Rick Jones, CEBS, ARe March 2014

Transcription

1 Rick Jones, CEBS, ARe March 2014

2 Current Issues Taxes New Employer Size Categories Delayed Employer Effective Dates Reporting Exchange Enrollment Minimum coverage / Max Cost Volunteer Firefighters are volunteers 90 Day Waiting Period Final Regulations

3 Taxes & Fees Comparative Outcomes Research (PCORI) $2 Per Person Per Year Reinsurance Fee $63 per person per year Health Insurer Tax About 2.5% of premiums Tanning 10% Medical Devices Tax Cadillac Plan Tax

4 Things That Changed Employer Mandate Delayed (repeatedly) Class Act Long Term Care for all, payroll deducted Numbers didn t add up Early Retiree Reinsurance Program Ran out of money Annual limits Waived repeatedly & again last week!

5 More Changes 1099 s to EVERYBODY Popular protest repealed Affordable coverage for families Dropped in IRS Regulations Covering Seasonal Employees Individual Mandate Dates Timelines for benefit statements, W2 s auto enrollment, more.

6 Cadillac Tax Begins 2018 Many Unknowns Need Regulations Knowns: 40% Excise Tax Starting January 2018 On amounts over a high cost plan limit What s included

7 Forty Percent??? The tax is paid on amounts OVER: $10,200 Single Coverage $27,500 Family Coverage May be adjusted for inflation, age/sex mix If employer is MAJORITY dangerous professions, limit is increased a little to: $11,850 single and $30,950 family Includes Police, Fire, EMT, retirees of same

8 Who? Employer calculates tax Insurer pays on health insurance Employer pays on HSA or MSA Plan Administrator pays on all others

9 What s Included Full amount of premium It doesn t matter if ER or EE pays Health Insurance Plans Health FSA HRA HSA Archer MSA Not Included: dental or vision

10 Remember Things change in this neighborhood!

11 Exchanges

12 Individual Mandate Starts 2014 Must have coverage or Pay Penalty Tax $95 for the year 2014, or 1% of income $325 for 2015, or 2% of income $695 thereafter, or 2.5% of income Pay the larger amount. Income is household income.

13 Exchanges Role Evaluate health plans Publish standard comparisons Call center to answer consumer questions Decide who s eligible, who s exempt Build computer systems to interact with Medicaid Insurers -- Individuals Employers -- Government Agencies

14

15 Exchanges 80% receiving subsidies Subsidies available up to 4 times the poverty level $95,400 for family of Four $62,920 for family of Two Subsidies expected to average $6,000 per person a year

16 Employer Responsibility

17 New Reporting New Combined Form 6056 & 6055 for 50+ EE large employers Smaller groups exempt do not complete First Due in early 2016 for the 2015 calendar year Fully Insured Groups will need to file 6056 info Self-Insured file both 6056 and 6055 details Using W2 forms was rejected

18 Reporting Dates Reporting due to EE s by January 31, 2016 Due to IRS March 1, 2016 (normally 2/28) By March 31 if filed electronically Can also report to EE s electronically IF: Written Consent obtained Consent meets strict requirements Consent must be revocable

19 Reporting Includes: Employer name, address, EIN Name & phone # of ER contact Certify coverage was offered, by month # of Full Time EEs for every month For each full time employee: Which months coverage offered EE premium cost (single coverage) by month Name, Address, SSN, which months covered

20 Simpler Reporting For generous employers 3 simpler Options Available A. Simpler form if annual cost ~$1100 B. Alternative method for 2015 ONLY if offered coverage to 95% or more employees C. Avoid specifying full time and part time by employee if offering coverage to 98% See Handout

21 Employer Mandate Update New Effective Dates Starts at renewal in 2015 or 2016 How big are you? 1-49 Ee s = Small Ee s = Large(ish) 100+ Ee s = Large(r) Add up fulltime Ee s and part-time FTE s to reach 50 or 100 Treat 30 hours as full-time

22 Employer Mandate Update 100+ Employee Groups must offer coverage to 70% by 2015 and 95% by 2016 or pay tax penalty Employee Groups must offer coverage to 95% by 2016 or pay tax penalty Large Employers have 50 employees!

23 Employer Mandate Two critical tests: Affordability Minimum Essential Coverage Meet these and you are Responsible and will not owe penalty taxes Must offer at least one plan to employees that satisfies these tests. They don t have to take it. Offer multiple plans? Only one must pass.

24 Employer Mandate If as an employer you meet both tests: Affordability Minimum Essential Coverage Then your work here is done. It DOES NOT MATTER what your employees or their families decide to do. Even if they get covered on the exchange and a subsidy you won t owe tax penalties.

