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Affordable Care Act: Update on the
Employer Mandate for 2015

Featuring Seyfarth Shaw LLP
Welcome

Today’s Host
Michelle Lanter Smith
Chief Marketing Officer
EPAY Systems, Inc.
mlsmith@EPAYsystems.com
773-499-751...
EPAY Systems -- designed to meet the
needs of your complex,
distributed workforce

• Reduce your labor
costs by 5% or more...
Today’s Discussion
The Affordable Care Act is upon us and there’s a lot to do in
order to be ready for January 1, 2015.
Do...
Our Speaker

Jennifer A. Kraft
Partner, Seyfarth Shaw LLP
Employee Benefits
jkraft@seyfarth.com
(312) 460 -5000

©2012 Sey...
Ask Your Questions

To ask a question, simply
type your question in the
“Question” box on the right
side of your screen.

...
Legal Disclaimer

The contents of this presentation should not be
construed as legal advice or a legal opinion on any
spec...
The Affordable Care Act
Medicaid
Expansion

Exchanges

Guaranteed
Issue/
Community
Rating

Individual
Mandate

Employer
Ma...
Health Benefit
Exchanges
or
―Marketplaces‖
©2012 Seyfarth Shaw LLP
Exchanges/Marketplaces
•

•
•

State-based collection of health insurance offerings (―Qualified
health plans‖)
o Private a...
Exchanges/Marketplaces
•

•

Each state will have one or two exchanges:
o Individual Exchange + Small Business Health Oper...
Exchanges/Marketplaces
•

Marketplace Notices
o Employers subject to FLSA




•

•

Deliver by October 1, 2013 to all cu...
Employer Mandate
Employer Mandate – Large Employers Only
o Threshold for ―Large Employer‖ = 50 Full-time Equivalent
Employees in prior year...
Employer Mandate
•

Employer ―Shared Responsibility‖ delayed to 2015
o If:



Employer has 50 or more full-time equivalen...
Employer Mandate
•

Employer ―Shared Responsibility‖ — Penalties
► Failure to Provide Minimum

Essential Coverage (―No Cov...
No Coverage Penalty
•

Employer Fails to Provide Minimum Essential Coverage
o At least one employee receives a tax credit ...
No Coverage Penalty
•

Minimum Essential Coverage
o Group health plan
o That is not excepted benefits



Dental only, vis...
No Coverage Penalty
•

Example
o Employer employs 55 full-time equivalent employees, 45 of
which are full-time employees
o...
Inadequate Coverage Penalty
•

•

Employer offers health insurance coverage, but not affordable
coverage that provides min...
Inadequate Coverage Penalty

PENALTY
$2,000 x (Total No. of Full-Time
Employees – 30)
THE LESSER OF:

$3,000 x No. of Full...
Inadequate Coverage Penalty
ADEQUATE HEALTH COVERAGE
AFFORDABLE

MINIMUM VALUE

• Employee-only premium cost
(regardless o...
Inadequate Coverage Penalty
•

Example
o Employer employs 55 full-time equivalent employees, 45 of
which are full-time emp...
Inadequate Coverage Penalty
•

Strategies for Achieving Affordability
o Set employee-only coverage premium at 9.5% but inc...
Inadequate Coverage Penalty
•

Strategies for Achieving Minimum Value
o Reduce participant cost-sharing




Co-insurance...
Full-Time Employee
•

What is a Full-Time Employee?
o Those who work, on average,




30 hours per week or
130 hours per...
Measurement/Stability Periods

Measurement Period

Admin

Stability Period

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oc...
Measurement/Stability Periods
•

May use different Measurement and Stability Periods for:

 Salaried and hourly employees...
Overlapping Periods
Starting with 2014, every year will feature a
simultaneous measurement and stability period
Measuremen...
Full-time/Part-time/Seasonal

• Full-time position
► If know that the position is more than 30 hours/week, must
offer cove...
Full-time/Part-time/Seasonal
•
•
•

