1. Action Items and Decisions
Facing Employers with the
Patient Affordable Care Act
Chris Hodge, District Manager
Oasis Outsourcing

2. Timeline of Key Provisions
2011 2012 2013 2014
• Adult children to • W-2 reporting  $2,500 health care FSA  Exchanges
age 26 (early requirements for salary reduction limits operational
adopter) health care coverage  Increase in Medicare
(for January 2013  Free rider penalty
• No lifetime or payroll tax on individuals
W-2s) making more than (employer mandate)
annual maximums
$200k/$250K
• 100% preventive • Summary of Benefits   Individual mandate
Investment income
care coverage and Coverage and subject to Medicare tax  Auto-enrollment
• FSAs cannot Uniform Glossary for individuals making
reimburse over- rules more than $200k/$250k  No preexisting
the-counter (OTC)  Expanded women’s
condition exclusions
• Nondiscrimination
expenses without testing rules in all preventive care  Wellness program
Rx plans, including  Comparative discount expansion
• No preexisting insured plans Effectiveness Fee per
member participant on  Eligibility waiting
condition
• Medical Loss Ratios all health plans period no longer
exclusions under
Rebates  Notify all employees than 90 days
age 19
about exchanges,
• Prohibition on • Tax credit for  Employer reporting
services and contact
rescissions employers with < 25 info. of health insurance
employees info to govt &
• New claims and
participants
appeals rules

3. 2013 Employer Checklist
$2,500 Flexible Spending Account Limit
Comparative Effectiveness Fee for all
health plan participants
Employer must provide written notice
regarding the existence of insurance
exchanges and that employee may qualify
for subsidies
2014 Employer Mandate will be based on
2013 FTEs and hours worked.

4. 2013 Employer Checklist
# 1 $2,500 Flexible Spending Account Limit
– Child Care spending limit is not affected
– Employee Contributions to Medical Flexible
Spending Accounts are limited to $2,500/year

5. 2013 Employer Checklist
# 2 Comparative Effectiveness Fee
• New fee to fund independent comparative
clinical research programs
• Fee became effective for plan years as of
October 1, 2012 and later
• Initial fee is $1 per member per year,
increasing to $2 per member in second year.
• Fee is due no later than July 31, 2013
• Assessed by the carrier

6. 2013 Employer Checklist
# 3 Employer must provide written notice
regarding the existence of insurance
exchanges and that employee may qualify
for subsidies
• Originally due March 1, 2013
• Postponed to early Autumn 2013. No exact
date yet.

7. 2013 Employer Checklist
# 4. Employers that do not currently provide
health insurance, evaluate headcount to
determine whether your company will be
subject to the employer mandate in 2014.

8. 2013 Employer Checklist
# 5. Employers that do provide health
insurance, evaluate plans to ensure that
by 2014 insurance meets requirements:
• Affordability
• Adequate coverage

9. 2014 Employer Checklist
Shared Responsibility Provision takes
effect (for companies with 50+ employees)
Automatic Enrollment of New Employees
Limits to waiting periods for coverage
Reporting of health insurance information
to government

10. 2014 Employer Checklist
# 1 Shared Responsibility Provision takes effect
• Applies only to employers with 50+ Full Time
EQUIVALENTS
• $3,000 penalty per employee
• If premium contribution is greater than 9.5% of income
– Example: For employee earning $35,000/year, 9.5% equals
$3,325 annually or $277 per month
• If plan covers less than 60% of allowable costs.
• The alternative penalty is $2,000 per employee for not
offering coverage.

11. How Eligibility is Calculated
• Do you have 50 Full Time Equivalents?
– Any employee averaging 30 or more hours a week is
considered a Full Time Employee.
– Add to that number, the total number of hours worked
by all PTEs every month divided by 120.
– Seasonal workers (<120 days/year) are excluded.
• Example: A firm has 35 FTEs & 20 PTEs
working 24 hours/week (or 96 hours/month).
– 20 PTEs X 96 (hours/month) / 120 = 16
– 35 FTEs + 16 Calculated FTEs = 51 FT Equivalents

12. How Eligibility is Calculated
• Companies under common control are
considered one company.
– You can’t subdivide businesses to avoid
eligibility.
– Separate businesses with common ownership
must be evaluated as a whole.

