are you ready?

All Rights ReservedDigital Benefit Advisors

Are You Ready?Presented by: Carl Pilger & David Martin

2014: Health Care Reform Requirements and Opportunities


Session Overview

Today, we’ll cover:

• Background

• Individual Requirements

• Employer Requirements

• Market Changes

• The Marketplace

• Potential Opportunities

• Question & Answer

David MartinManaging Principal

Credit Union ServicesDigital Benefit Advisors

Carl PilgerVice PresidentLegal Counsel

Digital Insurance


How Did We Get Here & Where Do We Go Now?


Where Do We Stand?

o SCOTUS Rulingo 5-4 vote finding ACA Constitutional (almost across the board)

o Chief Justice Roberts wrote majority opiniono Dissent - Would have overturned entire law

o Electiono Who was waiting?

o Businesseso Government – now seeing a flurry of proposed rules and

clarificationso Delays?

oAttempts to RepealoDefundingo Government Shutdown – little impact on ACA


What Does All This Mean to Credit Unions?

Time to Act

Broker/consultant and/or carriermust confirm you are in compliance

• ACA changes already in effect will remain in effect

• ACA’s provisions that are not currently in effect will continue to be implemented

Continue to prepare and take stockof steps already taken


How Are Credit Unions Doing?

31%

14%

11%

20%

6%

17%

Prepared for 2013 & 2014 RequirementsPrepared for 2013 Re-quirements OnlyHave Started PreparationsWill Begin Preparations After 2012 Not Prepared But Have a Timeline for Beginning PreparationsNot prepared and Do Not Have a Timeline for Prepara-tions

CUNA, Credit Union Staff Survey for Human Resources Planning, 2012 – 2013.


Sharing Responsibilities – INDIVIDUALS


Individual Responsibility (Mandate)ACA, HHS Proposed Rule (CMS-9958-P) 2/1/13

Who does this apply to?• Individuals of all ages, including

children• Those claiming dependents are

responsible for dependents

What is it?Requires one of the following for each individual:1. Minimum essential coverage2. Qualify for an exemption3. Make a payment when filing federal

income tax return

When is it effective?January 1, 2014


Minimum Essential CoverageACA, HHS Proposed Rule (CMS-9958-P) 2/1/13

Specialized coverage excluded:• Vision• Dental• Workers’ Compensation• Disability• Specified disease or condition

What counts?1. Employer-sponsored coverage, including

COBRA and retiree coverage 2. Coverage purchased in individual market3. Grandfathered plans4. Medicare and Medicare Advantage5. Medicaid6. Children’s Health Insurance Program (CHIP) 7. Certain types of Veterans health coverage8. State risk pool9. TRICARE


Tax Penalty

How much?The lesser of the monthly penalties or the average premium for a bronze plan

Failure to carry health coverage or qualify for an exemptions will result in a payment or tax penalty

Monthly Penalty Amounts

2014 2015 2016 …

$95 $325 $695

OR OR OR

1% of gross income

2% of gross income

3% of gross income

All monthly penalties with respect to any taxpayer for any month there is a failure will amount to 1/12 of the greater of….

ACA, HHS Proposed Rule (CMS-9958-P) 2/1/13, IRC 5000A


Sharing Responsibilities – EMPLOYERS


INFORMATION UPDATE:

Mandate

• Employers with 50 or more full-time and full-time equivalent employees

• Must offer coverage to full-timers and dependents

Compliance

• Assessment penalties if no offer of coverage or coverage doesn’t meet requirements

• Reporting requirements

Timing

• Assessment penalties waived until 2015• Reporting requirements waived until 2015

Employer Responsibilities Delayed

(Administration announcement 7/2/13; rules to follow)


Am I an Applicable Large Employer?

Definition Calculation

Full-time employees

30 hours or more of service

Count one for each full-time employee

Seasonal employees

Labor or services on a seasonal basis

Total hours ÷ 120 = equivalent FTAll other non-

full-time employees

All others – no exceptions

Monthly totals Full-time and full-time equivalent employees

Add FT and equivalents

Annual total Average monthly totals

÷ 12

Type

+


What is affordable?

Employee’s contribution, toward the employee-only premium, does not exceed 9.5% of the employee’s W2 income.

Example• Employee earns $24,000; spouse earns $7,500

• Employee-only coverage = $400/month ($4,800/yr.)

• Employee + Spouse = $750/month ($9,000/yr.)