Based on facts and circumstances at date of hire,
Cannot determine that employee is re...
Full-time/Part-time/Seasonal
•

Examples*
► Part-time employees
► Hourly employees with fluctuating schedules
► Seasonal e...
Full-time/Part-time/Seasonal
•

Seasonal Employee
► No definition for purposes of the
Employer Mandate

► Through 2014, em...
Full-time/Part-time/Seasonal

• ―Variable hour‖
o New hires must be offered coverage within 13
months of hire date (or sta...
When Must Variable Hour New Hires be
Offered Coverage?
Employee switches to ongoing
employee measurement period
effective ...
Breaks from Employment
Length of
Break

Length of
Employment

Result Upon Rehire

More than 26
weeks

N/A

Treat employee ...
Breaks from Employment
•

For ―special leaves‖ employees must not be penalized for
breaks in service
o Two methods:




...
Breaks from Employment

• Employees on paid leave must be
credited with hours of service during
leave, regardless of lengt...
Other
•
•
•
•
•
•

90-Day Waiting Period
Clinical Trials
Cost-sharing limits
Pre-existing conditions exclusions
Annual lim...
Other
•
•
•

Non-Discrimination Rules
Auto-Enrollment
Annual reporting (delayed from 2014)

©2013 Seyfarth Shaw LLP

©2012...
Key Considerations
Key Considerations
•

Employers are not required to pay 100% of the cost of
coverage
o Employees can be required to contri...
Next Steps
•

Start to project cost of options
o Determine maximum number of employees who could elect
coverage
o Determin...
Get Help!

44
Get Help!

Quick Access to
Resources

45
Get Help!

Sortable FAQ
46
ACA Resource Center
aca-seyfarth.com
47 |

©2013 Seyfarth Shaw LLP
Questions?
jkraft@seyfarth.com

To sign up for Seyfarth Alerts, email
healthreform@seyfarth.com

@SeyfarthEBLaw

©2012 Sey...
EPAY Systems

Michelle Lanter Smith
Chief Marketing Officer
EPAY Systems, Inc.

49
Real Time Data Collection
Data
Collection

1

3
2
Secure web
management
Payroll
Processo
r

50

Data Export
Payroll
EPAY Systems

John Gaudiuso
Sales Engineer
EPAY Systems, Inc.
Contact John at:
jgaudiuso@EPAYsystems.com
312-291-2032

51
ACA Dashboard
•
•
•
•
•

Compare all employees average hours to ACA guidelines
to determine total FTE’s
Will give total Fu...
Determining Average Hours in
Blueforce
•
•

Calculate employees’ average hours per week from hire
date
Report to show the ...
FTE Calculator

54
Affordability & Alerts

55
Upcoming Education
•
•
•

How to Avoid Costly Wage & Hour Pitfalls for Employers
in the Hospitality Industry. Nov 6: 12:00...
Thank You!

Jennifer A. Kraft
Partner, Seyfarth Shaw LLP
Employee Benefits
jkraft@seyfarth.com
(312) 460-5983

57
Connect With Us
Connect with EPAY:
o LinkedIn – follow our company page
at EPAY Systems
o Twitter -- @EPAYsystems
o Sign u...
Thank You!

