Health Care Reform: Recent Guidance and Next Steps for Employers. Presented by: Chase Cannon, JD, LLM Vice President,Counsel, NFP Benefits Compliance

Transcription

1 Health Care Reform: Recent Guidance and Next Steps for Employers Presented by: Chase Cannon, JD, LLM Vice President,Counsel, NFP Benefits Compliance

2 Reminders Please place your phone on mute for the call. If you would like to ask a question, please feel free to use the chat feature at any time during the call. You may direct your questions directly towards Chase Cannon. We will also have a Q & A period at the end of the presentation. 2

3 Biography for Chase Cannon Summary of Experience Chase joined NFP in He currently works with firms, employers and brokers to help solve their employee benefits-related compliance, regulatory and legal issues. Prior to joining NFP, Chase worked as an attorney at the Internal Revenue Service (IRS), Office of Chief Counsel in Washington, D.C., where he advised IRS agents and attorney litigators and drafted taxpayer guidance, including federal income tax regulations and private letter rulings, on issues relating to health and welfare benefits plans. He also spent two years as a judicial clerk for the Honorable Stephen Swift of the United States Tax Court in Washington, D.C. Professional Affiliations and Credentials Chase holds a Bachelor of Science in political science from the University of Utah, a Juris Doctor from the University of San Diego School of Law and a Master of Laws in Taxation from Georgetown University Law Center. He is a member of the State Bar of Maryland. 3

4 PPACA Discussion: Agenda Quick Review of Existing Obligations Employer Mandate Proposed Regulations 4

5 PPACA Timeline 5

6 PPACA: Review of Existing Obligations Health FSA Annual Limit Summary of Benefits and Coverage (SBC) Form W-2 Cost of Coverage Reporting PPACA Fees, Contributions, and Taxes Notice of Exchange Premium Variations for Employer-sponsored Wellness Programs 6

7 2013: Health FSA Annual Limit Effective for plan years beginning on or after Jan. 1, 2013, Health FSA participants will be limited to an annual contribution limit of $2,500. Does not include employer contributions (contributions that cannot be cashed out or allocated to other purposes) Will be adjusted for cost of living increases in subsequent years 7

8 Summary of Benefits (SBC): Delivery Four times SBC to Participants & Beneficiaries (Plan years after 9/23/12) Plan Enrollment As part of open enrollment materials; if none distributed, then by first day the participant or beneficiary is eligible to enroll in the coverage Special Enrollment Must be provided to HIPAA special enrollees no later than 90 days after enrollment Renewal Automatic Renewals: No later than 30 days prior to the first day of the new policy year Non-Automatic Renewals: By the distribution date of renewal application or open enrollment materials Upon Request Within 7 business days of the request 8

9 SBC: Modifications and 60-day Advance Notice Modifications Made at Renewal No Advance notice required but new SBC required with Open Enrollment Materials Modifications Made Outside of Renewal 60 Day Advance Notice Required May be done through updated SBC or through separate notice Remember to consider ERISA s SPD/SMM requirements 9

10 Summary of Benefits and Coverage How should an SBC be distributed? SBC may be provided in paper format or electronically The same rules apply as how to distribute SPD s electronically May if access is an integral part of their job May a notification of where to find on the intranet The system results in actual receipt of transmitted information OR 10

11 2013 Form W-2 Reporting: What needs to be reported? 11

12 PPACA Fees, Contributions and Taxes OVERALL IMPACT = 5-7% Increase in Premium Rates Both Fully and Self-insured Plans PCOR Fee Reinsurance Contributions Only Fully Insured Plans Health Insurance Tax 12

13 Patient-Centered Outcomes Research Institute: PCOR Fee Purpose & Due Date PCOR (aka Comparative Effectiveness Research Fee) Will fund PCOR Institute (research the effectiveness of medical treatments, procedures, drugs, other strategies) Applies for plan years ending after 9/30/12 until 9/30/19 Responsibility & Amount Fully Insured: Insurer (pass through cost to customers) Self-insured: Plan sponsor (usually the employer) $2 times the average number of covered lives ($1 for plan years ending before Oct.1, 2013) 13

14 Reinsurance Contributions Purpose & Due Date Fund reinsurance program for state exchanges Essentially it s insurance for insurers in the individual market Report due Nov. 15, 2014; Payment due Jan. 15, 2015 Runs for 3 years ( ) Responsibility & Amount Fully Insured Plans: Insurer (pass through cost to customer) Self-insured plans: Plan sponsor (usually the employer) $63 per covered life per year Tax deductible 14

