License No. 045127
Thank you for joining us. We have a great many participants in today’s call. Your phone
is currently mu...
License No. 045127License No. 045127
Affordable Care Act: Essential Points
You Need to Know about the “Notice to
Employees...
License No. 045127
Notice to Employees of Coverage Options
• Which employers are required to send the
Notice? What is the ...
License No. 045127
What is the “The Notice?”
• Employers must send a written notice to all
employees of coverage options a...
License No. 045127
Date of Notice Distribution
5
OCTOBER 2013
1
TUESDAY
… Or upon hire, if after October 1, 2013
License No. 045127
Who needs to send the Notice?
• Employers subject to FLSA
• Hospitals
• Schools
• Government agencies
6
License No. 045127
Who gets the Notice?
•Required:
–All employees
•Not Required:
–Non-employees
–Family members
–Retirees
...
License No. 045127
Delivery Requirements of the Notice
•Automatic
•Free of Charge
•Understandable by average employee
•Fir...
License No. 045127
DOL Electronic Delivery Safe Harbor
9
The Plan Administrator should:
1.Take appropriate and necessary m...
License No. 045127
What must the Notice say?
1. Inform the employee of the existence of the Marketplace (Exchange) includi...
License No. 045127
The Model Notice
11
http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf
License No. 045127
Model Notice Part A
12
License No. 045127
Model Notice Part B – Page 1
13
License No. 045127
Model Notice Part B – Page 2
14
License No. 045127
The Hard Part: Minimum Value/Affordability
15
 If checked, this coverage meets the
minimum value stand...
License No. 045127
Determining Minimum Value and Affordability
• “Minimum Value”
• “Total Allowed Costs”
• “Affordable”
• ...
License No. 045127
How will I know that my health plan has
“Minimum Value”?
• Insured Plans – Insurance Carrier
• Self-fun...
License No. 045127
Design-Based Minimum Value Safe Harbors
18
DESIGN-BASED MINIMUM VALUE SAFE HARBORS
Design Medical
Deduc...
License No. 045127
Minimum Value Calculator
19
http://cciio.cms.gov/resources/regulation/index.html.
License No. 045127
Non-Standard Plans
• What if my plan doesn’t fit into any of those
Minimum Value “Safe Harbor” tools?
–...
License No. 045127
How will I know that my health plan is
“Affordable”?
• An ACA FTE’s cost for the lowest cost self-only
...
License No. 045127
Affordability Safe Harbors
• Satisfying one of 3 Affordability Safe Harbors can exempt
employer from ta...
License No. 045127
Affordability Safe Harbors
• Federal Poverty Line Safe Harbor: Full-
Time and Part-Time Employees
– Emp...
License No. 045127
Affordability Safe Harbors
• Form W-2 Safe Harbor for Full-Time Employees
– Employee’s required contrib...
License No. 045127
Affordability Safe Harbors
• Rate of Pay Safe Harbor for Full-time and Part-Time
Employees
– Employee’s...
License No. 045127
Rate of Pay Safe Harbor Example :
Hourly Employee Full-Time
• Works 40 hours a week for $8.50/hr
• Mont...
License No. 045127
Rate of Pay Safe Harbor Example:
Salaried Employee Full-Time
• Monthly Salary: $1,360
• Monthly cost of...
License No. 045127
Rate of Pay Safe Harbor Example :
Hourly Employee Part-Time
• Works 20 hours a week for $8.50/hr
• Mont...
License No. 045127
“Bright Line” Determination of Affordability
Example:
Monthly cost of lowest cost minimum value self-on...
License No. 045127
One More Thing …
30
License No. 045127
Going Forward …
• Choose one or all of the three Affordability Safe
Harbors, depending on your categori...
License No. 045127
Keenan Resources: Employee Relations FAQ
32
License No. 045127
Employer Resources
• Are you subject to FLSA?:
• http://www.dol.gov/elaws/esa/flsa/scope/screen24.asp
•...
License No. 045127
34
Questions?
Disclaimer – Keenan & Associates is an insurance brokerage and consulting firm.
It is not...
License No. 045127
Innovative Solutions. Enduring Principles.
