p&b ppaca compliance checklist

PPACA COMPLIANCE CHECKLIST

PPACA Compliance Checklist

The following information provides employers with a guideline for ensuring their Health & Welfare Benefit Plans are in compliance with the Patient Protection and Affordable Care Act (PPACA).

Summary of Benefits Coverage Documents

All group health plans must issue a uniform plain language summary of benefits and coverage (SBC) to participants and beneficiaries (including COBRA partici-pants) that accurately describes the benefits and coverage provided under the plan. Compliant documents should be available from your carrier or administra-tor (TPA).

W-2 Reporting

Employers issuing 250 or more W-2s for a prior year must report the value of the applicable employer sponsored coverage in Box 12 on each employee’s annual form W-2.

Employer Shared Responsibility

Beginning in 2015, the Patient Protection and Affordable Care Act places respon-sibility on applicable large employers (i.e., employers with 50 or more full-time equivalent employees) to offer group health insurance coverage to their full-time employees, or potentially pay a penalty if at least one full-time employee obtains a subsidy for coverage through a health insurance marketplace. These provisions are commonly known as Employer Shared Responsibility (ESR) or "pay-or-play" requirements.

The ESR provisions go into effect for applicable large employers with 100 or more full-time employees on January 1, 2015. Employers with 50-99 full-time employees will see enforcement on ESR provisions beginning on January 1, 2016. Employers will use their employee information in 2014 to determine whether they have enough employees to be subject to these new provisions in 2015. The process for identifying potential fines for non-compliance will begin in 2015.

P&B Live is a benefits brokerage and consulting firm specializing in the design, implementation and management of fully and self insured plans. Headquartered in Dallas, TX with clients and offices from coast to coast, we are proud to partner with organizations of all sizes to create innovative solutions that positively impact bottom line results.

P&B Live 1505 Federal St. Suite 400 Dallas, TX 75201 1.800.963.5358 [email protected]

About Us

P&B Live is a benefits brokerage and consulting firm specializing in the design, implementation and management of fully and self insured plans. With the ever increasing cost of providing benefits and the expansion of consumer directed health plans, employers are looking for a way to improve employee access to benefit information, reduce costs and increase accountability for benefit choices. Since internal resources are limited many look to share some of the burden, and P&B Live can help. P&B Live 1505 Federal St. Suite 400 Dallas, TX 75201 1.800.963.5358 [email protected]

About Us PPACA Compliance Checklist

Transitional Reinsurance Program Fees

http://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/The-Transitional-Reinsurance-Program/Reinsurance-Contributions.html

Section 1341 of the Affordable Care Act and Health and Human Services (HHS) mandates an ACA Transitional Reinsurance fee that is assessed for years 2014 ($63 per enrolled life , including dependants) and 2015 ($44 per covered life, including dependents) to stabilize premiums in the individual market inside and outside of the Marketplace. The transitional reinsurance program will collect contributions from contributing entities to fund reinsurance payments to issuers of non-grandfathered reinsurance-eligible individual market plans, the administrative costs of operating the reinsurance program, and the General Fund of the U.S. Treasury for the 2014, 2015 and 2016 years. This is applicable to insurance issuers and self-insured plans. Annual enrollment and contribution submission form is available on Pay.gov. Below is a list of important deadlines:

December 5, 2015: Contributing entity must submit annual enrollment count January 15, 2015: Remit first contribution amount (Or combined contribution

amount) $52.50 per covered life (if remitting first contribution only), $63.00 if remitting combined contribution amount)

November 15, 2015: Remit Second Contribution, $10.50 per covered life (if remitting second contribution amount)

Additional Medicare Tax

For individuals earning more than $200,000 and joint filers earning more than $250,000, the Medicare Part A (hospital insurance) tax has increased – from 1.45 to 2.35 percent. It goes into effect for taxable years starting after December 31, 2012. This change is to the employee portion of Medicare only; the employer por-tion of this tax has not changed. Employers must only match the first 1.45 percent of the Medicare tax.