• Employer contributes 50% of employee-only amount and 0% of spouse’s amount

50% * ($4,800)/$24,000 = 10.0% = UNAFFORDABLE

Minimum Value of Employer PlansACA, IRS Proposed Rule - 5/3/13; Commentary due by July 2, 2013


Minimum Value of Employer Plans

Background• Individuals may not receive a premium tax credit

(subsidy) if offered an eligible employer-sponsored plan providing affordable, minimum value coverage, i.e. minimum essential coverage (MEC)

Applicability• All employer-sponsored plans

• Traditional small group plans offered in the public Marketplace, private exchanges and private market (bronze, silver, gold, platinum) will meet minimum value

• Plans offered in the large group market will need to be tested to determine minimum value

Group Size Applicability 2 - 50

50 - 100

100+

Funding Applicability

Fully-insured

Self-funded

Applies to grandfathered plans?

Yes

No

ACA, IRS Proposed Rule - 5/3/13; Commentary due by July 2, 2013


Sharing Responsibilities – MARKET CHANGES


Requirements and Obligations

1. Market rules

a. Essential health benefits

b. Community-rating

c. Limited rating rules

2. Minimum actuarial value of 60%, i.e. metal tier plans, i.e. bronze, silver, gold, platinum

3. Limit on annual deductible:

1. $2,000 individual

2. $4,000 family

3. (small group plans only) – under review

Group Size Applicability

2 - 50

50 - 100

100+


Fully-insured

Self-funded


Yes

No


Rating Rules & Methodologies

11/26/12 HHS proposed rule; Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation

1. Issuers = individual member ratings Employers = individual or composite rating

2. Age rating – limited to 3:13. Tobacco rating – limited to 1.5:14. Family size – individual v family

a. Maximum of 3 oldest family members under age 21b. No cap for family members over age 21

5. Geographic regiona. States or CMS can establish one or more rating areasb. Maximum rating areas cannot exceed the number of

MSAs plus onec. One rating area for state, county-based or 3-digit zip

codes, or metropolitan statistical areas (MSAs) and non-MSAs

6. Re-underwriting is prohibited

Will apply to non-grandfathered large group if state permits coverage to be offered through an Exchange in 2017

Applies to non-grandfathered health insurers (not self-funded)Apportioned

to each family member


The Basics Employer Notice RequirementACA – Section 1512

Why• HHS required

to “get the word out”

• Advertising of the new marketplace

• Employers have access to many individuals

Who• All active

employees, not just those eligible for coverage

• Does not include COBRA participants or retirees

What• Notice must

include information on:• Marketplace• Subsidies • Employer

contributions

When• By 10/1/13 for

all existing employees

• To all new hires from 10/1/13 on

• In 2014, within 14 days of hire date

How• Mail• New hire or

renewal kits• Hand delivery• Electronic

delivery per DOL guidelines

• Payroll stuffer• Can be done by

a 3rd party


Notice Considerations

Notice Option Participating employees

Eligible employees waiving due to cost

Eligible employees not electing family coverage

Non-eligible employees

Standard Notice - Part A Expanded Notice - Part B ? ? ?

Considerations

• Curiosity• Desire for

plan or cost alternatives

• Desire for lower cost options

• Subsidy eligibility1

• Contribution• Family

eligibility• Access to

other coverage

• Number of employees

• Access to other coverage

1 Subsidies are available to those with household incomes between133% and 400% FPL who do not have access to affordable, minimum essential coverage.

All Rights ReservedDigital Benefit Advisors 21

Preparing for 2014….

Essential Benefits Exchange

Operation

Actuarial Values

Nondiscrimination

Cadillac Plans

Reporting

Wellness

Auto Enrollment

Annual Limits

Employer Mandate

Premium Subsidies

Minimum Essential Coverage

Medical Loss Ratios

PCORI Fees

Risk Retention Fees

Safe Harbor

Full-time Employee

Stability Period

Initial Measurement Period


Sharing Responsibilities – THE MARKETPLACE


State Exchanges

Exchange• An organized marketplace to help qualifying individuals and employer

groups (initially small employers) buy health insurance in a way that permits easy comparison of available plan options based on price, benefits and quality.