35
Thank you for your
participation!
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Webinar: ACA “Notice of Coverage Options” Requirement – Are you Ready?

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“We have to send out the ‘Notice to Employees of Coverage Options’ form when???!!!!”

By October 1, 2013 – less than 1 month away! But don’t worry, Keenan is here to help you meet this deadline and comply with this requirement of the Affordable Care Act.

This complimentary, one hour webinar will give you a crash course regarding the following:

- What is the ‘Notice to Employees of Coverage Options’?
- How do we remain compliant with this ACA requirement?
- What does this notice need to contain?
- Is it better to use the Model Notice provided by the Department of Labor?
- How do you fill in the Model Notice?
- What are the methods to determine Minimum Value and Affordability?
- What resources are available for further information?

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Webinar: ACA “Notice of Coverage Options” Requirement – Are you Ready?

  1. 1. License No. 045127 Thank you for joining us. We have a great many participants in today’s call. Your phone is currently muted so that the noise level can be kept to a minimum. If you have not yet joined the audio portion of this webinar, please click on Communicate at the top of your screen, and then Join Teleconference. The dial-in information will appear. You can print this presentation: 1. On the File menu at the top of your screen, choose Print > Document. 2. Select the printing options that you want to use (print pages x-xx), and then print the document. If you have any questions, you can send them to the host using the Chat feature in the bottom right corner during the webinar. The webinar will start at 10 am. © 2013 Keenan & Associates Affordable Care Act: Essential Points You Need to Know about the “Notice to Employees of Coverage Options” due October 1, 2013
  2. 2. License No. 045127License No. 045127 Affordable Care Act: Essential Points You Need to Know about the “Notice to Employees of Coverage Options “ Presented by: Jerry Healy Employee Benefits Counsel Keenan Cynthia Stribling Training Director Keenan
  3. 3. License No. 045127 Notice to Employees of Coverage Options • Which employers are required to send the Notice? What is the due date? • Who gets the Notice? Can it be electronic? • What must the Notice say? Is it better to use the Model Notice? • What are the methods to determine Minimum Value and Affordability? What data do I need? • What constitutes compliance? What resources are available for further information? 3
  4. 4. License No. 045127 What is the “The Notice?” • Employers must send a written notice to all employees of coverage options available through the “Marketplace.” • In California, this means Covered California. • Notice is due by October 1, 2013 4
  5. 5. License No. 045127 Date of Notice Distribution 5 OCTOBER 2013 1 TUESDAY … Or upon hire, if after October 1, 2013
  6. 6. License No. 045127 Who needs to send the Notice? • Employers subject to FLSA • Hospitals • Schools • Government agencies 6
  7. 7. License No. 045127 Who gets the Notice? •Required: –All employees •Not Required: –Non-employees –Family members –Retirees –Cobra beneficiaries 7
  8. 8. License No. 045127 Delivery Requirements of the Notice •Automatic •Free of Charge •Understandable by average employee •First-class mail •Electronic delivery with special requirements 8
  9. 9. License No. 045127 DOL Electronic Delivery Safe Harbor 9 The Plan Administrator should: 1.Take appropriate and necessary measures reasonably calculated to ensure that the system for furnishing documents: (a) Results in actual receipt of the document (e.g. using return receipt, etc.); and (b )Protects the confidentiality of personal information relating to the individual’s accounts and benefits. 2. The document is prepared and furnished in a manner that is consistent with the style, format and content requirements of the Notice. 3. The employee is informed at the time the Notice is sent of the significance of the document and the right to receive a paper copy; and 4. Upon request, the individual is provided a paper version of the Notice. 5. Recipients must be either be (a) individuals who have the ability to access electronic documents from any location where the participant performs duties as an employee; and has access to the employer’s information system; or (b) individuals who have affirmatively consented to receiving documents electronically and have been provided a clear and conspicuous statement indicating: (i) The types of documents to which the consent would apply; (ii) That consent can be withdrawn at any time without charge; (iii) The procedures for withdrawing consent; (iv) The right to obtain a paper copy without charge; and (v) Any hardware or software requirements for obtaining and retaining documents or changes to such requirements http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=146cf725bf038cd08d96bc60304d65d2&rgn=div6&view=text&node=29:9.1.3.3.3.6&idno=29
  10. 10. License No. 045127 What must the Notice say? 1. Inform the employee of the existence of the Marketplace (Exchange) including a description of the services provided by the Marketplace, and the manner in which the employee may contact the Marketplace to request assistance; 2. Inform the employee that if the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60% of such costs, that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code (the “Code”) if the employee purchases a qualified health plan through the Marketplace; and 3. If the employee purchases a qualified health plan through the Marketplace, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes. 10
  11. 11. License No. 045127 The Model Notice 11 http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf
  12. 12. License No. 045127 Model Notice Part A 12
  13. 13. License No. 045127 Model Notice Part B – Page 1 13
  14. 14. License No. 045127 Model Notice Part B – Page 2 14
  15. 15. License No. 045127 The Hard Part: Minimum Value/Affordability 15  If checked, this coverage meets the minimum value standard, and the cost of this coverage to you is intended to be affordable, based on employee wages.
