The Payroll and HR Technology Toolkit for Managing the ACA

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Since the signing of the Affordable Care Act (ACA) in 2010, employers have seen many changes occur. The most significant mandates will be rolling out in 2014 and will affect all employers one way or …

Since the signing of the Affordable Care Act (ACA) in 2010, employers have seen many changes occur. The most significant mandates will be rolling out in 2014 and will affect all employers one way or another. While many employers may know what steps need to be taken to prepare, they may not understand how these mandates will change their business policies on a granular level.

The ACA has many employers in a frenzy over how to handle the tracking and reporting of employee hours of service, whether to provide coverage to all full-time employees or pay penalties, and where to even begin tracking and managing for these looming provisions.

These provisions will require employers to completely rethink their business processes and will require much more time spent on tracking and reporting. This will be very challenging, particularly for employers using manual processes, spreadsheets, or older systems for tracking employee information. As a result, applicable large employers are recognizing the importance of having a streamlined system in place to make these tasks more manageable.

In this webinar, we will discuss the challenges many employers face with impending ACA mandates going into effect next year, as well as solutions to help applicable large employers meet these challenges head on, streamline the processes that will be involved, and win the compliance battle. These requirements are not going away, so it is vital to start assessing how these challenges in tracking and reporting will be handled, as well what strategy your company will adopt.

