2015 Pay or Play Mandate. Thursday, March 13, :00 pm 3:00 pm EST

Transcription

1 2015 Pay or Play Mandate Thursday, March 13, :00 pm 3:00 pm EST

2 Today s Speakers Colleen Kelly Vice President, Health & Welfare Practice Consultant Conner Strong & Buckelew Phyllis Saraceni Senior Vice President, Compliance & Audit Practice Leader Conner Strong & Buckelew / AIM 2

3 Welcome and Agenda Conner Strong & Buckelew s next installment in ongoing series of webinars on key issues dealing with national healthcare reform Session will focus on 2014/2015 healthcare reform next steps Special emphasis on IRS reporting of full-time employees and on recently issued final rules on employer "Pay or Play" sharedresponsibility provisions set to take effect in

4 Health Insurance Reform Here to Stay Patient Protection and Affordable Care Act ( PPACA or healthcare reform) - outright repeal unlikely President standing firm on continued roll-out of law (with executive delays) - FY 2015 budget proposal unveiled recommending changes for employee benefits; recycled ideas from FY 2014 budget proposal with few modifications Vulnerable members of Congress concerned with re-election this year Highly partisan House and Senate under increasing pressure to find consensus and address problems Bipartisan legislative fix opportunities (unlikely to succeed - President will veto): House may take up bill that would modify definition of full-time employee by increasing it from 30 hours/week to 40 House approved bill for one-year delay of individual mandate Every individual, employer, and plan sponsor affected by some aspect of health care reform legislation 4

5 Perspectives Major implications for: - Economy - Providers - Health Insurers - Employees - Employers: Penalties - Employers: Near Term - Employers: Through

6 Economy Congressional Budget Office (CBO) released major study of government s budget and its effect on overall economy over next 10 years. - report delivers devastating analysis of inefficiencies and problematic social costs of health care reform law - new expenditures of as much as $2 trillion - colossal disruption of US medical system - according to CBO, in 10 years about same number of people will lack insurance as before Report says Americans will choose to supply less labor given the new taxes and other incentives they will face and the financial benefits some will receive. 6

7 Providers More disincentives for providers to enter/stay in medical profession Expansion of need for coverage for individuals who seek medical services Opportunities for increased preventive and primary care Many hospitals/health systems will manage under reform effectively - weaker providers will likely see ongoing margin and balance sheet pressure leading to rating deterioration Increase in Accountable Care Organization (ACO) models - allows hospitals in cooperation with physicians, to provide leadership in voluntary ACOs 7

8 Health Insurers Recent guidance extends health insurance transition policy through October 1, allows certain small employers who have insurance policies that are not compliant with PPACA to renew those policies without penalty through transition period - released under pressure to act because of federal exchange technical failures and promise to Keep What You Have Not all states and insurance companies will permit coverage to renew. Administration continues to work with insurers to fix trouble spots Concern about the cost of high-level benefits and potentially skewed risk pools for exchanges 8

9 Employees Confusion over Marketplace options and employer plan options - Enrollment timing and mid-year special enrollment rights - Subsidy eligibility Policy cancellations Chaos in 2014 as people start coming on/using benefits - Doctor/hospital of choice may not be available - Higher costs/deductibles - Increased potential for fraud Individual mandate tax tax return will include question on whether have insurance or qualify for exemption if not will owe penalty - implications likely to take a year or two to settle in; longer-term impact may not be apparent until 2016/2017 Pay back of miscalculated subsidies 9

10 Employers Penalties PPACA excise taxes now in effect that are potentially more significant than pay or play penalties PPACA imposes an excise tax of $100/day/affected individual for certain violations: - Example: Total potential ANNUAL excise tax with respect to single individual for continuous violation of single requirement could be $36,500 Applies for each day a failure occurs and ends on date failure is corrected Limited correction window available - makes identifying and promptly correcting any potential errors of utmost importance Employers are required to self-report and pay excise tax for violations of any of the applicable mandates using Form

11 Employers Penalties Excise tax applies to multitude of HCR requirements, including: No preexisting condition exclusions No discrimination based on health status Cost-sharing limitations on essential health benefits (EHBs) No waiting periods in excess of 90 days No lifetime or annual limits on essential health benefits No rescissions of coverage Coverage of preventive health services Extension of dependent coverage until age 26 Periodic summary of benefits and coverage (SBCs) Health plan claim and appeals protections Patient protections, including selection of primary care provider, coverage of emergency services, and access to pediatric, obstetrical and gynecological care providers 11