  16. 16. License No. 045127 Determining Minimum Value and Affordability • “Minimum Value” • “Total Allowed Costs” • “Affordable” • “Safe Harbors” 16
  17. 17. License No. 045127 How will I know that my health plan has “Minimum Value”? • Insured Plans – Insurance Carrier • Self-funded Plans: –Design-Based Safe Harbor –Minimum Value Calculator –Actuarial Certification 17
  18. 18. License No. 045127 Design-Based Minimum Value Safe Harbors 18 DESIGN-BASED MINIMUM VALUE SAFE HARBORS Design Medical Deductible Rx Deductible Medical Cost Sharing Rx Cost Sharing OOP Maximum Drug-Tier Co- Pays Specialty Drug Coinsurance HSA 1 $3500 Integrated Med/RX 80%/20% 80%/20% $6,000 N/A N/A N/A 2 $4500 Integrated Med/RX 70%/30% 70%/30% $6,400 N/A N/A $500 3 $3,500 $0 60%/40% 75%/25% $6,400 $10/$20/$50 75% N/A
  19. 19. License No. 045127 Minimum Value Calculator 19 http://cciio.cms.gov/resources/regulation/index.html.
  20. 20. License No. 045127 Non-Standard Plans • What if my plan doesn’t fit into any of those Minimum Value “Safe Harbor” tools? – Actuarial Certification is required – Contact your Keenan representative for assistance in determining Minimum Value 20
  21. 21. License No. 045127 How will I know that my health plan is “Affordable”? • An ACA FTE’s cost for the lowest cost self-only Minimum Essential Coverage that meets Minimum Value requirements offered by the employer is “affordable” if it does not exceed 9.5% of his/her Household Income – Challenge: Predicting ACA FTE Household Income – May ask employees for HI but they don’t have to provide this information (employee relations loser) 21
  22. 22. License No. 045127 Affordability Safe Harbors • Satisfying one of 3 Affordability Safe Harbors can exempt employer from tax penalties while allowing employee to receive Federal subsidies • Conditions: – Self-only coverage under plan must be of Minimum Value – Must give FTEs an opportunity to enroll each year – Employer cannot reduce hourly/monthly wages during the year • Safe Harbors may apply to any reasonable category of employees, provided done so on a uniform and consistent basis for all in category 22
  23. 23. License No. 045127 Affordability Safe Harbors • Federal Poverty Line Safe Harbor: Full- Time and Part-Time Employees – Employee’s contribution for lowest cost self-only coverage does not exceed 9.5% of FPL for a single individual, divided by 12 – 2013 FPL for an individual is $11,490 – 9.5% x $11,490 12 = $90.96 = maximum “affordable” contribution per month 23
  24. 24. License No. 045127 Affordability Safe Harbors • Form W-2 Safe Harbor for Full-Time Employees – Employee’s required contribution for the calendar year does not exceed 9.5% of employee’s Form W-2 wages (box 1) from the employer – Application of safe harbor occurs after close of calendar year – Employee’s contribution must be a consistent amount or percentage for the plan year(s) within the calendar year – Amounts are adjusted to reflect partial years of coverage • Example – Lowest cost self-only coverage is $100/month – Box 1 Form W-2 should be no less than $12,631.56 – $12,631.56 12 = $1,052.63 – 9.5% x $1052.63 = $100 = maximum “affordable” contribution per month 24
