ExpertQuote HCR slidesfinal.pdf

Presented by Ophelia Y., MBA, SPHR, GPHR, SHRM-SCP

HEALTH CARE REFORM AND ITS EFFECTS ON YOUR BUSINESS

AGENDA

Background & History

The Past: Previously Implemented HCR Provisions

The Present: Current & Pending HCR Provisions

The Near-Future: HCR Provisions on the Horizon

Cheat Sheets

Wrap Up/Questions and Answers

• US History of Healthcare

Reform

• Patient Protection and

Affordable Care Act

• Education Reconciliation Act

BACKGROUND & HISTORY

THE PAST: PREVIOUSLY IMPLEMENTED PROVISIONS

• Lactation Breaks

• Summary of Benefits and

Coverage

• Notice of Exchanges and

Subsidies

LACTATION BREAKS

• Requires almost all employers to provide reasonable break times for an employee to express breast milk for her nursing child

• Only applicable up to one year after thebirth of her child

• Exemptions for small employers (less than 50) if able to demonstrate undue hardship

• Amends the Fair Labor Standards Act (FLSA)

SUMMARY OF BENEFITS & COVERAGE

• A uniform template pre-filled with the important provisions of a specific health insurance plan

• Creates an “apples to apples” approach to comparing and contrasting health plans

•Must be included with open enrollment materials each year and to all new enrollees during the plan year

NOTICE OF EXCHANGES & SUBSIDIES

• Purpose: To inform employees of the existence of Health Insurance Exchanges (Health Insurance Marketplaces) and potential federal subsidies available to them

• Applies to virtually all employers, regardless of size

•Must be provided to each new employee within 14 days of the employee’s start date

NOTICE OF EXCHANGES & SUBSIDIES

• Federal Department of Labor has released two model notices

(one for organizations that sponsor a health plan, and one for

organizations that do not)

• No penalties for noncompliance at this time

THE PRESENT: CURRENT/PENDING HCR PROVISIONS

90-Day Waiting Period

New COBRA Notice Language

Tax Treatment: Individual Plan Reimbursements

W-2 Reporting – 2014 W-2s

THE PRESENT: CURRENT/PENDING HCR PROVISIONS

Employer Mandate

Employer Mandate Reporting

90-DAY WAITING PERIOD

• As of 1/1/14, no more than a 90-day waiting period for coverage for new

employees

• For all plans renewing on or after 1/1/14

• Applies to all group health plans, regardless of group size

• Applies to both Grandfathered and Non-Grandfathered Plans

• Current guidance does not allow “first of the month following 90-day” waiting

period

NEW COBRA NOTICE LANGUAGE

• Employers with 20+ employees who have a group health plans must offer COBRA

to qualified beneficiaries

• When a participant has a COBRA qualifying event, the employer must mail the

qualified COBRA beneficiary a COBRA Notice & Election Form

• Now this Notice must contain verbiage regarding the Marketplaces and federal

premium subsidies

• DOL has published a new model (May 2014)

EMPLOYER REIMBURSEMENTS FOR INDIVIDUAL HEALTH PLANS

• Per IRS Notice 2013-54, no longer favorable tax treatment for employer

reimbursements to employees for Individual or Marketplace plans

• The employer is generally unable to ensure that the individual plan meets certain

ACA market reforms to be eligible for pre-tax treatment

• Employer reimbursements for individual coverage must be taxed as income/wages

to the employee

• Penalty: $100 per employee per day

W-2 REPORTING

• Large employers (issuing more than 250 W-2s in the previous tax year)

must report the “aggregate cost” of employee-sponsored health plans

on the W-2

• Applies to both grandfathered and non-grandfathered plans

• Does not change tax treatment of plans

• For most plans, the “aggregate cost” includes both employee and

employer contributions

W-2 REPORTING

Who is required to report the cost of healthcare on the

2014 W-2’s?

THE PRESENT: NEW FOR 2015

Employer Mandate

Employer Mandate Reporting

EMPLOYER MANDATE DELAYED

Employer must offer health insurance to full-time employees (30 hours/week) according to the

following table:

Full Time Equivalents –

Including Control Groups

Employer Mandate

Penalties Begin

Margin of Error

100+ 1/1/2015 30% in 2015 and 5% thereafter

50 -99 1/1/2016** 5%

Less than 50 N/A N/A

** Delay to 2016 applies only if:1) The employer did not reduce its workforce to get below the 99 employee

threshold without a bona fide reason2) The employer did not materially reduce its health care plan

EMPLOYER MANDATE: FULL TIME EQUIVALENT EMPLOYEES (FTES)

• Look-back period

____ Part-time Employee Equivalents(Total Monthly Part-Time Hours/120)

+ ____ Full-time Employees (30 hours/week or more)

Owners (Sole proprietors, Partners in a Partnership, Members of LLCs

- ____ Taxed as a Partnership, and Shareholders who own two percent or more in an S Corporation)

= ____ Full-time Equivalent Employees

EMPLOYER MANDATE: PENALTIES

•Calculation:•$2,000 annually for each full-time employee, excluding the first 30 (80 in 2015) employees•{the total number of employees in the firm (subsidized and unsubsidized) minus 30 or 80} x {$2,000}

A Penalty: When a plan that meets minimum

coverage requirements is not offered

• Calculation:• $3000 annually for each employee who actually receives a federal

premium subsidy

B Penalty: When minimum coverage is provided but it is not

affordable

• Overall Penalty: The lesser of A Penalty or B Penalty

• Penalties are Calculated Monthly – Paid Annually

EMPLOYER MANDATE: IMMUNIZING THE PLAN

Minimum Essential Coverage

Affordable RateAll Full Time Employees

MINIMUM ESSENTIAL COVERAGE

• Health insurance plan design, not employer contribution to the plan

• Health insurance carrier must pay for at least 60% of treatment costs

(60% actuarial minimum value)