13. How the Penalties are Assessed
• Assessed differently than eligibility is assessed.
• Tax penalty is assessed if at least one FULL-
TIME employee obtains coverage from through
an exchange AND receives a premium credit.
– No penalties for part-time workers.
• Premium credits are for workers who are 138%
to 400% of the Federal poverty level.
– Employee premium must be greater than 9.5% of
income.
– Plan pays less than 60% of essential health benefits

14. Penalty for >50FTE Employer not
offering Health Insurance
• Penalty applied to FT Employees (working
over 30 hours a week) greater than 30.
• $166.67 per month penalty for every FTE
greater than 30 who do not have
company-sponsored health insurance.
– 35 FTEs and 20 PTEs. Penalty would be:
35 - 30 = 5 X $166.67 = $833.35/mo.
– 29 FTEs and 50 PTEs. Penalty would be:
29 - 30 = -1 or 0 X $166.67 = $0/mo.

15. Potential Penalties for Employers
>50 FTE who do offer health
insurance
• Penalty is applied if any of the employer’s FT
Employees (PTEs are excluded) receives a
premium credit to purchase from an exchange.
• To get premium credit:
– Employee must be 138-400% of FPL AND
– Employee’s share of premium > 9.5% of income OR
– Policy does not provide minimal essential coverage.
• Penalty is the lesser of:
– FTEs – 30 X $2,000
– FTEs receiving premium credits X $3,000

16. Potential Penalties Summarized
Less Large Employer: 50 or more FTEs
than 50 Does not offer coverage Offers coverage
FTEs No FTEs 1 or more FTEs No FTEs 1 or more FTEs
receive credit receives credit receive credit receives credit for
for exchange for exchange for exchange exchange coverage
coverage coverage coverage
No penalty No penalty Number of FTEs No penalty Lesser of:
minus 30 - Number of FTEs
multiplied by minus 30 multiplied
$2,000. by $2,000.
- Number of FTEs
who receive
premium credit
multiplied by $3,000

17. Online Tools to Determine Eligibility
and Penalties
• Online calculator at
www.franchise.org/healthcare/calculator.aspx
• Government’s Outline of Rules
http://www.healthcare.gov/using-insurance/emp
• DHHS to be releasing a calculator for
minimum essential coverage

18. How does this apply to 2013?
• The determination of the number of full-
time vs part-time employees in 2014 will
be based on a “Lookback Period” that
includes 2013.
– Each employee is classified FT or PT based
on the hours they worked in that period.
– Period can be 3 to 12 months
– Employer can determine the length of the
period

19. 2014 Employer Checklist
# 2 Automatic Enrollment of New
Employees
– Applies only to employers with 200+
Employees
– Employers must automatically enroll new full-
time employees in health plan
– Employees may opt out

20. 2014 Employer Checklist
# 3 Limits to waiting periods for coverage
• No health plan may impose a waiting period
for benefits of greater than 90 days
• Employers with 50+ employees will be fined
for waiting periods over 90 days ($600 per
FTE in waiting period).

21. Decisions facing Employers
• If you do provide • If you don’t provide
health insurance: health insurance:
– Should you continue to – Should you start?
provide coverage? – Can you stay below
– What changes should the 50 employee
you make to your threshold?
plans? – What are the best
– What changes should vehicles to provide
be made to insurance?
contributions?

22. Considerations in Deciding to
Maintain or Buy Group Coverage
• Insurance premiums are tax-deductible but penalties are
not.
• Cost of providing insurance is a function of the number
of participants, not the number of employees.
• The Individual Mandate will make insurance important to
employees who did not care before.
• Any additional compensation to cover Exchange costs
will increase payroll (FICA/FUTA) taxes for the employer,
and income and payroll (FICA) taxes for the employee.
• If you already provide coverage, why? Has that
changed?

23. Considerations for the Providing
Coverage
• Does the plan cover 60% of expenses?
– DHHS Calculator
– Common sense guide
• Does your contribution keep employees
from paying more than 9.5% of their
income for their plan?
– Increase contribution?
– Create classes that reverse discriminate?

24. Whatever you do (or don’t do)
• Do the math!
Summary of Results: Pay or Play Analysis
Potential Penalties
Full-time Employees 73
Penalty (Cost) for not offering coverage to all full-time employees 0
Employees paying more than 9.5% of income for single coverage 29
Does plan pay for at least 60% of covered expenses for a typical population? YES
Penalty for employees paying more than 9.5% $87,000
Total Potential Penalties Accrued $87,000
Cost of Providing Coverage
Annual cost of current plan $198,756
Employee Contributions, including increased employer contribution for low income employees (89,556)
Value of Federal Tax Deduction (37,128)
Employer net cost of plan $72,072

25. Whatever you do (or don’t do)
• Do the math!
• Make sure your assumptions are accurate.
• Spreadsheet your options
• Base calculations on what is known and
minimize speculation.
– We do know more than we don’t know
– Many remaining questions will not be significant
enough to require a change in course.
– If information changes, then change the spreadsheet.
• Re-assess after the exchanges have been
around for a year.

26. Questions and Answers