Affordable Care Act

Affordable Care Act: Update on the
Employer Mandate for 2015

Featuring Seyfarth Shaw LLP

Welcome

Today’s Host
Michelle Lanter Smith
Chief Marketing Officer
EPAY Systems, Inc.
mlsmith@EPAYsystems.com
773-499-7512

2

EPAY Systems -- designed to meet the
needs of your complex,
distributed workforce

• Reduce your labor
costs by 5% or more
• Keep you in control
and in compliance

3

Today’s Discussion
The Affordable Care Act is upon us and there’s a lot to do in
order to be ready for January 1, 2015.
Does your company even need to be concerned?
If so, who is eligible for health insurance at your company?
How do you calculate whether it’s better to offer health
insurance to your employees or just pay the penalty?

4

Our Speaker

Jennifer A. Kraft
Partner, Seyfarth Shaw LLP
Employee Benefits
jkraft@seyfarth.com
(312) 460 -5000

©2012 Seyfarth Shaw LLP

5

Ask Your Questions

To ask a question, simply
type your question in the
“Question” box on the right
side of your screen.


6

Legal Disclaimer

The contents of this presentation should not be
construed as legal advice or a legal opinion on any
specific facts or circumstances.

These materials are intended for general information
purposes only, and you are urged to consult a lawyer
concerning your own situation and any specific legal
questions you may have.

7|

The Affordable Care Act
Medicaid
Expansion

Exchanges

Guaranteed
Issue/
Community
Rating

Individual
Mandate

Employer
Mandate
8|


Health Benefit
Exchanges
or
―Marketplaces‖

Exchanges/Marketplaces
•

•
•

State-based collection of health insurance offerings (―Qualified
health plans‖)
o Private and non-profit insurers
o Essential health benefits
o If state did not establish, Federal government stepped in
2014
o Individuals (with tax credits and cost-sharing subsidies)
o Small businesses (100 or less employees)
2017
o Large employers (more than 100 employees)

10 |


•

•

Each state will have one or two exchanges:
o Individual Exchange + Small Business Health Operations
Program Exchange (SHOP Exchange)
OR
o Combined exchange for individuals and small businesses

All individuals can purchase coverage through the
exchange, regardless of:
 Income level
 Employment status

11 |


•

Marketplace Notices
o Employers subject to FLSA




•

•

Deliver by October 1, 2013 to all current employees
Deliver within 14 days of hire to new employees

Three Model Notices:
o Where health coverage is offered
o Where health coverage is not offered
o Updated COBRA notice
No penalty for not delivering the Notice

12 |


Employer Mandate – Large Employers Only
o Threshold for ―Large Employer‖ = 50 Full-time Equivalent
Employees in prior year
o Full-time employees = 30 hours per week, on average

#FULL-TIME
EMPLOYEES

Aggregate #
hours worked/
month by parttime employees
up to 120
________
Divided by 120

#Full-time
equivalent
employees

You must count all employees working for any company within
the corporate family (as determined by IRS rules)

14 |


Employer Mandate
•

Employer ―Shared Responsibility‖ delayed to 2015
o If:



Employer has 50 or more full-time equivalent employees


Add each month’s calculation up in the prior year and divide
by 12 to get average monthly count

o Then:



The employer is required to provide affordable ―minimum
essential coverage‖ to all full-time employees and their
dependents


Dependents does not include spouses

o Or else:



The employer will be assessed a penalty if an employee
receives a tax credit or subsidy through an Exchange
15 |


Employer Mandate
•

Employer ―Shared Responsibility‖ — Penalties
► Failure to Provide Minimum

Essential Coverage (―No Coverage Penalty‖)
OR

► Failure to Provide Affordable Coverage
(―Inadequate Coverage Penalty‖)

16 |


No Coverage Penalty
•

Employer Fails to Provide Minimum Essential Coverage
o At least one employee receives a tax credit or subsidy
through a state-based exchange



All full-time employees = 95% of full-time employees

o Penalty = $2,000 X # of Full-time Employees



Subtract first 30 full-time employees when calculating the
penalty

o Assessed employer-by-employer within the controlled group



30 person deduction must be spread ratably among all
employers

17 |

No Coverage Penalty
•

Minimum Essential Coverage
o Group health plan
o That is not excepted benefits



Dental only, vision only

o Could be preventive care only
o CAUTION: Mandatory enrollment in a plan that does not
offer minimum value will not get employers out of No
Coverage Penalty

18 |


No Coverage Penalty
•

Example
o Employer employs 55 full-time equivalent employees, 45 of
which are full-time employees
o The employer offers coverage to 35 of its full-time
employees, 77%, but chooses not to offer health insurance
coverage to 10 full-time employees
o One of those employees who was not offered coverage
purchases individual coverage through Exchange with a tax
credit
o The employer will be assessed a penalty of $30,000