59
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Affordable Care Act

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Affordable Care Act

  1. 1. Affordable Care Act: Update on the Employer Mandate for 2015 Featuring Seyfarth Shaw LLP
  2. 2. Welcome Today’s Host Michelle Lanter Smith Chief Marketing Officer EPAY Systems, Inc. mlsmith@EPAYsystems.com 773-499-7512 2
  3. 3. EPAY Systems -- designed to meet the needs of your complex, distributed workforce • Reduce your labor costs by 5% or more • Keep you in control and in compliance 3
  4. 4. Today’s Discussion The Affordable Care Act is upon us and there’s a lot to do in order to be ready for January 1, 2015. Does your company even need to be concerned? If so, who is eligible for health insurance at your company? How do you calculate whether it’s better to offer health insurance to your employees or just pay the penalty? 4
  5. 5. Our Speaker Jennifer A. Kraft Partner, Seyfarth Shaw LLP Employee Benefits jkraft@seyfarth.com (312) 460 -5000 ©2012 Seyfarth Shaw LLP 5
  6. 6. Ask Your Questions To ask a question, simply type your question in the “Question” box on the right side of your screen. ©2012 Seyfarth Shaw LLP 6
  7. 7. Legal Disclaimer The contents of this presentation should not be construed as legal advice or a legal opinion on any specific facts or circumstances. These materials are intended for general information purposes only, and you are urged to consult a lawyer concerning your own situation and any specific legal questions you may have. 7|
  8. 8. The Affordable Care Act Medicaid Expansion Exchanges Guaranteed Issue/ Community Rating Individual Mandate Employer Mandate 8| ©2012 Seyfarth Shaw LLP
  9. 9. Health Benefit Exchanges or ―Marketplaces‖ ©2012 Seyfarth Shaw LLP
  10. 10. Exchanges/Marketplaces • • • State-based collection of health insurance offerings (―Qualified health plans‖) o Private and non-profit insurers o Essential health benefits o If state did not establish, Federal government stepped in 2014 o Individuals (with tax credits and cost-sharing subsidies) o Small businesses (100 or less employees) 2017 o Large employers (more than 100 employees) 10 | ©2012 Seyfarth Shaw LLP
  11. 11. Exchanges/Marketplaces • • Each state will have one or two exchanges: o Individual Exchange + Small Business Health Operations Program Exchange (SHOP Exchange) OR o Combined exchange for individuals and small businesses All individuals can purchase coverage through the exchange, regardless of:  Income level  Employment status 11 | ©2012 Seyfarth Shaw LLP
  12. 12. Exchanges/Marketplaces • Marketplace Notices o Employers subject to FLSA   • • Deliver by October 1, 2013 to all current employees Deliver within 14 days of hire to new employees Three Model Notices: o Where health coverage is offered o Where health coverage is not offered o Updated COBRA notice No penalty for not delivering the Notice 12 | ©2012 Seyfarth Shaw LLP
  13. 13. Employer Mandate
  14. 14. Employer Mandate – Large Employers Only o Threshold for ―Large Employer‖ = 50 Full-time Equivalent Employees in prior year o Full-time employees = 30 hours per week, on average #FULL-TIME EMPLOYEES Aggregate # hours worked/ month by parttime employees up to 120 ________ Divided by 120 #Full-time equivalent employees You must count all employees working for any company within the corporate family (as determined by IRS rules) 14 | ©2012 Seyfarth Shaw LLP
  15. 15. Employer Mandate • Employer ―Shared Responsibility‖ delayed to 2015 o If:  Employer has 50 or more full-time equivalent employees  Add each month’s calculation up in the prior year and divide by 12 to get average monthly count o Then:  The employer is required to provide affordable ―minimum essential coverage‖ to all full-time employees and their dependents  Dependents does not include spouses o Or else:  The employer will be assessed a penalty if an employee receives a tax credit or subsidy through an Exchange 15 | ©2012 Seyfarth Shaw LLP
