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Focus on ACA Requirements2015 ADP Pro User Conference

Agenda

Effects of ACA

Employer Mandate (Shared Responsibility)

ACA Benefit Status – What is this?

Employer Mandate Reporting and Workforce Now

Disclaimer*

This presentation is not:

Legal or tax advice

A political opinion

The final word on the Affordable Care Act (ACA)

* Before taking any actions on the information contained in this presentation, employers and plan sponsors should review this material with internal and/or external counsel.

Copyright © 2015 ADP, LLC. Proprietary and Confidential Information.3

ACA Is Not Benefits Legislation –It Is Social Legislation With Far-Reaching Business Impact


The ACA Affects…

Employers Individuals Health CareProviders

InsuranceCompanies

Pharma & Medical Device Manufacturers


Data Elements Needed

Data will come from these major sources:– HR– Payroll– Time and Absence Management (Including Leaves)– Benefits

A wide range of data elements will be required in order to document, comply, and complete required reporting

HR

• Indicative data• Date of hire• Date of most recent termination• Most recent date of hire• Date of Birth• ACA FT Status effective date• Union status• State of residence

Time and Absence

Management

• Jury Duty• FMLA• USERRA• Other state mandated leaves• Start / End dates of leaves• Intermittent FMLA time / dates

Payroll

• Hours worked and paid• Hours not worked but paid• Payroll period begin / end date• Hourly rate of pay• Rate of pay effective date• Box-1 Form W-2 Value• SSN

Benefits

• MEC documentation• 60% Minimum Value Documentation• Proof of offering• EE cost by plan and tier• Status indicator (i.e., enrolled /

waived)• Plan funding (i.e., insured / self-

insuredCopyright © 2015 ADP, LLC. Proprietary and Confidential Information.6

Did at least one employee receive a premium tax credit or cost-sharing subsidy in a Marketplace/Exchange?

Those employees can choose to buy coverage ina Marketplace/Exchangeand may receive a premium tax credit.

The penalty (assessed monthly) for not offering coverage is the number of full-time employees (minus 80 in 2015; 30 in 2016) times $2,000 annually.

The penalty (assessed monthly) for failure to offer minimum value and/or affordable coverage is a $3,000 annual penalty that will be due for each full-time employee receiving a subsidy, up to a maximum of the total number of full-time employees (minus 80 in 2015; 30 in 2016) times $2,000.

Penalties do not apply to small employers.

No Penalty Payment Required

Employer has, on average, 100 in 2015 (50 in 2016) ACA full-time employees plus full-time equivalent employees in the prior year?

1st

CHECK

Does the employer offer minimum essential coverage (MEC) to at least 70% in 2015 (95% in 2016) of its ACA full-time employees?

2nd

CHECK

Does the plan provide coverage of at least 60% minimum value?3rd

CHECK

Would any full-time employees pay more than 9.5% of current year for lowest cost self-only coverage? Box 1 W-2 Wages, Rate of pay, or Federal Poverty Level

4th

CHECK

YES

YES

YES

NO

NO

NO YES

NO

YES

IRC §4980H(a) – “The Big Penalty”

IRC §4980H(b) – “The Lesser Penalty”

Shared Responsibility (Employer Mandate): Decision Flow To Avoid Penalties


Let’s look at the annual report requirements

© 2015, ADP LLC. Proprietary and Confidential Information.8

New IRS Forms Employer Mandate Reporting

Form 1094-C to the IRS Filing electronically (>250 Forms 1095-C)

by March 31 of the next year

Filing paper (<250 Forms 1095-C) by February 28 of the next year

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© Copyright 2015 ADP, LLC. Proprietary and Confidential Information.

Form 1095-C to IRS, Full-Time Employees and COBRA Participants and Retirees

– Mail paper forms to last known address or electronic delivery (with consent)

– By January 31 of the next year– First filing in 2016 for 2015 information

New IRS Forms 1094-C Employer & 1095-C EmployeeEmployer Mandate Reporting

Fully Insured Plans Self-Insured Plans

Annual Reporting

Who is responsible for reporting?- Applicable Large Employers (ALEs) This includes employers during 2015, with 50 to 99 employees, who did not have to fully

comply with the shared responsibility requirements due to transition relief

- For fully insured plans, the insurance provider is responsible for Part III of the Form1095-C (provided as a 1095-B)

Who needs to receive a 1095-C?- Any employees that were full-time for one or

more months- For self-insured ALEs, all persons who were

covered during the year which may include: Retirees COBRA beneficiaries, and Any other covered non-employee


Draft Form 1095-C: Employee Statement


Codes: Part II Line 14 – Offer Of Coverage

1A. Qualified Offer: Minimum Essential Coverage providing Minimum Value offered to full-time employee with employee contribution for self-only coverage equal to or less than 9.5% mainland single Federal Poverty Line and Minimum Essential Coverage offered to spouse and dependent(s).

