2. Before We Begin
It is easy to get caught up in the frenzy of Health Care
Reform and PPACA
Ask yourself the following questions:
• What key questions do you have that you would like to
get answered?
• What feedback or questions are you getting from your
employees?
• Is your company going to continue offering health
benefits to its employees?
3. Before We Begin
• What coverage do I want to offer?
• How much do I want to contribute?
• Do I have to offer coverage at all?
4. Before We Begin
However, there are potential penalties.
These include:
• Failure to offer coverage to everyone
• Failure to meet minimum standards
• Failure to offer affordable coverage
5. Agenda
• Background and Looking Forward
• Large Employer Status
• Employer Penalty Calculation
• Impact on Employers
• 2014 Compliance Deadlines
• Key Steps to Take Now
7. 2012
December 28, 2012: The Administration released comprehensive proposed rules
on the major employer coverage requirements under the ACA. Employers can
rely on these rules until final rules are released.
The Administration has provided transition relief in certain circumstances, such as:
Liability for penalties for non-calendar year plans in 2014
The process for smaller employers to determine large employer status in 2013
Measurement periods for stability periods starting in 2014
Coverage for dependents in 2014
Some issues remain outstanding and will be addressed in forthcoming regulations.
8. 2013
• October 1, 2013 – Exchanges begin open enrollment period
• Mandatory W-2 reporting for tax year 2012
− For employers who issue 250 or more W-2 forms
• Deduction for expenses allocable to employer Part D retiree drug subsidy
eliminated
• Medicare payroll tax increased
• New tax on unearned income
• Cap on salary-reduction contributions to FSA’s
• Employee Exchange Notification
9. 2014
• January 1, 2014 - Employers must generally be in compliance with coverage
requirements
• Individual Health Mandate
• Premium tax credits for Individuals
• Individual market subsidies for low and middle income individuals
• Annual dollar limits on essential benefits removed
• Optional medicaid eligibility expansions (under 65)
10. 2015 and Beyond
• Automatic enrollment for large employers
• Temporary reinsurance fee ends in 2016
• 40% excise tax on high-cost group health plans
12. Who is a Large Employer?
• Any employer with 50+ full time equivalents is considered a
large employer.
• IRC 4980H applies to all common law employers, including
governmental entities, churches, tax-exempt organizations with
at least 50 full-time equivalent employees.
• Foreign companies with at least 50 full-time equivalent
employees performing work in the US with US-source
compensation also are subject to the law.
13. Basic Large Employer Coverage Rules
• Large employers may be subject to an excise tax if at least one
full-time employee whose household income is between 100%
and 400% of the federal poverty level receives a premium tax
credit for Exchange coverage and an employer either:
Fails to offer coverage
to full-time employees
and their dependents
OR
Offers coverage to full-time
employees that does not
meet the law’s affordability
or minimum value standards
14. What is a Premium Tax Credit?
In 2014, people applying for private insurance coverage through exchanges may
apply for an advance premium tax credit to help offset the monthly cost of insurance
premiums. The premium tax credits work as follows:
− The tax credit is paid in advance, meaning that people do not have to wait until their taxes are
filed to receive the subsidy, nor do they have to pay any upfront costs for premiums.
− The tax credit is paid by the federal government directly to plans on a monthly basis, starting at
the point of enrollment. No payments are made directly to consumers.
− The credit is available to people with income between 100 and 400 percent federal poverty
level (FPL) who are not eligible for Medicaid and who do not have access to affordable
employer-sponsored health coverage.
− Income eligibility for the premium tax credits will be based on the previous year’s income tax
returns. Income can also be verified through pay stubs or other documentation.
17. Full-Time & Part-Time Employees
Calculation for
hourly & non-hourly
employees:
• Hourly employees: Count
actual hours served
• Non-hourly employees:
Select one of three
methods:
• Count actual hours
Days worked
equivalence
• Count 8 hours for
each day credited
with at least one hour
of service Weeks
worked equivalence
• Count 40 hours of
service for each
week credited with
at least one hour of
service
21. Full Time Equivalent Employee
Only a large employer may be subject to penalties regarding
employer-sponsored health insurance.
• A “large employer” is an employer with more than 50 full-time
equivalent employees during the preceding calendar year.
• In order to determine whether an employer is a “large
employer”, both full-time and part-time employees are
included in the calculation.
22. Full Time Equivalent Employee -
Example
A firm has 35 full-time employees (30+ hours). In addition, the firm has 20
part-time employees who all work 24 hours per week (96 hours per month).
These part-time employees’ hours would be treated as equivalent to 16 full-
time employees, based on the following calculation:
20 employees x 96 hours / 120
= 1920/120
=16 FTE’s
Thus, in this example, the firm would be considered a “large employer”,
based on a total full time equivalent count of 51 (35 FT + 16 FTE’s)
24. Impact on Employers
• Employers may elect to not offer coverage
• Applicable large employers that do not offer benefits may pay
a penalty/tax
• The penalty that must be paid depends on whether the
employer offers coverage and whether any employees receive
subsidies on the individual market exchange
• Penalty/tax applies to “applicable large employers”. An
applicable large employer is an employer with an average of
50 or more full-time equivalent employees in the preceding
calendar year.
26. • Employers must notify new employees regarding health
care coverage
− At time of hiring
• Notice must include information about 2014 changes:
− Existence of health benefit exchange
− Potential eligibility for subsidy under exchange if employer’s
share of benefit cost is less than 60 percent
− Risk of losing employer contribution if employee buys coverage
through an exchange
• More guidance and model notice expected
• Penalties apply for non compliance of $50/missed
statement; max $100k
New Notice Requirement –Exchanges
and Minimum Essential Coverage
27. Employer Reporting
• Employers will have to report certain information to
the government
− Whether employer offers health coverage to full-time
employees and dependents
− Whether the plan imposes a waiting period
− Lowest-cost option in each enrollment category
− Employer’s share of cost of benefits
− Names and number of employees receiving health coverage
28. More 2014 Changes
• No pre-existing condition exclusions or limitations
− Applies to everyone and all plans
• Wellness program changes
• Limits on out-of-pocket expenses and cost-sharing
• No waiting periods over 90 days
• Coverage of clinical trial participation
• Guaranteed issue and renewal in all markets
• Individual and fully insured group policies under 100 lives must abide by
strict modified community rating standards:
− Premium variations only allowed for age, tobacco use, family composition and
geography.
− Experience rating would be prohibited.
30. Fidelity Quickpay Will Help You:
• Determine the implications of whether or not to offer a health
plan.
− Health benefits are only one part of the total rewards strategy
− How will offering, or not offering, health benefits impact other talent
management and recruitment strategies
− Costs
• Perform analysis to determine if plan offered should stay
Grandfathered, if currently is
• If employee is over 50 years, perform a qualitative analysis to
determine if existing plans meet the eligibility and affordability
standards to avoid penalties. Calculators available!
• Consider cost and benefits of each option
• Analyze potential Cadillac Tax implications each year
(preparation for 2018)
31. Fidelity Quickpay Will Help You:
• Consider a communication strategy for employees
and candidates
− Implementation timeline on amending employee manuals,
when communication documents should be delivered and
how, employee engagement
• Consider staffing needs in light of reform and have
open discussions with CEO and CFO about direction
of company in terms of staffing and the role it plays
with rewards package
• Create a check-list of the various requirements and
their due dates