12 Employers Near Term Near term employers remain committed to offering benefits, but considering modifications: - trim benefits, eligibility, spousal benefits - utilize private exchanges - explore dual-plan approach - offer plan that meets requirements of PPACA, as well as stripped down skinny plan that does not meet all requirements, but generally is cheaper to employee - trim employees to get under 50-employee large employer threshold - create new part-time positions to replace full-time positions to reduce number of employees to whom health care will be provided (but watch for risks of potential employee challenges) 12

13 Participant Question Can I just eliminate my employer-sponsored group health plan coverage and establish a stand-alone health care reimbursement plan for my employees? No. Employers cannot reimburse employee s individual insurance premiums (either on or off exchanges) on tax-free basis, even if done so outside of an HRA or other tax-favored basis Guidance says an employer cannot offer a stand-alone Health Reimbursement Arrangement (HRA) because it fails PPACA s market reforms, unless the HRA is: for retirees-only used only to fund HIPAA-excepted coverage HRA needs to be sufficiently integrated with other qualifying coverage 13

14 Employers Through 2015 Through 2015, focus on: - managing program design - considering eligibility and employee hours - understanding 90-day waiting period rules - understanding application of pay or play rules - conducting analysis - understanding new requirement to report on health insurance coverage beginning with coverage in 2015 (calendar year) 14

15 Basic Timeline 2010: Age 26 and other benefit mandates take effect for plan years beginning on or after September 23, : Health FSAs can no longer be used for over-the-counter medications 2012: SBC; W-2 Reporting; PCOR Fee; MLR rebates; addition of women s health preventive services 2013: FSA contributions limited to $2,500/year; Exchange notices distributed; Increased Medicare tax 2014: Eliminate all remaining annual limits on coverage and pre-existing condition limitations for all; individual mandates begin; individual exchanges/marketplaces go-live; reinsurance tax on employers plans; wellness incentives to 30% differential; 90-day waiting period limit 2015: Employer responsibility mandate begins for employers with 100 or more full-time employees; IRS tracking of full time employees and reporting to IRS on coverage options begins for employers with 50 or more full-time employees 2016: Employer responsibility mandate begins for employers with 50 to 99 full-time employees 2017: States can permit larger groups on their exchanges 2018: 40% excise tax for high-cost Cadillac plans 15

16 Participant Question Now that we have the final rules, when do the employer mandate provisions go into effect? Employer shared responsibility (pay or play) provisions generally are not effective until January 1, so no penalty payments will be assessed for 2014 Employers will use information about the number of employees they employ and their hours of service during 2014 to determine whether they employ enough employees to be an applicable large employer for

17 Participant Question Where can I learn more about the IRS full-time employee and coverage reporting requirements? Final regulations just released govern how employers and insurers will report the information that the agency needs to enforce both the individual and employer shared responsibility requirements in The guidance provides simplified reporting alternatives for employers that offer affordable coverage to substantially all full-time employees, including a special transition rule for Employers now have the guidance they need to finalize compliance strategies for this reporting requirement. 17

18 Finally The Final Pay or Play Rules

19 Final Pay or Play Rules Release of long-awaited final employer mandate shared responsibility ( pay or play ) regulations - Can now finalize 2015 pay or play strategy - The pay or play rules and related IRS reporting provisions go into effect for 2015 (first information reports due early 2016) - Rules make number of changes and improvements in response to input on proposed December 2012 regulations - For-profit, nonprofit, church, government entity all subject to rules Final rules issued on employer IRS reporting requirements 19

20 Employer Size Under 50 Employers who employ fewer than 50 full-time employees (including full-time equivalents) in prior calendar year - ARE NOT required to provide coverage or fill out any reporting forms in 2015 or in any year All employees are counted (limited exception for certain seasonal workers) Number of employees and hours of service during 2014 considered to determine whether meet threshold for 2015 Can use 6 consecutive month period in rather than entire 2014 calendar (12 month) year - to determine cross threshold for 2015 Must consider entire controlled group 20

