WHAT BUSINESS LAW PRACTITIONERS NEED TO KNOW ABOUT THE AFFORDABLE CARE ACT

Transcription

1 WHAT BUSINESS LAW PRACTITIONERS NEED TO KNOW ABOUT THE AFFORDABLE CARE ACT First Run Broadcast: January 5, 2016 Live Replay: July 18, :30 p.m. E.T./1:30 p.m. C.T./12:30 p.m. M.T./11:30 a.m. P.T. (60 minutes) In 2016, smaller businesses not required to provide their employees with health insurance will be nonetheless be required to start collecting information from their employees and submitting regular information returns to the IRS. Larger businesses will also become subject to new changes in the health insurance they provide to their employees. Collecting this information and timely reporting it is a new and complex undertaking for which many businesses are unprepared. Understanding how these new-in-2016 regulations apply to all employers of all sizes is essential for business attorneys. This program will provide you with a practical guide to the new substantive and reporting requirements of employers of every size, a guide to the new IRS information returns, and best practices for advising clients to ensure compliance and avoid liability. Practical guide to Affordable Care Act compliance what employers should know in 2016 Compliance by smaller employers subject informational reporting to the IRS type of information, IRS forms, and deadlines Employers covered by the mandate scope of mandate, essential insurance coverage, and implementation deadlines Review of timelines, IRS forms, and penalties for employers of different sizes Renewed importance on properly classifying workers as part-time or full-time, and practical implications Framework of how the ACA fits into the larger context of employer/employee health care regulations Best practices for collecting information, providing notice, and limiting liability for employers Speaker: Nancy Taylor is a partner in the Washington, D.C. office of Greenburg Traurig, LLP, where she broad experience in areas relating to the Affordable Care Act provisions, CMS reimbursement and policy issues relating to health care providers and plans, and she has done a significant amount of FDA regulatory work. Prior to joining Greenberg Traurig, Nancy served 10 years as Health Policy Director for the United States Senate Committee on Labor and Human Resources and worked on a number of significant health and FDA laws, including NLEA, Safe Medical Device Act, Hatch-Waxman, COBRA and ADA. She also served as CEO of a start-up medical device company, where she obtained eight product clearances, including securing reimbursement coverage for each product. Mr. Taylor earned her B.S. from the University of Utah and her J.D. from The Catholic University of America, School of Law.

2 VT Bar Association Continuing Legal Education Registration Form Please complete all of the requested information, print this application, and fax with credit info or mail it with payment to: Vermont Bar Association, PO Box 100, Montpelier, VT Fax: (802) PLEASE USE ONE REGISTRATION FORM PER PERSON. First Name Middle Initial Last Name Firm/Organization Address City State ZIP Code Phone # Fax # Address What Business Law Practitioners Need to Know About ACA Teleseminar July 18, :00PM 2:00PM 1.0 MCLE GENERAL CREDITS VBA Members $75 Non-VBA Members $115 NO REFUNDS AFTER July 11, 2016 PAYMENT METHOD: Check enclosed (made payable to Vermont Bar Association) Amount: Credit Card (American Express, Discover, Visa or Mastercard) Credit Card # Exp. Date Cardholder:

3 Vermont Bar Association CERTIFICATE OF ATTENDANCE Please note: This form is for your records in the event you are audited Sponsor: Vermont Bar Association Date: July 18, 2016 Seminar Title: Location: Credits: Program Minutes: What Business Law Practitioners Need to Know About ACA Teleseminar - LIVE 1.0 MCLE General Credit 60 General Luncheon addresses, business meetings, receptions are not to be included in the computation of credit. This form denotes full attendance. If you arrive late or leave prior to the program ending time, it is your responsibility to adjust CLE hours accordingly.

4 Practical Guide for Employers Affordable Care Act in 2016 Nancy E. Taylor, Shareholder, Greenberg Traurig, LLP Telephone: G R E E N B E R G T R A U R I G, L L P A T T O R N E Y S A T L A W W W W. G T L A W. C O M 2014 Greenberg Traurig, LLP. All rights reserved.