PPACA Compliance Checklist

Small Business Tax Credits Your small business may qualify if you meet the following requirements:

Have less than 25 employees

Have average annual wages less than $50,000 (as adjusted for inflation begin-

ning in 2014)

Contribute 50 percent or more of the aggregate single premium cost for each

enrolled employee

Purchase coverage through the Small Business Health Options Program (SHOP)

Form 720 Quarterly Excise Tax Return (PORCI Fees)

http://www.irs.gov/uac/Form-720,-Quarterly-Federal-Excise-Tax-Return

The Affordable Care Act created an entity known as the Patient-Centered Out-comes Research Institute (PCORI). The institute researches and compares the clini-cal effectiveness of different medical treatments, and it will be funded by clinical effectiveness research fees (PCORI fees). Section 4375 of the ACA imposes the PCORI fees on each specified health insur-ance policy. For insured plans, the insurance carrier is responsible for paying the PCORI fees, and, in many cases, the carriers are passing along the cost to the em-ployers. Section 4376 of the ACA imposes the PCORI fees on the plan sponsor of an applica-ble self-insured health plan. These include plans maintained by employers for the benefit of their employees, which provide accident or health coverage where any portion of the coverage is provided other than through an insurance policy. For self-insured plans, the plan sponsor is responsible for paying the PCORI fees. The filing and payment of fees must be completed and paid by July 31 of the calen-dar year immediately following the end of the plan year.

P&B Live is a benefits brokerage and consulting firm specializing in the design, implementation and management of fully and self insured plans. P&B Live is committed to providing exemplary client services that will help employers leverage the time and resources they spend on benefits, retirement and technology. Our mission is to design and deliver customized employee benefit solutions that will empower and engage employees.


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The Department of Labor, Health and Human Services and the Treasury recently issued guidance that prohibits group health plans from imposing waiting periods that exceed 90 days. Employers should assess their current group health plan waiting period provisions and ensure that for plan years beginning on or after January 1, 2014, the waiting period does not exceed 90 days and that coverage under the group health plan will begin no later than the 91st day.


Waiting Period – 90 day* Employer Shared Responsibility (Play or Pay)

Enforcement of ESR provisions begins January 1, 2015 for employers with 100 or more full-time employees and January 1, 2016 for employers with 50-99 full-time employees. If an applicable large employer with 100 or more full-time employees does not

offer minimum essential coverage(MEC) to at least 70 percent of its full-time employees and their dependents in 2015, and at least one full-time employee receives a premium subsidy through a health insurance exchange, the employer may be assessed an annual penalty of $2,000 per full-time employee above the first 30 full-time employees.

If an applicable large employer with 100 or more full-time employees does offer

MEC to at least 70 percent of its full-time employees and their dependents in 2015, but at least one of the full-time employees obtains a premium subsidy through a health insurance exchange, the employer may be subject to a penalty of $3,000 for each non-covered full-time employee who receives a subsidy. However, the penalty cannot exceed the penalty that would be assessed for not offering any health coverage.

If an applicable large employer with 100 or more full-time employees offers health

coverage in 2015 that provides MEC but it is determined to be either: 1) unaffordable or 2) doesn't meet the minimum value and at least one full-time employee whose coverage was deemed to be unaffordable or lacked minimum value receives a subsidy through a health insurance exchange, then the employer may be fined $3,000 for each employee in that circumstance receiving a subsidy. The penalty cannot exceed the penalty that would be assessed for not offering any health coverage.

Many employers have commented that they will “put their employees on the exchanges and just pay the penalty because it is cheaper than offering coverage”. While this may or may not be true an employer considering this position needs to evaluate if less “rich”, but still compliant coverage can be offered on a more budget friendly basis. Generally, this approach is preferable to offering no coverage and paying a substantial non deductible penalty.


Planning Consideration Employer Shared Responsibility (Cont.)

Calculating FTEs

The FTE calculation is based on both full- and part-time employees. Whether an em-ployer is subject to the ESR provision is based upon the number of employees in the previous calendar year, therefore applicable employers should currently track employ-ees hours of service to help them make these determinations.

For the purposes of this provision, full-time employees are defined as working an aver-age of 30 hours per week, or 130 hours per calendar month.

Hours worked by part-time employees (those working less than 30 hours per week) are included by, on a monthly basis, dividing their total number of monthly hours worked by 120. For example, a company with 40 full time employees also has 20 part time employees who each work 24hrs per week, or 96hrs per month. These part time employees would count as 16 full time employees:

20 employees x 96hrs = 1920, 1920 / 120 = 16

This employer would be considered to have 56 full time equivalent employees.

Minimum Essential Coverage (MEC)

Health-insurance coverage that meets the minimum benefits standard of the small- or large-group market within the state is considered to offer minimum essential coverage (MEC). Must abide by all PPACA guidelines such as: • No lifetime maximum limitations • No pre-existing condition limitations • Offers coverage for dependents up to age 26 • Offers a PPACA-compliant benefit set, including preventive care covered at 100%

Minimum value (MV)

A health-insurance plan that has an actuarial value that covers at least 60 percent of the cost of medical expenses is considered to provide minimum value.