21 Participant Question How does one calculate the full-time equivalent number of employees? Must have employed during previous calendar year at least 50 full-time employees or a combination of full-time and part-time employees that equals at least 50. Example: Employer has 40 FTEs (employed 30 or more hours/wk on average) and 20 employees employed 15 hours/wk on average during Has equivalent of 50 FTEs, and would be an applicable large employer for Link to FAQs on this issue: Employer-Shared-Responsibility-Provisions-Under-the-Affordable-Care-Act 21

22 Employer Size 50 to 99 Employers who employ between 50 to 99 full-time employees (including full-time equivalents) in prior calendar year - ARE required to fill out reporting forms on workers and coverage in 2015 calendar year - must determine which employees working on average 30 hrs or more/wk for calendar year 2015 reporting - ARE NOT required to offer coverage in 2015 (have extra year to comply - until 2016 before have to either offer coverage or be liable for penalty) Must certify that - not reducing size of workforce to fall under 99 full time equivalent employees threshold during will maintain any previously offered health coverage through

23 Employer Size 100 or More Employers who employ 100 or more full-time employees (including fulltime equivalents) in prior calendar year - ARE required to fill out reporting forms on workers and coverage in ARE required to offer coverage or pay penalty beginning in 2015 > Must identify/count FTEs (30 or more hours/week) and track PTEs > Special variable hour/seasonal rules (can use lookback/measurement period) > Each controlled groups member's liability determined separately, based on offer (or lack) of coverage and number of full-time employees Whether paying or playing, be prepared to justify determinations about number of FTEs (used to determine substantially all test and penalty amount) 23

24 Unions/Multiemployer Plans Employer subject to pay or play mandate - not union/taft Hartley/multiemployer plan employer required by CBA to make contribution to multiemployer plan considered to comply so long as employee/dependents are offered minimum value, affordable coverage Employer (not multiemployer plan) responsible for identifying which employees are full-time (based on hours of service for employer) Special rule for IRS reporting of full-time employees plan administrators of multiemployer plan can complete reporting and provide statements to employees on behalf of contributing employers contributing employers retain liability for correct and timely filing employers to report only for those employees who do not participate in multiemployer plan 24

25 Participant Question For a large employer bound by CBA and participating in defined benefit plan dictated by union, can employer force existing associates into Obamacare? Over time, employers can renegotiate terms of CBA, but no employer can force employee to obtain exchange coverage. many fundamental unknowns about cost of coverage and operation of exchanges to consider when assessing suitability as vehicle to provide health benefits exchanges not apples to apples replacement for group coverage and may not make economic or practical sense for vast majority of current multiemployer participants 25

26 Employer Mandate Effective for plan years beginning in 2015: Employers with 100+ FTEs have to offer coverage or risk paying shared responsibility pay or play penalty Does not require employers to offer qualified health coverage, but if they don t they may have to pay tax: > NO COVERAGE offered penalty > SUBSTANDARD COVERAGE OFFERED penalty Penalty tax applies if at least one FTE goes to exchange for coverage and gets subsidy 26

27 70% Coverage Rule for 2015 NO COVERAGE offered penalty If employer does not offer minimum essential coverage (MEC) to 70% of full-time employees and dependents, then pay $2,000 annually for each full time employee, minus first 80 (for 2016 and subsequent years will be minus first 30) SUBSTANDARD COVERAGE OFFERED penalty If employer does offer MEC to 70% of full time employees and dependents, run risk of paying penalty of lesser of above no coverage penalty, or $3,000 annually for any full-time employee who gets subsidy to purchase coverage on exchange because either they were not offered coverage, or they weren t offered minimum value and affordable coverage For 2016 and later years, coverage must be offered to at least 95% of full-time employees 27

28 No Coverage Offered - Examples Employer has 1,000 FTEs (average of 30 hours/week) and 250 PTEs (average of less than 30 hours/week). No penalty for PTEs (not included in penalty calculations). Does not offer coverage to FTEs, but no FTEs receive credits for exchange coverage. No penalty Does not offer coverage to FTEs, but at least one FTE receives credits for exchange coverage: 1,000 FTEs 80 FTEs = 920 FTEs x $2,000 = $1,840,000 28

