Fun Slides Affordable Care Act (ACA)

Which Employers Are
Mandated to Offer Coverage?
O Those with 50 or more full time employees/equivalents
O For the mandate, a large employer is one where full time
employees and full-time equivalents (FTEs) sum to 50 or
more. A full time employee is one who works 130 hours per
month or more – roughly 30 hours per week. Each 120
hours per month of part-time and seasonal labor comprises
one FTE.
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What does Full Time
Equivalent (FTE)mean?

What is the Employer
Mandate
O The employer shared responsibility provisions
under Health Care Reform (also known as
"pay or play") applies to Applicable Large
Employers (ALEs) generally those with at
least 50 full-time employees, including full-
time equivalent employees (FTEs).
O If these employers do not offer health
insurance to full time employees and their
dependents, they will be subject to penalties.

“Minimum Value Standard &
Affordable Coverage”
O Affordable: Coverage that would cost an employee
more than 9.5 percent of their annual household
income is considered unaffordable. Three optional safe
harbors exist to assist the employer in determining
affordability: Form W-2 wages safe harbor, rate of pay
safe harbor and federal poverty line safe harbor.
O Minimum Value: A plan that covers at least 60 percent
of the total allowed cost of benefits that are expected to
be incurred under the plan is considered to provide
minimum value. The HHS and the IRS have published
various methods that may be utilized to determine
minimum value.

What is the Individual
Mandate?
O Health reform law requires that most
Americans be enrolled in health insurance by
March 31, 2014. To avoid the individual
mandate penalty employees can be covered
by health insurance through work, a
government program like Medicare or
Medicaid, or by a health plan they purchase
on their own.
O Those who remain uninsured will pay a
penalty. In 2016, the penalty has risen to $695
per adult ($347.50/child) or 2.5% of household
income, whichever is greater.

Reporting Requirements for
employers with 50+ employees?
O Under IRS 6056 employers are required to file
1094 B&C and 1095 B&C series forms.
(Insurance company will usually provide 1095-B to
employees, unless the employer is self-insured)
O Completing these requirements can be easier
with the right technology solution that
automates 1094-series and 1095-series
documents.
O The IRS has a digital filing system called AIR
(Affordable Care Act Information Returns) that
can help to alleviate the process of paper
filing.

Possible Reporting Requirements for
Small Businesses
O New W-2 Reporting: Beginning with the 2012 tax year, employers
with 250 FTE’s (adding part time up) or more W-2 Form Employees
must report the aggregate cost of employer-sponsored group health
coverage on employees’ W-2 Forms.
O PCORI/CER Plan Fees: The Patient-Centered Outcomes Research
Institute (PCORI) fees - also called comparative effectiveness
research fees or CER plan fees - are required for businesses with
self-funded (or self-insured) plans, including a Healthcare
Reimbursement Plan (HRP). These fees are due July 31st of each
year.
O High-Earner Medicare Payroll Taxes: As of 2013, employees
earning more than $200,000 a year ($250,000 for joint filers) must
pay higher Medicare hospital insurance (HI) taxes beginning in
2013. The new tax is 2.35% (an increase of 0.9%) of applicable
wages above those thresholds, so a worker earning $300,000 a
year will pay HI taxes of 1.45% on $200,000 plus 2.35% on
$100,000. There is no change to the employer’s share of the HI tax.

Calculating Full Time Status
The FTE is calculated to find a company’s total number of Full Time
Employees for compliance to the employer mandate only. For a
company to have to abide by the ACA, it must have 50 or more full time
employees or FTEs. The FTE is not used in calculating penalties.
• A full-time employee is one who works an average of at least 30
hours per week (or 130 hours of service in a calendar month).
• A “look-back measurement method” may be used to determine an
employee’s full-time status during a future period. This method is for
determining liability only.
• Different approaches can be used for other circumstances such as
employees who work variable hour schedules, seasonal employees
and employees of educational organizations
• FTE is determined by adding FTE hours worked for the month, but
not more than 120 per part-time employee. Then divide by 120.

Look Back Period OR
Monthly Measurement Period
O Employers must choose one option and stick with it!
Cannot change mid-year.
O Monthly Measurement: This method keeps the counting of
an employee’s hours to individual months, identifying an
eligible employee as worked 130 hours in any one month
of a tax year.
O Under this option: An offer of coverage would have to be made
the first day after the next two full months from the month for
which eligibility was determined.
O Look Back: an employer can create a testing period that
spans a number of months; the look-back period cannot be
less than 3 months, but not more than 12 months.
O An employee’s hours are calculated for the entire period in
order to see if they worked an average 130 of hours/
month. Employer would be required to offer coverage during
the stability period if the employee’s hours pass the test.

