Health Care Refotm

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Presented by Ophelia Y., MBA, SPHR, GPHR, SHRM-SCP
HEALTH CARE REFORM AND
ITS EFFECTS ON YOUR BUSINESS
AGENDA
Background & History
The Past: Previously Implemented HCR Provisions
The Present: Current & Pending HCR Provisions
The Near-Future: HCR Provisions on the Horizon
Cheat Sheets
Wrap Up/Questions and Answers

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• US History of Healthcare
Reform
• Patient Protection and
Affordable Care Act
• Education Reconciliation Act
BACKGROUND & HISTORY
THE PAST:
PREVIOUSLY IMPLEMENTED PROVISIONS
• Lactation Breaks
• Summary of Benefits and
Coverage
• Notice of Exchanges and
Subsidies
LACTATION BREAKS
• Requires almost all employers to provide
reasonable break times for an employee
to express breast milk for her nursing child
• Only applicable up to one year after the
birth of her child
• Exemptions for small employers (less than
50) if able to demonstrate undue hardship
• Amends the Fair Labor Standards Act (FLSA)

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SUMMARY OF BENEFITS & COVERAGE
• A uniform template pre-filled with the important
provisions of a specific health insurance plan
• Creates an “apples to apples” approach to
comparing and contrasting health plans
• Must be included with open enrollment materials
each year and to all new enrollees during the plan year

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NOTICE OF EXCHANGES & SUBSIDIES
• Purpose: To inform employees of the existence of Health
Insurance Exchanges (Health Insurance Marketplaces) and
potential federal subsidies available to them
• Applies to virtually all employers, regardless of size
• Must be provided to each new employee within 14 days of
the employee’s start date
NOTICE OF EXCHANGES & SUBSIDIES
• Federal Department of Labor has released two model notices
(one for organizations that sponsor a health plan, and one for
organizations that do not)
• No penalties for noncompliance at this time
THE PRESENT:
CURRENT/PENDING HCR PROVISIONS
90-Day Waiting Period
Small Business Tax Credits – 2014 Increase
Health Insurance Exchanges
New COBRA Notice Language
Tax Treatment: Individual Plan Reimbursements
W-2 Reporting – 2014 W-2s

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THE PRESENT:
CURRENT/PENDING HCR PROVISIONS
Employer Mandate
Employer Mandate Reporting
90-DAY WAITING PERIOD
• As of 1/1/14, no more than a 90-day waiting period for coverage for new
employees
• For all plans renewing on or after 1/1/14
• Applies to all group health plans, regardless of group size
• Applies to both Grandfathered and Non-Grandfathered Plans
• Current guidance does not allow “first of the month following 90-day” waiting
period
SMALL BUSINESS TAX CREDITS
2014 and beyond:2014 and beyond:2014 and beyond:2014 and beyond:
Up to 50%50%50%50% Tax Credit on
Employer-Paid
Premiums
(35% for nonprofits)
Tax credit, not a
deduction

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SMALL BUSINESS TAX CREDITS
To Be Eligible:
• Must contribute at least 50 percent of the cost of health care single coverage,
• Must pay average annual wages below $50,000,
• Must purchase coverage through the state SHOP exchange; and
• Must have less than the equivalent of 25 full-time employees
To Be Eligible for Full Amount:
• Must pay average annual wages below $25,000, and
• Must have less than the equivalent of 10 full-time employees
STATE HEALTH CARE EXCHANGES
Each state has one. Some
set up by federal
government, some by the
state and some are hybrids
Virtual/competitive
marketplace offering
health plans
Individuals and small
employers (fewer than 50
FTEs) may shop in exchanges
– Some states currently
allow groups of fewer
than 100
Starting in 2016, all SHOPs
will be open to employers
with up to 100 full time
equivalents
States have some flexibility
regarding the set up of the
exchange(s) and
participation requirements
STATE HEALTH CARE EXCHANGES
Two Parts to the State Health Care Exchange:Two Parts to the State Health Care Exchange:Two Parts to the State Health Care Exchange:Two Parts to the State Health Care Exchange:
1)1)1)1) MarketplaceMarketplaceMarketplaceMarketplace – Individual health plans
2)2)2)2) SHOPSHOPSHOPSHOP – Small Group Health Plans
(Small Business Health Options Program)

