The Affordable Care Act & Business: Recent Developments & What s Ahead Ye a r s S tanding U p f o r A m er ican E n terpr ise

Transcription

1 The Affordable Care Act & Business: Recent Developments & What s Ahead U. S. C H A M B E R O F C O M M E R C E 1 00 Ye a r s S tanding U p f o r A m er ican E n terpr ise

2 Recent Developments Judicial Regulatory Legislative What Ahead? Lame Duck 114 th Congress Overview Employers Compliance Concerns 4980H, 6055,

3 Judicial Developments Groundhog Day! The Supreme Court s health-care ruling could deal dramatic blow. November 2011 The U.S. Supreme Court will hear a case that could gut the ACA. November

4 Surprising SCOTUS Action Circuit Court Cases Were Still In Play Possible Ramifications 37 States 7.3 Million individuals What Will States Do? 4

5 Regulatory Developments EBH for 2016 Cadillac Tax Not all 60% AV plans are okay Small Group Definition 5

6 Small Group Definition What Will Happen? Individ. Market - - EHBs Large Group >50 - OOP Maxs - EHBs - Metallic AV levels -Rate Factors Small Group <50 Grps Large Group >100 6

7 Premiums will increase Why Is This Harmful, Generally? Benefits mandates Rating rules 4980H & Employer Shared Responsibility Disparate treatment based on size Same penalty but different mandated plans 7

8 Why Is This Particularly Harmful, Now? ACA Timeline: Intended definition to expand 2 years after implementation of: Employer Mandate SHOP State Innovation Waivers: 2017 Hamstrings states ability to protect sm. group market 8

9 Legislative Developments 9

10 What s Ahead? December 11, 2014 Repeal Insurance Bailout Repeal Physician Self-Referral Prohibition U. S. C H A M B E R O F C O M M E R C E 1 00 Ye a r s S tanding U p f o r A m er ican E n terpr ise 10

11 Legislative Developments (Hopefully!) Defined Contribution & HRAs Employer Mandate Restore FT definition to 40 hours or Repeal entirely Protect Workplace Wellness Programs 11

12 Employers Compliance Concerns 12

13 Impact of Employer Mandate Statutory Requirements Practical Challenges Ways to View the Requirement Current State 13

14 Statutory Requirements Employer Mandate Applicable Large Employers (ALE) with > 50 full-time equivalent employees must: OR Offer health care coverage to all fulltime employees (and dependents) That is affordable and Meets the minimum value threshold Potentially pay a penalty 14

15 Not So Simple Seasonal Worker/Employee Does he/she count toward ALE determination? If not only employ more than 50 FTE for 4 months/120 days or less, back seasonal worker out. (statutory) Does he/she constitute a FT employee for 4980H (a) Is seasonal employee works for 6 months or less no. (regulatory) Full-time Employee Variable Hourly Employee? (regulatory) Family Glitch Affordability Test vs. Subsidy Eligibility 15

16 Different Angles: Penalties vs. Requirements Statutory Text 2 possible penalties for ALE: Failing to offer coverage to all FT employees $2000 x (# FT ees -30) If a FT employee gets a tax credit & uses it to buy exchange coverage $3,000 x (# FT ees who do this) or $2,000 x (# FT ees-30) Regulatory View If an ALE, two requirements: 4980H(a) = Must Offer Coverage must be offered to all FT ees (& dependents) 4980H(b) = Coverage Adequacy Requirement Must offer affordable and minimum value coverage to all FT ees 16

17 Nutshell Caveats Where Are We Now? The Employer Mandate Beyond Delayed for All Employers Reporting Requirement Regulations Not Ready Treasury Blog Delayed for the smallest of the large applicable employers (ALE) >50 but <100 Maintain workforce & hours of service Maintain previously offered coverage Certify that it meets these requirements To satisfy requirement to offer to all FT employees may offer to lower threshold 70% of FT employees offered affordable MV coverage To satisfy requirement to offer to all FT employees with a deminimus error 95% of FT employees offered affordable MV coverage 17

18 Impact of Reporting Requirements Statutory Requirements Practical Challenges Ways to View the Requirement Current State 18

19 Statutory Requirements Reporting Requirements Documentation to prove: Employer mandate compliance Individual mandate compliance Eligibility for Premium Tax Credits 19