15 PCOR Fee & Reinsurance Contributions: Counting Covered Lives Three methods of calculating the number of covered lives: Actual count method - Calculate the sum of the lives covered for each day of the plan year and divide that sum by the number of days in the plan year. Snapshot method - Add the totals of lives covered on one date in each quarter, or an equal number of dates for each quarter, and divide the total by the number of dates on which a count was made. Form 5500 method - Utilize the number of participants reported on the Form 5500 for the plan year 15

16 Health Insurance Tax (HIT) Purpose & Due Date Help fund cost of PPACA implementation and exchanges Each calendar year beginning after Dec. 31, 2013 Responsibility & Amount Applies ONLY TO Fully Insured Plans Self-insured plans are exempt Exact Amount Unknown: Carriers will split target amount Target Amounts: 2014 = $8 billion; By 2017: $13.9 billion Not tax deductible (increases impact) 16

17 Notice of Exchange DELAYED!!! (Originally due March 1, 2013) In Summer/Fall, employers must distribute to current employees and subsequent new hires Applies to employers who are subject to the FLSA DOL will produce a model notice Content requirements: Notifies of the existence of the Exchange A description of the Exchange s services That they may be eligible for a premium tax credit or costsharing reduction Contact information 17

18 2014: Premium Variations for Wellness Programs Employers will be able to vary premiums by as much as 30% for employee participation in certain health promotion and disease prevention programs. Recent guidance authorizes this to increase up to 50% for tobacco-related wellness rewards. 18

19 Proposed Regulations: Shared Responsibility for Employers Regarding Health Coverage 19

20 Breaking Down the Employer Mandate Beginning in 2014, applicable large employers that do not provide affordable and minimum essential coverage to substantially all full-time employees (and their dependents) pay a penalty if any full-time employee receives federal premium assistance from an exchange. 20

21 Transition Rule for Non-calendar Year Plans For employers that sponsored a non-calendar year plan on Dec. 27, 2012: No penalty due for the period prior to the first day of the 2014 plan year. So if you have a non-calendar plan year, employer mandate penalty will not apply until 2014 plan year (assuming the employer sponsored a plan on Dec. 27, 2012). 21

22 Employer Mandate: Three Questions Am I an applicable large employer? Who are my full-time employees to whom I must offer coverage? Is the offer and the coverage sufficient to avoid the employer mandate penalties? 22

23 Applicable Large Employers 23

24 Applicable Large Employers Applicable large employer is an employer that: Employed at least 50 full-time employees those working 30 or more hours per week Taking into account part-time employees (full-time equivalents) During the previous year Determination of applicable large employer relies on actual hours of service Applies to all types of employers, including for profit, nonprofit and government entity employers. 24

25 Full Time Equivalent Employee Count All part time employees are included in employer size calculation by: Aggregate number of hours of service in one month for all part-time employees (but no more than 120 hours / employee) Divide the aggregate number by 120 Add the full-time equivalent count to the full-time employee count Disregard all fractions 25

26 Example of Full-Time Equivalent Calculation A law firm employs 42 employees who work more than 30 hours / week. The law firm also has 15 part time employees who average around 15 hours / week. The total number of part-time hours for the month of January is 900. Divide the total number of part-time hours for the month by 120 (900 / 120 = 7.5). In this scenario we have 7.5 full-time equivalent employees. Add the number of full-time equivalent employees to full-time employees to determine if the employer hits the 50-employee threshold = Disregard the fractions full-time employees (including full-time equivalents) would be rounded down to 49 total full-time employees. 26

27 Timeframe for Measuring Employer Size For 2014 only, employer may use any 6 month consecutive period in 2013 (rather than entire year) to determine whether it is applicable large employer. Example: Employer measures it size by counting employees from March through August If employer is an applicable large employer, it may then use September 2013 through December 2013 to establish a plan to avoid penalty. For 2015 and Beyond Use prior calendar year 27

28 Solid Yes: Applicable Large Employer Determination: Which Employees Do I Count? W-2 employees (including temporary, seasonal, intern, commissionbased, per diem/piece work) Solid No (per regulations): Sole proprietors, partners, 2-percent S corp. shareholders, and leased employees (as defined in 414(n)(2)) Unclear: 1099, Staffed Employees, and PEOs 28