5 Presentation Agenda > What employers need to know and watch for: Employer Responsibility Requirements Coverage of full-time employees Types of coverage to be offered Benefit requirements Potential penalties (individual and employer requirement) Reporting Requirements Taxes and Fees Imposed Issues To Watch in 2016 Best Practices for Compliance Practical Guide for Employers Affordable Care Act in

6 Fundamentals For Employers > 2016 A year for reporting and compliance; > Individual and Employer Shared Responsibility > Employer Reporting and Fee (taxes) requirements > Benefit changes (MOOP 2016 $6,850 individual; $13,700 family) > Renewal of Cancelled Plans (now permitted through Oct ) Practical Guide for Employers Affordable Care Act in

7 Individual Responsibility: Minimum Essential Coverage > Every individual must have MEC coverage or pay a fee. > MEC plans include: Coverage under certain government-sponsored plans; Employer-sponsored plans; Plans in the individual market; Grandfathered health plans; and Any other health benefits coverage as recognized by the Secretary of Health and Human Services (HHS). Practical Guide for Employers Affordable Care Act in

8 Individual Mandate to have Health Insurance Coverage > An individual must have minimum essential health coverage (unless the individual meets a hardship requirement) or pay a fee; Year Fee per adult (1/2 for each child) is the greater of the fee or percentage of household income 2014 $95 (up to a maximum of $285) 1.0% 2015 $325 (up to a maximum of $975) 2.0% 2016 $695 (up to a maximum of $2,085) 2.5% 2017 From 2017 onward, the fee will be increased by cost of living adjustment Percentage of Household Income Practical Guide for Employers Affordable Care Act in

9 Employer Responsibility Requirements > Step 1: Are you covered by the Affordable Care Act? Applicable large employer 100+ full-time employees and FTEs (2015) 50+ full-time employees and FTEs (2016) Who is full-time? (30+ hours/week different measurement standards) How to count part time employees? Aggregation requirements > Step 2: To whom do you have to offer coverage? Which employees could be eligible for a tax credit? If so, what is the penalty? ($2,000 for all full-time; $3,000 per individual; cap) > Step 3: Is the coverage offered in compliance? Does the plan meet minimum value requirements? Is the plan affordable? > Step 4: How can employers manage the cost? Various strategies are available that will avoid/mitigate financial impact to company Practical Guide for Employers Affordable Care Act in

10 Employer Responsibility: Full-time employees Full-Time Employees. An employee who is employed an average of at least 30 hours of service per week, 130 hours of service in a calendar month, 120 hours in a 4-week month, or 150 hours in a 5- week month, is full-time. Determine through look-back measurement method. Full-Time Employees Dependents. Employers must offer coverage (not necessarily affordable) to full-time employees dependents, defined as the children of an employee who have not attained age 26. Dependent does not include a spouse. New, Full-Time Employees. New employees reasonably expected to work full-time as of start date. New, Variable Hour Employees. Based on the facts and circumstances at their start date, it cannot be determined whether they are reasonably expected to provide, on average, at least 30 hours of service per week during the initial measurement period All Employers With More than 50 Full-time + Full-time Equivalent Employees Must Offer Coverage or Potentially Face Penalties Practical Guide for Employers Affordable Care Act in

11 Employer Responsibility: Variable Hour Employees > Standard for determining whether an employee is full-time Reasonable expectation that the employee will work full-time. > If this is not met, use look back and coverage period to make a determination and cover for an equal period. > Look-back (3-12 months); coverage (6-12 months). > On-going employees; new employees. Practical Guide for Employers Affordable Care Act in

12 Employer Responsibility: Complexity in Types of Workers and Calculations Salaried workers count actual or hours equivalency rules; Hourly employees count actual hours; Include paid time off in counting; Seasonal workers Rehired workers special rules Acquisition rules (stock versus asset deals and timing) Practical Guide for Employers Affordable Care Act in

13 Employer Responsibility No coverage offer required Existing and New Part-Time Employees. Based on the facts and circumstances at their start date, not reasonably expected to provide, on average, at least 30 hours of service per week. Seasonal Workers. Those employees who perform labor or services on a seasonal basis as defined by the Secretary of Labor, including (but not limited to) agricultural workers and retail workers employed exclusively during holiday seasons. 6 month standard. Spouses. Sole Proprietor; Partner in a partnership; 2% S corporation shareholder; a leased employee from an agency. Practical Guide for Employers Affordable Care Act in

14 Minimum Value vs. Minimum Essential Coverage Federal Requirement Standard Penalty Imposed Individual Mandate Individual taxpayer must maintain coverage for self and any dependents Employer Requirements If large employer offers no coverage to full-time employees (and their dependents) If large employer offers minimum essential coverage to full-time employees (and their dependents) If large employer offers minimum value coverage that is affordable (based on the safe harbors) to fulltime employees (and dependents) Minimum essential coverage Employees may seek coverage through the Exchange; if earning between 133%*-400% FPL, then eligible for a tax subsidy Employees may seek coverage through the Exchange; if earning between 133%*-400% of FPL, then eligible for a tax subsidy *Depending on Medicaid expansion in state Employees may seek coverage through the Exchange; may not be eligible for tax subsidy unless the plan is unaffordable based on family AGI The greater of: $95 annually in 2014; $325 annually in 2015; and $695 annually after 2015; (adjusted for cost of living 2017 onward) --- OR --- 1% of household income in 2014; 2% of household income in 2015; and 2.5% of household income after 2015 $2,000 x (each full-time employee 30) The lesser of: $3,000 for each employee who receives a tax subsidy --- OR --- $2,000 x (each full-time employee 30) No penalty Practical Guide for Employers Affordable Care Act in