  16. 16. Employer Mandate • Employer ―Shared Responsibility‖ — Penalties ► Failure to Provide Minimum Essential Coverage (―No Coverage Penalty‖) OR ► Failure to Provide Affordable Coverage (―Inadequate Coverage Penalty‖) 16 | ©2012 Seyfarth Shaw LLP
  17. 17. No Coverage Penalty • Employer Fails to Provide Minimum Essential Coverage o At least one employee receives a tax credit or subsidy through a state-based exchange  All full-time employees = 95% of full-time employees o Penalty = $2,000 X # of Full-time Employees  Subtract first 30 full-time employees when calculating the penalty o Assessed employer-by-employer within the controlled group  30 person deduction must be spread ratably among all employers 17 |
  18. 18. No Coverage Penalty • Minimum Essential Coverage o Group health plan o That is not excepted benefits  Dental only, vision only o Could be preventive care only o CAUTION: Mandatory enrollment in a plan that does not offer minimum value will not get employers out of No Coverage Penalty 18 | ©2012 Seyfarth Shaw LLP
  19. 19. No Coverage Penalty • Example o Employer employs 55 full-time equivalent employees, 45 of which are full-time employees o The employer offers coverage to 35 of its full-time employees, 77%, but chooses not to offer health insurance coverage to 10 full-time employees o One of those employees who was not offered coverage purchases individual coverage through Exchange with a tax credit o The employer will be assessed a penalty of $30,000  (45-30) X $2,000 19 |
  20. 20. Inadequate Coverage Penalty • • Employer offers health insurance coverage, but not affordable coverage that provides minimum value ► Affordable – Cost of coverage no more than 9.5% of household income ► Minimum value – Covers at least 60% of actuarial value of health costs Any employee receives a tax credit or subsidy through a statebased exchange 20 | ©2012 Seyfarth Shaw LLP
  21. 21. Inadequate Coverage Penalty PENALTY $2,000 x (Total No. of Full-Time Employees – 30) THE LESSER OF: $3,000 x No. of Full-Time Employees who receive a tax credit or subsidy and purchase coverage through an Exchange 21 |
  22. 22. Inadequate Coverage Penalty ADEQUATE HEALTH COVERAGE AFFORDABLE MINIMUM VALUE • Employee-only premium cost (regardless of what coverage employee elects) cannot exceed 9.5% of household income. May use: • Plan must cover at least 60% of the actuarial value of health costs (medical, hospital, prescription drug, lab, etc.) • Calculated in one of three ways • W-2 wages • HHS Calculator • Rate of Pay (hourly rate for each hourly employee multiplied by 130 hours per month) • Safe Harbor Checklist • Federal Poverty Line 22 | ©2012 Seyfarth Shaw LLP • Actuarial Certification
  23. 23. Inadequate Coverage Penalty • Example o Employer employs 55 full-time equivalent employees, 45 of which are full-time employees. o Employer offers health insurance to all 45 full-time employees, but the insurance only covers 50% of costs. o Five employees receive a credit through the exchange. The employer will be assessed a penalty of $15,000 (5 X $3,000).  Note this is less than $2000 x (45 – 30) full-time employees 23 | ©2012 Seyfarth Shaw LLP
  24. 24. Inadequate Coverage Penalty • Strategies for Achieving Affordability o Set employee-only coverage premium at 9.5% but increase dependent level costs:    Assume an employee has $30,000 a year in household income Premium is $2,400 for employee-only coverage (8% of household income) and $6,000 for family coverage (20% of household income) The employer will be deemed to have offered the employee affordable coverage, even if the employee elects family coverage 24 |
  25. 25. Inadequate Coverage Penalty • Strategies for Achieving Minimum Value o Reduce participant cost-sharing   Co-insurance, co-pays, deductibles Wellness programs that reduce cost-sharing cannot be considered, except for tobacco-cessation programs o Add benefits  Cover additional services o Add HRA/HSA component  With employer contributions 25 | ©2012 Seyfarth Shaw LLP
