Welcome to the Cigna Global Health Benefits Health Care …...Beta Korea has no US employees. Beta Korea is wholly owned by Beta Holdings, Inc. a Dutch Company, that also is the sole

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Web Meeting Call-in Number: 855-483-3538 Passcode: 100580

Welcome to the Cigna Global Health Benefits® Health Care Reform Webinar Employer Mandate and Minimum Essential Coverage Reporting

August 27, 2014

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Michelle Nguyen Director, Client Management, Cigna Groom Law Group Seth Perretta Malcolm Slee Groom Law Group, Chartered, a Washington D.C. based law firm, is nationally-renowned for its practice in health care and employee benefits. Cigna had established an arrangement with Groom to help clients navigate the evolving landscape created by the PPACA.

Webinar Overview

Featured Speakers

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Download this presentation on InformedOnReform.com under Reform News

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Today’s Agenda

Provide information to help you better understand how Patient Protection and Affordable Care Act (PPACA) impacts expatriate and inpatriate coverage

Explain how Cigna can work with you to provide compliant coverage to your expatriates and inpatriates

Answer any questions you may have


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The Full Picture

Individual Mandate

Employer Mandate

New Tax Reporting

Requirements

PPACA Market Reform

Requirements


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US - Inbound US - Outbound Multiple Entities

Numerous Potential Scenarios

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PPACA Basics – The Mandates

Employer Mandate

Requires large employers to offer medical coverage that meets new standards to full-time employees and their dependent children up to age 26, or potentially face additional taxes

Individual Mandate

Requires most individuals to maintain some level of health insurance (or group plan coverage) that meets the requirements of “minimum essential coverage” (MEC) or the individual could potentially face additional taxes


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PPACA Basics – The Mandates

Employer

Focus

Employee Focus


Individual Mandate

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Individual Mandate

Individuals must obtain Minimum Essential Coverage (MEC) for themselves and their dependents or pay a monthly penalty for each month they are without health insurance coverage.

For adults, the monthly penalty is 1/12 of the greater of the dollar penalty or the gross income penalty amounts.

– 2014 - Tax penalty is $95 per individual to a maximum of $285 per family, or 1% of household income

– 2015 - Tax penalty is $325 per individual to a maximum of $975 per family, or 2% of household income

– 2016 – Tax penalty is $695 per individual to a maximum of $2,085 per family, or 2 ½% of household income

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Individual Mandate Basics - Penalties


Employer Mandate Basics Phased-in beginning in 2015 for employers with 100 or more employees

Employer size Effective for plans beginning in 2015

2016 plan year and beyond

50-99 full-time employees Does not apply Employer must offer coverage to 95% of full-time employees

100 or more full-time employees

Employer must offer coverage to 70% of full-time employees

Employer must offer coverage to 95% of full-time employees

Employers must offer medical coverage that meets new standards to full-time employees and their dependent children.

100+ 50+

Employer-sponsored plans that begin on a date other than January 1 will not face penalties if they comply upon the first day of their 2015 or 2016 plan year, depending on employer size and subject to meeting certain requirements.

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Employer Mandate Basics - Penalties

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Do you offer minimum essential coverage?

Does the plan provide minimum value?

Is the coverage affordable?

“A-Penalty” (4980H(a)) $2,000 per FTE (minus first 30*) Only applies if one full-time employee receives federal premium assistance for Marketplace coverage.

“B-Penalty” (4980H(b)) Lesser of $3,000 per FTE receiving tax credit or $2,000 per FTE (minus first 30*)

NO

No penalty

YES

YES

YES

NO

NO

*For plan years beginning in 2015, the penalty is $2,000 for each full-time employee minus the first 80 employees. For plan years beginning in 2016 and beyond, employers can exclude 30 employees from the penalty calculation.

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Employer Mandate Reporting

Provide individuals and the IRS with information about an employer’s compliance with the employer mandate, minimum value, and affordability

Tax Reporting Basics

Minimum Essential Coverage (MEC) Reporting

Provide individuals and the IRS with information about minimum essential coverage and whether an individual satisfied the individual mandate for the preceding calendar year

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Unique Issues Regarding US-Outbound

U.S. expatriate remains subject to the individual mandate for any month unless:

The U.S. expatriate is a bona fide resident of a foreign country for the entire taxable year (in which case, deemed to have minimum essential coverage for entire taxable year)

The U.S. expatriate is not physically present in the U.S. for at least 330 full days within a consecutive 12-month period (in which case, deemed to have minimum essential coverage for these 12 months)

Individual Mandate


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Expatriate coverage underwritten by a domestic carrier constitutes MEC and will satisfy the individual mandate

Expatriate coverage underwritten by a foreign carrier and “regulated by a foreign government” will constitute MEC and satisfy the individual mandate if:

Notice is provided to enrollees who are U.S. citizens/nationals stating that the coverage is MEC

Federal MEC reporting requirements are satisfied

Individual Mandate


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Must continue to be treated as a full-time employee if:

Expect to be transferred abroad for less than 12 months, and/or

Has U.S.-source income following transfer

If neither of the above, then the expatriate can be treated as having had a termination of employment

Employer Mandate


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Reporting depends on whether the expatriate must be treated as a full-time employee even when out of country (see prior slide) or whether the expatriate can be treated as a terminated employee upon transfer

Tax Reporting


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MEC Reporting

Domestic carrier coverage will constitute MEC; carriers will be responsible for reporting on insured coverage

Foreign carrier coverage will generally constitute MEC if requisite notice provided. If so, then MEC reporting is required

Tax Reporting


Example A

ACME USA is subject to the employer mandate. ACME USA sends its full-time employee, VP of Distribution, to ACME Korea for a six-month detail to open up a new distribution facility in Korea


