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on ACA

Which Employers Are Mandated to Offer Coverage? O Those with 50 or more full time employees/equivalents

O For the mandate, a large employer is one where full time employees and full-time equivalents (FTEs) sum to 50 or more. A full time employee is one who works 130 hours per month or more – roughly 30 hours per week. Each 120 hours per month of part-time and seasonal labor comprises one FTE.

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What does Full Time Equivalent (FTE)mean?

What is the Employer Mandate

O The employer shared responsibility provisions

under Health Care Reform (also known as

"pay or play") applies to Applicable Large

Employers (ALEs) generally those with at

least 50 full-time employees, including full-

time equivalent employees (FTEs).

O If these employers do not offer health

insurance to full time employees and their

dependents, they will be subject to penalties.


“Minimum Value Standard & Affordable Coverage”

O Affordable: Coverage that would cost an employee more than 9.5 percent of their annual household income is considered unaffordable. Three optional safe harbors exist to assist the employer in determining affordability: Form W-2 wages safe harbor, rate of pay safe harbor and federal poverty line safe harbor.

O Minimum Value: A plan that covers at least 60 percent of the total allowed cost of benefits that are expected to be incurred under the plan is considered to provide minimum value. The HHS and the IRS have published various methods that may be utilized to determine minimum value.


What is the Individual Mandate?

O Health reform law requires that most Americans be enrolled in health insurance by March 31, 2014. To avoid the individual mandate penalty employees can be covered by health insurance through work, a government program like Medicare or Medicaid, or by a health plan they purchase on their own.

O Those who remain uninsured will pay a penalty. In 2016, the penalty has risen to $695 per adult ($347.50/child) or 2.5% of household income, whichever is greater.


Reporting Requirements for employers with 50+ employees? O Under IRS 6056 employers are required to file

1094 B&C and 1095 B&C series forms. (Insurance company will usually provide 1095-B to employees, unless the employer is self-insured)

O Completing these requirements can be easier with the right technology solution that automates 1094-series and 1095-series documents.

O The IRS has a digital filing system called AIR (Affordable Care Act Information Returns) that can help to alleviate the process of paper filing.


Possible Reporting Requirements for Small Businesses

O New W-2 Reporting: Beginning with the 2012 tax year, employers with 250 FTE’s (adding part time up) or more W-2 Form Employees must report the aggregate cost of employer-sponsored group health coverage on employees’ W-2 Forms.

O PCORI/CER Plan Fees: The Patient-Centered Outcomes Research Institute (PCORI) fees - also called comparative effectiveness research fees or CER plan fees - are required for businesses with self-funded (or self-insured) plans, including a Healthcare Reimbursement Plan (HRP). These fees are due July 31st of each year.

O High-Earner Medicare Payroll Taxes: As of 2013, employees earning more than $200,000 a year ($250,000 for joint filers) must pay higher Medicare hospital insurance (HI) taxes beginning in 2013. The new tax is 2.35% (an increase of 0.9%) of applicable wages above those thresholds, so a worker earning $300,000 a year will pay HI taxes of 1.45% on $200,000 plus 2.35% on $100,000. There is no change to the employer’s share of the HI tax.


Calculating Full Time Status


The FTE is calculated to find a company’s total number of Full Time

Employees for compliance to the employer mandate only. For a

company to have to abide by the ACA, it must have 50 or more full time

employees or FTEs. The FTE is not used in calculating penalties.

• A full-time employee is one who works an average of at least 30

hours per week (or 130 hours of service in a calendar month).

• A “look-back measurement method” may be used to determine an

employee’s full-time status during a future period. This method is for

determining liability only.

• Different approaches can be used for other circumstances such as

employees who work variable hour schedules, seasonal employees

and employees of educational organizations

• FTE is determined by adding FTE hours worked for the month, but

not more than 120 per part-time employee. Then divide by 120.

Look Back Period OR Monthly Measurement Period

O Employers must choose one option and stick with it! Cannot change mid-year.

O Monthly Measurement: This method keeps the counting of an employee’s hours to individual months, identifying an eligible employee as worked 130 hours in any one month of a tax year. O Under this option: An offer of coverage would have to be made

the first day after the next two full months from the month for which eligibility was determined.