• Must be established by January 1, 2014

Purpose• To facilitate the purchase of qualified health plans (QHPs)

• To provide small employers a Small Business Health OptionsProgram (SHOP Exchange)


Federal Government• sets criteria for plan participation and purchaser eligibility • provides subsidies for small businesses

and individuals • sets up Exchange if a state fails to

Small Businesses If up to 100 employees,

can buy thru Exchange

Self-insured plans not eligible to

Participate

Individuals (no subsidies for ones offered

employer-based coverage, unless that coverage is “unaffordable”)

States• each sets up own Exchange• will be involved in premium

reasonableness reviews; can approve/reject as provided under state law

A web portal “marketplace” for health insurance

Public Marketplace


TX

AZNM

UT

NV

MT

WY

ID

ND

SD

MN

NE

KS

OK

LA

MSAL

SC

NC

IN

KY

PAIA

WV

ME

AK

CA

OR

WA

COMO

AR

TN

WI

ILOH

MI

NY

GA

FL

VA

HI

MD

DE

NJ

CT RI

MA

VTNH

DC Operational State Exchanges (1)

State Partnership Exchange (7)

State Exchange Established (15+DC)Federally -Facilitated Exchange (27)

Individual Marketplace/Exchange

Information from: CIAB - June 28, 2013


SHOP Marketplace/Exchange

TX

AZNM

UT

NV

MT

WY

ID

ND

SD

MN

NE

KS

OK

LA

MSAL

SC

NC

IN

KY

PAIA

WV

ME

AK

CA

OR

WA

COMO

AR

TN

WI

ILOH

MI

NY

GA

FL

VA

HI

MD

DE

NJ

CT RI

MA

VTNH

DC Operational State Exchanges (2)

State Partnership Exchange (7)

State Exchange Established (15+DC)Federally -Facilitated Exchange (26)



Qualified Health Plans

Four Coverage Level Requirements for Essential Benefits Package

• Bronze: designed to provide benefits actuarially equivalent to 60% of full value;

• Silver: designed to provide benefits actuarially equivalent to 70% of full value;

• Gold: designed to provide benefits actuarially equivalent to 80% of full value; and

• Platinum: designed to provide benefits actuarially equivalent to 90% of full value.


Plan Types Public Marketplace Private Marketplace

Operated byState, state partnership with federal government or federally-facilitated

Carrier, broker, other private entity or partnership of entities

Participating carriers Approved carriers Select carriers

Type of plans offered Select plans submitted and approved

All plans filed with the state narrowed down by employer/individual

Individualized selection of plans and products

Yes, limited by Marketplace Yes; limited by employer

Availability of subsidies Yes No, unless web-broker

Availability of small employer tax credit Yes No

Can work with broker Yes, if certified Yes, if approved

Public and Private Marketplaces


Marketplace Employer Menus

Health options:• Employers may select from approved QHPs:

• One carrier plan (only option for FFEs in 2014)

• Multiples plans and carriers• Metal tier with multiple carriers• One carrier with multiple plans

Other insurance options:• Dental and vision offerings will vary by

state• Only available from health carriers• Life and disability will be rare

Additional offerings:• Whatever is offered by health carrier

selected

Public MarketplaceHealth options:• Employers may select from all plan options:

• One carrier plan • One carrier with multiple plans • Metal tier with one carrier

Other insurance options:• Multiple options from medical or ancillary-

only carriers• Products include: dental, vision, disability,

life, voluntary, pet, accident, cancer, etc.Additional offerings:

• Wellness programs• Administration and payroll• Compliance, education and other resources

Private Marketplace


3. Customer service – including decision support before, during, & after enrollment• Educational tools including videos • Decision support for medical, dental, vision, life insurance, & disability insurance• Plan recommendations based on an individual’s personal situation• Benefit counselors – available telephonically and via chat

1. Consolidated benefits administration• An online employee enrollment system – that integrates into the carriers & payroll service provider• An online employer administrative system – that easily provides the important data to manage the program• Benefit administration service team to manage the day-to-day activities of the benefit program.

2. Complete array of benefit choices• Health Plans: 8-15 health plan choice to meet the many demographics within the workforce• Ancillary Benefits: build your own dental, vision, life, disability, accident, critical illness, and more• New Benefits: such as telemedicine & concierge medicine

The 3 C’s of Benefit Marketplace:The employer has an expectation of being removed from the day-to-day management of a benefit plan such an enrollment,

changes, terminations, managing eligibility, reconciling multiple carrier bills, making premium payments, etc.

Private Marketplace


Defined Contribution Health Plans

Theory of gradual shift to defined contribution health plans• Shifting risk of incurring high health-care costs from employers to workers• Similar to previous shift for retirement plans

Today, market is predominately “defined-benefit” plans• Employers determine a set of health-insurance benefits

Move to “defined-contribution” where • Employers pay a fixed amount • Employees use money to buy or help pay for insurance they choose

themselves


Overview of Defined Contribution Approach


Shift in Funding Strategies….Aon Hewitt, Corporate Health Care Exchange Survey, The Time is Now, Rethinking Health Care Coverage, 2012.