29 Seasonal Employee Exemption Seasonal employee exemption: if an employer s workforce exceeds 50 full-time employees for 120 days or fewer during a calendar year, and the employees in excess of 50 who were employed during that period of no more than 120 days were seasonal workers, then The employer is exempt from being an applicable full-time employer May use 4 months or 120 days (whether or not consecutive). Only relevant for determining whether employer is an applicable large employer. 29

30 Foreign Employee Exception To determine employer s size, count only those employees who perform work in the U.S. Question: An employer has 150 employees in Canada and 25 in the U.S. Is the employer subject to the employer mandate? Answer: No. Only those employees working in the U.S. are included in the calculation to determine the employer s size. 30

31 Employer Aggregation Common ownership rules under Code 414(b), (c), (m), or (o) apply for large employer determination. Parent-subsidiary controlled group of corporations One or more chains of corporations with a common parent. The common parent owns, directly or indirectly, 80% or more of the shares or interest in the corporations Example: Question: ABC Consulting has 5 employees. ABC Consulting owns 100% of DEF Engineering, which has 25 employees. ABC Consulting also owns 100% of GHI Construction, which has 30 employees. Are the employers subject to the employer mandate? ABC 5 EE s DEF 25 EE s 100% 100% GHI 30 EE s Answer: Yes. They collectively have 50 or more EE s and are treated as a single employer. Each entity would be subject to the employer mandate. 31

32 Example: 1099 Employees Misclassification Issue This is not a new issue, just manifesting itself in a new context under the employer mandate) 1099 independent contractor vs. W-2 employees Looks at the Relationship between the Employer and the Employee Employer has the right to control and direct the individual who performs the services: Look not only at the result of the work but also at the details and means by which that result is accomplished. Employment Tax Returns may be good source if you don t know (but that doesn t mean they re not misclassified) Employers should be tracking this information already! 32

33 Common Law Employees The IRS has broken the right to control factor into three categories. These are: Behavioral control ER controls scheduling, tools, supplies, individual assignments Financial control If employee, cannot profit or loss; can just get paid If contractor, can profit or loss (may have unreimbursed expenses) Type of relationship the parties have created Employee offer letter, permanent v. temporary basis, other employee benefits? For more information, see IRS Publication 15-A, available at: 33

34 Examples: Staffed, Leased and PEO Employees Is the recipient organization or the staffing/leasing agency/peo the employer? Overall the answer is unclear Common law employee analysis (control factors) We hope future guidance will clarify 34

35 Temporary Staffing Agencies Anti-abuse rule: IRS is aware of structures to evade application of section 4980H and intends to publish an anti-abuse rule. If an individual performs service as an employee of an employer, and also performs the same or similar service for that employer as an employee of staffing agency, then all the hours of service are attributable to the employer. 35

36 Example: Leased Employees Leased employees are not treated as employees of the service recipient for purposes of the employer mandate requirement. The term "leased employee" means any person who is not an employee of the recipient and who provides services to the recipient if (A) such services are provided pursuant to an agreement between the recipient and any other person (in this subsection referred to as the "leasing organization"), (B) such person has performed such services for the recipient (or for the recipient and related persons) on a substantially full-time basis for a period of at least 1 year, and (C) such services are performed under primary direction or control by the recipient. 36

37 Summary: Applicable Large Employers Determine if employees are your employees Add up number of full-time employees Add up number of full-time equivalents If sum is 50 or more YOU ARE A WINNER!!! And you re subject to the employer mandate NEXT STEP: Determine Which EEs Are FTEs to Whom You Must Offer Coverage 37

38 Who are Full-time Employees To Whom Must I Offer Coverage? 38

39 Who is an Employee? Two Questions: Is the employee actually employed by the employer? Is the employee a full-time employee? 39

40 Is the employee my employee? Solid Yes: W-2 employees (including temporary, seasonal, intern, commissionbased, per diem/piece work) Solid No (per regulations): Leased employees (as defined in 414(n)(2)), Sole proprietors, partners and 2-percent S corp. shareholders Unclear: 1099, Staffed Employees, and PEOs 40

41 Is the Employee a Full-Time Employee? A full-time employee is an employee who was employed on average at least 30 hours of service per week. Hours of service includes hours for which an employee is paid even when no work is performed (vacation, illness, holiday, leave, military duty, jury duty). 130 hours of service per month is the monthly equivalent of 30 hours of service / week. An hour of service for one applicable large employer member is treated as an hour of service for all members. Count only hours worked in the U.S. 41