PPACA regulations and compliance guidelines continue to evolve. Employers should remain prepared to accommodate evolving rules under the PPACA going forward. This material is intended for general information purposes only. It should not be construed as legal advice or legal opinions on any specific facts or circumstances. For answers to your questions call;


Planning Consideration Employer Shared Responsibility (Cont.)

Affordability Determine if health benefit required employee contribution to the plan meets PPACA‟s affordability guidelines. Assuming a plan with minimum essential and minimum value coverage is offered, the employer must determine if its contributions to health plan costs are in compliance with PPACA‟s affordability rules. Affordability: The rules require that the employee does not pay more than 9.5% of their household income towards the cost of their employer‟s health plan. Household Income: In 2011 the IRS issued safe harbor options for the challenging task of assessing the “household income” of an employee: Form W-2 safe harbor; an employer can determine affordability by referring to an employee‟s wages. Wages for this purpose would be the amount required to be reported in box 1 of Form W-2. Rate of Pay safe harbor; Benefits are affordable if monthly contributions for self-only coverage for the lowest cost plan are equal to or lower than 9.5% of employee‟s hourly rate of pay on the first day of the plan year, multiplied by 130. Cost of Health Plan: The IRS recently issued guidance that the „cost of an employer‟s health plan‟ is based on the cost of Employee Only coverage. If an employer fails to provide affordable coverage and one or more employees apply for and receive a subsidy to purchase coverage from the exchange the employer is subject to a $3,000 penalty for each employee that receive the subsidy. Individuals enrolling in the exchange must have total household income of less than 400% of the Federal Poverty Level (FPL) in order to be eligible for a subsidy. In 2012, 400% of the federal poverty level is approximately $96,000 for a family of four.

For many employers the data contained in the health benefits census has been relatively straightforward; name, m/f, date of birth, date of hire and zip code. PPACA rules require that employers look at more than just those factors in determining compliance. Therefore, individuals or teams responsible for managing a company’s health benefit program should consider additional categories depending on their unique circumstances. A suggested list is provided in the body of this section. P&B Live 1505 Federal St. Suite 400 Dallas, TX 75201 1.800.963.5358 [email protected]

Planning Consideration Organizing Health Plan Eligibility

Employers will want to develop a comprehensive census of all employees in order to track eligibility and affordability. Depending on the nature of your job descriptions this could include:

1.) Any employee working 30 + hours per week; including those who are not currently health benefit eligible 2.) Part-time employees (anyone who receives a W-2 wage statement, excluding full time seasonal employees who work less than 120 hours per year), based on the number of monthly hours worked divided by 120 3.) Seasonal employees – Those employees who work on a seasonal basis. 4.) Temporary employees 5.) Variable employees – An employee is a variable hour employee if based on the facts and circumstances at the employee's start date, it cannot be determined that the employee is reasonably expected to work on average at least 30 hours per week. 6.) Commissioned employees – Employees who are paid on a commission basis, in whole or in part.

If not already in place, consider a census coding system to easily identify different groups of employees. The goal will be to filter this list down to the final list of employees eligible for benefits under PPACA.


The Benefit Innovators Organizing Eligibility (cont...)

The census should include the following employee data categories: 1. Employee name 2. Date of hire 3. Date of birth 4. Dependents under age 26? Yes / No 5. Wages a. Type of wages paid (salary, hourly, bonus, commissions, etc.) b. Amount of wages per employee by hour, weekly, bi-weekly, semi-monthly or monthly. 6. Employee classification from previous page 7. Identify collectively bargained vs. non-collectively bargained employees 8. Employer share of contribution for: a. Single coverage only b. Dependent coverage On-going Eligibility Reporting Requirements Beginning in 2014, PPACA requires that large employers track each employee’s status as a full-time employee or part-time. They will be required to report each employee’s status to the IRS and keep as part of their tax records the status of each employee. • Hours worked • Hours for which an employee is paid but does not work (vacation, holi days, paid sick days, jury duty, military duty or all paid periods of leave of absence • Periods of unpaid leave under FMLA. Hours of service must be tracked on an actual hours basis for hourly employees. The rules provide optional days-worked and weeks-worked tracking categories. These are designed to facilitate tracking wages of salaried employees. Employers may also use weekly, bi-weekly or semi-monthly payroll periods rather than months as the basis for their elected measurement (aka “look back”) period; again, to facilitate easier compliance with the PPACA’s eligibility tracking rules.

p&b ppaca compliance checklist

Documents

fulltime employees

pb live

summary of benefits

reporting employers

group health plans

applicable large employers

benefits brokerage

fulltime equivalent