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Affordable Care Act
The document discusses updates to the employer mandate provision of the Affordable Care Act for 2015. It explains that employers with 50 or more full-time equivalent employees must offer affordable health insurance that provides minimum value to full-time employees and dependents or face penalties. It outlines the two types of penalties for failing to offer coverage or offering inadequate coverage, and provides strategies for employers to achieve affordability and minimum value standards. The presentation also addresses various other aspects of defining and tracking full-time employees.
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Affordable Care Act
- 1. Affordable Care Act:Update on the Employer Mandate for 2015 Featuring Seyfarth Shaw LLP
- 2. Welcome Today’s Host Michelle LanterSmith Chief Marketing Officer EPAY Systems, Inc. mlsmith@EPAYsystems.com 773-499-7512 2
- 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. Today’s Discussion The AffordableCare 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. Our Speaker Jennifer A.Kraft Partner, Seyfarth Shaw LLP Employee Benefits jkraft@seyfarth.com (312) 460 -5000 ©2012 Seyfarth Shaw LLP 5
- 6. Ask Your Questions Toask a question, simply type your question in the “Question” box on the right side of your screen. ©2012 Seyfarth Shaw LLP 6
- 7. Legal Disclaimer The contentsof 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. The Affordable CareAct Medicaid Expansion Exchanges Guaranteed Issue/ Community Rating Individual Mandate Employer Mandate 8| ©2012 Seyfarth Shaw LLP
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- 10. Exchanges/Marketplaces • • • State-based collection ofhealth 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. Exchanges/Marketplaces • • Each state willhave 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. Exchanges/Marketplaces • Marketplace Notices o Employerssubject 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
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- 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. Employer Mandate • Employer ―SharedResponsibility‖ 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. Employer Mandate • Employer ―SharedResponsibility‖ — 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. No Coverage Penalty • EmployerFails 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. No Coverage Penalty • MinimumEssential 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. No Coverage Penalty • Example oEmployer 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. Inadequate Coverage Penalty • • Employeroffers 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. Inadequate Coverage Penalty PENALTY $2,000x (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. Inadequate Coverage Penalty ADEQUATEHEALTH 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. Inadequate Coverage Penalty • Example oEmployer 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. Inadequate Coverage Penalty • Strategiesfor 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. Inadequate Coverage Penalty • Strategiesfor 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. Full-Time Employee • What isa 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. Measurement/Stability Periods Measurement Period Admin StabilityPeriod Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. 2015 27 | ©2012 Seyfarth Shaw LLP
- 28. Measurement/Stability Periods • May usedifferent 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. Overlapping Periods Starting with2014, 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. 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. Full-time/Part-time/Seasonal • • • Based on factsand 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. 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. Full-time/Part-time/Seasonal • Seasonal Employee ► Nodefinition 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. Full-time/Part-time/Seasonal • ―Variable hour‖ oNew 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. When Must VariableHour 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. Breaks from Employment Lengthof 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. 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. 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. Other • • • • • • 90-Day Waiting Period ClinicalTrials 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. Other • • • Non-Discrimination Rules Auto-Enrollment Annual reporting(delayed from 2014) ©2013 Seyfarth Shaw LLP ©2012 Seyfarth Shaw LLP 40 |
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- 42. Key Considerations • Employers arenot 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. Next Steps • Start toproject 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
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- 45. Get Help! Quick Accessto Resources 45
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- 47. ACA Resource Center aca-seyfarth.com 47| ©2013 Seyfarth Shaw LLP
- 48. Questions? jkraft@seyfarth.com To sign upfor Seyfarth Alerts, email healthreform@seyfarth.com @SeyfarthEBLaw ©2012 Seyfarth Shaw LLP
- 49. EPAY Systems Michelle LanterSmith Chief Marketing Officer EPAY Systems, Inc. 49
- 50. Real Time DataCollection Data Collection 1 3 2 Secure web management Payroll Processo r 50 Data Export Payroll
- 51. EPAY Systems John Gaudiuso SalesEngineer EPAY Systems, Inc. Contact John at: jgaudiuso@EPAYsystems.com 312-291-2032 51
- 52. ACA Dashboard • • • • • Compare allemployees 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. Determining Average Hoursin 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
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- 56. Upcoming Education • • • How toAvoid 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. Thank You! Jennifer A.Kraft Partner, Seyfarth Shaw LLP Employee Benefits jkraft@seyfarth.com (312) 460-5983 57
- 58. Connect With Us Connectwith 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
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Editor's Notes
- #3 Thanks Josh. Welcome to our first webinar in our Compliance Series “Wage & Hour Attorneys’ Best Tips for Staying Out of Trouble” presented by EPAY Systems. My name is Michelle Lanter Smith. I am the Vice President of Marketing here at EPAY Systems.I’d like to extend a warm welcome to all of you on the line with us today. We have over __ people joining us . . . From across the nation. Many of you my stem from various industries, but you all have a couple things in common –You all face a challenging, complex labor environment – one where you workers are distributed across many locations – making it difficult for consistent management policies and proceduresManaging compliance issues – such as Overtime pay, meal breaks, employee travel . . . is a real concern. And because of your distributed workforce, it’s even harder to manage.