20 The Reporting Requirements Why and What? Employer Responsibility Enforcement Section 6056 all ALEs (50+ FTEs) must report on which fulltime employees are offered coverage for each month Form 1095-C to employee - Parts I & II (fully-insured plans) Form 1094-C to IRS Individual Responsibility Enforcement Section 6055 all entities providing MEC (sometimes issuer, sometimes employer) must report on whom they cover Form 1095-B to employee (from issuer if fully-insured plan) Form 1095-C to employee Parts I, II, & III (from employer if selfinsured coverage) 20

21 Not All ALEs Are Equal: Different Reporting Requirements ALE self insured Why? What? ALE fully insured Why and What? 6055 = Individual Mandate & Premium Tax Credits 4980H (b) Employer reports To document which employees are enrolled MEC Parts III of Form 1095 C Issuer reports Ditto 6056 = Employer Mandate 4980H (a) and 4980H (b) Employer reports To document what (if any) coverage was offered to FT employees & dependents Parts I and II of 1095 C Employer reports Ditto 21

22 Requested Changes Adopted Single form combining 6055 & 6056 Permit Qualifying Offer safe-harbor 22

23 Things to Watch Creative Changes to Control ESI Costs Upcoming Regulations Legal Challenges to the Distribution of PTC 23

24 Moving Forward Restore Delay Targeted Repeal Preserve Flexibility 24

25 Additional Resources US Chamber of Commerce Health Reform Law

26 g{tç~ léâ Katie Mahoney Executive Director, Health Policy U.S. Chamber of Commerce

27 Additional Slides Background on Employer Mandate What is it and how does it work? What is an FTE? What is an FT Employee? How does Medicaid Expansion relate? 27

28 Most Critical Provision for Business: The Employer Mandate It sounds so simple: Applicable large employers Must offer affordable minimum value coverage To all full-time employees (and their dependents) Or potentially pay a penalty. 28

29 Defining the Elements: Employer Mandate In A Nutshell Applicable large employers = The WHO? ALE employs 50 or more full time equivalent employees (FTEs) # of FTEs = # of FT employees + aggregate # of hrs of PT employees for a month 120 Affordable, minimum value coverage = The WHAT? Affordable for non-medicaid eligible individuals: Employee s portion of the premium for self only coverage < 9.5% House-Hold Income Minimum Value: Plan has actuarial value of 60% NOTE: FTEs = FT Employees Full-time (FT) employees (and dependants) = The TO WHOM? FT employee Employee working > 30 hrs. per week, averaged over a month for more than 120 days/yr (excludes seasonal workers) Dependents Children up to 26 years of age Penalty if FT employee free rides = The OR ELSE? Penalty amount calculation will vary based on employer s actions: was no coverage offered at all or was the coverage offered not affordable, minimum value coverage 29

30 The Employer Mandate In Bite-sized Pieces WHO has to comply with the employer mandate? Applicable large employers* WHAT is required? *Caveat: In 2015, only those with 100 FTEs or more; but in 2016 all ALEs Affordable, minimum value coverage TO WHOM must this be offered? Full-time employees (and dependents) OR ELSE what will happen? May have to pay a penalty WHY would the penalty be triggered? Full-time employee free-rides on the Exchange 30

31 WHO? What is an Applicable Large Employer? An Applicable Large Employer or ALE employs 50 or more full-time equivalent employees (FTEs) 31

32 WHO (continued) What is a Full-time Equivalent Employee (FTE)? A Full Time Equivalent (FTE) reflects a combination of various part-time employees as necessary whose hours add up to 30 hours per week, collectively constituting a full-time employee. The number of FTEs is a way to measure the size of a company taking into consideration the number of hours worked by part time employees along with the number of full-time employees. 32

33 WHO (continued) How do I know how many FTEs I employ? # of FTEs = # of PT hrs. worked a month + # FT employees 120 Add together the total number of part time hours worked by all part time employees in a month together and divide that number by 120. Then add the number of full-time employees. 33

34 VERY IMPORTANT FTEs FT Employees FTEs = Full Time Equivalent Employeess (Answers the Who? ) FT Employees = Full-Time Employees (Answers the To Whom? )* * Although, the number of FT employees is included in calculating the number of FTEs for purposes of the Who? ) 34

