Over 50 Breakout Group	     Kerry	  Drake	                 Mike	  Bertaut	                   William	  PoAer	             ...
Legal Overview	    Patrick	  D.	  Seiter	             February	  26,	  2013	  
Am I an Applicable Large Employer?	            (generally 50 FTEs for 6 consecutive months)	•  Who is an employee?	       ...
Should I Pay or Play?	•  Offer minimum essential benefits to substantially all (95%) full-time   employees – no penalties. ...
If I Play, Should I Insure or Self-Insure?	•  Insured – more mandates, less flexibility, less risk	•  Self-insured – few ma...
Examples of ACA Requirements Applicable to Self-Insured Plans	  •  Dependent coverage to age 26	  •  Coverage of preventat...
Examples of ACA Requirements              Not Applicable to Self-Insured Plans	•  Essential Health Benefits requirements (i...
Thank you                          Patrick	  D.	  Seiter                                                	                 ...
Time to Implement!Moving Forward with Reform                	        Mike	  Bertaut	              February	  26,	  2013	  
Disclaimer	All information in this presentation INCLUDING THE OPINIONS OF THE PRESENTER are solely forillustrative purpose...
IRS Bulletins 2012 – 58/59	•  Redefined Full Time      •  Established rules for   Employee for health        seasonal emplo...
Am I an Applicable Large Employer? (ALE)	                    FULL TIME	   PT HOURS	        /120 FTE	   TOTAL FTE	   AVERAG...
Common Law Definition of Employee 	•  FOR THE ALE COMPUTATION, the common law definition of   employee must be used:	•  Unde...
Employer Responsibility Requirement 	                                      Section 4980H	•  Applies to all “Applicable Lar...
Affordability Safe Harbors	To	  determine	  if	  ALE	  is	  in	  compliance:	  •  Federal Poverty Line:	  o  Use 100% of F...
When do ALE’s have to comply?	•  In general, an ALE must comply with the new rules or face fines by his   RENEWAL DATE in 2...
Thank you  Michael R. Bertaut    Healthcare Economist         LINKED-INRecommendations WELCOME!!! Michael.bertaut@bcbsla.c...
Healthcare Reform Paths	        Kerry	  Drake	             February	  26,	  2013	  
Health Care Reform Paths	                PLAY            01	  
Are you subject to the penalty?	                          Does the employer                  Penalties do                 ...
Are you subject to the penalty?	 Does the insurance pay for at least             Employees can choose to                  ...
How do you 	choose yourpath
Considerations	•    Lost tax advantages	•    Reporting burdens remain	•    Loss of social contract	•    Recruitment and re...
Commitments to Play	•  Managing Eligibility 	           •     Added HR Responsibility	   o  Spousal carve-out	            ...
Employer Scenario	        ABC Company	 •  Employee Demographics 	    •  300 Full-time employees       (30+ hours)	    •  2...
Scenario Outcomes	Scenario 1	                          Status Quo - No Changes in enrollment, contributions, or plan offer...
Thank you      Kerry	  Drake	       Regional President healthcarereform@bxsi.com    Office: 225-336-3238                   ...
Definition of Control Groups andPenalties Faced by Large Employers	           William	  C.	  PoAer	                    Febr...
Determination of Full-time Employees in a Controlled Group	  •  Businesses organized in multiple forms may be considered a...
Parent - Subsidiary Controlled Group	•  Control exists if parent owns 80% of the subsidiary 	•  Could involve multiple sub...
Brother – Sister Controlled Group	•  Where the same five or fewer individuals own 80% of the related entities,   AND	•  Eff...
Example	     Percentage of Ownership	                            •  The four owners have more                             ...
Affiliated Service Groups 	•  Subjective determination	•  Related entities may or may not have ownership relationships	•  P...
Large Employer Penalties	•  Effective in 2014 for employers with at least 50 full time employees	•  Large employer must of...
Penalty for Non-Compliance	•  Employer not offering coverage	•  Employer offering coverage whose employee receives a credi...
Employers Not Offering Coverage	•  Such employers are subject to a penalty if one or more FTE is certified to   the employe...
Example	•  One FTE of a large employer who does not offer health coverage   enrolled in an exchange	•  Suppose the employe...
