Overview of Tribes and Tribal Entities as

Employers under the Patient Protection and

Affordable Care ActVersion: October 18, 2013

Disclaimer

This training material is for informational purposes only and is not intended as tax or legal advice. Please talk with your attorney or tax professional for specific questions related to your Tribe or Tribal entity as an employer.

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This Training

• Seven sections to this training:– Overview of Tribes and Tribal Entities as

Employers under the ACA– Small Business Health Options Program (SHOP)– Small Business Tax Credit (Tax Credit)– Employer Shared Responsibility

• Look Back Measurement Method• Transition Rules

– IRS Reporting and Other Requirements

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Overview of Tribes and Tribal Entities as Employers

Topics• The Patient Protection and Affordable Care Act (ACA)• ACA Employer Provisions • Importance to Tribes and Tribal Entities• Small Businesses v. Large Businesses• Introduction to Counting Employees• Introduction to Determining Full-Time Employees

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The Patient Protection and Affordable Care Act (ACA)

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The Affordable Care Act• On March 23, 2010, President Obama signed into

law the Patient Protection and Affordable Care Act (ACA).

• The ACA protects the right of all Americans, including American Indians and Alaska Natives, to access affordable health care.

• More than 32 million in this country who would otherwise not have health insurance will have access to health coverage.

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The Affordable Care Act• There are several strategies under the ACA to ensure

that everyone has access to the affordable health care by January 1, 2014• Medicaid Expansion • Health care tax credits for individuals and small businesses• Insurance Marketplaces in each state

• Major insurance reform• No annual or lifetime limits allowed• A person cannot be denied coverage for a pre-existing

condition

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ACA Employer Provisions

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ACA Employer Provisions• Provisions related to employers began to take effect

in 2010 while other provisions will be phased in through 2018.

• Regulations issued by– Department of Health and Human Services (HHS)

• Centers for Medicare & Medicaid Services (CMS)

– Department of Labor (DOL)– Department of Treasury, Internal Revenue Service (IRS)– U.S. Office of Personnel Management (OPM)

• Regulations will continue to be issued through 2014.

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ACA Employer Provisions At-A-Glance ACA Provisions

Number of employees

1 to 24 25 to 49 50 to 100 101-200 > 200

Small Business Health Care Tax Credit X

Small Business Health Options Program (SHOP) X X X

(may be limited to

50)

IRS Assessable Payments X X X

Automatic enrollment of full-time employees in employer health plan

X

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Importance to Tribes and Tribal Entities

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Why is this Important for Tribes and Tribal Entities?

• If a Tribe is considered a “large employer,” it may incur an assessable payment for not providing insurance.

• Tribes may be eligible to purchase health insurance through the Small Business Health Options Program (SHOP).

• Tribes can strategize to meet ACA employer requirements in a cost effective manner.

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Importance for Tribes and Tribal Entities

• Exemption from some plan rules for employers with:1. Self-funded plans2. Large group market plans, and3. Grandfathered plans

• Large tribal employers will likely have one of these exempt plans.

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Provisions Apply to Tribes and Tribal Entities as Employers

• Small Business Health Care Tax Credit– Qualify if 1 to 24 full-time equivalent employees. – Per IRS Guidance, an agency or instrumentality of

an Indian tribal government is not eligible for the tax credit unless it is a 501(c)(3).

– Other Tribally owned entities may be eligible for the tax credit (e.g., an entity organized under State law).

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Provisions Apply to Tribes and Tribal Entities (continued)

• Small Business Health Options Program (SHOP) – Qualify if up to ≤ 50 employees (or < 100

employees as determined by State).– Tribes and Tribal entities may be eligible to

purchase insurance for full-time employees through the SHOP.

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Provisions Apply to Tribes and Tribal Entities (continued)

• Employer Shared Responsibility provisions (i.e., assessable payments):

– Applicable to employers with > 50 full-time employees.

– Tribal governments and subdivisions of Tribal governments are subject to the Employer Shared Responsibility provisions.

• Rules for governmental entities have not been released

– Other Tribal entities are subject to provisions– Delayed until 2015.

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Provisions Apply to Tribes and Tribal Entities (continued)

• Fair Labor Standards Act (FLSA), § 18A- Requires automatic enrollment of full-time employees in employer’s health plan:– Applicable to employers with > 201 employees.

– Federal courts are divided as to the application of FLSA to Tribal employers.

– Compliance not required until regulations are issued.

