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. Legal Overview
Patrick
D.
Seiter
February
26,
2013

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. 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. 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. 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. 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. Thank you
Patrick
D.
Seiter
AAorney,
Taylor
Porter
Chair
of
the
Health
Care
PracIce
Team
pat.seiter@taylorporter.com
225.381.0281

9. Time to Implement!
Moving Forward with Reform
Mike
Bertaut
February
26,
2013

10. Disclaimer
All information in this presentation INCLUDING THE OPINIONS OF THE PRESENTER are solely for
illustrative purposes. The information is based on certain assumptions, interpretations, and calculations that
are not necessarily accurate with regard to provisions of PPACA, HCERA, HIPAA, COBRA, ERISA, and
other rules, regulations, guidance and all other documents issued by relevant state and federal agencies with
regard to these laws and any other relevant laws. The information provided should not be
considered as legal, financial, accounting, planning, or tax advice. You should consult your
attorneys, accountants, and other employees or experts of this type of this type of advice based on their
own interpretations, calculations, and determinations of applicable laws, rules, regulations, guidance, and any
other documents and information that they determine may be relevant. The authors make no guarantees or
other 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 any
BCBSLA employee or by any other person. No warranty of any kind is given with regard to the contents of
the presentation.
01
Office:
225-­‐297-­‐2719
michael.bertaut@bcbsla.com

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. 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. 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. 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. 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. 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. Thank you
Michael R. Bertaut
Healthcare Economist
LINKED-IN
Recommendations WELCOME!!!
Michael.bertaut@bcbsla.com
Office: 225-297-2719
Cell: 225-573-2092

18. Healthcare Reform Paths
Kerry
Drake
February
26,
2013

19. Health Care Reform Paths
PLAY
01

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 penalty
employer offer premium tax credit for not offering
coverage 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. 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. How do you
choose your
path

23. Considerations
• Lost tax advantages
• Reporting burdens remain
• Loss of social contract
• Recruitment and retention challenges
• Penalty increases
04

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. 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. 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. Thank you
Kerry
Drake
Regional President
healthcarereform@bxsi.com
Office: 225-336-3238

28. Definition of Control Groups and
Penalties Faced by Large Employers
William
C.
PoAer
February
26,
2013

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. 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. 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. Example
Percentage of Ownership
• The four owners have more
than 80% of A and B, so that
Member
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. 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. 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. 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. 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. 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. 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. 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. 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. Thank you
William
C.
PoAer
Senior Tax Director
bpotter@pncpa.com
Office: 225-922-4600

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