Note	•  Large employer not offering coverage may not be liable for penalties 	•  If employer has no FTE whose income would...
Employers Offering Coverage	•  Some employers who offer health insurance coverage to FTE’s may be   subject to a penalty	•...
Penalty Calculation	•  For each FTE in the Exchange, the monthly penalty each month is   1/12 th   of $3,000 or $250	•  If...
Thank you William	  C.	  PoAer                      	    Senior Tax Director bpotter@pncpa.com Office: 225-922-4600        ...
Over 50 Breakout Group	     Kerry	  Drake	                 Mike	  Bertaut	                   William	  PoAer	             ...
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Health Care Reform - Companies with Over 50 Employees

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Health Care Reform - Companies with Over 50 Employees

  1. 1. Over 50 Breakout Group Kerry  Drake   Mike  Bertaut   William  PoAer   Patrick  Seiter  BancorpSouth  Insurance   Blue  Cross  Blue  Shield   Postlethwaite  &   Taylor  Porter  Services/Wright  &  Percy   Healthcare  Economist   NeAerville,  APAC   Chair  of  the  Health     Regional  President   Exchange  Coordinator     Senior  Tax  Director   Care  Prac:ce  Team  
  2. 2. Legal Overview Patrick  D.  Seiter   February  26,  2013  
  3. 3. Am I an Applicable Large Employer? (generally 50 FTEs for 6 consecutive months) •  Who is an employee? o  Independent Contractors? o  Leased Employees? •  What is full-time? •  How do I calculate the number of full-time equivalent employees? •  Who is the employer? o  Brother/sister o  Affiliated service groups Office:  225.381.0281   01   Email:  pat.seiter@taylorpoter.com  
  4. 4. Should I Pay or Play? •  Offer minimum essential benefits to substantially all (95%) full-time employees – no penalties. •  Offer coverage but not to 95% of full time employees or fail affordability and/or minimum value tests – if at least 1 employee purchases insurance through exchange and receives a subsidy (400% of FPL) – pay $3000 annually per subsidized employee. o  Affordable – generally 9.5% of household income o  Minimum value – generally 60% coverage •  Don t offer coverage – pay $2000 per employee over 30 employees. Office:  225.381.0281   02   Email:  pat.seiter@taylorpoter.com  
  5. 5. If I Play, Should I Insure or Self-Insure? •  Insured – more mandates, less flexibility, less risk •  Self-insured – few mandates, more flexibility, more risk 03  
  6. 6. Examples of ACA Requirements Applicable to Self-Insured Plans •  Dependent coverage to age 26 •  Coverage of preventative health services without cost-sharing (grandfathered plans exempt) •  No rescissions of coverage except for fraud or material misrepresentation •  No lifetime limits and, after 2014, no annual limits on essential health benefits o  Lifetime and annual limits on non-essential benefits allowed as otherwise permitted under the State and Federal Law. o  Note that State-imposed restrictions on self-insured plans would give rise to ERISA preemption issues. •  Access to pediatric and ob/gyn care •  Due process and appeal rights 04  
  7. 7. Examples of ACA Requirements Not Applicable to Self-Insured Plans •  Essential Health Benefits requirements (individual and small markets only) •  Annual limitations on deductibles •  Nondiscrimination in favor of highly compensated employees 05  
  8. 8. Thank you Patrick  D.  Seiter   AAorney,  Taylor  Porter   Chair  of  the  Health  Care  PracIce  Team   pat.seiter@taylorporter.com   225.381.0281
  9. 9. Time to Implement!Moving Forward with Reform Mike  Bertaut   February  26,  2013  
