06/24/2014Diane Craney – Office of General Counsel

Rachel Carabell – Product Development TeamMel Grau – Marketing Coordinator

First Look: Affordable Care Act Changes for 2015

Don’t miss our next webinar!

July 16 - 10:00 a.m.

Get more out of your wellness portal• What is the best way to get your

employees to use the portal?• What kinds of online tools are most

popular—and effective?• How can you take online portals

offline?

July 16 - 10:00 a.m.

1. Employer Responsibility2. Counting Hours3. Implementation4. Open Enrollment5. What is the Penalty?6. Example7. Waiting Periods8. IRS Reporting

Agenda

Employer Mandate:Does it apply to you?

Employer Responsibility

The ACA requires that large employers are subject to penalties if they do not offer insurance to their full-time employees.• More than 50 full-time equivalent employees

during the preceding year• Need to track hours in 2014 for 2015• Part-time hours are included in calculation• Excludes seasonal employees who work less than

120 days

• Full-time employees + Part-time employees

• Full-time definition– 30 hours per week – 130 hours per month

• 1 FTE = 120 hours worked per month

• Example– 38 Full-time employees– 20 Part-time employees 24 hrs/week (96 hrs/month)– (20 x 96)/120 = 16 FTE

Are You a Large Employer?

What coverage do you have to offer?

Avoiding Penalties

To avoid the penalties, the health plan offered has to meet three tests:

– Minimum essential coverage (major medical)– Minimum value (on average, plan pays at least

60% of costs/member pays no more than 40% ) – Affordability (single premium for lowest cost plan

can be no more than 9.5% of household income)

• How do you calculate this test?– W2 wages safe harbor (9.5% of wages

reported in Box 1)– Hourly wages safe harbor (9.5% of

hourly rate x 130 hours/month)– Federal Poverty Level safe harbor (9.5%

of $972.50/month)

Affordability

Counting Hours

• Employees who work 30 hours or more per week OR 130 hours per month

• Look-Back Measurement Method – Measure for “block” of time, “lock in / lock out” status for same length

• You need to count hours now if you may be responsible for the penalty in 2015

Who do you need to offer coverage to?

Who do you need to offer coverage to?

• 3-12 month period to count hours and determine if employee has worked 30 hours per week on average

Measurement Period

• No longer than 90 days• Notify employees qualifying for coverage

and handle enrollment tasks

Administrative Period

• Period of time during which employees who meet the hours threshold must be treated as full-time regardless of actual hours worked

Stability Period

2013 2014 2015 2016Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2015 Plan Year

2016 Plan Year

Who do you need to offer coverage to?

Green = Measurement PeriodRed = Administrative Period

Blue = Stability Period

• If employee works 30 or more hours per week during school year, you cannot consider them part-time because of summer break

• Summer break –– Exclude it from counting and average

without those weeks– OR assume that the employee would have

worked their average number of hours

Special Rules for Education Institutions

Implementation Timeline

Implementation

2015: Groups with 100 or more full-time employees will have to offer coverage to at least 70% of its full-time employees.

Open Enrollment

Open Enrollment – Avoiding the PenaltyAn open enrollment period must be held within the 12 months prior to the penalty being effective.

After that, open enrollment must be offered yearly.

The period must be an “effective opportunity” to accept of decline coverage.

What is the penalty?

Offering penalty:

• $2,000 annually per full-time employee (assessed monthly)

if employer does not offer coverage AND if any employee

receives a premium subsidy through the Exchange; or

Affordability penalty:

• $3,000 annually per employee who is offered coverage that

is not affordable or not minimum value and that employee

receives a premium subsidy through the Exchange

What is the penalty?

Example

EMPLOYER # OF FTE EEs # OF Full-Time EEs RECEIVING SUBSIDY

A 45 15

B 53 0

C 130 10

Who owes a penalty?

Waiting Periods for New Hires

Waiting Periods - Effective January 1, 2014

• Waiting periods cannot exceed 90 calendar days

• Other criteria can be required before the 90 calendar-day period begins– Examples: Licensure, Orientation

• Late enrollment penalties are still allowed

IRS Reporting

Section 6055 (Insurer) and 6056 (Employer)

• Required to administer the premium tax credit, the individual responsibility and employer responsibility penalties

• Used to verify the months for which an individual was offered and enrolled in minimum essential coverage (major medical)

Section 6055 (Insurer)• First reporting required is in 2016 for

2015• Insurers will need to make statements to

subscribers by January 31 of the following calendar year

• IRS requires insurers report Social Security Numbers of:– your employees– their dependents

Section 6056 (Employer)• Required elements:

– Name, address, EIN and calendar year– Employer contact information– Certification the employer made a qualifying offer to

its full-time employees the opportunity to enroll, by month

– The number of full-time employees by month– The months for which coverage was available– Employee’s share of lowest cost monthly premium for

self-only coverage by month– Name, address and SSN of each full-time employee

and which months the employee was covered

Section 6056 (Employer)• Statements to full-time employees

– Must include name, address and EIN of the employer and the information included on the Section 6056 forms provided to the IRS

– May be provided electronically if employee consents– Can be mailed with W2s

• Timing– 6056 returns must be filed with the IRS no later than

February 28 (or March 31 if filed electronically)– Employee statements must be provided on or before

January 31 for previous year– First year reporting is required is 2016 for 2015

On the radar

DOES apply to you Cadillac Tax• Starting in 2018, annual premiums

that exceed $10,200 for a single plan will be taxed at 40% of the amount exceeding the $10,200

• Some employers are starting to adjust plan designs now to avoid this tax in the future.

Don’t worry about now• Auto-enrollment• Non-discrimination requirements• Fees:

– PCORI– Insurer Assessment– Reinsurance

Questions?