Other

Employees choose a plan on their own from options available on the open market (employer does not

contribute to health benefits)

Employer provides access to a corporate or private health exchange giving employees variou plans to choose from (employer sponsorship through a fix

dollar amount)

Employer suggests a few plans for employees to choose from (through sponsorship of traditional

health benefit plans where employers pays a percentage of premium)

Employer selects the health plan for all employees (no options, employer pays 100%)

0% 20% 40% 60% 80% 100%

10%

8%

44%

31%

7%

8%

4%

4%

77%

7%

Current and Future Approach to Providing Health Care Benefits

Current ApproachFuture Approach (next 3-5 years)


A Balancing Act


Do you have the answer?

Should my Credit Union offer Coverage in light of Health Care Reform?

• Have to consider “Play or Pay”

• What will be offered through each state’s “Exchange”?

• What will I need to do to remain competitive?


Strategic Inventory

Why do you offer health insurance as part of your current benefits package?

a. Protection for employee and family

b. Attract and retain talent

c. Obligation

d. Personal need

e. Tax advantages

f. Employee expectation

Why do your employees participate in your health insurance program?

a. Lower costb. Tax advantagesc. Protection for familyd. Transfer of responsibility


What if?

• If you eliminate health insurance as part of your benefits package, would you replace it? With other benefits? With salary?

• What would employee reaction be if you eliminated this benefit?

• How might productivity be affected?

• Will all your employees obtain health insurance coverage on their own?

• What would you do personally for your own benefits?

BENEFITS COSTS


Summary

• HCR not likely to change substantially in the near future in wake ofSCOTUS ruling and Presidential election

• Danger in waiting too long to ensure complianceo DOL Auditso Lack of time to create strategy

• Potential “opportunities” for credit unions thru HCRo Private Exchanges making shift to defined contribution funding easiero Public Exchanges o Possibility of dropping coverage if neededo “Employer of Choice” strategies


League Opportunity


For More Information Contact:Lynn Athens

VP Human Resources & Collaborative Office SolutionsCalifornia and Nevada Credit Union Leagues2855 E. Guasti Rd. #600, Ontario, CA 91761

Phone: [email protected] www.ccul.org


Questions


References and Resources


Plan Fees

Provision Qualification Effective Date Group Size Applicability


Applies to grand-

fathered plans?

Patient-Centered Outcomes/ Comparative Effectiveness Fees (PCORI) – Applies to health insurance issuers and self-funded plan administrators

• The amount of the fee is $1 for each covered life for the 2012 policy or plan year, $2 for each covered life for the 2013 policy or plan year

• Report and pay fee annually on IRS Form 720

Due by July 31 of each year, beginning July 31, 2013

Plan years on or after 10/1/12 and before 10/1/19

2 – 50

50 – 100

100+

Fully-insured

Self-funded

Yes

No

Transitional Reinsurance Program- Applies to health insurance issuers and self-funded plan administrators

2014 fee = approx. $5.25/month per capita. Total fees to collect are $10, $6, and $4 billion for 2014, 2015, 2016, respectively

• Begins 1/1/14 and applies for a 3-year period (e.g. 2014, 2015, 2016)

• First invoice to be issued by HHS in 11/14/13 for payment 1/1/15

2 – 50

50 – 100

100+

Fully-insured

Self-Funded

Yes

No

IRS Final regulation 12/10/12, FR 2012-29184


PCORI Fees



Applies to grand-

fathered plans?

Patient-Centered Outcomes/ Comparative Effectiveness Fees (PCORI) – Applies to health insurance issuers and self-funded plan administrators

• The amount of the fee is $1 for each covered life for the 2012 policy or plan year, $2 for each covered life for the 2013 policy or plan year

• Report and pay fee annually on IRS Form 720

Due by July 31 of each year, beginning July 31, 2013

Plan years on or after 10/1/12 and before 10/1/19

2 – 50

50 – 100

100+

Fully-insured (Carrier pays)

Self-funded (Employer pays)

Yes

No

GENERAL INFORMATION:

ACA, IRS Final Regulation- 12/18/12; FR 2012-29184


Counting Number of Lives

STANDARD METHODS:

1. Actual count method – a. count each covered life for each day of the plan

year

b. divide by number of days

2. Snapshot method – a. choose one or more corresponding days each

calendar quarter

b. add covered lives on those dates

c. divide by number of days chosen

3. 5500 method – (if filed by 7/31)

a. Offering employee coverage only - add number of participants reported at beginning of year to the number reported at end of year and divide by 2

b. Offering employee and any other family coverage - add the total participants covered at the beginning of the plan year to the total participants covered at the end of the plan year

(IRS Final Regulations 12.10.12; Dept. of Treasury 2013-04836)


Multiple plans

FEE REQUIREMENTS:

Plan Types Treat as 1 plan Treat as multiple plans

2 or more self-funded plans with same plan year X

2 or more self-funded plans with different plan years X

Stand-alone health reimbursement arrangement (HRA) X

Health reimbursement arrangement (HRA) integrated with fully-insured plan

X

Health reimbursement arrangement (HRA) integrated with self-funded plan

X

(IRS Final Regulations 12.10.12; Dept. of Treasury 2013-04836)




Applies to grand-

fathered plans?