25 Employer Mandate Tax penalty is $2,000 a year per EE above employees? = % Rule (70% for 100+ in 2015) 170 x 2,000 = $340,000 Employers offering required coverage that have employees receiving subsidy will pay $3,000 per subsidized employee (not to exceed above penalty tax)

26 New Transition Relief Will not owe tax penalties on any full time employee until plan renewal in 2015 Under 100 employee groups won t owe any tax penalties before renewal in 2016 Provided these full-time employees are offered affordable, qualifying coverage at that time

27 Minimum Coverage Test Employers Plans must pay at least 60% of costs Out of pocket maximums: $6,250 Single, $12,500 Family Indexed Most plans meet the standard

28 Minimum Coverage Test Must offer coverage to employees and dependents Children are dependents Not dependents for this purpose: Spouses Foster children Step children Overseas non-citizen children Doesn t matter if they take coverage

29 Affordability Test Law says employee cost must not exceed 9.5% of Household Income for plan taken (Single, Two-person, Family, etc.) Employers can t determine Household Income IRS has provided relief And updated regulations on 2/12/2014 See RIN 1545-BL33 for Final Regulations

30 Affordability Safe Harbors W2 vs. Single Plan cost Lowest cost plan with minimum coverage can t cost more than 9.5% of employee W2 income as reported in Box 1 Box 1 includes wages, bonuses, tips but excludes pre-tax health benefits, some retirement plans, etc.

31 Rate Of Pay Affordability Safe Harbors Multiply lowest employee pay rate by 130 for monthly income, compare to employee share of premium (don t exceed 9.5%) For Salaried employees use monthly salary. In years when reducing pay must adjust monthly. Federal Poverty Line 11,670 x 9.5% = / 12 = $92.39 (monthly) (weekly)

32 30 Hours is Full-Time? Determining full-time employees 30 hours is full-time for needing to provide health insurance or pay a penalty Effective when employer mandate is Volunteers for local governments are now officially volunteer and hours not counted IRS has offered safe harbors

33 Hour of Service Hour of service means each hour for which an employee is paid, or entitled to payment: For the performance of duties For time during which no duties are performed due to: Vacation Illness Layoff Military duty Holiday Incapacity (including disability) Jury duty Leave of Absence

34 Typical Problem Cases Substitute teachers EMTs Adjunct Faculty (2¼ per) 24 hour shift firefighters Part-time in several departments 32 hour schedules (designed to avoid benefits)

35 Do They Work 30 hours? Safe Harbor for Variable Hour & Seasonal employees based on facts and circumstances at the start date, it cannot be reasonably determined whether the new employee is expected to work full time. Uncertainty of coverage not good for employees, families, or employers Uses 3 types of time periods

36 3 Time Periods Standard Measurement Period For tracking actual hours worked Getting started also called Lookback Period Administrative Period Optional, in case you need time to enroll employees Stability Period Qualifying employees can count on coverage

37 Standard Measurement Period Employer chooses length, from 3 to 12 months, now with flexible dates Longer periods favor most employers Total hours worked are tracked for entire period Count vacation, sick leave as time worked Average hours of 130 per month is the cutoff point. This equals 30 hours per week.

38 Stability Period Must be same length as Measurement Period If an employee worked 130 hours per month on average then: They are entitled to health insurance for the entire Stability Period, no matter how many actual hours are worked Entitled to at least six months coverage Worked less than 130? No coverage this Stability Period

39 Administrative Period Optional, employer choice Between Measurement & Stability Periods -or- overlaps Measurement 90 days or less, shorter better For smooth enrollment process following determination of eligibility

40 Salaried Employees 3 methods to determine if full time: A. Track actual hours worked B. Credit them 8 hours for any day they're scheduled to work even an hour C. Credit them 40 hours for any week they're scheduled to work However may not use method B or C if they substantially understate actual hours worked such that an employee does not qualify for health insurance

41 Seasonal Employee Now has a definition Generally don t need to be offered coverage

42 Automatic Enrollment Applies to Employers of 200+ Must automatically enroll all new full-time employees Employer may select plan Employee must be able to opt-out Awaiting final regulations Not effective until regulations issued

43 Next Steps A glass of red wine helps reduce stress Did you know we offer an EAP? Review each employee not being offered health insurance Study actual hours worked Consider how best to get ready now: Restructure positions, reduce hours, plan to pay benefits, combine positions

44 ACCG Health Members may call us for help: Rick Jones, Benefits Consultant to ACCG Ben Pittarelli, ACCG Your BCBS (or other insurer) Representative