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Small Businesses v. Large Businesses

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Small Businesses v. Large BusinessesSummary

  Small Business

Large Business

Tax Credits for premiums paid for employee health insurance

Yes No

Assessable Payments (taxes) for not providing affordable health coverage

No Yes

Can purchase insurance on SHOP

Yes No

Health plans offered must have Essential Health Benefits (EHB)

Yes Yes – for new plans.Exempt: large group

plans, grandfathered, & self-insured

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Small Businesses v. Large Businesses Summary (continued)

  Small Business Large Business

Health plans offered must cover dependents (not spouse)

No Yes

Employer must pay portion of premiums for dependents

No No

Health plan offered must cover spouse

No No

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Introduction to Counting Employees

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Counting Employees• Different methods are used to count

employees for different provisions of the ACA, including:– Small Business Tax Credit– SHOP

• State-based (state specific)• Federally-facilitated (same as Employer Shared

Responsibility)

– Employer Shared Responsibility

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Counting Employees (continued)Employer Provisions General Description of Method

Small Business Tax Credit (1 to 24 full-time equivalent employees)

Count full-time and part-time employees to determine number of full-time equivalent employees. A specific method is required; different than method for FF-SHOP and Employer Shared Responsibility.

SHOP (≤ 50 employees or < 100 employees as determined by State)

For State-based SHOP: Follow State method for counting employees.

For FF-SHOP: Count number of full-time employees and full-time equivalent employees (part-time employees). Same method as Employer Shared Responsibility.

Employer Shared Responsibility (≥ 50 full-time employees)

Count number of full-time employees and full-time equivalent employees (part-time employees).

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Introduction to Determining Full-Time Employees

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Determining Full-Time Employees• Federal definition of full-time employee used

to identify full-time employees for:– FF-SHOP eligibility (possibly, State SHOP)– Shared Employer Responsibility provisions

applicability• Large Employer Status • Insurance coverage requirement • Assessable payments

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Determining Full-Time Employees(continued)

Full-Time Employee: An employee who is employed an average of 30 hours of service per week or 130 hours of service per month.

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Full-Time Employees: Determining Hours of Service

• Hours of Service includes each hour an employee is paid or entitled to payment:

1. For performance of duties for the employer; or2. For a period of time during which no duties are

performed due to vacation, holiday, illness, incapacity including disability, layoff, jury duty, military duty or leave of absence.

– Applies to FF-SHOP, Small Business Tax Credit, and Employer Shared Responsibility provisions, but not to State-based SHOP until 2016.

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Full-Time Employees: Determining Hours of Service(continued)

• For Hourly Employees: – Calculate the actual hours of service by the employee.

• For Non-Hourly Employees:– Calculate the actual hours of service by the employee.– Days-worked equivalency: Credit the employee with 8

hours of service for each day the employee would be credited with at least 1 hour of service.

– Weeks-worked equivalency: Credit the employee with 40 hours of service for each week.

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Full-Time Employees: Determining Hours of Service(continued)

• Rules as to Use of Equivalencies:– Prohibited use of equivalencies: Cannot be used to

substantially understate an employee’s hours of service.– Different classifications of non-hourly employees:

Different equivalencies may be used for different classifications of non-hourly employees provided that the classifications are reasonable and consistently applied.

– Calendar Year Changes: An employer may also change the method for calculating non-hourly employee each calendar year. For example, for all non-hourly employees, an employer may use the actual hours worked in 2014, but may use the days-worked equivalency method for counting hours of service in 2015.

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Example: Hourly Employee Hours of Service

• Susan is a hostess at the Tribal Casino Buffet, an hourly position.

• HR records reflect that in February she worked an average of 35 hours of service per week (or an average of 140 hours of service per month).

• Susan is considered a full-time employee for the month of February.

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Example: Application of Equivalencies on Non-Hourly Employee Hours of Service

Mike is a Cage Manager at the Tribal Casino, a non-hourly position. [Note: This example shows why the Days-worked equivalency cannot be used for Mike. An employer is not required to use all three methods].

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Methods Hours of Service Full-time?

Actual Mike worked 10 hour days, 3 days a week in February (30 hours of service per week).

Yes.

Days-worked equivalency

This equivalency cannot be used for Mike because if he worked 3 days a week, the days worked equivalency would result in Mike working 24 hours of service per week.

No. However, this equivalency is prohibited

because it would underestimate Mike’s hours

of service.

Weeks-worked Equivalency

This equivalency can be used for Mike. Using this equivalency, Mike is credited with 40 hours of service in a week.

Yes.

Section Review• Explain why the employer provisions are

important to Tribes.• Name one strategy under the ACA to get

people insured.• Name one of the employer requirements

under the ACA.• Describe one provision that is different for a

small business compared to a large business.• Define full-time employee

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Questions

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