- #4 Well, that’s where EPAY comes in. EPAY is in the time and labor management business. And we specialize in dealing with companies that have very complex and distributed labor environments. Our organization understands all of the challenges and limitations a company with employees scattered everywhere deals with as it relates to deploying new technology in the field, as well as managing and tracking it’s labor force.Distributed labor can present many challenges. Yet, labor is probably your largest cost.Complex pay rules, shift differentials, employees working one task in the morning and a different one in the afternoon. Employees working at customer sites or moving from job to job.These are tough for most time and attendance systems. But not for us. Our uniquely flexible pay rules engine can handle complex union rules and state regulations, not to mention your own complexities because of the nature of your business.Our web-based system, Blueforce, drives two main benefits for our clients:We help them reduce their total labor costs by more than 5%We help them lower their overall risk in facing compliancy issues – we have a built-in compliance orientated features . . . Right in our system
- #5 The Affordable Care Act (ObamaCare) is upon us and there’s a lot to do in order to be ready for January 1, 2014. Depending on the number of employees you have, do you even need to be concerned? If so, who is eligible for health insurance at your company? And finally, how do you calculate whether it’s better to offer health insurance to your employees or just pay the penalty?In this webinar, Jennifer Kraft of Seyfarth Shaw LLP, will review this pay or play mandate and ways employers can mitigate the financial impact, including:Are you even subject to the Affordable Care Act and if you are, what are your options? Which employees must you offer coverage to or pay a penalty? What are the state exchanges and how do they work with the employer mandate?How is the employer penalty calculated?How will the expansion of eligibility for Medicaid in your state affect the employer penalty? How do you discover whether your state’s ruling will impact your employees and who you will need to provide insurance to?If your employee hours vary (like in part-time and fluctuating schedule workers in industries such as retail, hospitality, and health care), how do you calculate your ACA liabilities?What steps should you be taking right now to determine whether you should pay or play? How can you ensure that you’re minimizing the financial impact of the ACA on your business?At the end, John Gaudiuso from EPAY will join us and discuss how a time and labor management system can help you monitor and track the data required to make these decisions and manage the ACA on an ongoing basis. Automated tools from your time-tracking system, such as reports and alerts, will be critical to managing who is eligible and mitigating the risk of non-compliance.For more than 60 years, Seyfarth Shaw has been recognized as one of the “go-to” labor and employment firms for business by providing extraordinary, cost-effective results. EPAY Systems, Inc. has joined forces with Seyfarth Shaw to educate employers of distributed labor environments on how compliance risk can be minimized.
- #6 Jennifer is a partner in the Employee Benefits Department and Co-Chair of the Firm’s Welfare Benefits Practice Group. With broad experience assisting Fortune 500 companies with all aspects of their employee benefits plans, she helps clients understand the myriad of complex laws impacting employee benefits.Jennifer is a member of the firm's cross-departmental Health Care Reform Team. This team of firm lawyers from different practice areas works together to assess the different ways health care reform will impact our clients and create cutting-edge strategies for a holistic response. Ms. Kraft has guided clients in the design and administration of their health plans and also helps clients consider alternatives for keeping health care costs contained such as the implementation of health savings accounts and wellness programs in light of a shifting legal landscape.Jennifer is frequently quoted on health care reform issues in publications as diverse as CNN Money, Yahoo! Finance, National Law Journal, Benefits Pro and Modern Healthcare and Scrip.Welcome Jennifer, thanks for joining us today!