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STATE HEALTH CARE EXCHANGES:
THE MARKETPLACE
• Open Enrollment for 2015:
11/15/1411/15/1411/15/1411/15/14 –––– 2/15/152/15/152/15/152/15/15
• Forfeit the employer health insurance contribution, but may be eligible
for federal premium subsidy
• No payroll deduction available for Marketplace Plans
STATE HEALTH CARE EXCHANGES: THE SHOP
• For groups with less than 50 employees
• May shop with or without a broker, cost is the same to the employer
• Small business tax credit onlyonlyonlyonly available for plans purchased through
the SHOP
STATE HEALTH CARE EXCHANGES: THE SHOP
• Employers may enroll at anytime during the year
• If the employer enrolls by the 15th of the month, coverage may begin as soon as
the 1st of the next month
• Must offer plan to all full-time employees working 30+ hours/week
• In many states, at least 70% of the full-time employees must enroll in the SHOP
plan to maintain eligibility. (Employers who apply for SHOP coverage from 11/15 -
12/15 can enroll without meeting this requirement.)
• States that set up their own Exchanges have some
flexibility in the features

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STATE HEALTH CARE EXCHANGES
• Plans Available in an Exchange:
• Costs are paid through deductibles, co-pays, and co-insurance
NEW COBRA NOTICE LANGUAGE
• Employers with 20+ employees who have a group health plans must offer COBRA
to qualified beneficiaries
• When a participant has a COBRA qualifying event, the employer must mail the
qualified COBRA beneficiary a COBRA Notice & Election Form
• Now this Notice must contain verbiage regarding the Marketplaces and federal
premium subsidies
• DOL has published a new model (May 2014)
EMPLOYER REIMBURSEMENTS
FOR INDIVIDUAL HEALTH PLANS
• Per IRS Notice 2013-54, no longer favorable tax treatment for employer
reimbursements to employees for Individual or Marketplace plans
• The employer is generally unable to ensure that the individual plan meets certain
ACA market reforms to be eligible for pre-tax treatment
• Employer reimbursements for individual coverage must be taxed as income/wages
to the employee
• Penalty: $100 per employee per day

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W-2 REPORTING
• Large employers (issuing more than 250 W-2s in the previous tax year)
must report the “aggregate cost” of employee-sponsored health plans
on the W-2
• Applies to both grandfathered and non-grandfathered plans
• Does not change tax treatment of plans
• For most plans, the “aggregate cost” includes both employee and
employer contributions
W-2 REPORTING
Who is required to
report the cost of
healthcare on the
2014 W-2’s?
THE PRESENT: NEW FOR 2015
Employer
Mandate
Employer
Mandate
Reporting

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EMPLOYER MANDATE DELAYED
Employer must offer health insuranceto full-time employees (30 hours/week) according to the
followingtable:
Full Time Equivalents –
Including Control Groups
Employer Mandate
Penalties Begin
Margin of Error
100+ 1/1/2015 30% in 2015 and 5% thereafter
50 -99 1/1/2016** 5%
Less than 50 N/A N/A
** Delayto 2016 applies onlyif:** Delayto 2016 applies onlyif:** Delayto 2016 applies onlyif:** Delayto 2016 applies onlyif:
1) The employer did not reduce its workforce to get below the 99 employee
threshold without a bona fide reason
2) The employer did not materially reduce its health care plan
EMPLOYER MANDATE:
FULL TIME EQUIVALENT EMPLOYEES (FTES)
• Look-back period
____ Part-time Employee Equivalents
(Total Monthly Part-Time Hours/120)
+ ____ Full-time Employees (30 hours/week or more)
Owners (Sole proprietors, Partners in a Partnership, Members of LLCs
- ____ Taxed as a Partnership, and Shareholders who own two percent or more in an S
Corporation)
= ____ Full-time Equivalent Employees
EMPLOYER MANDATE: PENALTIES
•Calculation:Calculation:Calculation:Calculation:
•$2,000 annually for each full-time employee, excluding the first 30
(80 in 2015) employees
•{the total number of employees in the firm (subsidized and
unsubsidized) minus 30 or 80} x {$2,000}
A Penalty:A Penalty:A Penalty:A Penalty: When a plan
that meets minimum
coverage requirements is
not offered
• Calculation:Calculation:Calculation:Calculation:
• $3000 annually for each employee who actually receives a federal
premium subsidy
B Penalty:B Penalty:B Penalty:B Penalty: When
minimum coverage is
provided but it is not
affordable
• Overall Penalty:Overall Penalty:Overall Penalty:Overall Penalty:The lesser of A Penalty or B Penalty
• Penalties are Calculated Monthly – Paid Annually