Health Insurer Fee – Applies to all entities with >$25 million in aggregate net premiums in the preceding calendar year, except: VEBA’s, governmental, or non-profits

Imposes an aggregate fee of:• $8 billion for 2014• $11.3 billion for 2015-16 • $13.9 billion for 2017• $14.3 for 2018• Subsequent years will be assessed at $14.3 billion plus the rate of premium growth.Estimates indicate it will cost about $300-$500/ family

• Due annually, no later than September 30

• Fees beginning 9/30/14

2 – 50

50 – 100

100+

Fully-insured

Self-funded

Yes

No

Medical Device Tax - Applies to manufacturers, producers or importers of medical devices

A tax equal to 2.3% of the sale price of any taxable medical device. Does not apply to eyeglasses, hearing aids or other types for individual use.

Applies to sales after December 31, 2012

2 – 50

50 – 100

100+

Fully-insured

Self-Funded

Yes

No

Carrier/Manufacturer Fees

ACA, IRS Final Regulation- 12/18/12; FR 2012-29184


Healthcare Reform References

• Dept. of Health and Human Services www.hhs.gov

www.healthcare.gov

• Kaiser Family Foundation http://healthreform.kff.org

• America’s Health Insurance Plans www.ahip.org

• National Association of Health Underwriters

www.nahu.org

• Internal Revenue Service

www.irs.gov

• Department of Labor

www.dol.gov

http://www.hhs.gov/

http://www.healthcare.gov/

http://healthreform.kff.org/

http://healthreform.kff.org/

http://www.ahip.org/

http://www.nahu.org/

http://www.irs.gov/

http://www.dol.gov/


Education and Communication

Communicating to Your Employees About ACA August 14, 2013 - 2 p.m. ET

Do your employees understand how the Affordable Care Act (ACA) will impact them? A recent survey showed that only eight percent of employees said they had heard about it from their employer. In this webinar, you’ll learn:

What you need to communicate to your employees about ACA now

What tools and presentations Digital provides for employee education

Please note: Due to numerous client inquiries, the webinar will also provide a brief update on the Defense of Marriage Act’s (DOMA) impact on ACA. Register today.


Appendix


Act Now – Why?

DOL is beginning to audit ACA compliance• New development, ramifications still not clear…but concerning• What has the DOL requested? Depends on “status” of plan

• Grandfathered planso Records documenting the terms of the plan on March 23, 2010, and any additional documents to

confirm the plan’s grandfathered status; ando The participant notice of grandfathered status included in materials that describe the benefits

provided under the plan

• Non-grandfathered planso Documents related to preventive health services for each plan year beginning on or after 9/23/10;o The plan’s internal claims and appeals procedures;o Contracts or agreements with independent review organizations or TPAs providing external reviewo Notices regarding adverse benefit determinations and final external review determination notices;

ando Documents relating to the plan’s emergency services benefit

• All planso A sample notice describing enrollment opportunities for children up to age 2 for plans with

dependent coverage;o A list of participants who have had their coverage rescinded and the reasons for the rescissions;o Documents related to any lifetime limit that has been imposed under the plan since 9/23/10; ando Documents related to any annual limit that has been imposed under the plan since 9/23/10


ExemptionsACA, HHS Proposed Rule (CMS-9958-P) 2/1/13

Who is exempt from MEC?• No filing requirement

• Religious conscience

• Hardship

• Health care sharing ministry

• Indian tribes

• Incarceration

• Short coverage gap (3 consecutive mos.)