  26. 26. Full-Time Employee • What is a Full-Time Employee? o Those who work, on average,   30 hours per week or 130 hours per month o Full-time status determined on a monthly basis o Measurement & Stability periods    Measurement period (look-back) could range between 3-12 months Stability period must be at least as long as the look-back period and can be no shorter than 6 months Administrative Period up to 90 days between the two  To determine who will be eligible, notify them and enroll them 26 | ©2012 Seyfarth Shaw LLP
  27. 27. Measurement/Stability Periods Measurement Period Admin Stability Period Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. 2015 27 | ©2012 Seyfarth Shaw LLP
  28. 28. Measurement/Stability Periods • May use different Measurement and Stability Periods for:  Salaried and hourly employees  Employees of different entities  Employees located in different states  Collectively bargained with different collective bargaining agreements 28 | ©2012 Seyfarth Shaw LLP
  29. 29. Overlapping Periods Starting with 2014, every year will feature a simultaneous measurement and stability period Measurement Period #2 Stability Period #1 Admin Stability Period #2 Measurement Period #3 Admin Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. 2014 Stability period (following 2013 measurement period) 2015 New measurement period begins (for 2016 stability period) Optional administrative period. Overlaps with stability period 29 | ©2012 Seyfarth Shaw LLP 2016
  30. 30. Full-time/Part-time/Seasonal • Full-time position ► If know that the position is more than 30 hours/week, must offer coverage within 3 months of hire ► Monitor hours going forward under Measurement Period approach 30 | ©2012 Seyfarth Shaw LLP
  31. 31. Full-time/Part-time/Seasonal • • • Based on facts and circumstances at date of hire, Cannot determine that employee is reasonably expected to work, on average, at least 30 hours per week (or 130 hours per month) The IRS may disagree with determination and impose penalty if every crew member is labeled as ―variable hour‖ but many end up working full-time 31 | ©2012 Seyfarth Shaw LLP
  32. 32. Full-time/Part-time/Seasonal • Examples* ► Part-time employees ► Hourly employees with fluctuating schedules ► Seasonal employees *These are merely examples of individuals that might be considered variable hour new hires. Facts and circumstances may limit an employer’s ability to treat these employees as variable hour new hires. • NOTE: Expected (short) length of employment can be taken into consideration, but only for 2014 (will transition relief be extended?) 32 | ©2012 Seyfarth Shaw LLP
  33. 33. Full-time/Part-time/Seasonal • Seasonal Employee ► No definition for purposes of the Employer Mandate ► Through 2014, employers may make a good-faith interpretation of the term ► Example • Employees hired for summer season • Employees hired over holiday break 33 | ©2012 Seyfarth Shaw LLP
  34. 34. Full-time/Part-time/Seasonal • ―Variable hour‖ o New hires must be offered coverage within 13 months of hire date (or start of next calendar month thereafter), o if they work at least 130 hours per month on average during that time 34 | ©2012 Seyfarth Shaw LLP
  35. 35. When Must Variable Hour New Hires be Offered Coverage? Employee switches to ongoing employee measurement period effective October 1, 2014 Measurement Period #2 Measurement Period #1 Stability Period #2 Stability Period #1 Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. 2015 Variable Hour New Hire – Hire Date February 15, 2014 Measurement Period ends February 14, 2015 Administrative Period From February 15 – March 31 35 | ©2012 Seyfarth Shaw LLP 2016 Stability Period coverage begins April 1, 2015 (and continues through March 31, 2016)
  36. 36. Breaks from Employment Length of Break Length of Employment Result Upon Rehire More than 26 weeks N/A Treat employee as new hire (i.e., start new measurement period and disregard prior service) Less than 26 weeks but more than 4 weeks Shorter than break Treat employee as new hire (i.e., start new measurement period and disregard prior service) Less than 26 weeks but more than 4 weeks Longer than break Continue existing measurement period (0 hours counted during break*) OR Continue coverage for remainder of stability period Less than 4 weeks N/A Same as above 36 | ©2012 Seyfarth Shaw LLP
