Affordable Care Act Title 1: Employer Mandate. MAJ Philip Durando CPT Elvis Gonzalez CPT Stephanie Kessinger

Transcription

1 Affordable Care Act Title 1: Employer Mandate MAJ Philip Durando CPT Elvis Gonzalez CPT Stephanie Kessinger

2 Agenda Employer Mandate Tax Penalties and Credits Components defined Full Time Employee Affordability Minimal value Dependents Coverage Requirements Key Dates?

3 What is Employer Mandate? Employer Shared Responsibility Provision Requires Employers with 50 or more Full Time Employees to provide health insurance to employees and their dependents Penalties for noncompliance

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5 Employer Mandate Timeline Immediate health insurance market reforms Medicare Part D donut hole relief begins Reporting value of health benefits on Form W-2 (due by 1/31/2013) State-based exchanges Individual mandate and tax credits Employer mandate Medicaid expansion Other insurance market reforms Health insurers fee Employer reporting to the IRS (due by 1/31/2015) 40% excise tax on high-cost health plans Drug manufacturers fee Coverage expansions take effect States may open Exchanges to large group market Medicare Part D donut hole closed Increase Medicare payroll tax by 0.9% on earned income Impose 3.8% tax on unearned income Eliminate deduction for retiree drug costs covered by Medicare Part D subsidy Excise tax on medical devices Fair Labor Standards Act notices

6 Coverage Requirements for Employers Large employers must offer coverage to their full-time employees and their dependents Coverage must be affordable and of a minimum value for certain employees Employers subject to tax penalties if any employee receives tax credits for Exchange coverage Any employer with 50+ full-time equivalents is considered a large employer.

7 Employer Responsibility Payment

8 No Coverage If a large employer does not offer coverage to their full-time employees and their dependents, employers face a penalty of: $2,000 x the total number of full-time employees (excluding 30) if at least one worker is receiving a premium assistance tax credit

9 Unaffordable Coverage If a large employer offers coverage but the coverage is unaffordable to certain employees or does not provide minimum value, employers face a penalty of: The lesser of $3,000 x the number of FTEs receiving a premium assistance tax credit or $2,000 x the total number of FTEs

10 Small Business Health Care Tax Credit Employer tax credits up to 50% of premium costs Requirements: Less than 25 full-time equivalent employees Average annual wages of less than $50,000 Employer pays at least 50% of health insurance premiums Non-profits eligible for 35% credit

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12 Defining Full-Time Employee An employee who works on average 30 hours per week, 130 hours per month, for more than 120 days in a year Seasonal employees excluded Large employers are not required to offer coverage to part-time employees

13 Full-Time Equivalent Employees Part-time Employees can be added to the number of Full-time Employees to determine mandate Total number of hours per week of part-time workers divided by 30 Veterans covered under the VA or DoD do not count Example: 10 Part-time employees work 20 hours a week 200 hours divide by 30 = 6.7 additional Full Time Equivalent Employees

14 Defining Affordability Employee s share of the self-only premium cannot exceed 9.5% of household income Safe Harbor: No employer penalty if the employee s share of the self-only premium for the employer s lowest-cost, minimum value plan does not exceed 9.5% of the employee s current W-2 wages from the employer Clarifies that an employer must offer coverage to employees and dependents, but that the affordability test is based on employee contribution to self-only coverage *Family Affordability Glitch*

15 Minimum Value Minimum value: A plan fails to provide minimum value if the plan s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs. Generally understood to be a 60% actuarial value test (percentage of medical expenses -- deductibles, co-insurance, co-payments, etc. -- paid for by the plan for a standard population and set of allowed charges).

16 Minimum Value cont d Employers are not required to provide any specific category of benefits, but minimum value will be determined in comparison to a standard population and claims data set that is driven by the provision of four core categories of benefits: Hospital/ER services Physician/mid-level practitioner care Pharmacy benefits Lab/imaging services

17 Employer Coverage Requirements Wait periods: Prohibits plans from including wait periods longer than 90 days before enrolling eligible employees into employer coverage. Auto-enrollment: Employers with at least 200 employees must auto-enroll full-time employees into coverage if no election is made. Implementation delayed until regulations are issued. Essential Health Benefits: Essential health benefits apply to products sold in the individual and small group markets, both inside and outside state insurance Exchanges. Although large group plans are not required to offer the essential health benefits package, large group plans are prohibited from imposing lifetime or annual limits on any essential health benefits that they do offer. The ACA describes EHBs as consisting of 10 benefit classes: Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health and substance use disorder services, including behavioral health treatment Prescription drugs Rehabilitative and habilitative services and devices Laboratory services Preventive services and wellness services and chronic disease management Pediatric services including oral and vision care

18 Employer Requirement to Inform Employees of Coverage Options In accordance with regulations to be issued by the Department of Labor, employers who are subject to the Fair Labor Standards Act must provide a written notice to employees: Written notice informing employees: of the existence of an Exchange, including a description of the services provided by such Exchange, and the manner in which the employee may contact the Exchange to request assistance; if the employer plan's share of the total allowed costs of benefits provided under the plan is less than 60% of such costs, that the employee may be eligible for a premium tax credit and a subsidy if the employee purchases a qualified health plan through the Exchange; and if the employee purchases a qualified health plan through the Exchange, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes. The statute states that employers will be required to provide this notice to current employees on March 1, 2013, and to new employees on the date of hire thereafter.

19 Original Key Dates for Employers 1/31/2013: Employers begin reporting the value of employer-sponsored health insurance on employees form W2 3/1/2013: Notice of coverage options to current employees and to all new hires after this date 10/1/2013: Open enrollment in Exchanges begins 1/1/2014: Major coverage expansion takes effect 1/31/2015: Mandatory reporting to the IRS for large employers (100 employees or more), health insurance issuers, government agencies, employers that sponsor self-insured plans, and other persons that provide minimum essential coverage to an individual

20 Amended Key Dates Employer Penalty: originally set to begin in 2014, was delayed until , Employers must file an annual return reporting whether and what health insurance they offered their employees 2015, if you provide self-insured health coverage to your employees, you must file an annual return reporting certain information for each employee you cover. 2015, you may have to make a payment if you do not offer adequate, affordable coverage to your full-time employees, and one or more of those employees get a Premium Tax Credit

21 References Act/Employers/Affordable-Care-Act-Tax- Provisions-for-Large-Employers heaffordablecareact_summaryofemployerre quirements.pdf?ibctoken= beb0-498a-acb6-790a5742e914