• “Bronze level” plan

AFFORDABLE RATE

• Exclusively refers to employee contribution

to the plan

• Misconception – Certain Contribution %

Required

• Coverage is considered “affordable” if

employee contributions for employee only

coverage do not exceed 9.5% of an

employee’s household income

There are three safe harbor methods for determining affordability:

1) W-2 Wages - 9.5% of an employee’s W-2 wages (reduced for salary reductions under a 401(k) plan or cafeteria plan)

2) Rate of Pay - 9.5% of an employee’s monthly wages (hourly rate x 130 hours per month)

3) Federal Poverty Level - 9.5% of the Federal Poverty Level for a single individual

FULL TIME EMPLOYEES

• Minimum essential coverage at an affordable rate must be offered to

all full time employees regularly working at least 30 hours per week

following the 90-day waiting period

• Also, it must be offered to their dependent children, but not spouses

• No requirement to offer insurance to part time employees – less than

30 hours

• Begins in 2015 tax year and only applies to employers with 50+ full-time equivalent

employees

• The forms must be filed for first time in early 2016 for the 2015 calendar year.

• Just like W-2’s, copies of the forms must be provided to employees by January 31st

and filed with the IRS by February 28th (paper) or by March 31st (electronic)

• Electronic filing required unless the employer will be submitting fewer than 250 1095-

C forms for the year

EMPLOYER MANDATE: REPORTING REQUIREMENTS

Section 6056 of the Tax Code requires:

1) One Transmittal Form (IRS Form 1094-C)

2) Employee Statements (IRS Form 1095-C – top half only)

It may help you to think of the 1094-C as similar to the W-3 (a transmittal form) and

the 1095-C as similar to the W-2 (a separate return for each employee)

*Self-funded plans require additional reporting under Section 6055 of the Tax Code

EMPLOYER MANDATE: REPORTING REQUIREMENTS

Three Methods of Reporting:

1) General Method – Required method for all large employers unless they qualify for reporting relief provided by the two alternative methods. (See next two slides for data collection requirements)

2) Qualifying Offer Method – To use this method the employer must offer a bronze level or higher plan where the cost to the employee of employee-only coverage is less than about $1,100 in 2015. Also, plan must be offered to all family members. Provides relief from reporting monthly, employee-specific health information.

3) 98% Offer Method – To use this method, the employer must offer a bronze level or higher plan at an affordable rate to at least 98% of the company’s full time employees. Provides relief from identifying which employees regularly work full-time hours.

EMPLOYER MANDATE: REPORTING REQUIREMENTS

So What Information Do I Need to Track in 2015?

1) Employer name, address, and Tax ID

2) Name and phone number of employer’s contact person responsible for health insurance (this

may be either an employee or agent of the employer)

3) Calendar year for which the information is reported

4) Certification as to whether the employer provided minimum essential coverage to full-time

employees and their dependents by calendar month

5) Months minimum essential coverage was available to each full-time employee

EMPLOYER MANDATE: REPORTING REQUIREMENTS

So What Information Do I Need to Track in 2015 (cont.)?

6) Each full-time employee’s monthly cost for employee-only coverage under the employer’s least

expensive minimum value plan (bronze level or higher plan)

7) Number of full-time employees employed each month in the calendar year

8) Name, address, and tax ID of each full-time employee employed during the calendar year

9) Months each employee was covered on the group health plan during the year

** Self-insured plan sponsors must collect additional information

EMPLOYER MANDATE: REPORTING REQUIREMENTS

THE NEAR FUTURE: HCR PROVISIONS ON THE HORIZON

• Non-Discrimination

• Automatic Enrollment

NON-DISCRIMINATION

Per IRS, delayed until at least 2015

“Similar” to current regulations for self-insured plans

Grandfathered plans excluded

When implemented will most likely prohibit:

• Management Carve-Out Plans

• Higher % contributions to HCI’s

• Executive Health Plans

AUTOMATIC ENROLLMENT

Employers with more than 200 full‐time employees required to automatically enroll new employees

Employees may still opt out

Automatic Enrollment Rules delayed until at least 2015, probably longer

Federal Department of Labor has not yet issued guidance on this issue

CHEAT SHEETS

Provisions by Employer Size

CHEAT SHEET #1

1) Notice of Exchanges and Subsidies

2) Lactation Breaks

3) No Favorable Tax Treatment for Individual or Marketplace Plan Reimbursements

Provisions for Small Employer (fewer than 50 employees) with no Health Insurance Plan:

CHEAT SHEET #2

1) Notice of Exchanges and Subsidies

2) Lactation Breaks

3) Summary of Benefits and Coverage

4) New COBRA Notice Language

5) 90-Day Waiting Period

6) Non-Discrimination – if non-grandfathered (delayed)

Provisions for Small Employer (fewer than 50 employees) with a Health Insurance Plan:

CHEAT SHEET #3

1) Notice of Exchanges and Subsidies

2) Lactation Breaks

3) W-2 Reporting (if issue more than 250 W-2s)

4) Summary of Benefits and Coverage

5) New COBRA Notice Language

6) 90-Day Waiting Period

7) Employer Mandate – Effective 1/1/15 for 100+ employees and 1/1/16 for 50 – 99 employees.

8) Employer Mandate Reporting

9) Non-Discrimination – if non-grandfathered (delayed)

10) Automatic Enrollment – 200+ employees (delayed)

Provisions for Large Employer (50+ employees) with a Health Insurance Plan:

Questions?