O Look Back: an employer can create a testing period that spans a number of months; the look-back period cannot be less than 3 months, but not more than 12 months. O An employee’s hours are calculated for the entire period in

order to see if they worked an average 130 of hours/ month. Employer would be required to offer coverage during the stability period if the employee’s hours pass the test.



Timeline

What Records Must Be Retained?

O No guidance has been given concerning record retention and the ACA.

O Because of ERISA, the retention will probably be 6 years.

O Our recommendation is to keep any plan documents, notices and modifications indefinitely; and all other employee plan records for a period of 7 years. With technology, long-term retention of records has become easier.


Required Notices (Some may be distributed by Insurer and some by Employer)

O Notice Summary Plan Description(SPD)

O Summary of Material Modifications (SMM)

O Plan Documents

O Health Insurance Exchange Notice

O Summary of Benefits & Coverage (SBC) & Glossary

O Disclosure of Grandfather Status or Notice of Patient Protection (depends on your status

O Other Notices to Note: O HIPPA Notice of Enrollment Rights & Wellness Program Disclosure

& Notice of Privacy Practices.

O Women’s Health & Cancer Rights Act; Mental Health Parity & Addiction Equity Act; Employer CHIP Notice; Michelle’s Law Notice; Newborns’ and Mothers’ Health Protection Act

O Medicare Part D Creditable or Non-Creditable Coverage Disclosure

O Other Benefit Notices also required for other regulations (COBRA, etc.)


What are the Potential Penalties? O Penalty for Employers Not Offering Coverage: to fewer than 95% (70% in 2015) of its full-time

employees (and their dependents—**spouses are not considered dependents) during the calendar year

owes a penalty equal to the number of full-time employees employed for the year (minus up to 30)

multiplied by $2,160, as long as at least one full-time employee receives a premium tax credit. For an

employer that offers coverage for some months but not others during the calendar year, the penalty is

computed separately for each month for which coverage was not offered. The amount of the penalty for

the month equals the number of full-time employees employed for the month (minus up to 30) multiplied

by 1/12 of $2,160.

O Penalty for Employers Offering Coverage That is Not Affordable or Does Not Provide Minimum

Value*: For ALE that offers coverage to at least 95% (70% in 2015) of its full-time employees (and their

dependents---spouses are not considered dependents), but has one or more full-time employees who

receive a premium tax credit, the penalty is computed separately for each month. The amount of the

penalty for the month equals the number of full-time employees who receive a premium tax credit for that

month multiplied by 1/12 of $3,240. The amount of the penalty for any calendar month is capped at the

number of the employer's full-time employees for the month (minus up to 30) multiplied by 1/12 of $2,160.

The Business would pay the lesser of the two above totals.

O ACA Reporting: For 2015 tax, penalties waived for filers who can prove they made every effort to file

correctly and on time. In the future: Forms filed late, but within 30 days: $50 per report, $500,000

maximum penalty; Forms filed late, but by August 1: $100 per report, $1,500,000 maximum penalty;

Forms filed after August 1 or not at all: $250 per report, $3,000,000 maximum penalty. 30 day extensions

can be requested, but a second extension will require good reasoning for not filing.


Upcoming Dates for ACA

O The ACA is still evolving, so keep up with updates from the IRS, DOL and Treasury

O 2017 O State Exchanges/Marketplaces may allow large

employers )generally employers with over 50 employees) to buy insured group coverage through the exchange marketplace

O 2020 O 40% excise tax on high-cost health plans

(delayed from 2018) The Cadillac Tax is also discussed in the ACA Toolkit along with other valuable tools for ACA Compliance!


GW Human Resources & Business Services

For more great tools, tips, guidance and training, visit www.GWHumanResources.com

Disclaimer: Upon purchasing our product you are understanding, acknowledging and agreeing with this disclaimer. This information is provided for general informational purposes only. GW Human Resources and Business Services makes no warranties, express, implied or statutory, as to the adequacy, timelines, completeness or accuracy of the information provided. The provided information does not constitute advice and does not bind us in any way to a business-client relationship. Laws are numerous. The amount of regulations is rising. Statements concerning legal matters should be understood to be general observations and should not be relied upon as legal advice, which we are not authorized to provide. Consult legal counsel to make sure that you are fully compliant.


Download - Fun Slides Affordable Care Act (ACA)

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