15 Employer Responsibility: Minimum Value Coverage Employers must offer coverage that meets minimum value in the benefits offered or potentially face a penalty; MV coverage is coverage that pays 60% of the costs of the benefit plan. Additional requirements now include: Must have hospital/physician coverage Must cap the out-of-pocket costs Must offer certain benefits (including certain preventive benefits with a zero copayment) Coverage of new employees must commence no longer than 90 days (unless variable hour employee) Practical Guide for Employers Affordable Care Act in

16 Employer Responsibility: Employer Mandate to Offer Coverage > An employer must offer at least one plan to full-time employees that includes minimum value benefits and is affordable for that employee and offer dependent coverage that isn t required to be affordable. > Affordability means that premium charged for employee only coverage does not exceed 9.5% of employees adjusted gross income. Safe Harbors: W-2 wages; rate of pay; or set at 9.5% of 100% of the federal poverty level. Practical Guide for Employers Affordable Care Act in

17 Employer Responsibility: Employer Penalties Employer doesn t offer coverage to less than 95% of full-time employees $166.6 per month ($2,000 per year) 30 employees Employer does offer coverage to full-time employees but doesn t satisfy MV and affordability test $250 per month ($3,000 per year) for each employee that receives a tax subsidy when purchasing coverage through the State/Federal Exchanges. Practical Guide for Employers Affordable Care Act in

18 Legal Questions Asked the Most Often > Can an employer offer an MEC plan (lower value) along side with a MV/Affordable plan? Yes meet other requirements such as prohibition on preexisting condition exclusions, excessive waiting periods, annual or lifetime dollar limits > What are the rules for staffing agency workers, interns? > Could an employer offer cafeteria/hra funding for employees to purchase coverage in the Public Exchange? No > Will the NRLB/EEOC take actions under the ACA? Nothing from NRLB to date as employer mandate not in effect; EEOC see next page Practical Guide for Employers Affordable Care Act in

19 Employer Sponsored Coverage: Workplace Wellness Programs > ACA permits employers to offer wellness programs that have a reasonable likelihood to improve certain health care conditions. > Provide incentives up to 30% of premium for participation or achievement (50% for smoking cessation) > Types of programs: Diabetes programs; cholesterol/blood pressure/obesity; Health risk assessments. Practical Guide for Employers Affordable Care Act in

20 Legal Actions by the EEOC > EEOC has brought three actions to date regarding workplace wellness: Orion (August 2014) program to submit to wellness examinations and be subject to disability-related inquiries. EEOC alleges not job-related or consistent with business necessity. Wellness program not voluntary. Allegations if not participate, pay 100% of premium. Flambeau (October 2014) challenged program that required employees to submit to biometric testing and health risk assessment; failure was of 100% of health. insurance premiums or cancellation. Also, allegation of firing employee as a result of good faith objections to the wellness program. EEOC claims wellness program was not voluntary. U.S. District Court for Western District of Wisconsin rejected the EEOC claims as the activities fall under the ADA insurance safe harbor (12/31/15) Honeywell (October 2014) lawsuit against Honeywell alleging wellness program not voluntary. Sought TRO to stop the biometric screening where non compliance resulted in up to $42 per month premium increase. Court did not grant injunctive relief. Stated that program was voluntary (or pay increase premium established under HIPAA); program complied with Federal privacy laws; and program complies with ACA s surcharge limits and supporting one of the primary goals of healthcare reform: reducing overall health care costs. Practical Guide for Employers Affordable Care Act in

21 EEOC Proposed Regulations on Workplace Incentive Programs > Aligning ACA provisions on Health Based Incentive programs with ADA and GINA requirements > Proposed regulations by the EEOC 4/16/15 - ADA Final regulations have not issued > Proposed regulations by the EEOC 10/29/2015 Comments were due Dec. 29 Practical Guide for Employers Affordable Care Act in

22 Other Fees/Taxes/Reporting for Employer Sponsored Plans > Reinsurance fee Applies to group health plans; fullyinsured or self-insured. > Three years of payments $63 per coverage life $44 per covered life $27 per covered life > Fee used to support Federal/State Exchange plans > States may continue reinsurance fee after 2016 (question regarding application to self-insured plans) Practical Guide for Employers Affordable Care Act in