42 Who is a Full-Time Employee? 30- hour threshold is the same Applicable large employer - discussed previously For purposes of determining whether pay or play penalties apply, there are some differences: Applicable large employer Part-time employees are counted as full-time equivalents Test to determine is retrospective (looks at employee s work history in preceding calendar year) Pay or play penalties Penalty is not assessed on full-time equivalents who do not average 30 hours/week or 130 hours/month Looks at employee s hours on a monthly and ongoing basis in the current year. 42

43 Tracking Hours Human Resources Considerations Exception reports Accounting v. Payroll tracking methods HR professionals have been having conversations about for years Employer mandate is bringing this to the surface. FLSA Considerations 43

44 Measuring Hours Employees whose schedules you know (or should know) Hourly Non-hourly/Salaried Part-time, full-time as defined in your handbook and benefits Seasonal (maybe) Temporary (maybe) Employees that no one knows (even the IRS) Airline pilots, adjunct professors, commissioned salespeople Employees whose schedules you might not or truly don t know Seasonal and temporary Variable hour 44

45 Employees Schedules That You Know Look at employees hours of service on a monthly and ongoing basis during the current year 1. Hourly employees: calculate actual hours 2. Non-hourly employees: employer may choose a method below (employer may apply different methods for different classifications): a) Count actual hours of service b) Use a days-worked equivalency of 8 hours / day* c) Weeks-worked equivalency of 40 hours / week* *but may not use these methods if they substantially understate an employee s hours of service and this would cause the employee to not be treated as full-time. 45

46 Educational Organizations Special compared to other workplaces because they typically function on an academic year with periods where the institution is not in session (such as winter or spring break). Paid leave- included in hours of service Unpaid Leave- disregard when averaging hours of service 46

47 New Short-term Employees Employer mandate would not apply to full-time employees employed for three months (90 days) or less. If coverage offer is not made, penalty includes 90 day period If coverage offer is made, penalty does not include 90 day period Issues regarding short-term employment exceeding three months. The IRS is seeking comments on this issue. Concern of abuse. Inefficiency of offering coverage to employees whose employment is not expected to last more than 4 or 5 months for example. 47

48 Employees That No One Knows (even the IRS!) Pilots, Adjunct faculty, Commission based employees Some workers are compensated in a manner that is not tied to hours worked. Airline pilots are limited by law in the number of hours that they are permitted to fly. Adjunct faculty members are paid based on credit hours taught. Educational organizations typically do not track hours worked outside of classroom. Should an employer calculate 3 hours of work per course credit? Salespeople that are only compensated on a commission basis. Employers may not track hours worked. Until further guidance is issued, employers must use a reasonable method for crediting hours of service. For example, it would be unreasonable to not count travel time for a salesperson paid on a commission basis; or to not include class preparation time for adjunct faculty 48

49 Employees Schedules That You Might Not or Truly Don t Know New full-time employee Start date Reasonably expected to be employed on average of 30 hours of service per week Offer of coverage no later than initial three calendar months of employment to avoid pay or play penalty Reasonably expected (1) Whether the employee is replacing an employee who is a fulltime employee (2) Whether the hours of service of ongoing employees in the same or comparable positions vary 49

50 Seasonal Employees That You Might Know Seasonal employees- maybe Labor is performed on a seasonal basis where, ordinarily, the employment pertains to or is of the kind exclusively performed at certain seasons or periods of the year and which, from its nature, may not be continuous or carried on throughout the year. (29 CFR (b)(3)(ii)(A)) New definition- expanded. Until further guidance, employers may apply a reasonable, good faith interpretation of the statutory definition of seasonal worker 50

51 Variable Hour Employees: Measurement Periods For ongoing employees Standard Measurement Period: 3-12 consecutive months Stability Period: Same as measurement period, but at least 6 mos. Admin Period: Up to 90 days For new (variable hour) employees Initial Measurement Period: 3-12 consecutive months Stability Period: 6 months or standard measurement period length Admin Period: Up to 90 days 51

52 Example: Standard Periods of 12 Months Admin Measurement Period Period Coverage Period Oct. 15, 2012 Oct. 14, Oct. 15- Dec , 2013 Jan. 1 Dec. 31,

53 Example: Initial and Standard Periods Overlap New Employees: Measurement starts on date of hire Date of hire = March 1, 2014 Initial Measurement Period Mar. 1 July 31, 2014 Initial Admin Period Aug. 1-31, 2014 Initial Coverage Period Sep. 1, 2014 Feb. 28, Standard Measurement Period July 1 Nov. 30, 2014 Standard Admin Period Dec. 1-31, 2014 Standard Coverage Period Jan. 1 June 30, 2015