29 Coverage Offered - Examples Employer has 1,000 FTEs (average of 30 hours/week) and 250 PTEs (average of less than 30 hours/week). No penalty for PTEs (not included in penalty calculations). Assumes also offering coverage to dependents and assumes at least one FTE receives credits for exchange coverage. Does offer coverage to certain FTEs but it is not MEC: 1,000 FTEs 80 FTEs = 920 FTEs x $2,000 = $1,840,000 Does offer MEC benefits but does not offer to at least 70% of all FTEs: 1,000 FTEs 80 FTEs = 920 FTEs x $2,000 = $1,840,000 Does offer MEC benefits and does offer to at least 70% of all FTEs but coverage does not meet MV/affordability test: lesser of $3,000 x each FTE that buys exchange coverage and receives a subsidy, or $1,840,000 29

30 Coverage Offered - Examples Same assumptions as on previous slide: Does offer MEC benefits and does offer to at least 70% of all FTEs and the coverage does meet MV/affordability test: No penalty as long as MV/affordability test met (and could pay $3,000 x each non-offered FTE who receives a subsidy) Does offer MEC benefits and does not offer to at least 70% of all FTEs and the coverage does meet MV/affordability test: 1,000 FTEs 80 FTEs = 920 FTEs x $2,000 = $1,840,000 Does offer MEC benefits and does offer that coverage to 100% of all FTEs and the coverage does meet MV/affordability test: No penalty 30

31 Participant Question Will amount of employer mandate penalty payment be increased over time? Yes. Recently issued FAQs confirm that beginning in 2015 penalty amounts are subject to annual adjustments to reflect increases in average health premiums since 2013 (HHS previously proposed 2015 adjustment of 6%) - If finalized, $2,000 multiplier will be $2,120, and $3,000 multiplier will be $3,180 31

32 Mandate Effective Date January 1, 2015 for calendar year plans For employers with non-calendar year plans, mandate may apply beginning with first day of 2015 plan year - subject to complicated fiscal plan year transition relief rules (coverage must generally be offered to full-time employees on first day of 2015 plan year and it must be affordable and provide minimum value) - requires that employer maintained non-calendar year plan on December 27, 2012 and must not have changed plan year after December 27, 2012 to begin at later date Form 5500 filing year is generally plan year - for public sector employers (no Form 5500 required), plan year generally is policy year, presuming plan administered on policy year - Example: policy renews July 1 but plan administered with open enrollment changes effective January 1 year, the agencies might reasonably argue that plan year is calendar year 32

33 Dependent Coverage Employers required to offer coverage to dependents Does not include spouse, foster children, stepchildren, and certain children who are not US citizens or nationals Requirement to cover dependents will not apply to employer who does not currently offer dependent coverage in 2015, so long as employer is taking steps to arrange for such coverage to begin in Relief is not available to extent employer offered dependent coverage during its 2013 or 2014 plan year and then subsequently dropped it 33

34 Participant Question Does an employer have to provide family coverage for eligible per diem employee or can we provide single coverage and have employee pay for dependent coverage? The employee can be required to pay for dependent coverage. We understand the employer is offering family health coverage to a per diem employee. To avoid penalty, employer must OFFER minimum essential coverage to employee and dependent. In order to offer affordable coverage, employer mandate penalty rules only require that employee s share of premium meets the 9.5% of W-2 income test for self-only coverage offered to employee. 34

35 Counting Hours Full-Time means average of at least 30 hours of service/weekk or 130 hours of service/calendar month and includes: Each hour for which employee is paid, or entitled to payment, for performance of duties for any member of employer s controlled group Paid leave for vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence is counted - no limit to hours in these categories Can use optional look-back measurement method for determining which employees must be treated as full-time, and special rules for monthly measurement method to determine full-time status Guidance also generally retains approaches (actual, days-worked equivalency, weeks-worked equivalency) for determining hours worked by non-hourly workers. 35

36 Participant Question How do you handle new hires in measurement period? If a new hire is not seasonal and not variable and is scheduled to work more than 30 hours/week, then they are full-time and no measurement period will apply. For employers using a look-back measurement method rules outline how to determine whether new hire reasonably may be classified as variable-hour employee criteria include: whether new hire is replacing an employee who was (or was not) a full-time worker, the extent to which employees in same or comparable positions are (or are not) full-time employees, and whether position was advertised or communicated to new hire as requiring more or less than 30 hours a week 36