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  • 1. The Payroll and HR Technology Toolkit for Managing the ACA APS, Inc.• apspayroll.com • Toll Free 888.277.8514 • Fax 318.222.0601
  • 2. Presenters Christian Valiulis • Chief Revenue Officer at APS Payroll • Former Business Development Leader at Praeses Corporation • 20+ years experience in Sales, Marketing, and Business Development Tracy Maranto-Phillips • Human Resources Consultant at Querbes & Nelson • Former Director of Human Resources at Centenary College of Louisiana • 10+ years experience in Human Resources www.apspayroll.com
  • 3. Disclaimer All information in this presentation, including the opinions of the presenters, is solely for illustrative purposes. The information is based on certain assumptions, interpretations, and calculations that are not necessarily accurate with regard to provisions of the PPACA, HCERA, HIPAA, COBRA, ERISA, and other rules, regulations, guidance, and all other documents issued by relevant state and federal agencies with regard to these laws and any other relevant laws. The information provided should not be considered as legal, financial, accounting, planning, or tax advice. You should consult your attorneys, accountants, and other colleagues or experts of this type for advice based on their own interpretations, calculations, and determinations of applicable laws, rules, regulations, guidance, and any other documents and information that they determine may be relevant to your particular situation. The authors make no guarantee or other representations as to the accuracy or completeness of the data in this presentation. Automatic Payroll Systems, Inc. and Querbes & Nelson expressly disclaim any liability for information obtained from use of this presentation by any other person. No warranty of any kind is given with regard to the contents of this presentation. www.apspayroll.com
  • 4. What Does It Mean To You? www.apspayroll.com 2014 2015 Mandate
  • 5. Takeaways • General understanding of the Patient Protection and Affordable Care Act (PPACA or ACA) • Understanding of strategy options and penalties • Understanding recent guidance on reporting requirements and the employer mandate • Applying the provision requirements to workforce management (Payroll, HR, and Time & Attendance practices) • How a unified cloud solution can help manage ACA requirements www.apspayroll.com
  • 6. Timeline: Focus on 2014 www.apspayroll.com
  • 7. Health Insurance Marketplace Notices All employers covered by the Fair Labor Standards Act (FLSA) are required to provide a notice about the state’s Health Insurance Marketplaces to current employees by October 1, 2013 and to new employees within 14 days of the hire date moving forward. • Employers need to consider the process for providing notices - paper vs. digital o If digital, request an eSignature and have a document management system in place o Understanding the Interim Policy on Electronic Disclosure Under 29 CFR 2550.404a-5 www.apspayroll.com
  • 8. What is a Large Employer? A "large employer" is defined as one with more than 50 full-time equivalent employees during the preceding calendar year. • Full-time employees are defined as those working 30 or more hours per week • Full-time excludes season employees who work less than 120 days during the year • Part-time or variable employees' hours as a group are included in the calculation SEASONAL: Seasonal retail, agricultural, and others included under good faith reasonable interpretation the number exceeded 50 for only 120 days/4 months (or fewer). COMMON CONTROL OWNERSHIP: If you are considered to be a control group, under IRS Control Group Rules, you may have to combine the employee counts from each company. DEFINING EMPLOYEE USING THE COMMON LAW DEFINITION: Anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. REMEMBER: Per the Fair Labor Standards Act (FLSA), proper employee classifications are IMPORTANT for calculation and potential audits. www.apspayroll.com
  • 9. Hours of Service • Each hour for which an employee is paid, or entitled to payment, for the performance of duties for the employer; AND • Each hour for which an employee is paid, or entitled to payment by the employer on account of a period of time during which no duties are performed due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence www.apspayroll.com
  • 10. Large Employer Calculation Example of ACA FTE Report in APS OnLine www.apspayroll.com Employers have to determine if they are an applicable large employer and subject to the provisions of the ACA. CAVEAT: Seasonal employees must be reviewed by hours of service on a daily basis. If a seasonal employee worked over 120 hours in a four month period, they would be factored into the calculation.
  • 11. Shared Responsibility Rules for Applicable Large Employers • Must offer coverage to full-time employees and to children under the age of 26 (excludes spouses) • Under IRC Section 4980H, must comply with annual IRS reporting requirements (50+ employees) • Employer subsidy required on employee only premium tier and must satisfy the following 3-pronged criteria: www.apspayroll.com 3-pronged test for insurance coverage
  • 12. Large Employers Must Offer Coverage to Whom? • Any employee averaging 30 hours of service or more per week in previous lookback period (3-12 months) • Any new hire who, after 90 days, is REASONABLY EXPECTED to work more than 30 hours per week www.apspayroll.com 2015
  • 13. Lookback, Stability, and Administrative Periods • Lookback period for Large Employer Determination vs. Stability period - there are different periods • Variable employees • Lookback period can be 3-12 months to determine eligibility for variable employees - employer determines the length of the period • Stability period should equal the lookback period, but a minimum of 6 months (i.e. 3 month lookback period, minimum 6 months stability) • Administrative period - 90 days - they have to have insurance within 90 days (suggestion is a 60 day waiting period) www.apspayroll.com
  • 14. Compliance Requirements EMPLOYEE GETS THE SUBSIDY IN THE MARKETPLACE IF: • Prong 1: Subsidy Safe Harbors OR • Prong 2: Minimum Essential Coverage (MEC) satisfied OR • Prong 3: Minimum Value (MV) satisfied www.apspayroll.com
  • 15. The required employee contribution for single coverage exceeds 9.5% of their household income (Safe Harbors) Safe Harbors: 1. Pay below 100% federal poverty level (FPL) or pay above 400% of FPL (those earning below 100% FPL and 400% + are not eligible for subsidy) 2. Pay at 9.5% of lowest wage earner 3. Pay at 9.5% of individual wages Prong 1 - Subsidy Safe Harbors www.apspayroll.com
  • 16. Safe Harbor #1 Household Size 100% 200% 400% 1 $11,490 $22,890 $45,960 2 $15,510 $31,020 $62,040 3 $19,530 $39,060 $78,120 4 $23,550 $47,100 $94,200 5 $27,570 $55,140 $110,280 6 $31,590 $63,180 $126,360 7 $35,610 $71,220 $142,440 8 $39,630 $79,260 $158,520 For each additional person, add $4,020 $8,040 $16,080 2013 Federal Poverty Level (FPL) www.apspayroll.com
  • 17. Safe Harbor #2 Hourly Rate Annual Salary Annual Premium 9.5% Wages Annual Ins. Cost ER Paid $10.00 $20,800 $6,000 $1,976 $4,024 $20.00 $41,600 $6,000 $1,976 $4,024 $30.00 $62,400 $6,000 $1,976 $4,024 $40.00 $83,200 $6,000 $1,976 $4,024 9.5% Lowest Wage Earner Employer Cost: $16,096 $500 Employee only Monthly Premium www.apspayroll.com