  25. 25. License No. 045127 Affordability Safe Harbors • Rate of Pay Safe Harbor for Full-time and Part-Time Employees – Employee’s contribution for a month for the lowest cost self-only coverage doesn’t exceed 9.5% of an amount equal to 130 hours multiplied by the employee’s hourly rate of pay on the first day of coverage (the first day of the plan year) – Use monthly salary for salaried employees – To use this Safe Harbor, employer may not reduce wages during the year • Example – Lowest cost self-only coverage is $100/month – Employee’s rate of pay is $8.50/hour – $8.50 x 130 hours = $1,105 monthly rate of pay – $1,105 x 9.5% = $104.98 = maximum “affordable” contribution per month 25
  26. 26. License No. 045127 Rate of Pay Safe Harbor Example : Hourly Employee Full-Time • Works 40 hours a week for $8.50/hr • Monthly cost of insurance: $100 • 130 times $8.50 = $1,105 monthly rate of pay • 9.5% of $1,105 = $104.98 Affordable! 26
  27. 27. License No. 045127 Rate of Pay Safe Harbor Example: Salaried Employee Full-Time • Monthly Salary: $1,360 • Monthly cost of insurance: $130 • 9.5% of $1,360 = $129.20 Not Affordable! 27
  28. 28. License No. 045127 Rate of Pay Safe Harbor Example : Hourly Employee Part-Time • Works 20 hours a week for $8.50/hr • Monthly cost of insurance: $100 • 130 times $8.50 = $1,105 monthly rate of pay • 9.5% of $1,105 = $104.98 Affordable! 28  If checked, this coverage meets the minimum value standard, and the cost of this coverage to you is intended to be affordable, based on employee wages.
  29. 29. License No. 045127 “Bright Line” Determination of Affordability Example: Monthly cost of lowest cost minimum value self-only coverage on January 1, 2014 is $102 $102/.095 = $1,073.68 (130 x hourly rate of pay or monthly salary). Conclusion: 1. Hourly employees whose hourly wage is no less than $8.26/hour ($1,073.68/130) have “affordable” coverage. 2. Salaried employees whose monthly salary is no less than $1, 073.68 have “affordable” coverage. 29
  30. 30. License No. 045127 One More Thing … 30
  31. 31. License No. 045127 Going Forward … • Choose one or all of the three Affordability Safe Harbors, depending on your categories of employees • Complete your Workforce Analysis to see who must be tested • Review the impact of your findings with your governing body/board by doing a Strategic Impact Study 31
  32. 32. License No. 045127 Keenan Resources: Employee Relations FAQ 32
  33. 33. License No. 045127 Employer Resources • Are you subject to FLSA?: • http://www.dol.gov/elaws/esa/flsa/scope/screen24.asp • The Model Notice to Employees can be found at: http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf • Federal Calculator to determine Minimum Value: • http://www.cms.gov/CCIIO/Resources/Regulations-and- Guidance/Downloads/mv-calculator-final-4-11-2013.xlsm • Guidance on Determining Affordability: • http://www.keenan.com/news/brief/2013/BRF_20130204_Assess ablePartI_KA.pdf • Employee Relations FAQs and Other Resources: • http://www.keenan.com/hcr/ 33
  34. 34. License No. 045127 34 Questions? Disclaimer – Keenan & Associates is an insurance brokerage and consulting firm. It is not a law firm or an accounting firm. We do not give legal advice or tax advice and neither this presentation, the answers provided during the Question and Answer period, nor the documents accompanying this presentation constitutes or should be construed as legal or tax advice. You are advised to follow up with your own legal counsel and/or tax advisor to discuss how this information affects you. 34
  35. 35. License No. 045127 Innovative Solutions. Enduring Principles. 35 Thank you for your participation!
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