• Unaffordable coverage option

• Not lawfully present

No action required

Exchange only

Exchange or income tax

Income tax only


Individual Mandate – Penalty Transition ReliefApplies to:

• Employees and related individuals enrolled in, or eligible to enroll in, an employer’s non-calendar year plan

• Where the plan year begins 2013 and ends 2014

Transition Relief:

• No individual mandate penalty for months in 2014 prior to the first day of the plan year beginning in 2014

Example:

• Employee and minor daughter eligible to enroll in a non-calendar year plan that begins August 1, 2013 and ends July 31, 2014

• Neither employee nor daughter enroll in plan for the 2013-2014 plan year

• Employee and daughter eligible for transition relief for January 2014 through July 2014

(IRS Notice 2013-42)



1. Mandatory plan changes from 2010

2. Maximum waiting period of 90 calendar

days

3. Removal of annual plan limits effective 2014

4. Expanded wellness incentives

5. Reporting to substantiate individual offerings


2 - 50

50 - 100

100+


Fully-insured

Self-funded


Yes

No



1. Nondiscrimination rulesa. Existing rules and penalties for self-

funded• If plan favors the highly compensated,

difference is taxable to the highly compensated

b. New expansion to fully-insured • Penalties suspended pending further

guidance

2. Expansion of preventive care with no cost-sharing

3. Guaranteed availability and renewability (under review)


2 - 50

50 - 100

100+


Fully-insured

Self-funded


YesNo



1. Employer Sharing – must offer coverage to full-time employees and their dependentsa. Variable hour and seasonal employeesb. Affordability rules

2. Minimum Valuea. Plan’s share of the total allowed costs

of benefits provided under the planb. Must be at least 60%

3. Reporting to justify mandate compliance


2 - 50

50 - 100

100+


Fully-insured

Self-funded


Yes (#1 & 3 only)

No



1. Market rules

a. Essential health benefits

b. Community-rating

c. Limited rating rules

2. Minimum actuarial value of 60%, i.e. metal tier plans, i.e. bronze, silver, gold, platinum

3. Limit on annual deductible:

1. $2,000 individual

2. $4,000 family

3. (small group plans only) – under review


2 - 50

50 - 100

100+


Fully-insured

Self-funded


Yes

No


Applicable Large EmployerReview of Prior Rules

• All employees, including seasonal, are counted to determine status

• An employee is an individual who is an employee under common law standard

• Leased employees are not cross-referenced under IRC §4980H

• A sole proprietor or 2% S-corp. shareholder is typically not an employee

• If an applicable large employer, must offer coverage to full-time employees and their dependents

Employer Sharing Responsibility

REG-138006-12Proposed Amendment

(CMS-9958-P) 1/2/13


Employer DefinitionsEmployer

Entity that is the employer of an employee under the common-law test.

Entities Counted as One EmployerAll entities treated as a single employer under § 414(b), (c), (m), or (o) are treated as a single employer for purposes of § 4980H.

IRS §414• 414(b) - all corporations of a controlled group of

corporations• 414(c) - trades or businesses under common control• 414(m) - all employees of an affiliated service group • 414(o) – Discretionary regulations to prevent the avoidance

of any employee benefit requirement

IRS §4980H, IRS §414(b), (c), (m), or (o)

http://upload.wikimedia.org/wikipedia/commons/thumb/8/8b/US-InternalRevenueService-Seal.svg/600px-US-InternalRevenueService-Seal.svg.png


Variable Hour and Seasonal Employees

Look-back Period

Ongoing full time employees

Standard Measurement Period Employer’s choice of 3 6, 9 or 12 months

New hires Initial Measurement Period Can be no less than 3 months of selected SMP

Administrative period = Can be no more than 90 days. Duration rule = IMP and admin period no more than 13

months.

Tools to help with developing the optimal look-back strategy

Determining Full-time Status


Assessments - §4980H(a), (b)Penalties Associated With Non-Compliance

Employers may be assessed fees for any month they:1. Fail to offer employer-sponsored minimum essential coverage

to FTEs and their dependentsa. AND at least one person enrolls for coverage, from the Exchange, and

receives a subsidy

b. Assessment = 1/12 of $2,000, or $166.67 per month, for each FTE, less the first 30 employees

2. Offer employer-sponsored minimum essential coverage to FTEs and their dependents but the employee contribution is deemed unaffordable

a. AND 1 or more employees enroll for coverage, from the Exchange, and receive a subsidy

b. Assessment = the lesser of:

i. 1/12 of $3,000, or $250 per month, for FTE receiving a subsidy OR

ii. 1/12 of $2,000, or $166.67 per month, for each FTE, less the first 30 employees



(CMS-9958-P) 1/2/13


Applicable Large Employer

IRS/HHS Notices 2011-73, 2012-17, 2012-58, DOL 2012-2, IRS §4980H

Who is an applicable large employer?