37 Seasonal Employees Seasonal employees - very confusing and easily misunderstood Seasonal employee rule differs for purposes of (1) determination of whether employer is a large employer (special rule makes it easier to avoid applicable large employer status where employer s non-seasonal workforce is 50 or fewer) (2) counting FTEs for the penalty But in both cases - NO explicit exclusion for seasonal employees Those in positions for which customary annual employment is 6 months or less can be treated as variable-hour and subject to initial measurement period even if they are expected to work more than 30 hours/week at time of hire; but only if position begins around same time each year (e.g., winter or summer). 37

38 Transitional Rules On one-time basis, in 2014 preparing for 2015, to measure full time employee status of variable hour employees, plans may use measurement period of 6 months and stability period (for offer of coverage) of up to 12 months - The 6 month transition measurement period must begin by July 1, 2014, and end no earlier than 90 days before first day of 2015 plan year (since administrative periods are limited to 90 days) - Employer with calendar-year plan likely will want to start transition standard measurement period no later than April 1, 2014, in order to allow for a 90 day administrative period before start of 2015 plan year - Transition measurement period applies only to workers already employed when it starts. For those hired during or after period, general rules for new employees under look-back measurement method apply 38

39 Break in Service/Leave of Absence Rehires and employees returning from unpaid leave generally can be treated as new employees if period of no service was at least 13 weeks (old rule was 26 weeks) 26 weeks still applies for educational institutions Otherwise, treat as continuing employee with same status for that stability period For employees returning after special unpaid leave (FMLA, USERRA, jury duty) Exclude special unpaid leave period, or Credit hours of service for leave period at average weekly rate outside period Special rule for continuing employees of educational organizations 39

40 Various Employee Categories Special rules apply for determining full time status of various types of workers Volunteers: Hours contributed by bona-fide volunteers for government or taxexempt entity, such as volunteer firefighters and emergency responders, will not be counted when identifying full time employees as long as volunteers' only compensation from organization is for expense reimbursement, reasonable benefits (such as service awards), and nominal fees. On-call hours: Employers must take into account on-call hours for which an employee is: paid, required to remain on call on employer's premises, or subject to substantial restrictions that prevent employee from using time effectively for his or her own purposes 40

41 Educational Institutions Adjunct faculty: Crediting adjunct faculty member with 2.25 hours of service for each hour of classroom time/week plus an hour of service/week for each required hour of non-classroom time (such as office hours and faculty meetings) is considered reasonable Educational employees: Teachers and other educational employees will not be treated as part-time for year simply because school is closed or operating on limited schedule during summer (final rules continue 26 week break-in-service period under rehire rules to avoid treating educational employees as new hires) Student work-study programs: Hours worked by student employees under federal or state-sponsored work-study programs will not be counted in determining whether they are full time employees. student employees' hours working outside of subsidized work-study program must be counted service performed under an internship or externship program count as hours of service for outside employer and not educational institution 41

42 Participant Question For educational institutions what is recommended method of tracking substitute teachers? Use of one of two measurement methods for determining whether employee has sufficient hours of service to be full-time employee. monthly measurement method where employer determines each employee s status as full-time employee by counting employee s hours of service for each month look-back measurement method under which employer may determine status of employee as full-time employee during future period (stability period), based upon hours of service of employee in prior period (measurement period) 42

43 Participant Question What happens when you have an associate at 40 hrs and benefits eligible who goes out on disability and you get a part timer (under 30 hrs) to cover that person who currently is not benefits eligible. Do we have to offer the benefits even though they are covering an over 40 hr associate temporarily? Temporary assignments that result in averaging over 30 hours/week can result in employee being considered full-time. Employers have to offer coverage to certain short-term hires/employees where they are reasonably expected to work full-time schedule (cannot treat them as variable) by first day of fourth month on that schedule (or risk paying penalty). 43

44 Participant Question How will an employer know that it owes a penalty payment? IRS will adopt procedures that ensure employers receive certification that one or more employees have received a premium tax credit. IRS will contact employers to inform them of their potential liability and provide an opportunity to respond before any liability is assessed or notice and demand for payment is made. The contact for given calendar year will not occur until after due date for employees to file individual tax returns for that year claiming premium tax credits and after due date for applicable large employers to file information returns identifying their full-time employees and describing coverage that was offered (if any). 44