- #7 Now I’m sure many of you are going to have questions for Rebecca and Noah today. If you have one, simply type it in the Question box in bottom right section of your screen. We’ll be monitoring the questions and Noah and Rebecca will attempt to answer your questions throughout their presentation.So let’s get started . . .Noah, let me turn it over to you to discuss some of the trends you’re seeing in wage and hour litigation.
- #8 I need to read our disclaimer here, which basically tells you that . . . The Co
- #23 Read through slide. Affordability safe harbors. Set employee-only premium at no more than 9.5% of one of the safe harbors listed. Review W-2 wages for lowest-paid full-time employeeAssume lowest-paid full-time employee makes $30,000 in W-2 wages per year. If the employee-only premium for health coverage is $2,850 or less (i.e., 9.5% of the lowest W-2 wages), then no employee will ever become eligible for tax credits through the exchanges, and the employer will not be liable for the play or pay penalty. Or, set premium at 9.5% of FPL2013 FPL is $11,490 for a single person9.5% is $1091.55 Number does not vary with employee wagesMV = Calculator on line. Safe harbor checklist includes 4 core benefits with minimum cost sharing for each. This one is not available if you have non-standard benefits. Actuarial certifications include HRAs and HSA contributions.
- #50 Thanks Rebecca. Wow – what a lot of great information you’ve give us in such a short time. Now if you have question for Rebecca or Noah, just let us know. We’ll see a short survey when you close out today’s session. Just let us know and we’ll try to help get your question answered.I’d like to wrap up our time together today with a few words on EPAY and how we address your compliance needs.
- #51 We’ll provide multiple options to collect that data to ensure the lowest cost of ownership for our clients (WALTER, Mobile App, IVR, Web App)Biometric time clocks ( biometrics - specifically for sites over 15 ee) – BEST OPTION TO PREVENT TIME THEFTIVR (developed with caller id tracking – smaller sites 1-14 ee)Mobile Application ( gps coordination – smaller or very mobile ee sites)Web Application (IP tracking – office environments)
- #52 Today’s expert joining me today is John “God i you so”. He’s been a pioneer in the high-tech industry for 10 years. Schooled and trained as an electrical engineer, John has advanced his career working in product development in some of the nation’s thriving technical companies. His technical expertise spans a number of technologies from solar cells to RFID. He also is intimately familiar with ERP, implementing wide-scale ERP systems for large, regional tech firms. Time and labor management has been his new focus for the last two years working closely with EPAY’s customers in the HR and Payroll functions. Since mobile technologies have come into play, John has embraced the technology and its application within time and labor management. He is now responsible for deploying EPAY’s mobile solution to our customers, demonstrating EPAY’s innovation in this area and driving creative solutions to our client’s time and attendance issues.
- #58 Wage and hour cases continue to be a source of potential liability for employers. Indeed, the vast majority of class and collective actions filed in state and federal courts continue to be wage-hour cases. Additionally, the Department of Labor has hired more investigators and continues to aggressively investigate company’s wage-hour practices. Companies hit with these cases may face significant exposure and, even if their policies are lawful, defending a class or collective action can cost hundreds of thousands of dollars, if not more. As a result, it is critical for a company facing a lawsuit to quickly assess its risks and determine its litigation “goals.” Even if not currently facing a lawsuit, a company should take measures to avoid litigation and to minimize its legal risks. To do so, companies need to keep abreast of changes in the law and litigation trends. Wage-hour law continues to develop and change, and these developments may impact your organization or industry.
- #60 That’s all the time we have today. John and I would like to extend a big thank you to all of you for joining us today. We’d like to be your time and labor management provider. At EPAY, we’re IN TIME WITH YOU.Until next time, then, have a wonderful rest of your day. Good-bye.