1B. Minimum Essential Coverage providing Minimum Value offered to employee only. 1C. Minimum Essential Coverage providing Minimum Value offered to employee and at least

Minimum Essential Coverage offered to dependent(s) (not spouse). 1D. Minimum Essential Coverage providing Minimum Value offered to employee and at least

Minimum Essential Coverage offered to spouse (not dependent(s)). 1E. Minimum Essential Coverage providing Minimum Value offered to employee and at least

Minimum Essential Coverage offered to dependent(s) and spouse. 1F. Minimum Essential Coverage not providing Minimum Value offered to employee, or employee

and spouse or dependent(s), or employee, spouse and dependents. 1G. Offer of coverage to employee who was not a full-time employee for any month of the calendar

year and who enrolled in self-insured coverage for one or more months of the calendar year. 1H. No offer of coverage (employee not offered any health coverage or employee offered coverage

not providing Minimum Essential Coverage). 1I. Qualified Offer Transition Relief 2015: Employee (and spouse or dependents) received no offer

of coverage, or received an offer of coverage that is not a Qualified Offer, or received a Qualified Offer for less than all 12 months.


Codes: Part II Line 16 – Safe Harbor

2A. Employee not employed during the month. 2B. Employee not a full-time employee. 2C. Employee enrolled in coverage offered. 2D. Employee in a Section 4980H(b) limited non-assessment period. 2E. Multi-employer interim rule relief. 2F. Section 4980H affordability Form W-2 safe harbor.

Note: Certain codes on lines 14 and 16 may apply simultaneously, and certain codes on these lines can be inconsistent with other codes. The IRS instructions identify which codes to use when more than one can apply, and which may not be used along with certain other codes.


Draft Form 1094-C: Employer Transmittal


Draft Form 1094-C: Employer Transmittal (continued)


Best Practices: Report Timing And Potential Penalties

First reports will be filed in 2016 for the 2015 calendar year

Form 1095-C must be distributed to all covered participants and any employee that was full-time for any month of the calendar year

Form 1094-C must be filed with the IRS- February of each year for employers who filed fewer than 250 Forms 1095-C- March of each year (electronically) for all other employers

Penalties and Transition Relief- Penalties for failure to file on time will be $100 per form –

not to exceed $1.5 million per year - Transition Relief No relief for late filing No penalties if employer has inadvertent

errors or incomplete data but can demonstrate a good faith effort to comply


How can ADP help?


Where does an Employer start collecting data for the 1094-C/1095-C forms?

20 © 2015, ADP LLC. Proprietary and Confidential Information.

The full-time and part-time status under ACA rules must be determined and counted toward Full-Time Equivalency

Workforce Now refers to this full-time or part-time status as ACA Benefit Status- Derived from the Measurement Period evaluations OR- Established by the employer at new hire

Any employee with an ACA Benefit Status of Full-time for at least one month in the calendar year must be reported on the 1095-C

- For self-insured employers, employees with an ACA Benefit Status of part-time enrolled in a medical plan must also be reported

Measurement Periods in Workforce Now can assist with compliance to show that employers have evaluated the ACA Benefit Status

- Gives employers confidence that they have met the requirements- Provides an automated way to allow changes in eligibility for ACA Benefit Status and

work events for enrollments in a timely manner- ACA Dashboard provides real-time visibility into required administrative actions and

historical data

ACA Command Center/Dashboard – Comes with Purchase of Benefit (Essential/Enhanced)

21© Copyright 2014 ADP, LLC. Proprietary and Confidential Information

Benefit Offering – Comes w Benefits (V8 Essential & Enhanced) + ADP Health Compliance: Annual Health Care Statements (1094/5C)

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© Copyright 2013 ADP, Inc. Proprietary and Confidential Information


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Employer Input Screens 1094-C - Draft