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EMPLOYER MANDATE: IMMUNIZING THE PLAN
Minimum
Essential
Coverage
Affordable Rate
All Full Time
Employees
MINIMUM ESSENTIAL COVERAGE
• Health insurance plan design, notnotnotnot employer contribution to the plan
• Health insurance carrier must pay for at least 60% of treatment costs
(60% actuarial minimum value)
• “Bronze level” plan
AFFORDABLE RATE
• Exclusively refers to employee contribution
to the plan
• Misconception – Certain Contribution %
Required
• Coverage is considered “affordable” if
employee contributions for employee only
coverage do not exceed 9.5% of an9.5% of an9.5% of an9.5% of an
employee’s householdemployee’s householdemployee’s householdemployee’s household incomeincomeincomeincome
There are three safe harbor methods for
determining affordability:
1)1)1)1) WWWW----2 Wages2 Wages2 Wages2 Wages - 9.5% of an employee’s W-2
wages (reduced for salary reductions
under a 401(k) plan or cafeteria plan)
2)2)2)2) Rate of PayRate of PayRate of PayRate of Pay - 9.5% of an employee’s
monthly wages (hourly rate x 130 hours
per month)
3)3)3)3) Federal PovertyLevelFederal PovertyLevelFederal PovertyLevelFederal PovertyLevel- 9.5% of the
Federal Poverty Level for a single
individual

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FULL TIME EMPLOYEES
• Minimum essential coverage at an affordable rate must be offered to
all full time employees regularly working at least 30 hours30 hours30 hours30 hours per week
following the 90-day waiting period
• Also, it must be offered to their dependent children, but not spouses
• No requirement to offer insurance to part time employees – less than
30 hours
• Begins in 2015 tax year and only applies to employers with 50+ full-time equivalent
employees
• The forms must be filed for first time in early 2016 for the 2015 calendar year.
• Just like W-2’s, copies of the forms must be provided to employees by January 31st
and filed with the IRS by February 28th (paper) or by March 31st (electronic)
• Electronic filing required unless the employer will be submitting fewer than 250 1095-
C forms for the year
EMPLOYER MANDATE:
REPORTING REQUIREMENTS
Section 6056 of the Tax Code requires:Section 6056 of the Tax Code requires:Section 6056 of the Tax Code requires:Section 6056 of the Tax Code requires:
1) One Transmittal Form (IRS Form 1094-C)
2) Employee Statements (IRS Form 1095-C – top half only)
It may help you to think of the 1094-C as similar to the W-3 (a transmittal form) and
the 1095-C as similar to the W-2 (a separate return for each employee)
*Self-funded plans require additionalreporting under Section6055Section6055Section6055Section6055 of the Tax Code
EMPLOYER MANDATE:
REPORTING REQUIREMENTS