(45-30) X $2,000

19 |

Inadequate Coverage Penalty
•

•

Employer offers health insurance coverage, but not affordable
coverage that provides minimum value
► Affordable – Cost of coverage no more than 9.5% of
household income
► Minimum value – Covers at least 60% of actuarial value of
health costs
Any employee receives a tax credit or subsidy through a statebased exchange

20 |



PENALTY
$2,000 x (Total No. of Full-Time
Employees – 30)
THE LESSER OF:

$3,000 x No. of Full-Time Employees
who receive a tax credit or subsidy
and purchase coverage through an
Exchange

21 |

ADEQUATE HEALTH COVERAGE
AFFORDABLE

MINIMUM VALUE

• Employee-only premium cost
(regardless of what coverage
employee elects) cannot exceed
9.5% of household income. May
use:

• Plan must cover at least 60% of
the actuarial value of health costs
(medical, hospital, prescription
drug, lab, etc.)
• Calculated in one of three ways

• W-2 wages

• HHS Calculator

• Rate of Pay (hourly rate for
each hourly employee
multiplied by 130 hours per
month)

• Safe Harbor Checklist

• Federal Poverty Line

22 |


• Actuarial Certification

•

Example
o Employer employs 55 full-time equivalent employees, 45 of
which are full-time employees.
o Employer offers health insurance to all 45 full-time
employees, but the insurance only covers 50% of costs.
o Five employees receive a credit through the exchange. The
employer will be assessed a penalty of $15,000 (5 X
$3,000).



Note this is less than $2000 x (45 – 30) full-time employees

23 |


•

Strategies for Achieving Affordability
o Set employee-only coverage premium at 9.5% but increase
dependent level costs:





Assume an employee has $30,000 a year in household income
Premium is $2,400 for employee-only coverage (8% of
household income) and $6,000 for family coverage (20% of
household income)
The employer will be deemed to have offered the employee
affordable coverage, even if the employee elects family
coverage

24 |

•

Strategies for Achieving Minimum Value
o Reduce participant cost-sharing




Co-insurance, co-pays, deductibles
Wellness programs that reduce cost-sharing cannot be
considered, except for tobacco-cessation programs

o Add benefits



Cover additional services

o Add HRA/HSA component



With employer contributions

25 |


Full-Time Employee
•

What is a Full-Time Employee?
o Those who work, on average,




30 hours per week or
130 hours per month

o Full-time status determined on a monthly basis
o Measurement & Stability periods





Measurement period (look-back) could range between 3-12 months
Stability period must be at least as long as the look-back period and
can be no shorter than 6 months
Administrative Period up to 90 days between the two


To determine who will be eligible, notify them and enroll them

26 |


Measurement/Stability Periods

Measurement Period

Admin

Stability Period

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

2015

27 |


Measurement/Stability Periods
•

May use different Measurement and Stability Periods for:

 Salaried and hourly employees
 Employees of different entities
 Employees located in different states
 Collectively bargained with different collective bargaining
agreements

28 |


Overlapping Periods
Starting with 2014, every year will feature a
simultaneous measurement and stability period
Measurement Period #2
Stability Period #1

Admin

Stability Period #2


Admin


2014
Stability period
(following 2013
measurement
period)

2015
New
measurement
period begins
(for 2016
stability period)

Optional administrative period.
Overlaps with stability period

29 |


2016

Full-time/Part-time/Seasonal

• Full-time position
► If know that the position is more than 30 hours/week, must
offer coverage within 3 months of hire
► Monitor hours going forward under Measurement Period
approach

30 |


•
•
•

Based on facts and circumstances at date of hire,
Cannot determine that employee is reasonably
expected to work, on average, at least 30 hours per
week (or 130 hours per month)
The IRS may disagree with determination and
impose penalty if every crew member is labeled as
―variable hour‖ but many end up working full-time

31 |


•

Examples*
► Part-time employees
► Hourly employees with fluctuating schedules
► Seasonal employees

*These are merely examples of individuals that might be
considered variable hour new hires. Facts and circumstances
may limit an employer’s ability to treat these employees as
variable hour new hires.

• NOTE: Expected (short) length of employment can be taken
into consideration, but only for 2014 (will transition relief be
extended?)

