Health Care Reform: Strategies for Compliance

Transcription

1 Health Care Reform: Strategies for Compliance Dave Byrd National Ski Areas Association Tracy Roseman Paychex, Inc.

2 Introductions Q & A / Overview of 2014 U.S. Supreme Court Ruling Small Business Tax Credits 2012 November Elections Landscape States accepting Medicaid Funding States creating own Exchanges

3 Many critical Regulations Pending from Federal Agencies Known Unknowns Numerous Deadlines / Timelines for Compliance Will Federal / State Exchanges be created by 2014? Educating Employees Eligible for Subsidies

4 WHERE WE ARE TODAY? Employer Mandate January 1, Percent of today s Uninsured will be eligible for subsidies! Large Employer and the Seasonal Worker Exemption; FTEs Full Time Equivalents Preliminary Questions: Provide health insurance to YEAR-ROUND staff, not Seasonal staff?

5 Rethinking Benefits Packages Who provides Health Insurance to Year- Round Staff / Senior Management? What can your You AFFORD to provide? How much of Plan costs can you afford to Pay? 100% vs. 80% vs. 60% Employee RETENTION, Benefits Strategies

6 STARTING OUT BASICS Large Employer Must offer health care to Full Time but NOT Part Time employees; Full Time Equivalents = FTEs Pay or Play penalties / assessments Full Time = Average of 30 hours averaged over Month; 130 hours /month Minimum Plan AV VALUE : 60 % Employer / 40% Employee Premium Split in cost of plan New Hires: 90-Day Waiting Period

7 Seasonal Worker Exemption An employer shall not be considered to employ more than 50 full-time employees if: (I) the employer s workforce exceeds 50-full time employees for 120 days or fewer during the calendar year, and (II) they are seasonal workers.

8 Seasonal Worker Exemption Applies only to issue of Large Employer determination, so issue for very small employers FTEs = Adding Full time employees, + all part-time hours worked and seasonal workers each month, divided by 120 Do you cut your season to 119 days? Part-timers + Full-time may tip you over 50 FTEs

9 SEASONAL EMPLOYEES Only may exclude Seasonal Workers from Pay or Play penalties when: -- Number of Seasonal Employees + full time employees exceeds 50 employees, for less than 120 days in a calendar year

10 NSAA White Paper: Financial Implications for Health Care Reform Conclusions of the NSAA White Paper : Offer Insurance only Push eligible employees into Medicaid Younger employees on Parents / Spouse plan Premium Tax Credits thru Exchanges Restrict Part-time hours? Employee-education on value of Employer plan Employee vs. Dependent Coverage -- Exchanges

11 STRATEGIES -Employers dropping health benefits entirely? -- Pay-or-Play penalties / Assessed Monthly -- loss of tax deduction / SB Tax Credits -- HUGE retention tool / competitive -- Increasing Salary: taxes on wages to employer AND employee -- Employees UNSOPHISTICATED to navigate health care market on own -- Health Care cost deduction $131 billion, largest tax deduction to U.S.

12 Pushing Employees to Exchanges or Off Employer s Plan? -- Stay on Parents Plan until Young, healthy employees Spouse or parents plans, can avoid pay or play penalties -- Young, lower incomes to Exchanges, better value, avoid Pay to Play penalties -- But young, low risk employees wanted to keep premiums LOW; only insuring higher risks, older employees?

13 Strategies to Minimize Costs Avoid Pay to Play penalties, but these are only assessed MONTHLY, not annually Move dependents to Exchanges / Medicaid? Lower Plan AV value: drop from 100% to 60%, employee shares in burden, go to Exchange Emphasize Part-time? Practical Pros and Cons Sharply monitor 130 hours month?

14 Strategies to Minimize Costs Utilize full 90-day waiting period but returning seasonals? Start out as part-time for first 60 days, go to full time for last 90 days of season, but make this waiting period; vice versa Plan eligibility restricted to only Full Timers Differentiate Plan $: Affordable for employee, but HIGH rates for spouse/kids

15 Strategies to Minimize Costs Last month full-time: Pay or Play penalties only based MONTHLY, take the hit for small # of key full time employees, $167 per month if fail to offer Insurance Hire J-1 Visa holders? 90-day Waiting Period Measurement Periods

16 LOOK BACK Provision Gift to Seasonal Employers New Guidance from IRS Sept. 1 Whether variable hour or seasonal employees are Full Time Employees Essentially gives employers 2014 / 2015 opportunity to adjust, effectively no Pay to Play penalties SAFE HARBOR 2012/2013 season NOT the season for determining 2014 Full Timers; 2014 will determine 2015 Full Timers

17 Look Back Periods How they work Safe Harbors Initial Measurement Periods 3 to 12 months, chosen by employer Must be uniform for all employees in same category (Exceptions: salaried vs. hourly, different states) Stability Period begins after Measurement Period Administrative periods up to 90 days

18 Look Back / Measurement Periods Ski Instructor Example of seasonal employee in Recent Guidance, very promising for ski areas Nov. 15, 2014 thru March 60 hrs / week Initial measurement period 12 months Not averaging 30 hours per week for 12 month period, thus not full time employee, not plan eligible, no penalty to employer

19 Rationale: Smallest Employers Tax Credit = Credit applied to reduce business income taxes Deduct 35% of costs 2013; 50% of costs in 2014 Eligibility: Less than 25 FTEs / Average Employee Wage Less than $50K Employer must pay 50% of Health Insurance Premium

20 Owners CANNOT take Credit for OWN health care costs Only have to cover 50% of costs of EMPLOYEE S insurance, not dependents Credit Reduced / Phased Out the more employees, the higher the average wage Can be applied to Dental / Vision Businesses may take both DEDUCTION for health care AND tax credit

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22 Summary of Benefits & Coverage Starting September 23, 2012 Provide to Participants, Beneficiaries, Enrollees Prominent & Readily Accessible Culturally and Linguistically Appropriate, 4 double-sided Pages Have both Electronic and Paper Copies Available

23 SBC Substance Definitions Description Exceptions, Reductions & Limitations on Coverage Cost-Sharing Coverage Facts Label Statement Regarding Minimum Essential Coverage Statement that SBC is only a Summary Contact Number

24 Sample SBC