New IRS Forms 1094-C Employer & 1095-C EmployeeEmployer Mandate Reporting

What the IRS says about the filings:

http://www.irs.gov/instructions/i109495c/ar01.html


If a client has 150 employees who need a 1095-C form, then it will take 30 hrs(150 X 12 min = 1,800/60 min = 30 hrs + 4 hrs

34 hours for 1 Fed ID number with 150 1095-C forms

Introducing Essential ACA


Your ADP Health Compliance Solution

30 Copyright © 2015 ADP, LLC. Proprietary and Confidential Information.

Human Capital Management Platforms

IRS

Exchanges

Regulatory ManagementAffordabilityEligibility

Reporting and Analytics

Time & Leaves

Notice of Coverage Exchange

Management Annual

Reporting Penalty

Management

Benefits

HRPayroll

Essential ACA - Includes


Screens &Dashboards

• Premium Benefits Screens- Benefit Offering

• Trending Dashboard Matrix (v9)

Reporting

• ACA Benefit Offering Audit Report

Annual Filings

• 1094-C Employer forms

• 1095-C Employee forms

Recurring Fee: $1.50 PEPM plus a one time Implementation fee.

ACA Concierge Service

Employers are feeling very unsure about the multitude of requirements around ACA.

• ACA Full Time Status

• Measurement Periods

• Rules, etc.

Concierge helps promote a long-term partnership with ADP by demonstrating how to leverage ADP’s expertise & technology to support and guide them in navigating through this complex law.

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ACA Concierge Service – Service Bundle

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1. Initial meeting to review ACA Questionnaire & ACA Strategy

Baseline Assessment of readiness for compliance with the Employer Mandate.

2. Webinar/Live Meeting session – up to 2 hours session

ACA Timeline & Provision Review

Review of Employer Shared Responsibility Mandate; 6055/6056 overview

ACA Tracking within ADP Platform

Reporting Analysis

Review & Demo of ACA Technology within the ADP Platform

Customized Recommendations for client’s specific setup and long term ACA Strategy

3. Wrap-up call to review remaining questions/take a deeper dive as needed

What Our Clients Are Saying!

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We feel better prepared and equipped for compliance. We are much more clear on what to do to be in compliance. We have less anxiety based on this enhanced knowledge. We have a much higher degree of confidence on how to use the system We know what questions to ask our Broker

Thank You

For additional ACA insights and to subscribe to ADP’s Eye on Washingtonregulatory alerts visit: www.adp.com/eyeonwashington

Please visit www.adp.com/acafaqs for a current list of ACA Frequently Asked Questions.

The use of the HRCI seal is not an endorsement by the HR Certification Institute of the quality of the program. It means that this program has met the HR Certification Institute's criteria to be pre-approved for recertification credit. This material is subject to change and is provided for informational purposes only and nothing contained herein should be taken as legal opinion, legal advice, or a comprehensive compliance review. The ADP Logo, ADP, ADP Research Institute, and In the Business of Your Success are registered trademarks of ADP, LLC. All other trademarks and service marks are the property of their respective owners. Copyright © 2015 ADP, LLC. ALL RIGHTS RESERVED.

Please submit all questions now through your chat/question form This session has been certified for 1 HRCI credit

35Copyright © 2015 ADP, LLC. Proprietary and Confidential Information.

Appendix


Variable Hour New Hire2013 2014 2015

Oct Nov

Dec

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

Sep Oct Nov Dec

DOH11-Month New Hire / Initial Measurement Period 60 Day Ad

Pd 12-Month Stability Coverage Period

1 2 3 4 5 6 7 8 9 10 11 12 13

Look-Back 90 Day Admin

New Hire And Ongoing Measurement Periods With Administrative Periods

2013 2014 2015

Oct Nov

Dec

Jan Feb

Mar

Apr May

Jun Jul Aug

Sep

Oct Nov

Dec

Jan Feb

Mar

Apr May

Jun Jul Aug

Sep

Oct Nov

Dec

DOH

90 Day Admin Coverage in Force

OE Admin Period

Coverage in Force

Full-Time Employees

12-Month Look-Back Standard Period: Ongoing Hourly EE

11-Month Look-Back Initial Measurement Period to Determine Eligibility: New Hire

2013 2014 2015

Oct Nov

Dec

Jan Feb

Mar

Apr May

Jun Jul Aug

Sep

Oct Nov

Dec

Jan Feb

Mar

Apr May

Jun Jul Aug

Sep

Oct Nov

Dec

Look-Back 90 Day Admin Stability Coverage Period

Look-Back 90 Day Admin


Proof Of “Offering” Coverage

Roll-over existing elections– Does not address Current waivers Newly eligible

Bar-coded First-Class Mail®

Electronic distribution– Must comply with DOL requirements

Drop shipments– Must obtain employee signature

Actual affirmative elections made by employee


Still To Come

Nondiscrimination Rules for Health Plans- IRC Sec.105(h) applicable to self-insured plans to be enforced

