Webinar The Affordable Care Act Pay or Play

Transcription

1 Webinar The Affordable Care Act Pay or Play Presented by Patrick C. Haynes, Jr., Esq., LL.M.

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3 Patrick C. Haynes, Jr. Today s presenter As counsel for Crawford Advisors Employee Benefits and Executive Compensation Group, Mr. Haynes advises employers and plan sponsors in a variety of health and welfare benefit plan compliance matters, including, but not limited to, tax qualification and other Internal Revenue Code issues, ERISA, COBRA and HIPAA portability and privacy issues. Mr. Haynes lectures frequently and has published many articles on health and welfare benefit plan compliance topics. Practice Areas Employee Benefits & Exec Comp, ERISA, COBRA, HIPAA, 125, and 105, 106, 129, 132 Education Temple University School of Law, LL.M. Rutgers University School of Law, J.D. Rutgers University School of Business, M.B.A. Rutgers University College of Arts & Sciences, B.A. Admitted to Practice U.S. Supreme Court Federal and State Courts of New Jersey Pennsylvania Connecticut District of Columbia 3

4 What Happens In 2014 Employer s must do options >50 Employees full time equivalent must provide coverage or Send employees to an exchange and pay a penalty or Or develop a new Hybrid Health Plan Employers will pay a penalty of $3,000 for their employees who find coverage unaffordable when they go to the exchange for coverage and receive a subsidy 4

5 What Happens In 2014 Coverage offered by the employer must be affordable Integral to the ACA...States must establish Exchanges (or coop with other States) to provide a range of options Individuals who meet income guidelines will be eligible for Government subsidies to assist them in paying premiums 5

6 The Dilemma 2014 Do employer s extend affordable coverage that meets the definition of Essential Benefits? Guidance received on February 25 Business Sense to Continue Exit en masse 6

7 What We Don t Know 2014 Will an Exchange offer comparable plans Will Exchange rates truly be lower for employees How effective will the exchanges be How will employees react Tax implications 7

8 The Calculation Pay or Play Current and future cost of insurance vs. mandated penalties Impact of dropping coverage on acquisitions and employee retention The Jones Factor what is everyone else doing? Potential Cost Savings 8

9 The Shift in Responsibility The employee mandate to have coverage Like Auto Insurance and Homeowners Employees now are part of the decision Do they qualify for a subsidy to purchase coverage in an exchange, how do they get the $$$ Do they qualify to purchase coverage in an exchange Do they qualify for Medicaid 9

10 The Calculation Pay or Play Identify full time employee status Identify what full time employees will qualify for Employer plan Medicaid, Medicare, etc. Subsidies to purchase coverage in an exchange Identify the employer cost to provide Essential Benefits an actuarial calculation Calculate the allowed employee contribution under ACA using allowed safe harbors and other methodologies 10

11 The Calculation Pay or Play Illustrate the corporate tax (Federal and State) savings to continue to provide coverage Calculate the penalties ($2K per all FTEs, or $3K for subsidized EEs) Illustrate the corporate cost (after tax) to pay the penalties We illustrate the following: Employer s cost to continue coverage Adjusted for Essential Benefits Adjusted for Full-Time Equivalent employees Net of allowed contributions Net of corporate taxes Employer s cost to discontinue coverage Adjusted for taxes 11

12 Health Coverage Under the Affordable Care Act (ACA) How to Get Coverage Beginning in 2014 START Is employer coverage available? Is family income less than or equal to 133% of the Federal Poverty Level (FPL)? Has state opted for the ACA Medicaid expansion? YES YES YES Employee is eligible for coverage through Medicaid. Family is eligible for coverage through Medicaid. YES Has state opted for the ACA Medicaid expansion? YES Is family income less than or equal to 133% of the FPL? Does the employer plan cover at least 60% of health expenses on average? YES Family is guaranteed access to insurance through an exchange and is eligible for a tax credit. YES Is family income between the FPL and 4x the FPL? Family is guaranteed access to unsubsidized insurance through an exchange or in the non-group market. Does the employer pay more than 9.5% of income for the premium in the employer plan? YES Is family income between the FPL and 4x the FPL? YES Employee can choose coverage in the employer plan or buy unsubsidized insurance through an exchange or in the non-group market. KEY FACTS The FPL in 2012 was $11,170 for a single individual and $23,050 for a family of % FPL in 2012 was $44,680 for a single individual and $92,200 for a family of 4. In 2012 employees paid $951 on average towards the cost of single coverage in an employer plan and $4,316 for a family of 4. Employee can choose coverage in the employer plan or buy insurance through an exchange and be eligible for a tax credit. 12

13 Questions Crawford Advisors, LLC 200 International Circle, Suite 4500, Hunt Valley, MD Devon Square Two, 744 West Lancaster Avenue, Suite 215, Wayne, PA Via to: To Download These Slides: Questions & Requests: 13