  10. 10. Disclaimer All information in this presentation INCLUDING THE OPINIONS OF THE PRESENTER are solely forillustrative purposes. The information is based on certain assumptions, interpretations, and calculations thatare not necessarily accurate with regard to provisions of PPACA, HCERA, HIPAA, COBRA, ERISA, andother rules, regulations, guidance and all other documents issued by relevant state and federal agencies withregard to these laws and any other relevant laws. The information provided should not beconsidered as legal, financial, accounting, planning, or tax advice. You should consult yourattorneys, accountants, and other employees or experts of this type of this type of advice based on theirown interpretations, calculations, and determinations of applicable laws, rules, regulations, guidance, and anyother documents and information that they determine may be relevant. The authors make no guarantees orother representations as to the accuracy or completeness of the data in this presentation. BCBSLA expressly disclaims any liability for information obtained from use of this presentation by anyBCBSLA employee or by any other person. No warranty of any kind is given with regard to the contents ofthe presentation. 01   Office:  225-­‐297-­‐2719     michael.bertaut@bcbsla.com  
  11. 11. IRS Bulletins 2012 – 58/59 •  Redefined Full Time •  Established rules for Employee for health seasonal employment insurance purposes (no more than 120 (typically 30 hr/wk days per year, true avg) season) •  Established rules for •  Established counting waiting periods for methodology for the health benefits Applicable Large (nothing over 90 Employer standard. days) 02   Office:  225-­‐297-­‐2719     michael.bertaut@bcbsla.com  
  12. 12. Am I an Applicable Large Employer? (ALE) FULL TIME PT HOURS /120 FTE TOTAL FTE AVERAGE Jan 2013 22 3300 27.5 49.5 Feb 2013 23 2800 23.3 46.3 Mar 2013 23 3250 27.1 50.1 Apr 2013 23 3450 28.8 51.8 May 2013 24 3105 25.9 49.9 June 2013 22 3271 27.3 49.3 July 2013 23 3655 30.5 53.5 Aug 2013 24 3705 30.9 54.9 Sept 2013 25 3000 25.0 50.0 Oct 2013 26 3800 31.7 57.7 Nov 2013 27 3950 32.9 59.9 Dec 2013 30 4250 35.4 65.4 53 03   Office:  225-­‐297-­‐2719     michael.bertaut@bcbsla.com  
  13. 13. Common Law Definition of Employee •  FOR THE ALE COMPUTATION, the common law definition of employee must be used: •  Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed. 04   Office:  225-­‐297-­‐2719     michael.bertaut@bcbsla.com  
  14. 14. Employer Responsibility Requirement Section 4980H •  Applies to all “Applicable Large Employers” (ALE) (including controlled or affiliated service groups) •  3 Options: 1.  AVOID FINES - Must offer “affordable”, “minimum value” health coverage to 95% of all eligible employees. Must offer coverage to children under age 26 (but not spouse and subsidy not required). 2.  RISK SOME FINES - Offer coverage that fails one of the tests in #1 above. Employer is fined $250 per month per employee who “leaks” to the Exchange. Max fine is total fine computed under “3” below. 3.  PAY THE FINES - Offer no coverage at all, employer must pay $2,000 per year per uncovered employee minus first 30 lives. 05   Office:  225-­‐297-­‐2719     michael.bertaut@bcbsla.com  
  15. 15. Affordability Safe Harbors To  determine  if  ALE  is  in  compliance:  •  Federal Poverty Line: o  Use 100% of FPL x 9.5% = affordable premium for all employees. o  In 2012, would be $11,170 x 9.5% = $1,061.15 •  Rate of Pay: o  Use hourly rate times 130/month to determine wages x 9.5% to compare to premium. o  At $10/hour, $1,300/month x 12 x 9.5% = $1,482.00 •  9.5% of Employee Box 1 W-2 income in premiums for employee-only coverage. o  Determined at end of calendar year, and on an employee-by-employee basis. o  Partial-year adjustments allowed for new employees who work part of a year. o  At $20,800/year ($10/hr, 40 hrs/week) = $1,976.00 06   Office:  225-­‐297-­‐2719     michael.bertaut@bcbsla.com  
  16. 16. When do ALE’s have to comply? •  In general, an ALE must comply with the new rules or face fines by his RENEWAL DATE in 2014, not necessarily 1/1/2014 BUT… •  If a group today has a fiscal year plan, and offers it to less than 33% of their employees (part timers AND full timers) or currently cover less than 25% of employees, then they MUST comply with the new ALE standards for affordability/actuarial value/offer to 95% •  Or fines will start on 1/1/2014, not on their renewal date. 07   Office:  225-­‐297-­‐2719     michael.bertaut@bcbsla.com  