- All self-insured health care plans are required to pass two tests under IRC Sec.105(h): Eligibility Test: the plan does not discriminate in favor of highly compensated individuals as to

eligibility to participate Benefits Test: the benefits provided under the plan do not discriminate in favor of participants

who are highly compensated individuals

- ACA requires IRS to promulgate nondiscrimination rules for fully insured plans

Auto-Enrollment- Required under the ACA- Effective date is not specifically stipulated in the legislation- Significant issues related to IRC Sec.125 are likely


Insurance Marketplace / Exchange Notification

Effective 2013:- DOL has provided model notices for employers who: Do offer health coverage Do NOT offer health coverage

Employers must notify new employees of: - Their right to purchase health coverage through state/federal Marketplaces/Exchanges- Their potential eligibility for government subsidies- Their potential non-eligibility for government subsidies if the employer has offered affordable,

ACA -compliant health plans- The possibility of losing any employer-sponsored coverage and tax-free contribution if insurance is

purchased through a Marketplace/Exchange

On September 11, 2013, the DOL clarified that employers would not be penalized or fined for failing to provide these notices. - Notices are still required under the health care law, however

• Notice must be provided to:- Newly hired employees within 14 days of start date

- One-time event – not annual• Notice must be provided free of charge via:

- First-Class Mail®- Electronically, if method is compliant with DOL Electronic Distribution safe harbor


Marketplaces / Exchanges Must Verify Eligibility

The Marketplace/Exchange must verify: - Whether an applicant is eligible for qualifying coverage in an employer-sponsored plan for the benefit

year for which coverage is requested.

The Marketplace/Exchange must obtain data about enrollment in and eligibility for an eligible employer-sponsored plan from any electronic data sources that are available to the Marketplace/Exchange and which have been approved by HHS.

When the Marketplace/Exchange does not have information from data sources for the verifications related to enrollment in an eligible employer-sponsored plan and eligibility for qualifying coverage in an eligible employer-sponsored plan, the Marketplace/Exchange will move forward with a sampling process, which involves sending inquiries to employers.- Effective electronic data sources generally do not exist yet.- Regulations clarify that the verification requirement will not apply for 2015.

Employers may be called upon to substantiate: - The existence of qualified employer-provided coverage- Whether or not an employee is eligible for that coverage - Whether or not the employee was offered qualified coverage

BEST PRACTICE: In order to support this effort, employers will need to have auditable records that provide the requisite substantiation. They will have 90 days to respond/appeal – timing could be reduced in the future.


Qualifying Offer Methods

Qualifying Offer Method- Employer certifies that it offered to at least 70% (95% in 2016 and thereafter) of

ACA full-time employees MEC At least 60% actuarial value (including hospitalization) Affordable coverage under any one of the three safe harbors

2015 Qualifying Offer Method Transition Relief - An employer that has provided a “qualifying offer” to 95% of its full-time employees

and their spouses and dependents may provide each of its full-time employees with a statement informing the employee that they will not be eligible for premium tax credits, if the “qualifying offer” was made to the full-time employees and their spouses and dependents for each of the 12 months of the year, or

- That they may be eligible for premium tax credits for any months in which a qualifying offer was not made

- The statement must also include contact information for the employer


Qualifying Offer Methods (continued)

Section 4980H Transition Relief - Applies only during 2015 to Employers with 50 to 99 employees, or Employers with more than 100 employees who will have a penalty assessment and are

able to exclude the first 80 employees (rather than the first 30)

- March of each year (electronically) for all other employers


98% Offer Method- Must offer coverage to 98% of all employees and

their dependents- Base affordability on Federal Poverty Level- Do not have to report which employees are full-time and

which are part-time when filing annual report No relief for late filing No penalties if employer has inadvertent errors or incomplete data

but can demonstrate a good faith effort to comply

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