23 Other Fees/Taxes/Reporting for Employer Sponsored Plans > PCORI Fee-Applies to group health plans; fully-insured or self-insured. > Seven years beginning for plan years beginning after October 1, 2012-October 1, (File return no later than July 31.) > Fee: $1 per covered life in 2012, $2 per covered life in 2013; indexed thereafter ( $2.08). > Finances patient outcome research at Department of Health and Human Services. Practical Guide for Employers Affordable Care Act in

24 Reporting for Employer Sponsored Plans > Reporting requirements for employers that offer at least minimum essential coverage (fully-insured or self-insured) (IRC Section 6055 and 6056). > Section 6055 collects information for the individual mandate compliance. > Section 6056 collects information for the employer mandate compliance. > Who must report? Applicable large employer members (subsidiaries; can delegate) > What must be reported? Offer of coverage to all full-time employees Employer information, employee information > When to report? Forms are due to the IRS by February 28 of the year following the applicable reporting year (or March 31 if filing electronically) Furnish statement to employees in January Practical Guide for Employers Affordable Care Act in

25 Reporting for Employer Sponsored Plans > Reporting to begin in 2016 (delayed filing in first year) for coverage in > An applicable large employer will report on Forms 1094-C and 1095-C. > Filing to IRS Due Feb. 28; efiling due March 31; Furnish to employees by January 31 > IRS published notice that extends from February 1, 2016 to March 31, 2016, the deadline to provide 2015 Form 1095-B, Health Coverage and 2015 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage. > It also extends from February 29, 2016 to May 31, 2016 (if not filing electronically) and from March 31, 2016 to June 30, 2016 (if filing electronically) the deadlines for filing 2015 Form 1094-B, Transmittal of Health Coverage Information Returns; 2015 Form 1095-B, Health Coverage; 2015 Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and 2015 Form 1095-C, Employer- Provided Health Insurance Offer and Cover. Practical Guide for Employers Affordable Care Act in

26 40% Excise Tax on Health Benefits > Treasury/IRS authority to tax health benefits that exceed certain thresholds. Two sets of proposed guidance; regulations to be promulgated Applicable coverage defined includes pre-tax contributions to FSAs, HSAs and other benefits Thresholds in 2018: $10,200 for individual; $27,500 for family (indexed generally by CPI in future years) Estimated 46% of large employers (over 200) will have one plan exceed the threshold Thresholds have limited adjustments for certain workforces and age Practical Guide for Employers Affordable Care Act in

27 40% Excise Tax on Health Benefits > In late December, Congress delayed the effect date of this tax for years 2018 and (Pub.L , ). > Law extended the implementation until 2020; law made the tax paid as a deductible expenses; and law requires a study of the impact of the thresholds on age and gender. Practical Guide for Employers Affordable Care Act in

28 Compliance Issues > Non-compliance with the requirements can be significant. $100 per day, per employee violation Employers with more than 50 employees Reasonable cause demonstrated is limited to the lesser of $500,000 or 10% of the total amount spent on health care benefits. Department of Labor conducting audits Recent announcement of agreement with NY AG s office to joint compliance/audit reviews Practical Guide for Employers Affordable Care Act in

29 State Waivers > New issues will arise: 2017 States may seek waivers from certain requirements. Guidance released by the Departments of Health and Human Services and Treasury in December Permits States to change requirements for coverage and affordability so long as the out-of-pocket limitations aren t increased and so long as the number of covered lives are retained. Concerned by large, multi-state employers regarding the effect of variation in requirements for self-insured plans. Practical Guide for Employers Affordable Care Act in

30 Advice on Activities/Other Risk Issues > Compliance and updating information on changes through interpretative guidance/qs and As must be monitored. > Deadlines need to be adhered to as it is a complex web to determine retroactively who is covered, where the coverage is derived, and the effort to reconcile subsidy payments by the government to individuals will be a priority for IRS. > If a large employer, ensure documentation is done on all employees, offerings and compliance. Practical Guide for Employers Affordable Care Act in

31 Be Audit Ready > Employee records are critical Document job classification; offer of coverage; nonelection of coverage; dependent elections/nonelections. Reporting forms in files (W-2, reporting, premium and benefits. Compliance with minimum value and affordability requirements analysis. Practical Guide for Employers Affordable Care Act in

32 Affordable Care Act - Employers > Any questions, please ask. Nancy E. Taylor Co-Chair, Health and FDA Practice Group Greenberg Traurig taylorn@gtlaw.com Practical Guide for Employers Affordable Care Act in