  17. 17. Thank you Michael R. Bertaut Healthcare Economist LINKED-INRecommendations WELCOME!!! Michael.bertaut@bcbsla.com Office: 225-297-2719 Cell: 225-573-2092
  18. 18. Healthcare Reform Paths Kerry  Drake   February  26,  2013  
  19. 19. Health Care Reform Paths PLAY 01  
  20. 20. Are you subject to the penalty? Does the employer Penalties do have at least 50 full- no not apply to Start time equivalent small employees? employers. The penalty is $2,000 annually times the Did at least one Employer must number of full-time Does the employee receive a employees minus 30. no yes pay a penaltyemployer offer premium tax credit for not offeringcoverage to its or cost sharing coverage The penalty is employees? subsidy in an increased each year by Exchange? the growth in insurance premiums 01  
  21. 21. Are you subject to the penalty? Does the insurance pay for at least Employees can choose to no 60% of the total allowed cost of buy coverage in an benefits? Exchange and receive a premium tax credit. The employer must yes pay a penalty for not offering “affordable” Do any employees have to pay more coverage. than 9.5% of household income for the yes Those employees can choose to buy coverage employer coverage? in an Exchange and receive a premium tax no credit. The penalty is $3,000 The penalty is annually for each increased each year The employer fulltime employee by the growth in is not required to pay receiving a tax credit insurance premiums up to a maximum of a penalty since it $2,000 times the offers “affordable” number of fulltime coverage. employees minus 30. 02  
  22. 22. How do you choose yourpath
  23. 23. Considerations •  Lost tax advantages •  Reporting burdens remain •  Loss of social contract •  Recruitment and retention challenges •  Penalty increases 04  
  24. 24. Commitments to Play •  Managing Eligibility •  Added HR Responsibility o  Spousal carve-out •  Enrollment o  Dependent audit •  Staying Compliant o  Classifying employees •  Engaging Employees o  Restructuring workforce o  Wellness •  Controlling Costs o  Education and communication o  Plan design o  Surcharges/incentives o  Analytics 05  
  25. 25. Employer Scenario ABC Company •  Employee Demographics •  300 Full-time employees (30+ hours) •  200 Enrolled on plan •  100 Not covered •  Medical Plan Overview •  Dual Plan (HDHP PPO) •  4-Tiers 06  
  26. 26. Scenario Outcomes Scenario 1 Status Quo - No Changes in enrollment, contributions, or plan offerings Exchange Government   Plan Enrollment Premium Cost HCR Penalties Employee Cost Employer Cost Enrollment Subsidy 2013 200 0 $970,454 $0 $0 $385,358 $585,096 ER COST 2014 200 0 $1,048,090 $0 $0 $416,187 $631,904 $631,904 Scenario 2 Same as Scenario 1, but with 50% waivers joining the plan in 2014 due to the individual mandate Exchange Government   Plan Enrollment Premium Cost HCR Penalties Employee Cost Employer Cost Enrollment Subsidy ER COST 2014 250 0 $1,321,065 $0 $0 $528,026 $793,039 $793,039 Scenario 3 Do not offer healthcare coverage starting in 2014, and do not increase employee salaries Exchange Exchange Government   Plan Enrollment HCR Penalties Employee Cost Employer Cost Enrollment Premium Cost Subsidy ER COST 2014 0 250 $1,321,065 $540,000 $585,974 $919,901 $817,564 $817,564 Scenario 4 Do not offer healthcare coverage starting in 2014, but increase employees salaries to compensate Exchange Exchange Government   Plan Enrollment HCR Penalties Employee Cost Employer Cost Enrollment Premium Cost Subsidy ER COST 2014 0 250 $1,321,065 $540,000 $490,472 $499,927 $1,451,935 $1,451,935 07  
  27. 27. Thank you Kerry  Drake   Regional President healthcarereform@bxsi.com Office: 225-336-3238
  28. 28. Definition of Control Groups andPenalties Faced by Large Employers William  C.  PoAer   February  26,  2013  
  29. 29. Determination of Full-time Employees in a Controlled Group •  Businesses organized in multiple forms may be considered as a single employer •  Controlled groups can be parent-subsidiary, brother-sister, combinations or affiliated service groups 01   Office:  225-­‐922-­‐4600   bpoQer@pncpa.com  