32 |


•

Seasonal Employee
► No definition for purposes of the
Employer Mandate

► Through 2014, employers may make
a good-faith interpretation of the term

► Example

•

Employees hired for summer season

•

Employees hired over holiday break

33 |



• ―Variable hour‖
o New hires must be offered coverage within 13
months of hire date (or start of next calendar
month thereafter),
o if they work at least 130 hours per month on
average during that time

34 |


When Must Variable Hour New Hires be
Offered Coverage?
Employee switches to ongoing
employee measurement period
effective October 1, 2014


Stability Period #2

Stability Period #1


2015
Variable Hour
New Hire – Hire
Date February
15, 2014

Measurement Period
ends February 14, 2015
Administrative Period
From February 15 –
March 31
35 |


2016
Stability Period coverage
begins April 1, 2015 (and
continues through March
31, 2016)

Breaks from Employment
Length of
Break

Length of
Employment

Result Upon Rehire

More than 26
weeks

N/A

Treat employee as new hire (i.e.,
start new measurement period and
disregard prior service)

Less than 26
weeks but more
than 4 weeks

Shorter than
break

Treat employee as new hire (i.e.,
start new measurement period and
disregard prior service)

Less than 26
weeks but more
than 4 weeks

Longer than
break

Continue existing measurement
period (0 hours counted during
break*)
OR
Continue coverage for remainder of
stability period

Less than 4
weeks

N/A

Same as above

36 |


•

For ―special leaves‖ employees must not be penalized for
breaks in service
o Two methods:




Apply average hours worked before and after leave to
determine ―hours‖ equivalent during leave,
Exclude leave period when calculating average hours

o Special leaves include:





FMLA
USERRA
Jury Duty

37 |



• Employees on paid leave must be
credited with hours of service during
leave, regardless of length!!!!!


38 |

Other
•
•
•
•
•
•

90-Day Waiting Period
Clinical Trials
Cost-sharing limits
Pre-existing conditions exclusions
Annual limits (beware of fixed indemnity plans)
Wellness programs



39 |

Other
•
•
•

Non-Discrimination Rules
Auto-Enrollment
Annual reporting (delayed from 2014)



40 |

Key Considerations
•

Employers are not required to pay 100% of the cost of
coverage
o Employees can be required to contribute to the cost of
coverage, in increasing amounts based on increasing income
o Employees can be required to pay the full cost of dependent
coverage

•

Large employers are only required to offer coverage
o There is no penalty if an employee declines coverage
o Not all employees will elect the coverage that is offered

42 |

Next Steps
•

Start to project cost of options
o Determine maximum number of employees who could elect
coverage
o Determine number of employees likely to elect coverage

•
•

Select Measurement Period and Stability Period
o Document
Consider design options for 2015
o Wellness rewards

43 |


Get Help!

Quick Access to
Resources

45

ACA Resource Center
aca-seyfarth.com
47 |


Questions?
jkraft@seyfarth.com

To sign up for Seyfarth Alerts, email
healthreform@seyfarth.com

@SeyfarthEBLaw


EPAY Systems

Michelle Lanter Smith
Chief Marketing Officer
EPAY Systems, Inc.

49

Real Time Data Collection
Data
Collection

1

3
2
Secure web
management
Payroll
Processo
r

50

Data Export
Payroll

EPAY Systems

John Gaudiuso
Sales Engineer
EPAY Systems, Inc.
Contact John at:
jgaudiuso@EPAYsystems.com
312-291-2032

51

ACA Dashboard
•
•
•
•
•

Compare all employees average hours to ACA guidelines
to determine total FTE’s
Will give total Full Time Employees (> 30 hours)
Will give total Part Time Employees (< 30 hours)
Total the two to determine total FTE’s
Could also use alerting to ensure employees not going
over 30 hours per week

52

Determining Average Hours in
Blueforce
•
•

Calculate employees’ average hours per week from hire
date
Report to show the employee, the hire date and the
average hours worked per week

53

Upcoming Education
•
•
•

How to Avoid Costly Wage & Hour Pitfalls for Employers
in the Hospitality Industry. Nov 6: 12:00 cst
Mobile GPS Webinar: Time Tracking & Mobile Apps. Nov
7: 10:00 am cst
EPAY Demonstration: Time Tracking Your Way. Nov 14:
10 am cst

Register at www.EPAYsystems.com

56

Thank You!

Jennifer A. Kraft
Partner, Seyfarth Shaw LLP
Employee Benefits
jkraft@seyfarth.com
(312) 460-5983

57

Connect With Us
Connect with EPAY:
o LinkedIn – follow our company page
at EPAY Systems
o Twitter -- @EPAYsystems
o Sign up for our e- newsletter at
www.EPAYsystems.com

Connect with Seyfarth Shaw LLP:
o Wage & Hour Litigation Blog
http://www.wagehourlitigation.com/
o Twitter - @SeyfarthShawLLP
o Twitter - @SeyfarthEBLaw

58

Affordable Care Act

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

Similaire à Affordable Care Act

Similaire à Affordable Care Act (20)

Plus de EPAY Systems

Plus de EPAY Systems (20)

Dernier

Dernier (20)

Affordable Care Act

Notes de l'éditeur