Timeline

What Records Must Be
Retained?
O No guidance has been given concerning
record retention and the ACA.
O Because of ERISA, the retention will
probably be 6 years.
O Our recommendation is to keep any plan
documents, notices and modifications
indefinitely; and all other employee plan
records for a period of 7 years. With
technology, long-term retention of records
has become easier.

Required Notices
(Some may be distributed by Insurer and some by Employer)
O Notice Summary Plan Description(SPD)
O Summary of Material Modifications (SMM)
O Plan Documents
O Health Insurance Exchange Notice
O Summary of Benefits & Coverage (SBC) & Glossary
O Disclosure of Grandfather Status or Notice of Patient
Protection (depends on your status
O Other Notices to Note:
O HIPPA Notice of Enrollment Rights & Wellness Program Disclosure
& Notice of Privacy Practices.
O Women’s Health & Cancer Rights Act; Mental Health Parity &
Addiction Equity Act; Employer CHIP Notice; Michelle’s Law Notice;
Newborns’ and Mothers’ Health Protection Act
O Medicare Part D Creditable or Non-Creditable Coverage Disclosure
O Other Benefit Notices also required for other regulations (COBRA,
etc.)

What are the Potential Penalties?
O Penalty for Employers Not Offering Coverage: to fewer than 95% (70% in 2015) of its full-time
employees (and their dependents—**spouses are not considered dependents) during the calendar year
owes a penalty equal to the number of full-time employees employed for the year (minus up to 30)
multiplied by $2,160, as long as at least one full-time employee receives a premium tax credit. For an
employer that offers coverage for some months but not others during the calendar year, the penalty is
computed separately for each month for which coverage was not offered. The amount of the penalty for
the month equals the number of full-time employees employed for the month (minus up to 30) multiplied
by 1/12 of $2,160.
O Penalty for Employers Offering Coverage That is Not Affordable or Does Not Provide Minimum
Value*: For ALE that offers coverage to at least 95% (70% in 2015) of its full-time employees (and their
dependents---spouses are not considered dependents), but has one or more full-time employees who
receive a premium tax credit, the penalty is computed separately for each month. The amount of the
penalty for the month equals the number of full-time employees who receive a premium tax credit for that
month multiplied by 1/12 of $3,240. The amount of the penalty for any calendar month is capped at the
number of the employer's full-time employees for the month (minus up to 30) multiplied by 1/12 of $2,160.
The Business would pay the lesser of the two above totals.
O ACA Reporting: For 2015 tax, penalties waived for filers who can prove they made every effort to file
correctly and on time. In the future: Forms filed late, but within 30 days: $50 per report, $500,000
maximum penalty; Forms filed late, but by August 1: $100 per report, $1,500,000 maximum penalty;
Forms filed after August 1 or not at all: $250 per report, $3,000,000 maximum penalty. 30 day extensions
can be requested, but a second extension will require good reasoning for not filing.

Upcoming Dates for ACA
O The ACA is still evolving, so keep up with
updates from the IRS, DOL and Treasury
O 2017
O State Exchanges/Marketplaces may allow large
employers )generally employers with over 50
employees) to buy insured group coverage
through the exchange marketplace
O 2020
O 40% excise tax on high-cost health plans
(delayed from 2018) The Cadillac Tax is also
discussed in the ACA Toolkit along with other
valuable tools for ACA Compliance!

GW Human Resources &
Business Services
For more great tools, tips, guidance and
training, visit www.GWHumanResources.com
Disclaimer: Upon purchasing our product you are understanding, acknowledging and agreeing with this
disclaimer. This information is provided for general informational purposes only. GW Human Resources and
Business Services makes no warranties, express, implied or statutory, as to the adequacy, timelines,
completeness or accuracy of the information provided. The provided information does not
constitute advice and does not bind us in any way to a business-client relationship. Laws are
numerous. The amount of regulations is rising. Statements concerning legal matters should be understood
to be general observations and should not be relied upon as legal advice, which we are not authorized to
provide. Consult legal counsel to make sure that you are fully compliant.

Fun Slides Affordable Care Act (ACA)

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