full-time hours.

EMPLOYER MANDATE:

REPORTING REQUIREMENTS

(35)

So What Information Do I Need to Track in 2015?

1. Employer name, address, and Tax ID

2. Name and phone number of employer’s contact person responsible for health insurance (this may be either an employee or agent of the employer)

3. Calendar year for which the information is reported

4. Certification as to whether the employer provided minimum essential coverage to full-time employees and their dependents by calendar month

5. Months minimum essential coverage was available to each full-time employee

EMPLOYER MANDATE:

REPORTING REQUIREMENTS

(36)

So What Information Do I Need to Track in 2015 (cont.)?

6. Each full-time employee’s monthly cost for employee-only coverage under the employer’s least expensive minimum value plan (bronze level or higher plan) 7. Number of full-time employees employed each month in the calendar year 8. Name, address, and tax ID of each full-time employee employed during the

calendar year

9. Months each employee was covered on the group health plan during the year

** Self-insured plan sponsors must collect additional information

EMPLOYER MANDATE:

REPORTING REQUIREMENTS

(37)

NON-DISCRIMINATION

Per IRS, delayed until at least 2015

“Similar” to current regulations for self-insured plans

Grandfathered plans excluded

When implemented will most likely prohibit:

• Management Carve-Out Plans

• Higher % contributions to HCI’s

• Executive Health Plans

(38)

AUTOMATIC ENROLLMENT

Employers with more than 200 full‐time employees

required to automatically enroll new employees

Employees may still opt out

Automatic Enrollment Rules delayed until at least

2015, probably longer

Federal Department of Labor has not yet issued

guidance on this issue

(39)

CHEAT SHEETS

Provisions by Employer Size

(40)

CHEAT SHEET #1

Provisions for Small Employer (less than 50) with no Health Insurance Plan: 1) Notice of Exchanges and Subsidies

2) Lactation Breaks

3) No Favorable Tax Treatment for Individual or Marketplace Plan Reimbursements

(41)

CHEAT SHEET #2

Provisions for Small Employer (less than 50) with a Health Insurance Plan: 1) Notice of Exchanges and Subsidies

2) Lactation Breaks

3) Small Business Tax Credits (If less than 25 employees) 4) Summary of Benefits and Coverage

5) New COBRA Notice Language 6) 90-Day Waiting Period

7) Non-Discrimination – if non-grandfathered (delayed)

(42)

CHEAT SHEET #3

1) Notice of Exchanges and Subsidies

2) Lactation Breaks

3) W-2 Reporting (if issue more than 250 W-2s)

4) Summary of Benefits and Coverage

5) New COBRA Notice Language

6) 90-Day Waiting Period

7) Employer Mandate – Effective 1/1/15 for 100+ employees and 1/1/16 for 50 – 99 employees.

8) Employer Mandate Reporting

9) Non-Discrimination – if non- grandfathered (delayed)

10) Automatic Enrollment – 200+ employees (delayed)

Provisions for Large Employer (50+ Employees) with a Health Insurance Plan:

(43)

WRAP UP,

QUESTIONS & ANSWERS

(44)

THANK YOU!

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