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Example B

ACME USA is subject to the employer mandate. ACME USA sends its full-time employee, VP of Distribution, to ACME Korea for a two-year detail to open up a new distribution facility in Korea


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Takeaways Regarding US-Outbound

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Individual Mandate may apply to an expatriate for some of the time abroad

Employer Mandate may apply to the expatriate if the number of full-time U.S.-based employees across the employer’s group. Coverage requirements could depend on: (i) the expatriate’s status as a full-time employee prior to transfer abroad, (ii) the expected length of time abroad, and (iii) whether the expatriate has U.S.-source income during his time abroad

Tax reporting may apply depending on the facts and circumstances

Employer Mandate Reporting: Applies to the employer if the expatriate needs to be treated as a full-time employee during time abroad

MEC Reporting: To determine if reporting applies, consider whether (i) the coverage for the expatriate is underwritten by a domestic carrier, or (ii) if the coverage is underwritten by a foreign carrier, the requisite notice is provided. When applicable, reporting for fully-insured plans is the carrier’s responsibility; for self-funded plans reporting is the employer’s responsibility.

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Unique Issues Regarding US-Inbound

The inpatriate generally will be subject to the individual mandate upon becoming a resident alien of the U.S.

Individual Mandate


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If the employer is a foreign company, that appears to be irrelevant

Focus on whether the company has 50+ full-time employees or equivalent employees working in the U.S.

To determine the number of U.S.-based employees relative to the employer mandate requirements:

IRC section 414 controlled group rules generally apply

Only look at hours of service that result in U.S.-source income

To determine who are full-time employees that must be offered qualifying coverage:

Only consider those with full-time hours (where compensation for the hour of service results in U.S.-source income)

Employer Mandate


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MEC Reporting

Domestic carrier coverage will constitute MEC; carriers will be responsible for reporting on insured coverage

Foreign carrier coverage will generally constitute MEC if requisite notice provided. If so, then MEC reporting is required

Tax Reporting


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Reporting required if employer has 50 or more full-time (or equivalent) employees and if inpatriate is a full-time employee

Tax Reporting


Example C Beta Korea has no US operations and has no affiliated entities with operations in the US. Beta Korea sends its full-time, VP of Distribution, to the US to open up a US facility

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Example D

Beta Korea has no US employees. Beta Korea is wholly owned by Beta Holdings, Inc. a Dutch Company, that also is the sole shareholder of Beta USA. Beta USA has 45 full-time employees. Beta Korea sends 15 employees over to the US to work full-time for 2+ years in the USA in connection with a new corporate initiative

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Takeaways Regarding US-Inbound

Individual Mandate will only apply to if the inpatriate becomes a resident

Whether the Employer Mandate will apply to the inpatriate depends on the number of full-time U.S.-based employees across the employer’s group. If so, coverage requirements may apply if the inpatriate is expected to work full-time while in the U.S.

Tax reporting may apply depending on the facts and circumstances

Employer Mandate Reporting: Will apply to the employer to the extent the inpatriate needs to be treated as a full-time employee during his/her time in the U.S.

MEC Reporting: To determine if reporting applies, consider whether (i) coverage for the inpatriate is underwritten by a domestic carrier, or (ii) if the coverage is underwritten by a foreign carrier, the requisite notice is provided. When applicable, reporting for fully-insured plans is the carrier’s responsibility; for self-funded plans reporting is the employer’s responsibility.

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Employer Mandate Reporting What Must Be Reported

What must be reported Information Reported Through Indicator Codes

Employer contact and tax information, including contact person and phone number

Whether coverage provides minimum value and employee had opportunity to enroll his or her spouse

Year for which information is reported Total number of employees, by calendar month

Certification that full-time employees and dependents offered opportunity to enroll in MEC, by calendar month

Whether an employee’s effective date of coverage was affected by a permissible waiting period, by calendar month

For each full-time employee, months for which MEC was available

Whether there were no employees or otherwise credited hours of service during any particular month, by calendar month

Each full-time employee’s share of lowest cost monthly premium for self-only coverage of minimum value standards, by calendar month

If employer is of an aggregated group, and the name and EIN of each employer member of that aggregated group

Number of full-time employees for each month during the calendar year

Name, address, and SSN/ITIN of each full-time employee and the months of coverage, if any

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MEC Reporting What Must Be Reported

What must be reported What doesn’t have to be reported

Name, address, and EIN of reporting entity

Name address and SSN/ITIN for most “responsible individuals”

SSN/ITIN not required of individuals not enrolled in the coverage

Name and SSN/ITIN of each covered individual

Months individual was covered during calendar year

Don’t have to report exact dates – just months

For insured group health plans, name, address, and EIN of employer sponsoring plan

Don’t have to report portion of premium paid by employer

Whether coverage is through the SHOP exchange, and the SHOP’s unique identifier

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Cigna to send Customer Census via Eligibility Analyst

Cigna will provide a sample SSN/ITIN collection letter for your employees

Clients must return required information to Cigna by Friday, October 17, 2014

Manual Enrollment Process (emails/forms) – fill in missing data in provided Census and return to Cigna

Electronic Enrollment Process – add missing data identified by Census via existing electronic filing process

If the data is not received by the deadline, employees may be included in the wider Cigna PPACA notification and SSN/ITIN collection mailing, beginning November 2014

Next Steps

SSN/ITIN Collection

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Questions?

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Documents

Welcome to the Cigna Global Health Benefits Health Care …...Beta Korea has no US employees. Beta Korea is wholly owned by Beta Holdings, Inc. a Dutch Company, that also is the sole