  30. 30. Parent - Subsidiary Controlled Group •  Control exists if parent owns 80% of the subsidiary •  Could involve multiple subsidiaries 02   Office:  225-­‐922-­‐4600   bpoQer@pncpa.com  
  31. 31. Brother – Sister Controlled Group •  Where the same five or fewer individuals own 80% of the related entities, AND •  Effectively control more than 50% (identical ownership) •  Attribution 03   Office:  225-­‐922-­‐4600   bpoQer@pncpa.com  
  32. 32. Example Percentage of Ownership •  The four owners have more than 80% of A and B, so thatMember A Corp B LLC Effective requirement is satisfied. But A 80% 20% 20% identical ownership is only B 10% 50% 10% 40% so they fail the 50% C 5% 15% 5% test. They are two separate D 5% 15% 5% employees Total 100% 100% 40% 04   Office:  225-­‐922-­‐4600   bpoQer@pncpa.com  
  33. 33. Affiliated Service Groups •  Subjective determination •  Related entities may or may not have ownership relationships •  Performing services to or on behalf of the other entity, and when capital is not a material income producing factor 05   Office:  225-­‐922-­‐4600   bpoQer@pncpa.com  
  34. 34. Large Employer Penalties •  Effective in 2014 for employers with at least 50 full time employees •  Large employer must offer full time employees (FTE) and their dependents the opportunity to enroll in minimum essential coverage under an eligible employer sponsored plan •  FTE must generally not be asked to pay more than 9.5% of their modified household income for coverage •  Exceptions for new employees 06   Office:  225-­‐922-­‐4600   bpoQer@pncpa.com  
  35. 35. Penalty for Non-Compliance •  Employer not offering coverage •  Employer offering coverage whose employee receives a credit 07   Office:  225-­‐922-­‐4600   bpoQer@pncpa.com  
  36. 36. Employers Not Offering Coverage •  Such employers are subject to a penalty if one or more FTE is certified to the employer as being covered by an Exchange and received a premium tax credit •  Penalty for any month is an amount equal to the number of FTE’s in excess of 30 times 1/12th of $2,000 •  Regardless of the number of FTE’s who are enrolled in the Exchange and received a premium credit 08   Office:  225-­‐922-­‐4600   bpoQer@pncpa.com  
  37. 37. Example •  One FTE of a large employer who does not offer health coverage enrolled in an exchange •  Suppose the employer has 70 FTE’s •  The monthly penalty would be: 70 – 30 = 40 x ($2,000 / 12) = $6,667 •  If the employer offered no coverage all year, the penalty would be: $6,667 x 12 = $80,004 09   Office:  225-­‐922-­‐4600   bpoQer@pncpa.com  
  38. 38. Note •  Large employer not offering coverage may not be liable for penalties •  If employer has no FTE whose income would qualify him or her for a subsidy through an Exchange 10   Office:  225-­‐922-­‐4600   bpoQer@pncpa.com  
  39. 39. Employers Offering Coverage •  Some employers who offer health insurance coverage to FTE’s may be subject to a penalty •  Penalty can apply based on the number of FTE’s who purchase coverage through an Exchange and receive a credit or cost- sharing reduction 11   Office:  225-­‐922-­‐4600   bpoQer@pncpa.com  
  40. 40. Penalty Calculation •  For each FTE in the Exchange, the monthly penalty each month is 1/12 th of $3,000 or $250 •  If 25 employees are in the Exchange, penalty per month would be $6,250 •  Penalty is limited •  Assume 50 FTE’s. Penalty is: 50 – 30 = 20 20 x 1/12 of $2,000 = $3,333 12   Office:  225-­‐922-­‐4600   bpoQer@pncpa.com  
  41. 41. Thank you William  C.  PoAer   Senior Tax Director bpotter@pncpa.com Office: 225-922-4600
  42. 42. Over 50 Breakout Group Kerry  Drake   Mike  Bertaut   William  PoAer   Patrick  Seiter  BancorpSouth  Insurance   Blue  Cross  Blue  Shield   Postlethwaite     Taylor  Porter  Services/Wright    Percy   Healthcare  Economist   NeAerville,  APAC   Chair  of  the  Health     Regional  President   Exchange  Coordinator     Senior  Tax  Director   Care  Prac:ce  Team  

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