  37. 37. Breaks from Employment • For ―special leaves‖ employees must not be penalized for breaks in service o Two methods:   Apply average hours worked before and after leave to determine ―hours‖ equivalent during leave, Exclude leave period when calculating average hours o Special leaves include:    FMLA USERRA Jury Duty 37 | ©2012 Seyfarth Shaw LLP
  38. 38. Breaks from Employment • Employees on paid leave must be credited with hours of service during leave, regardless of length!!!!! ©2013 Seyfarth Shaw LLP 38 |
  39. 39. Other • • • • • • 90-Day Waiting Period Clinical Trials Cost-sharing limits Pre-existing conditions exclusions Annual limits (beware of fixed indemnity plans) Wellness programs ©2013 Seyfarth Shaw LLP ©2012 Seyfarth Shaw LLP 39 |
  40. 40. Other • • • Non-Discrimination Rules Auto-Enrollment Annual reporting (delayed from 2014) ©2013 Seyfarth Shaw LLP ©2012 Seyfarth Shaw LLP 40 |
  41. 41. Key Considerations
  42. 42. Key Considerations • Employers are not required to pay 100% of the cost of coverage o Employees can be required to contribute to the cost of coverage, in increasing amounts based on increasing income o Employees can be required to pay the full cost of dependent coverage • Large employers are only required to offer coverage o There is no penalty if an employee declines coverage o Not all employees will elect the coverage that is offered 42 |
  43. 43. Next Steps • Start to project cost of options o Determine maximum number of employees who could elect coverage o Determine number of employees likely to elect coverage • • Select Measurement Period and Stability Period o Document Consider design options for 2015 o Wellness rewards 43 | ©2012 Seyfarth Shaw LLP
  44. 44. Get Help! 44
  45. 45. Get Help! Quick Access to Resources 45
  46. 46. Get Help! Sortable FAQ 46
  47. 47. ACA Resource Center aca-seyfarth.com 47 | ©2013 Seyfarth Shaw LLP
  48. 48. Questions? jkraft@seyfarth.com To sign up for Seyfarth Alerts, email healthreform@seyfarth.com @SeyfarthEBLaw ©2012 Seyfarth Shaw LLP
  49. 49. EPAY Systems Michelle Lanter Smith Chief Marketing Officer EPAY Systems, Inc. 49
  50. 50. Real Time Data Collection Data Collection 1 3 2 Secure web management Payroll Processo r 50 Data Export Payroll
  51. 51. EPAY Systems John Gaudiuso Sales Engineer EPAY Systems, Inc. Contact John at: jgaudiuso@EPAYsystems.com 312-291-2032 51
  52. 52. ACA Dashboard • • • • • Compare all employees average hours to ACA guidelines to determine total FTE’s Will give total Full Time Employees (> 30 hours) Will give total Part Time Employees (< 30 hours) Total the two to determine total FTE’s Could also use alerting to ensure employees not going over 30 hours per week 52
  53. 53. Determining Average Hours in Blueforce • • Calculate employees’ average hours per week from hire date Report to show the employee, the hire date and the average hours worked per week 53
  54. 54. FTE Calculator 54
  55. 55. Affordability & Alerts 55
  56. 56. Upcoming Education • • • How to Avoid Costly Wage & Hour Pitfalls for Employers in the Hospitality Industry. Nov 6: 12:00 cst Mobile GPS Webinar: Time Tracking & Mobile Apps. Nov 7: 10:00 am cst EPAY Demonstration: Time Tracking Your Way. Nov 14: 10 am cst Register at www.EPAYsystems.com 56
  57. 57. Thank You! Jennifer A. Kraft Partner, Seyfarth Shaw LLP Employee Benefits jkraft@seyfarth.com (312) 460-5983 57
  58. 58. Connect With Us Connect with EPAY: o LinkedIn – follow our company page at EPAY Systems o Twitter -- @EPAYsystems o Sign up for our e- newsletter at www.EPAYsystems.com Connect with Seyfarth Shaw LLP: o Wage & Hour Litigation Blog http://www.wagehourlitigation.com/ o Twitter - @SeyfarthShawLLP o Twitter - @SeyfarthEBLaw 58
  59. 59. Thank You! 59

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