  • 18. Safe Harbor #3 Hourly Rate Annual Salary Annual Premium 9.5% Wages Annual Ins. Cost ER Paid $10.00 $20,800 $6,000 $1,976 $4,024 $20.00 $41,600 $6,000 $3,952 $2,048 $30.00 $62,400 $6,000 $5,928 $72 $40.00 $83,200 $6,000 $7,904 ($1,904) 9.5% of Individual Income Employer Cost: $4,240 $500 Employee only Monthly Premium www.apspayroll.com
  • 19. Prong 2 - Minimal Essential Coverage Coverage that satisfies the INDIVIDUAL MANDATE includes the following types of coverage: • Coverage under an "eligible employer-sponsored plan" which the proposed Treasury rule defines generally to mean coverage under a group health plan whether insured or self-insured, including coverage under a federal or non-federal governmental plan • Coverage under an employer-sponsored retiree health plan • Coverage under certain government programs, such as Medicare, Medicaid, the Children's Health Insurance Program (CHIP), and TRICARE • Coverage in the individual insurance market, including a plan offered by a Marketplace AND • Other coverage recognized by HHS, including self-funded student health coverage and coverage under Medicare Advantage plans www.apspayroll.com
  • 20. Projected costs for essential health benefits (EHB) coverage for the group Projected charges for EHB coverage for a typical self-insured group health plan population Prong 3 - Minimum Value (MV) The ACA provides that an employer group health plan fails to offer MV if "the plan's share of the total allowed costs of benefits provided under the plan is less than 60% of such costs." - Human Health Services (HHS) is defining these rules The HHS rules offer several options for calculating MV • Use the HHS MV Calculator (online tools) • Apply a Safe Harbor developed by HHS and the IRS • Provide an actuarial certification from a member of the American Academy of Actuaries • Small group plans also meet MV requirements if they provide a bronze level plan www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/ www.apspayroll.com Formula:
  • 21. 2014 - Two Types of Penalties 1. Penalty of *$2,000 per full-time employee and paid annually (excluding the first 30) if at least one FTE receives a government subsidy to buy coverage on a Marketplace 1. Employers that offer coverage to employees may still face a "free rider" penalty if the coverage offer is deemed unaffordable or low in value - *$3,000 for each employee that receives a subsidy NOTE: There are special rules on the penalty calculation for employers that are part of a control group. *Penalty figures above may also be presented as a monthly amount www.apspayroll.com
  • 22. Required Reporting W-2 Health Costs Reporting Requirement • Employers are required to report the aggregate cost of applicable employer-sponsored coverage on W-2 • The aggregate cost of coverage includes costs paid by both employer and employee and should be calculated on a calendar year basis regardless of when the plan renews • At this point, information only, not taxable NOTE: Specific coverages are excluded (i.e. accident only coverage) www.apspayroll.com
  • 23. Required Reporting Under IRC Section 4980H, ALE must comply with annual IRS reporting requirements (50+ employees): • Employer details (name of business, employer identification number) • Confirm full-time employees are offered coverage through an employer-sponsored plan • Details regarding the employer-sponsored plan (waiting period, availability, premium costs, employer’s share of costs of benefits) • Number of full-time employees for each month during the year • The name, address, and tax identification number of each full-time employee during the year and the months during which he or she was covered under the employer-sponsored health- benefit plan CHALLENGE: May impact your benefits administration in the future by having to report dependents being offered coverage and if the health plan coverage meets the MEC and MV. STRATEGY: Utilizing a unified solution for benefits administration will help with reporting compliance www.apspayroll.com
  • 24. Are You Prepared to Meet Reporting Requirements Under the ACA? Ask yourself: • Do you have the capability to pull all this data from your payroll and/or HR/benefits administration system? • Do you have to pull this information from multiple systems? • Do you have the ability to pull the information info a manageable format for tracking and reporting it to agencies and executives? www.apspayroll.com
  • 25. Strategy #1 - Avoid Fines Required Systems Avoid Fines Time & Attendance Identify seasonal staff Proactive management of part-time/variable staff hours Electronic Time and Attendance Records - Present and Historical Data for Audit Trail Payroll Aggregate premium Hours of service/Lookback decision W-2 wages IRC Section 4980H reporting HR with Benefits Administration Enrollment tracking - individual and dependent coverage offered and waived, 95% coverage threshold, Benefit election/change logs Document management - waivers, SOB's, enrollment elections IRC Section 4980H reporting www.apspayroll.com
  • 26. Strategy #2 - Risk Some Fines Required Systems Risk Some Fines Time & Attendance Identify seasonal staff Proactive management of part-time/variable staff hours Electronic Time and Attendance Records - Present and Historical Data for Audit Trail Payroll Aggregate premium Hours of service/Lookback decision W-2 wages IRC Section 4980H reporting HR with Benefits Administration Effective and efficient benefits administration - enrollment tracking, document management Benefit election/change logs IRC Section 4980H reporting www.apspayroll.com
  • 27. Strategy #3 - Pay Fines Required Systems Pay Fines Time & Attendance Identify seasonal staff Proactive management of part-time/variable staff hours Electronic Time and Attendance Records - Present and Historical Data for Audit Trail Payroll Aggregate premium Hours of service/Lookback decision IRC Section 4980H reporting HR with Benefits Administration www.apspayroll.com
  • 28. Managing ACA Requirements - System Capabilities 1. Report Aggregate Cost of Health Insurance - Employers who are subject to this reporting requirement should already be familiar with this. 1. Applicable Large Employer Calculation - Determine how many FTEs you have 1. Health Insurance Marketplace Notices (Oct 1, 2013) - Must be provided to current and new employees 1. Determine Lookback and Stability Period - Identify lookback period and stability period that mitigates your company's exposure 1. Part-Time Staff Management - Avoid any employees exceeding the 30 hours per week threshold that shouldn't 1. Tracking Employee Benefit Enrollment - Know which employees are currently enrolled, those who have declined, and those newly eligible 1. Health Plan Coverage Reporting - Due to the IRS beginning 2015 for calendar year 2014 www.apspayroll.com
  • 29. Resources • www.apspayroll.com/about-us/affordable-care-act-resource-page • www.irs.gov - IRS • www.dol.gov - Department of Labor • www.federalregister.gov - Federal Register • www.cciio.cms.gov - The Center for Consumer Information & Insurance Oversight • www.shrm.org - Society of Human Resources Management • www.kff.org/health-reform - The Kaiser Family Foundation Contact Info: Christian - cvaliulis@apspayroll.com Tracy - tphillips@qnins.com www.apspayroll.com
  • 30. Questions? www.apspayroll.com