35 AGAIN Why Do FTEs Matter? Full-Time Equivalent employees: Matter for purposes of determining whether an employer is an applicable large employer (ALE). An employer with 100 or more FTEs in 2015, or 50 or more in 2016 is required to offer coverage under the employer mandate. 35

36 WHAT? What must an ALE offer? Affordable, To be considered affordable, the full-time employee s portion of the premium for self-only coverage cannot exceed more than 9.5% of that employee s household income. Minimum Value Coverage The coverage offered to the full-time employee must have an actuarial value of 60%. 60% of the costs of the benefits covered under the plan must be covered by the plan. And Dependent Coverage To children of the full-time employee until those children turn 26 years old. (Doesn t have to be affordable, minimum value coverage) 36

37 To Whom? To Full-Time Employees A full-time employee is an employee that works on average 30 hours a week averaged over the course of a month. To Dependents of Full-Time Employees Children of full-time employees until the children exceed 26 years of age. Employer does not need to contribute a portion of the premiums to cover dependents. 37

38 VERY IMPORTANT FTEs FT Employees FTEs = Full Time Equivalent Employees (Answers the Who? ) FT Employees = Full-Time Employees (Answers the To Whom? )* * Although, the number of FT employees is included in calculating the number of FTEs for purposes of the Who? ) 38

39 AGAIN Why do FT Employees matter? Full-time employees are those to whom an ALE must offer affordable, minimum value coverage. The dependents of full-time employees are also those to whom an ALE must offer coverage. Full-time employees are the only employees that may trigger a penalty stay tuned! 39

40 Or Else Two Ways to Fail = Two Different Penalties Possible If an ALE does not offer any coverage to all fulltime employees and their dependents, the A penalty may apply. If an ALE offers coverage to all full-time employees and their dependents, but the employees coverage is either not affordable or does is not minimum value coverage, the B penalty may apply. 40

41 Penalties Possible May Apply What s The Trigger? The Penalty is not triggered by: Simply not offering coverage to all full-time employees or Offering insufficient coverage It is triggered by a full-time employee free-riding. 41

42 Free Rider Penalty If a full-time employee: The Trigger Goes to the public exchange, Gets a Premium Tax Credit, and Uses it to purchase coverage on the exchange. The Employer Mandate/Free Rider Penalty will be triggered. 42

43 What Cocks the Trigger? A full-time employee can only get a premium tax credit if: His/her household income is between % of the Federal Poverty Level; He/she is not eligible for Medicaid; and He/she does not have an offer of affordable, minimum value coverage by his/her employer. 43

44 Once Triggered, How is the Penalty Calculated? When the penalty is triggered, A full-time employee uses a premium tax credit to purchase coverage on the exchange, The penalty calculation depends on the employer s action: Did the employer fail to offer coverage to all full-time employees and their dependents (A penalty) Or Did was the coverage offered unaffordable and/or not minimum value coverage (B penalty) 44

45 Large Employer Not Offering Coverage Will I be assessed the penalty? Yes, if I employ. 50 or more FTEs* (*Under transition relief : 100 or more FTEs in 2015; 50 or more FTEs in 2016) At least 1 FT employee (ineligible for Medicaid, with household income of % FPL) qualifies for a premium assistance credit At least one such eligible employee uses the credit to purchase coverage in the exchange, and Have more than 30 FT employees How will the penalty be calculated? $2,000 per year x (total number of full time employees 30) = Penalty 45

46 Large Employer Offering Coverage Will I be assessed the penalty? Yes, if I employ. 50 or more FTEs* (*Under transition relief : 100 or more FTEs in 2015; 50 or more FTEs in 2016) At least 1 FT employee (ineligible for Medicaid, with household income of % FPL) qualifies for a premium assistance credit because coverage is unaffordable and or not minimum value coverage, and At least one such eligible employee uses the credit to purchase coverage in the exchange. How will the penalty be calculated? It will be the lesser of either: $2,000 per year x (total # of FT employees 30) Or $3,000 per- year x (# of FT employees receiving premium assistance credit & purchasing coverage) 46

47 Medicaid Expansion and Employer Mandate ACA as Enacted vs. Post SCOTUS Eligible for pemium tax credits* Medicaid eligible Employer mandate 450 Eligible for 400 premium tax credits* Medicaid eligible (if state expands) Employer mandate * P 47