54 Is the Offer and Coverage Sufficient to Avoid the Employer Mandate Penalties? 54

55 Employer Mandate Penalty A PENALTY A applies if the employer: (1) Fails to offer its full-time employees and their dependents the opportunity to enroll in minimum essential coverage and the full-time employee is certified as having received a premium tax credit or cost sharing reduction through a state health insurance exchange Amount of Penalty A: $2,000 x total number of FTEs (minus 30) 55

56 Employer Mandate Penalty B PENALTY B applies if the employer: (2) Offers its full-time employees and their dependents the opportunity to enroll in minimum essential coverage that is either unaffordable or does not provide minimum essential value and the full-time employee is certified as having received a premium tax credit or cost sharing reduction Amount of Penalty B: $3,000 x total number of FTEs receiving tax credit (no 30-employee reduction) 56

57 5 Key Definitions Associated with Penalty Provision Dependents Minimum Essential Coverage Minimum Value Affordability Offer 57

58 First Key Definition: Dependent Dependents: Limited to employee s children who are under the age of 26 May rely on employee s representation concerning identity and age Does NOT include employee s spouse Incorporates definition in 152(f)(1) Daughter/son Stepchildren Adopted children Foster children 58

59 Second Key Definition: Minimum Essential Coverage Minimum Essential Coverage Coverage under an eligible employer-sponsored plan which includes a group health plan offered by an employer that is (1) governmental plan; (2) any plan or coverage offered in small or large group market; or (3) any grandfathered plan offered in the group market. Defined very broadly and includes virtually any employersponsored plan Incorporates definition found in IRS Code Section 5000A(f) Expect more regulations on health reimbursement and self-insured plans 59

60 Third Key Definition: 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% of those costs. Employee does not have to pay more than 40% of the costs of benefits under the plan. Current industry averages: Large group plans = 80% Small group plans = 70% HDHP =? On November 26, 2012, HHS issued proposed regulations on methodologies for determining minimum value A minimum value calculator made available by HHS and the IRS Actuarial certification Safe harbor checklist 60

61 Fourth Key Definition: Affordability Affordability: Coverage for an employee under a plan is affordable if the employee s required contribution for selfcoverage does not exceed 9.5 percent of the employee s household income for the taxable year. Household income: The modified adjusted gross income of the employee and any members of the employee s family who are required to file an income tax return. Difficulty for Employers Resulted in THREE SAFE HARBORS 61

62 Three Affordability Safe Harbors Safe Harbors: Do not apply to determining the penalty amount Do not affect employee s eligibility for premium tax credit Are optional for the employer May choose to use any/all of the safe harbors for any reasonable category of employees provided it is done uniformly and consistently 62

63 Form W-2 Safe Harbor Under the Form W-2 safe harbor test: Look at employee s W-2 wages from his/her job with employer only (not family income) Look at employee s single coverage cost under the employer s lowest cost plan And if cost of employer s cheapest single coverage plan is less than 9.5% of employee s income, the employee has access to affordable coverage Employee-by-employee basis Look at end of calendar year wages Ex: Look at 2014 Form W-2 wages and compare to 2014 premiums 63

64 Rate of Pay Safe Harbor Employer satisfies rate of pay safe harbor if: Employee s contribution for the month for the employer s lowest self-only coverage that provides minimum value does not exceed 9.5% of an amount equal to 130 hours multiplied by the employee s hourly rate as of first day of coverage period (generally first day of the plan year). Ex: ER offers coverage to EE and his dependents. The employee contribution for self-only coverage is $85 per month. EE is paid $7.25/hr. ER may assume EE earned $ per month (130 x $7.25). Affordability is determined by comparing the monthly income ($942.50) to monthly contribution ($85). Because $85 is less than 9.5% of EE s income, coverage is affordable. 64

65 Rate of Pay Safe Harbor (continued) Employer satisfies rate of pay safe harbor if: Salaried employees use monthly salary May use any reasonable method for converting payroll periods to monthly salary Ex: ER offers EE + dependents coverage. EE begins employment on 5/15, obtains insurance 8/1, which costs $100/mth. Earns $15,000 by year end. The W-2 wages are multiplied by 5/8 (5 calendar months of coverage over 8 months of employment). Accordingly, affordability is determined by comparing adjusted wages ($9,375) to the employee s contribution for same period ($500). Because $500 is less than 9.5% of $9,375, coverage is affordable. 65

