Are you ready for the upcoming Affordable Care Act changes? In 2015, employers will assume additional responsibilities, and not understanding how they work can be costly. In this 30-minute presentation, WEA Trust experts Diane Craney and Rachel Carabell will explain what new penalties, waiting periods, reporting and benefits you can expect. You’ll leave with a solid understanding of how best to prepare for 2015.

1. 06/24/2014
Diane Craney – Office of General Counsel
Rachel Carabell – Product Development Team
Mel Grau – Marketing Coordinator
First Look: Affordable Care Act Changes for 2015

2. Don’t miss our
next webinar!
July 16 - 10:00 a.m.

3. Get more out of your wellness portal
• What is the best way to get your
employees to use the portal?
• What kinds of online tools are most
popular—and effective?
• How can you take online portals offline?
July 16 - 10:00 a.m.

4. 1. Employer Responsibility
2. Counting Hours
3. Implementation
4. Open Enrollment
5. What is the Penalty?
6. Example
7. Waiting Periods
8. IRS Reporting
Agenda

5. Employer Mandate:
Does it apply to you?

6. Employer Responsibility
The ACA requires that large employers are subject
to penalties if they do not offer insurance to their
full-time employees.
• More than 50 full-time equivalent employees
during the preceding year
• Need to track hours in 2014 for 2015
• Part-time hours are included in calculation
• Excludes seasonal employees who work less than
120 days

7. • Full-time employees + Part-time employees
• Full-time definition
– 30 hours per week
– 130 hours per month
• 1 FTE = 120 hours worked per month
• Example
– 38 Full-time employees
– 20 Part-time employees 24 hrs/week (96 hrs/month)
– (20 x 96)/120 = 16 FTE
Are You a Large Employer?

8. What coverage do you have
to offer?

9. Avoiding Penalties
To avoid the penalties, the health plan offered
has to meet three tests:
– Minimum essential coverage (major medical)
– Minimum value (on average, plan pays at least
60% of costs/member pays no more than 40% )
– Affordability (single premium for lowest cost plan
can be no more than 9.5% of household income)

10. • How do you calculate this test?
– W2 wages safe harbor (9.5% of wages
reported in Box 1)
– Hourly wages safe harbor (9.5% of hourly rate
x 130 hours/month)
– Federal Poverty Level safe harbor (9.5% of
$972.50/month)
Affordability

11. Counting Hours

12. • Employees who work 30 hours or more
per week OR 130 hours per month
• Look-Back Measurement Method –
Measure for “block” of time, “lock in / lock
out” status for same length
• You need to count hours now if you may
be responsible for the penalty in 2015
Who do you need to offer coverage to?

13. Who do you need to offer coverage to?
• 3-12 month period to count hours and
determine if employee has worked 30
hours per week on average
Measurement
Period
• No longer than 90 days
• Notify employees qualifying for coverage
and handle enrollment tasks
Administrative
Period
• Period of time during which employees
who meet the hours threshold must be
treated as full-time regardless of actual
hours worked
Stability Period

14. 2013 2014 2015 2016
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 Plan Year
2016 Plan Year
Who do you need to offer coverage to?
Green = Measurement Period
Red = Administrative Period
Blue = Stability Period

15. • If employee works 30 or more hours per
week during school year, you cannot
consider them part-time because of
summer break
• Summer break –
– Exclude it from counting and average without
those weeks
– OR assume that the employee would have
worked their average number of hours
Special Rules for Education Institutions

16. Implementation Timeline

17. Implementation
2015: Groups with 100 or
more full-time employees
will have to offer coverage to
at least 70% of its full-time
employees.
2016: Groups with 50 or
more full-time employees
will have to offer coverage to
at least 95% of its full-time
employees.

18. Open Enrollment

19. Open Enrollment – Avoiding the Penalty
An open enrollment period must be
held within the 12 months prior to
the penalty being effective.
After that, open enrollment must be
offered yearly.
The period must be an “effective
opportunity” to accept of decline
coverage.

20. What is the penalty?

21. Offering penalty:
• $2,000 annually per full-time employee (assessed monthly) if
employer does not offer coverage AND if any employee
receives a premium subsidy through the Exchange; or
Affordability penalty:
• $3,000 annually per employee who is offered coverage that is
not affordable or not minimum value and that employee
receives a premium subsidy through the Exchange
What is the penalty?

22. Example

23. EMPLOYER # OF FTE EEs # OF Full-Time EEs
RECEIVING SUBSIDY
A 45 15
B 53 0
C 130 10
Who owes a penalty?

24. Waiting Periods for
New Hires

25. Waiting Periods - Effective January 1, 2014
• Waiting periods cannot exceed 90
calendar days
• Other criteria can be required before the
90 calendar-day period begins
– Examples: Licensure, Orientation
• Late enrollment penalties are still allowed

26. IRS Reporting

27. Section 6055 (Insurer) and 6056 (Employer)
• Required to administer the premium tax
credit, the individual responsibility and
employer responsibility penalties
• Used to verify the months for which an
individual was offered and enrolled in
minimum essential coverage (major
medical)

28. Section 6055 (Insurer)
• First reporting required is in 2016 for 2015
• Insurers will need to make statements to
subscribers by January 31 of the following
calendar year
• IRS requires insurers report Social
Security Numbers of:
– your employees
– their dependents

29. Section 6056 (Employer)
• Required elements:
– Name, address, EIN and calendar year
– Employer contact information
– Certification the employer made a qualifying offer to
its full-time employees the opportunity to enroll, by
month
– The number of full-time employees by month
– The months for which coverage was available
– Employee’s share of lowest cost monthly premium for
self-only coverage by month
– Name, address and SSN of each full-time employee
and which months the employee was covered

30. Section 6056 (Employer)
• Statements to full-time employees
– Must include name, address and EIN of the employer and
the information included on the Section 6056 forms
provided to the IRS
– May be provided electronically if employee consents
– Can be mailed with W2s
• Timing
– 6056 returns must be filed with the IRS no later than
February 28 (or March 31 if filed electronically)
– Employee statements must be provided on or before
January 31 for previous year
– First year reporting is required is 2016 for 2015

31. On the radar

32. DOES apply to you
Cadillac Tax
• Starting in 2018, annual premiums that
exceed $10,200 for a single plan will be
taxed at 40% of the amount exceeding the
$10,200
• Some employers are starting to adjust plan
designs now to avoid this tax in the future.

33. Don’t worry about now
• Auto-enrollment
• Non-discrimination requirements
• Fees:
– PCORI
– Insurer Assessment
– Reinsurance

34. Questions?