50 or more full-time equivalents

UNLESS…

Seasonal exception applies:50 or more employees for no more than 4 calendar months

Less than 50 full-time equivalents

SMALLBUSINESS


Employer Sharing

As an applicable large employer, I must offer coverage to:

• All employees averaging 30 hours or more of service per week; (130 hours if using a monthly standard)

• Dependents = children up to age 26

• Employees performing services outside the U.S. for which an individual receives U.S. source income



(CMS-9958-P) 1/2/13


Compliance with §4980H(a), (b)

1. Form W2 safe harbor – wages to be reported in Box 1 of Form W2

– Must offer its full-time employees (and their dependents) AND

– Employee contribution toward self-only premium for not exceed 9.5% of the employee’s Form W2 wages for that calendar year.

2. Rate of pay safe harbor– Take the hourly rate of pay for each hourly employee and

multiply by 130 hours/month – Use this monthly amount to compare to premium

contributions

3. Federal poverty line safe harbor– Employer can use FPL for a single to set premium

contribution, i.e. set employee contribution for self-only coverage of the lowest cost plan to ≤9.5%.

– Can use the most recently published FPL guidelines as of the first day of the plan year.



(CMS-9958-P) 1/2/13

Affordability Safe Harbors – applies only for purposes of whether the employer satisfies the 9.5% affordability test


Compliance with §4980H(a), (b)

• Definition of dependent: An employee’s child under age 26 – does not include spouse

• Employers will not face a tax penalty if not offering coverage to spouses, who will be able to seek a federal premium tax credit to purchase health insurance in an Exchange if other minimum essential coverage is not available.

• Offer of coverage in case of non-payment: Employer will not be deemed as not offering coverage if employee fails to pay their portion of the premium – this regulation adopts the COBRA 30-day grace period rule

• Offer of coverage:Employer will satisfy requirement as having offered if they offer to 95% of their employees

• Assessment payments: These are not tax deductible



(CMS-9958-P) 1/2/13

Assessment penalties can be avoided if the employer offers minimum essential coverage under an employer-sponsored plan to its full-time employees and their dependents.


What is minimum value?• The plan’s share of the total allowed costs of benefits provided under the plan

Methods of Determination• Minimum value calculator - http://cciio.cms.gov/resources/regulations/index.html

• Safe harbor established by HHS and IRS

• Actuarial certification from a member of American Academy of Actuaries

• Plans in the small group market satisfying any of the levels of metal coverage

Minimum Value

Anticipated amount plan would pay for covered costs for essential health benefits

Anticipated amount both plan and participant would pay for covered costs for essential health benefits

Minimum Value of Employer PlansACA, IRS Proposed Rule - 5/3/13; Commentary due by July 2, 2013

http://cciio.cms.gov/resources/regulations/index.html




Plan Attribute Plan #1 Plan #2 Plan #3

Medical deductible $3,500 $4,500 $3,500

Dental deductible Integrated with medical plan

Integrated with medical plan $0

Coinsurance 80% 70%60% medical

75% drug ($10/$20/$50 copays tier 1-3 and 75% for

specialty)

Maximum out-of-pocket limit $6,000 $6,400 $6,400

Employer HSA contribution None $500 None

If the plan covers all of the benefits included in the Minimum Value (MV) calculator, the following plans designs will be considered to meet minimum value

Proposed Safe Harbor PlansACA, IRS Proposed Rule - 5/3/13; Commentary due by July 2, 2013


Arrangements affecting minimum value:

• HSA: All amounts contributed by an employer for the current plan are treated as amounts available for first dollar coverage

• HRA integrated with employer-sponsored plan: Amounts newly made available count only if they may be used for cost-sharing and may not be used to pay insurance premiums

ACA, IRS Proposed Rule - 5/3/13; Commentary due by July 2, 2013

Arrangements affecting affordability:

• HRA integrated with employer-sponsored plan: Amounts newly made available count only if they may be used for determining affordability if the employer may only use the amounts for premiums or may choose to use the amounts for either premiums or cost-sharing

Valuations of Alternative Arrangements


Essential Health Benefits

HHS Pre-rule bulletin 12/16/11 and PPACA; Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation –11/26/12 proposed rule

DefinitionApplies to:• Individual plans• Small employer group plans• Offered in and out of the

Exchange

Plan requirements:• Specific categories of

benefits• Certain cost-sharing

standards• Provide certain levels of

coverage

Items and ServicesMust include:1. Ambulatory patient services2. Emergency services3. Hospitalization4. Maternity and newborn care5. Mental health and substance

use disorder6. Prescription drugs7. Rehabilitative and

habilitative services8. Laboratory9. Preventive and wellness10.Pediatric services

ApplicabilityEffective Date:• First plan year, for

individual and small group market, starting on or after January 1, 2014

Plan types that won’t meet the criteria:

• Mini-meds • Specified disease or

illness• Accident only coverage• Other types of “excepted

benefits”


ContentDept. of Labor (DOL), Technical Release 2013-2http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf

Notices must include information on:

1. Existence of the Marketplace/Exchange

a. Description of services

b. How to contact

2. Subsidies available through the Marketplace/Exchange

3. Potential loss of employer contributions if purchasing coverage through the Marketplace/Exchange

http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf


Model Notice - employers w/o plansDept. of Labor (DOL), Technical Release 2013-2http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf

http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf


Model Notice - employers with plansDept. of Labor (DOL), Technical Release 2013-2http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf

http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf


Compliance Information

Minimum standard

• Use CMS template Part A (page 1)

• Create alternative template incorporating the three items described as required by the Department of Labor

Minimum standard with additional information for employee use

• Use CMS template Parts A & B (page 1 and 2, with or without page 3)

Penalties for non-compliance

• No penalty specific to this provision

• May be subject to the standard ACA penalty of $100 per day per failure

Minimum Value Responses:

• Check “Yes” if:

• Purchasing small group plan on 1/1/14

• Result of minimum value calculator exceeds 60%

• Check “No” if plan for 1/1/14 will not meet minimum value

• Enter “Unknown at this time” or “TBD” if:

• Plan not selected for 1/1/14

• Unsure of calculation results


COBRA Model Election Notice – REVISED

Dear: [Identify the qualified beneficiary(ies), by name or status] This notice contains important information about your right to continue your health care coverage in the [enter name of group health plan] (the Plan), as well as other health coverage alternatives that may be available to you through the Health Insurance Marketplace. Please read the information contained in this notice very carefully.

There may be other coverage options for you and your family. When key parts of the health care law take effect, you’ll be able to buy coverage through the Health Insurance Marketplace. In the Marketplace, you could be eligible for a new kind of tax credit that lowers your monthly premiums…

Dept. of Labor (DOL), http://www.dol.gov/ebsa/cobra.html.

http://www.dol.gov/ebsa/cobra.html


Summary of Benefits & CoverageRevised template:

Provides language indicating whether the plan provides:

1. Minimum essential coverage

2. Minimum value

Compliance for year 2:

1. Utilize new template OR

2. Create a cover letter for the existing template using the model language to address minimum essential coverage and minimum value

Does this Coverage Provide Minimum Essential Coverage?The Affordable Care Act requires most people to have health care coverage that qualifies as “minimum essential coverage.” This plan or policy [does/does not] provide minimum essential coverage.

Does this Coverage Meet the Minimum Value Standard?The Affordable Care Act establishes a minimum value standard of benefits of a health plan. The minimum value standard is 60% (actuarial value). This health coverage [does/does not] meet the minimum value standard for the benefits it provides.

(Department of Labor – DOL; FAQs Part XIV)


Wellness Incentives

Departments joint final regulations issued 12/13/06 - 71FR75014

*Consumer-protection conditions:

a. Total reward does not exceed 20% of the total cost of coverage

b. Reasonably designed to promote health or prevent disease

c. Gives eligible individuals an opportunity to qualify at least once per year

d. Reward available to all similarly situated individuals

e. Plan materials must highlight reasonable alternative standard

Types of wellness programs1. Participatory

a. No required standard related to a health factor OR

b. No reward offered2. Health-contingent*

a. Requires individuals to satisfy standard related to a health factor AND

b. Offers a reward


Wellness Incentives

ACA• Reflects the 2006 regulations• Extends nondiscrimination provisions to

individual market

Proposed RulesApplicability:• Grandfathered and non-grandfathered plans• Plan years on or after

January 1, 2014• Extension to individual marketIncrease in incentives:• 30% maximum program reward• 50% maximum tobacco prevention or reduction

reward

Affordable Care ActHHS Proposed Rule

11/26/12


Medicaid Expansion

Moving Eligibility from 100% FPL to 133% FPL

TX

AZNM

UT

NV

MT

WY

ID

ND

SD

MN

NE

KS

OK

LA

MSAL

SC

NC

IN

KY

PAIA

WV

ME

AK

CA

OR

WA

COMO

AR

TN

WI

ILOH

MI

NY

GA

FL

VA

HI

MD

DE

NJ

CT RI

MA

VTNH

DC

Will expand (25) + DCAlternative Method (4)Undecided (0)Leaning toward no expansion (4)No expansion (17)


are you ready?

Documents

government shutdown

preventive care coverage

shutdown little impact

health care reform law

aca constitutional

health insurance exchanges

compliance aca changes

effect acas provisions