The Affordable Care Act: Update for Employers. Agenda

Transcription

1 The Affordable Care Act: Update for Employers Attorney Gesina (Ena)Seiler Agenda General Overview Health Insurance Marketplaces Employer Shared Responsibility ( Play or Pay ) Employer Considerations

2 General Overview The Patient Protection and Affordable Care Actoften referred to as Obamacare or the Affordable Care Act Goal is to increase the rate of health insurance coverage for Americans and reduce the overall costs of health care Ongoing court challenges, proposed rules, and safe harbors may change the applicability and scope of the ACA ACA Changes in Effect Dependent Coverage until age 26 No pre-existing condition exclusions Prohibits rescissions unless intentional misrepresentation of material fact No lifetime or annual limits Coverage for preventative services

3 Reporting Requirements Informational reporting of value of ER-sponsored coverage on W2s (250 or more W-2s)(2013 for 2012) IRS 6055: ER and individuals who provide coverage to any individual file report (file in 2015 for 2014) IRS 6056: Large ERs file information return with the IRS to report whether they offer their employees and their dependents provide copy to FT EEs Non-Discrimination Requirements Prohibits group health plans from discriminating in favor of highly-compensated individuals Could ultimately impact employment or severance agreements Implementation pending until regulations issued Refer to IRS Notice for more specific information

4 Health Insurance Marketplaces Enrollment began October 1, 2013, for coverage beginning January 1, 2014; enrollment closes March 31, Compare the costs of various health plans and different types of health coverage benefits. Navigators distribute fair and impartial information concerning enrollment in health plans through the Marketplace Wisconsin opted not to operate a State Marketplace and participates in a Federal Marketplace instead which can be found at Tiers of coverage available: Bronze, Silver, Gold, and Platinum, which will offer benefits ranging from the Bronze Plan, which provides essential health benefits and 60% of the costs of the plan to the Platinum Plan, which provides essential health benefits and 90% of the costs of the plan (Catastrophic Plans also available) Marketplace, cont. Individuals and small businesses (more than one and less than 50 FTEs) can shop on the Marketplace Tax credits and subsidies will be available for those who shop on public Marketplaces, income is less than 400% of the federal poverty level, and who do not qualify for Medicaid (Family of Four $23,550 to $94,200) Some health insurers are creating private Marketplaces for large ERs or individuals not eligible for subsidies Cap on out of pocket expenses ($6,350 individual, $12,700 family) delayed until 2015.

5 Small Business Health Options Program (SHOP) Small ERs (more than one, less than 50 FTEs) looking for health coverage for their EEs will be able to use SHOP ERs with less than 50 EEs are not required to contribute toward the cost of coverage, but can if they so choose Beginning in 2015, SHOP will aggregate all of the EEs premiums, calculate and apply any credits/subsidies, and send one statement to the ER Notice of Marketplaces ERs subject to the FLSA were required to provide Notices to EEs about the existence of Marketplaces by October 1, 2013 New EEs must receive notices within 14 days of hire Sample notices are located at No penalties for failure to provide notice

6 Business Size Matters Benefits for Small ERs Effects on Medium ERs Burden on Large ERs Determine who is the potential ERcontrolled group/common ownership rules set forth under Internal Revenue Code Sections 414(b) and 414(c) apply Small and Medium ERs SmallERs(fewerthan25FTEsaveraginglessthan $50,000/year) can receive tax credits to help offset cost of providing health care (up to 35% of premiums paid, 50% in 2014) ERs with less than 50 FTEs are exempt from requirement to provide health care coverage for EEs Medium ERs should ensure that they have sufficient documentation to show they are not large ERs

7 Large ER An ER with 50 or more FT and FTEs qualifies as a large ER -A Full Time employee works on average 30 hours per week (includes paid time off due to vacation, holiday, illness, disability, layoff, jury duty, military duty, or leave of absence), or at least 130 hours in a given month -Special rules for seasonal workers Large ER, cont d An ER with 50 or more FT and FTEs qualifies as a large ER -A FTE employee is a combination of employees, where each individual employee is not full-time, but in combination with other employees, are counted together as a Full-Time employee. -Example: Four employees who each work 15 hours per week are added together to equal two Full-Time employees, or two FTEs.

8 Qualifying EEs to Determine Offer of Coverage EE Classifications -Ongoing (FT and part-time) -waiting period limited to 90 days after qualified -if over 200 FTEs-auto enroll w/ opt out -New Full Time -New Variable Hour -New Seasonal Qualifying EEs, cont. Look Back/Measurement Period -purpose is to examine whether EE averaged (ongoing) or averages (new) 30 hours/week -3 to12 month period -status as full time is locked in during stability period

9 Qualifying EEs, cont. Stability Period -begins after Look Back/Measurement Period -period when qualifying EE is offered insurance -must be at least 6 months or same length as Measurement Period -may be delayed for a brief Administrative Period ER Shared Responsibility ( Play or Pay ) Begins January 1, 2015 (delayed one year from original effective date) Applies only to large ERs (50 FTEs or more) Play means offer affordable essential coverage to qualifying EEs and dependents (not spouse) Pay means one of the following scenarios occurs, when

10 Play or Pay, Cont. Scenario 1: An employer doesn t offer coverage to 95% of FT EEs + dependents, AND At least one FT EE receives a premium tax credit in the individual Marketplace, Pay: A payment of $166.67/mo. x (FT EEs 30), calculated for each month. 19 Play or Pay, Cont. Scenario 2: An employer offers coverage that isn t affordable or minimum value, AND At least one FT EE receives a premium tax credit in the individual Marketplace, Pay: A payment of $250/mo. x FT EEs receiving credit, calculated for each month, not to exceed Scenario #1 payment 20

11 Affordable means: Play or Pay, Cont. Employee share of least expensive employeeonly coverage costs 9.5% of annual household income or less Minimum Value means: Plan covers at least 60% of total cost of incurred benefits Play or Pay, Cont. When employer payment is not owed: For non-coverage of part-time employees If ER offers affordable coverage to a FT EE who declines it If EE obtains coverage through spouse, or other coverage, outside the individual Marketplace

12 Large ER Options Offer insurance that complies with the ACA s minimum value and affordability requirements and pay no penalties Offer minimum essential coverage to 95% of qualified EEs and pay a $3,000 penalty per EE who receives subsidized coverage (if coverage is not affordable and 60% minimum value) Offer no insurance and pay a $2,000 penalty for each EE (not first 30) if one of your EEs receives subsidized coverage Prohibition on Retaliation Under the ACA, ERs may not retaliate against EEs who: -Received a tax credit or a cost sharing reduction for purchasing insurance through an exchange -Provided information relating to any violation of Title I of the ACA -Testified, assisted, or participated in a proceeding concerning a violation of Title I of the ACA, or are about to do so -Objected or refused to participate in any activity they reasonably believed to be in violation of Title I of the ACA Complaints are filed with OSHA

13 ER Considerations Consult with team (legal, accounting, insurer) Applicability of ACA Review of Workforce Estimate potential penalties Possibility of unknown cost increases for all Changes to insurance coverage, hours, etc. EE retention issues Questions? Attorney Gesina (Ena) Seiler Axley Brynelson, LLP