45 Participant Question How will an employer make a penalty payment? If it is determined that employer is liable for payment after employer has responded to initial IRS contact, IRS will send notice and demand for payment. That notice will instruct employer on how to make payment. Employers will not be required to include penalty payment on any tax return that they file. 45

46 Full Time Employee Reporting Requirements Employers with 50 or more full time equivalent employees need to track data for reporting information to IRS for: - Health coverage offered effective January 1, Number of full time employees employed each month; working on average 30 hours or more/week for 2015 Need to understand complex guidance about measurement and stability period safe harbors for determining whether certain variable hour employees meet this full time standard Be prepared to justify determinations about number of full time employees on which shared-responsibility penalty will be base Be prepared to demonstrate if full time employees are eligible for minimum essential coverage that is affordable and offers minimum value (if applicable) 46

47 Full Time Employee Reporting Requirements Section every entity (including health insurers and sponsors of selfinsured health plan) that provides Minimum Essential Coverage (MEC) is required to file annual returns reporting specific information for each individual for whom MEC is provided (facilitates compliance with employer mandate) Section every applicable large employer (50+) must file return with IRS that reports terms and conditions of health care coverage provided to employer's full-time employees during year (facilitates compliance with individual mandate) Reporting effective for 2015 calendar year (first reporting is due in early 2016) 47

48 Full Time Employee Reporting Requirements Self-insured plans can report information required under both 6055 and 6056 on single combined form Simplified reporting obligations for employees offered minimum value MEC at an employee cost for employee only-coverage of no more than 9.5% of the federal poverty line, and also offered MEC to employees spouses and dependents (defined in regulations as qualifying offer ) Solely for 2015, if employer made qualifying offer to at least 95% of full-time employees and their spouses and dependents then can provide simplified notice to employees regarding coverage provided Employer that offers minimum value/affordable MEC to 98% or more of its employees (and dependents) does not have to determine whether each employee is full-time or report total number of full-time employees 48

49 Full Time Employee Reporting Requirements EMPLOYER HEALTH PLAN Full Time Employee Reporting Requirements Section 6055 Reporting Section 6056 Reporting Primary Reporting Purpose Report Minimum Essential Coverage (MEC) offer to enforce individual mandate Determine eligibility for premium tax credit and enforce employer mandate Which Employers must Report? All size employers who offer MEC health plans to their employees Applicable large employers (employed average of 50 full time or full time equivalent employees during prior calendar year) Each member of a controlled group must separately comply (reporting can be coordinated by one party, but each member has the reporting obligation) Insured Group Health Plan Insurance companies Who is Responsible for Reporting? Employer Self Insured Group Health Plan Employer Employer 49

50 What To Do Now? Determine plan year Determine full time equivalent employees If between 50 99, not subject to employer mandate for 2015, but will have to certify not reducing size of workforce to fall under 99 and you also subject to certain maintenance of coverage requirements If between or 100 or more, measure full time employees in 2015 for IRS reporting on full time employees and coverage in 2015 If 100 or more, determine pay or play strategy - Exclude coverage for some full time employees and risk paying $3,000 /year/ full-time employee getting subsidy - If don t cover 70%, pay $2,000/year/full time employee, minus first 80 50

51 Simple Strategy for Plan Compliance

52 4 Steps to Protect Your Plan in 2015 Employers who want to continue to offer benefits can do so and effectively navigate through cost pitfalls Here is a simple 4 point plan for 2015: 1) Offer at least one safe harbor plan providing 60% coverage to 70% of full time employees and dependents ($3,000 penalty can apply to those getting subsidy who were not offered coverage) 2) Design cost share for 60% plan and employee contributions for single coverage to be not more than 9.5% of W-2 income 3) Adjust full time hours to be less than 30 (if desirable) 4) Ensure waiting period (based on time) is 90 days or less (effective 2014) Skinny plan can also be offered on an optional basis for employees who cannot afford 60% plan Higher cost plans can also be offered on an optional basis alongside 60% plan 52

53 Checklist of Healthcare Reform Requirements

54 Requirements PPACA requires all group health plans to comply with many mandates which have been phased in over time. Most provisions apply to Grandfathered Plans and Non-Grandfathered Plans Some provisions don t apply to Grandfathered Plans Some provisions effective for plan years beginning on or after September 23, Special rules for Grandfathered Plans in existence on March 23, 2010 but certain coverage changes after that date may cause plan to lose Grandfathered status - Some provisions effective for plan years beginning or after January 1, Some provisions have a later effective date - Some provisions have a still to be determined effective date (delayed insured plan non-discrimination rules and the delayed automatic enrollment provisions) 54

