Affordable Care ActEmployer Pay or Play Mandate           2014
Pay or Play Mandate – Simply PutPPACA will require employers to make a choice:•Play by continuing to offer employees healt...
Pay or Play Mandate - Recap• Beginning in 2014• Large employers:  – 50 or more full time employees• Required to provide he...
Penalty – Non ComplianceTwo Types  1. No Coverage Penalty  2. Unaffordable Coverage Penalty
1. No Coverage Penalty• Applicable to employers who offer no coverage• $2000* “free rider” penalty” per year• for each ful...
2. Unaffordable Coverage Penalty• Coverage offered employees must be affordable  and valuable• Penalty assessed when cover...
2. Unaffordable Coverage Penalty• QUALITY Standard• Plan must have at least 60% actuarial value  – Plan must be expected t...
2. Unaffordable Coverage PenaltyAFFORDABILITY Standard•Employee’s contribution must not exceed 9.5%of employee’s W2 wages ...
Play or Pay Considerations• Attracting/retaining skilled talent   – Must provide market value• Exchange Affordability   – ...
Play or Pay Considerations• Exchange Complexity  – currently only 17 states setting up exchanges  – all have different rul...
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Affordable Care Act Pay or Play

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A quick review of the main considerations regarding the Pay or Play options with a mid-size employer under PPACA, effective 2014.

Published in: Business, Economy & Finance
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Affordable Care Act Pay or Play

  1. 1. Affordable Care ActEmployer Pay or Play Mandate 2014
  2. 2. Pay or Play Mandate – Simply PutPPACA will require employers to make a choice:•Play by continuing to offer employees healthbenefits or•Pay a penalty tax for dropping group healthbenefits
  3. 3. Pay or Play Mandate - Recap• Beginning in 2014• Large employers: – 50 or more full time employees• Required to provide health insurance – to all full time employees( 30+ hours/week) – and their dependents
  4. 4. Penalty – Non ComplianceTwo Types 1. No Coverage Penalty 2. Unaffordable Coverage Penalty
  5. 5. 1. No Coverage Penalty• Applicable to employers who offer no coverage• $2000* “free rider” penalty” per year• for each full time employee• if even one full time employee obtains federally subsidized coverage from exchange penalty assessed• first 30 employees excluded from calculation*indexed for inflation after 2014
  6. 6. 2. Unaffordable Coverage Penalty• Coverage offered employees must be affordable and valuable• Penalty assessed when coverage fails to meet QUALITY or AFFORDABILITY standards• $3,000*/ employee receiving federal subsidy• Employees eligible for subsidy if income is 138% to 400% of federal poverty level*indexed for inflation after 2014; penalty is capped when equal to non coverage penalty
  7. 7. 2. Unaffordable Coverage Penalty• QUALITY Standard• Plan must have at least 60% actuarial value – Plan must be expected to pay at least 60% of covered medical expenses• MVP will be advising which plans meet this standard – Employer funding of HRA needs to be included in equation
  8. 8. 2. Unaffordable Coverage PenaltyAFFORDABILITY Standard•Employee’s contribution must not exceed 9.5%of employee’s W2 wages – Applies to single premium coverage
  9. 9. Play or Pay Considerations• Attracting/retaining skilled talent – Must provide market value• Exchange Affordability – Not a “slam dunk” cost saving measure – Will cost employers to make employees whole• Employee Impact – Will suffer significant reduction in overall compensation – Employees will not be able to absorb projected inefficiency of exchange based coverage
  10. 10. Play or Pay Considerations• Exchange Complexity – currently only 17 states setting up exchanges – all have different rules for rating, etc. – messy for a multiple state administration• Spousal/Dependent Coverage Impact – to be a Valid Health Plan under PPACA an employer must offer coverage to spouses and children

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