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Three Methods of Reporting:Three Methods of Reporting:Three Methods of Reporting:Three Methods of Reporting:
1)1)1)1) GeneralMethodGeneralMethodGeneralMethodGeneralMethod– Required method for all large employers unless they qualify for reporting
relief provided by the two alternative methods. (See next two slides for data collection
requirements)
2)2)2)2) QualifyingOffer MethodQualifyingOffer MethodQualifyingOffer MethodQualifyingOffer Method – To use this method the employer must offer a bronze level or higher
plan where the cost to the employee of employee-only coverage is less than about $1,100 in
2015. Also, plan must be offered to all family members. Provides relief from reporting
monthly, employee-specific health information.
3)3)3)3) 98% Offer Method98% Offer Method98% Offer Method98% Offer Method– To use this method, the employer must offer a bronze level or higher plan
at an affordable rate to at least 98% of the company’s full time employees. Provides relief
from identifying which employees regularly work full-time hours.
EMPLOYER MANDATE:
REPORTING REQUIREMENTS
So What Information Do I Needto Track in 2015?So What Information Do I Needto Track in 2015?So What Information Do I Needto Track in 2015?So What Information Do I Needto Track in 2015?
1) Employer name, address, and Tax ID
2) Name and phone number of employer’s contact person responsiblefor health insurance (this
may be either an employee or agentof the employer)
3) Calendaryear for which the information is reported
4) Certification as to whether the employer provided minimum essential coverageto full-time
employees and their dependents by calendar month
5) Months minimum essential coveragewas available to each full-time employee
EMPLOYER MANDATE:
REPORTING REQUIREMENTS
So What Information Do I Needto Track in 2015 (cont.)?So What Information Do I Needto Track in 2015 (cont.)?So What Information Do I Needto Track in 2015 (cont.)?So What Information Do I Needto Track in 2015 (cont.)?
6) Each full-time employee’s monthly cost for employee-only coverage under the employer’s least
expensive minimum value plan (bronze level or higher plan)
7) Number of full-time employees employed each month in the calendar year
8) Name, address, and tax ID of each full-time employee employed during the calendar year
9) Months each employee was covered on the group health plan during the year
** Self-insured plan sponsors must collect additionalinformation
EMPLOYER MANDATE:
REPORTING REQUIREMENTS

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THE NEAR FUTURE:
HCR PROVISIONS ON THE HORIZON
• Non-Discrimination
• Automatic Enrollment
NON-DISCRIMINATION
Per IRS, delayed until at least 2015
“Similar” to current regulations for self-insured plans
Grandfathered plans excluded
When implemented will most likely prohibit:
• Management Carve-Out Plans
• Higher % contributions to HCI’s
• Executive Health Plans
AUTOMATIC ENROLLMENT
Employers with more than 200 full-time employees required to
automatically enroll new employees
Employees may still opt out
Automatic Enrollment Rules delayed until at least 2015, probably longer
Federal Department of Labor has not yet issued guidance on this issue

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CHEAT SHEETS
Provisions by
Employer Size
CHEAT SHEET #1
1) Notice of Exchanges and Subsidies
2) Lactation Breaks
3) No Favorable Tax Treatment for Individual or Marketplace Plan
Reimbursements
Provisions for Small Employer (fewer than 50 employees) with noProvisions for Small Employer (fewer than 50 employees) with noProvisions for Small Employer (fewer than 50 employees) with noProvisions for Small Employer (fewer than 50 employees) with no HealthHealthHealthHealth
Insurance Plan:Insurance Plan:Insurance Plan:Insurance Plan:
CHEAT SHEET #2
1) Notice of Exchanges and Subsidies
2) Lactation Breaks
3) Small Business Tax Credits (If less than 25 employees)
4) Summary of Benefits and Coverage
5) New COBRA Notice Language
6) 90-Day Waiting Period
7) Non-Discrimination – if non-grandfathered (delayed)
Provisions forProvisions forProvisions forProvisions for SmallSmallSmallSmall EmployerEmployerEmployerEmployer (fewer than 50(fewer than 50(fewer than 50(fewer than 50 eeeemployeesmployeesmployeesmployees) with a) with a) with a) with a HealthHealthHealthHealth
Insurance Plan:Insurance Plan:Insurance Plan:Insurance Plan:

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CHEAT SHEET #3
1) Notice of Exchanges and Subsidies
2) Lactation Breaks
3) W-2 Reporting (if issue more than 250
W-2s)
4) Summary of Benefits and Coverage
5) New COBRA Notice Language
6) 90-Day Waiting Period
7) Employer Mandate – Effective 1/1/15 for
100+ employees and 1/1/16 for 50 – 99
employees.
8) Employer Mandate Reporting
9) Non-Discrimination – if non-
grandfathered (delayed)
10) Automatic Enrollment – 200+ employees
(delayed)
Provisions for Large Employer (50+Provisions for Large Employer (50+Provisions for Large Employer (50+Provisions for Large Employer (50+ employeesemployeesemployeesemployees) with a) with a) with a) with a HealthHealthHealthHealth Insurance PlanInsurance PlanInsurance PlanInsurance Plan::::
Questions?