55 Inventory of Major HCR Requirements 1) Determine Pay or Play Effective Date 25) Elimination of the RDS 2) Plan for Pay or Play Reporting 26) Early Retiree Reinsurance Program 3) Track Full Time Employees 27) Over the Counter Drug Changes 4) Decide whether to Pay or Play 28) Cadillac Tax 5) Worker Classification and Time Tracking 29) Plan Amendment/Terminations 6) Non-Calendar Year Section 125 Plans 30) Automatic Enrollment 7) Prepare for Interaction with the Marketplaces 31) First Dollar Coverage for Preventive Care 8) Pre-Existing Condition Exclusion 32) Revised Appeal Process 9) PCOR Fee 33) Patient Protections 10) Transitional Re-Insurance Fee 34) Insured Non-Discrimination Rules 11) Health Insurer Fee 35) Clinical Trial Coverage 12) Prepare and Distribute Marketplace Notice 36) Transparency Reporting 13) Summary of Benefits and Coverage (SBC) 14) Prepare and Distribute SPDs and SMM 15) Wellness Program Incentive 16) 90 Day Waiting Period 17) Lifetime Limit on Essential Health Benefits 18) Out of Pocket Limits 19) Coverage for Adult Children 20) W2 Reporting for Value of Benefits 21) Recessions 22) Health FSA Contribution Limit 23) Health FSA Carry Over 24) Medical Loss Ratio Rebates 55

56 2014 Immediate Issues FSA $500 carryover Non-calendar year midyear election changes Reinsurance fee Cost-sharing / OOP limitations Essential health benefits (EHBs) and benchmark plans Updates to Summary of Benefits and Coverage (SBCs) Same sex marriage eligibility and tax rules Actions required for certain HRAs 90 day waiting period rules HIPAA privacy and security requirements/certification 56

57 Participant Question Can our plan still have a first of the month following 90 days waiting period? No. For plan years beginning on or after January 1, 2014, all group health plans (grandfathered, insured, self insured, under 50 employees) may not impose waiting periods of more than 90 days before coverage becomes effective Special rules allow for eligibility rules not based on lapse of time (e.g., completion of license or certification requirements) Requirement to successfully complete reasonable and bona fide employment-based orientation period may be imposed as condition for eligibility for coverage under plan (maximum duration of an otherwise permissible orientation period limited to one month) 57

58 Preparing for 2015

59 2015 Checklist Know all requirements and deadlines (CSB 2014 Healthcare Reform Checklist) Confirm compliance with waiting period rules Start planning for tracking of FTE workforce effective 1/1/15 (CSB FTE Tracking Tool) - for pay or play reporting and penalty assessment - when and how to start counting hours 59

60 2015 Checklist Prepare for pay or play - run calculations to determine cost of penalty against cost of providing employer-sponsored health coverage (CSB Calculator) - if playing, consider affordability and minimum value standards - consider alternatives such as captives and private exchanges Start planning for Cadillac tax in for entities with high cost plans, plan design and labor contract negotiation strategies need to be put in place to protect from this potentially exorbitant tax 60

61 Resources

62 Agency Resources Agency Healthcare Reform Sites: Health and Human Services (HHS): Department of Labor (DOL): Internal Revenue Service (IRS): 62

63 Help from Conner Strong & Buckelew Conner Strong & Buckelew Healthcare Reform website page at: News updates» Online library of client updates and alerts» Summary of major provisions» Detailed Year-by-Year timeline of changes» Outline of all aspects of law Check back for updates, news and analysis, and updated tools to help you navigate this complex process Call Conner Strong & Buckelew at

64 Other Resources from Conner Strong & Buckelew Periodic Webinars - Web-based presentations on health care legislation, regulations and innovative ideas Alerts and Updates - High level, quickly produced articles about emerging issues intended to alert clients to legislative and regulatory developments - Historic library available on line Perspectives - Thought pieces intended to identify trends and issues, helping clients anticipate challenges 64

65 Thank You Thank you for your participation! 65