66 Federal Poverty Line Safe Harbors Federal Poverty Line Safe Harbor Employer satisfies this safe harbor if the employee s required contribution for the month (for the employer s lowest cost of selfcoverage that provides minimum value) does not exceed 9.5% of the federal poverty line for a single individual for a calendar year, divided by 12. Applicable federal poverty line is the line for the state in which the employee is employed. If coverage offered during at least one day of the month, the entire calendar month is counted. Ex: Assume federal poverty line for an individual is $11,170. ER determines the monthly employee contribution for employee-only coverage for the year is an amount equal to 9.5% multiplied by $11,170 or $1, $1, is then divided by 12. Thus, safe harbor satisfied if employee contribution is less than $88.43 regardless of the employee s wages. 66

67 Fifth Key Definition: Offer of Coverage EE must have meaningful opportunity to accept/decline coverage that is not affordable or not minimum value Cannot render employee ineligible for tax credit by providing mandatory coverage Nonpayment or late payments ER is not required to provide coverage for period where premiums not timely paid (but COBRA rules regarding 30-day grace period apply) 95% of full-time employees = substantially all For small employer: 5 employees if greater than 5% 67

68 Aggregation Rules No aggregation in determining liability of an applicable large employer The determination of whether an employer is subject to penalty is determined on member-by-member basis. Computed and assessed separately for each applicable large employer member based on that members offer or coverage and number of full-time employees. In calculating liability under Section 4980H(a), employer is permitted to reduce employee population by 30. Allocate employees ratably among commonly-owned companies 68

69 Multiemployer Plans/Collective Bargaining Agreements Transition Rule through 2014 Employer will not be treated as failing to offer the opportunity to enroll in MEC to a full-time employee (and dependents) for purposes of section 4980H(a), and will not be subject to a penalty under section 4980H(b) if (i) the employer is required to make a contribution to a multiemployer plan pursuant to a collective bargaining agreement; (ii) coverage under the multiemployer plan is offered to the full-time employee (and dependents); and (iii) the coverage offered to the full-time employee is affordable and provides minimum value. 69

70 Employer Mandate Penalties Start Here Does the employer have at least 50 fulltime equivalent employees? No Penalties do not apply to small employers. Yes Employees working at least 30 hours per week + total part-time hours /

71 Employer Mandate Penalties Yes Does the employer offer coverage to its workers? No Did at least one employee receive a premium tax credit/subsidy in the Exchange? Yes The employer must pay a penalty Yes The penalty = $2000 annually x # of full-time workers (- 30) 71

72 Employer Mandate Yes Does ER plan pay for 60% of covered health care expenses? Yes No Employees will qualify for premium tax credit in the Exchange. The employer must pay a penalty Does the employer offer affordable coverage to its workers? Yes No Employees will qualify for a premium tax credit in the Exchange The penalty = $3000 x # of employees receiving premium tax credit (capped at total from above) No Penalty 72

73 Penalty Assessment How and when does an employer get assessed a penalty? Reporting Cycle 2015: Two Months to Remember 73

74 Penalty Assessment: Reporting Cycle Individual Goes to Exchange Exchange to HHS Exchange to Employer HHS to IRS IRS collects 1040 IRS collects ER Report IRS IRS to Individual IRS to Employer 74

75 Month of Reckoning #1: January 2015 Informational Reporting Due Report to IRS ER name, date and EIN Whether ER offers coverage to all FTEs/dependents Number of FTEs for each month Name, address and TIN of each FTE covered during year Months during which coverage was available to FTEs Monthly premium for lowest cost option(s) ER s share of the total allowed costs of benefits (minimum value) Any waiting periods Report to Covered Employees Summary of above (with respect to that individual) 75

76 Month of Reckoning #2: April 2015 IRS Contacts Employers Employer May Respond IRS Sends Notice of Payment Process may take 3-6 months 76

77 Primary Questions for Employers As an applicable large employer: How will you defend your January 2015 Report? How will you respond to an April 2015 IRS Inquiry? Boils down to this: WHO IS A FULL-TIME EMPLOYEE? AND DID YOU OFFER THEM AFFORDABLE MINIMUM VALUE COVERAGE? 77

78 Summary: Employer Mandate Considerations Planning for employer mandate Evaluate plan cost and design: Affordable and Qualified? Develop definition of eligible employee (and dependents) Evaluate employee population Consider tax consequences Consider employee compensation and retention Assess total rewards strategy 78

79 Conclusion Questions? 79