1. Affordable Care
Act: What Does It
Mean For Small
Employers

2. Before We Begin
It is easy to get caught up in the frenzy of Health Care
Reform and PPACA
Ask yourself the following questions:
• What key questions do you have that you would like to
get answered?
• What feedback or questions are you getting from your
employees?
• Is your company going to continue offering health
benefits to its employees?

3. Before We Begin
• What coverage do I want to offer?
• How much do I want to contribute?
• Do I have to offer coverage at all?

4. Agenda
• Background and Looking Forward
• Small Employer Status
• Compliance Regulations and Tax Credit
• Impact on Employers
• Key Steps to Take Now

5. Background and
Looking Forward

6. 2012
December 28, 2012: The Administration released comprehensive proposed rules
on the major employer coverage requirements under the ACA. Employers can
rely on these rules until final rules are released.
The Administration has provided transition relief in certain circumstances, such as:
Liability for penalties for non-calendar year plans in 2014
The process for smaller employers to determine large employer status in 2013
Measurement periods for stability periods starting in 2014
Coverage for dependents in 2014
Some issues remain outstanding and will be addressed in forthcoming regulations.

7. 2013
• October 1, 2013 – Exchanges begin open enrollment period
• Mandatory W-2 reporting for tax year 2012
− For employers who issue 250 or more W-2 forms
• Deduction for expenses allocable to employer Part D retiree drug subsidy
eliminated
• Medicare payroll tax increased
• New tax on unearned income
• Cap on salary-reduction contributions to FSA’s
• Employee Exchange Notification

8. 2014
• January 1, 2014 - Employers must generally be in compliance with coverage
requirements
• Individual Health Mandate
• Premium tax credits for Individuals
• Individual market subsidies for low and middle income individuals
• Annual dollar limits on essential benefits removed
• Optional medicaid eligibility expansions (under 65)

9. 2015 and Beyond
• Automatic enrollment for large employers – not small employers
• Temporary reinsurance fee ends in 2016
• 40% excise tax on high-cost group health plans

10. Small Employer Status

11. Who is a Small Employer?
• From now until 2016, states can define the size of small groups:
− Small employer can be either 50 and under or 100 and under
• Beginning in 2016, the definitions in the federal reform law will
apply:
− Small employers are those who had, on average, 1-100 employees in the
preceding calendar year and at least 1 employee on the first day of the plan
− Definitions are not applied consistently throughout the law, as noted
throughout this presentation

12. Grandfathered Plans
• Existing Plans = Grandfathered Plans
− A group health plan or health insurance coverage in which an individual was enrolled on the date of
enactment of the health care reform legislation (March 23, 2010)
• Regulations provide guidance on changes that could take a
plan out of “grandfathered” status

13. Grandfathered Plans – Which Rules
Apply?
• Health Insurance Changes – Prohibitions on:
◦ Lifetime and annual limits
◦ Pre-existing condition exclusions ◦ Rescissions
◦ Excessive waiting periods
• Required coverage of adult children up to age 26
• Summary of benefits and coverage
• Reporting medical loss ratio

14. Compliance Regulations
Changes Effective Right Away

15. The Basics
No requirement to provide coverage and no penalties for failing to do so.
If providing coverage:
§ No lifetime or annual limits
§ If you offer dependent coverage then must cover children up to age
26 – you don’t have to cover the cost
§ Medical loss ratio rebates
§ Summary of benefits and coverage
§ 90 day maximum waiting period
§ Transitional reinsurance fee

16. Small Employer Tax Credit
• Qualifying small employers that provide health care coverage to
employees are eligible for tax credit
◦ Have fewer than 25 full-time equivalent (FTE) employees
◦ Pay wages averaging less than $50,000 per employee per year
◦ Has a “qualifying arrangement” (pays premiums for each employee in a uniform
percentage that is at least 50 percent of the cost of coverage)
◦ Tax-exempt 501(c) organization also eligible
• Credit based on premiums paid by employer
• Claimed on employer’s annual income tax return

17. Small Employer Tax Credit
Amount of Credit
• Up to 35 percent of health (includes dental & vision) premium
costs paid in 2010 (25 percent for tax-exempt employers)
• On Jan. 1, 2014, increases to 50 percent (35 percent for tax- exempt
employers)
Depends on employees and wages
• The credit phases out gradually for:
• Employers with average wages between $25,000 and $50,000
and
• Employers with the equivalent of between 10 and 25 full-time
workers

18. Small Employer Tax Credit

19. Small Employer Tax Credit
Employers not eligible
◦Government employers
• Federal
• State
• Local
• Indian tribal
• Unless the employer is a tax-exempt 501(c) organization

20. Coverage for Adult Children Until
Age 26
• Plans that cover dependent children must make coverage
available until child turns 26
− Includes grandfathered plans, unless child has own employer coverage (before
2014)
− Covers married and unmarried children
− Children of covered adult children do not have to be covered
• State mandates above this level continue to apply
• Insurers complying early to avoid coverage gaps

21. Restrictions on Lifetime and Annual
Limits
• Apply to new and grandfathered plans
• No lifetime limits on essential benefits
• Restricted annual limits on essential benefits
− Allowed for plan years beginning before Jan. 1, 2014
• Essential benefits generally include:
− Ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health
and substance abuse services, prescription drugs, rehab services, lab services, wellness and disease
management, pediatric care
• Some regulations issued, waiting on others

22. Access to Coverage
• No rescission of coverage
− Applies to group and individual coverage
− Applies to new and grandfathered plans
− Exception for fraud or intentional material misrepresentation
− ◦ Individual must be given prior notice of cancellation for permitted reasons (including nonpayment of
premium or plan termination)
• No pre-existing condition exclusions or limitations for children under
age 19
− This prohibition will apply to everyone in 2014
− Applies to new and grandfathered group plans

23. Impact on Employer

24. • Employers must notify new employees regarding health
care coverage
− At time of hiring
• Notice must include information about 2014 changes:
− Existence of health benefit exchange
− Potential eligibility for subsidy under exchange if employer’s
share of benefit cost is less than 60 percent
− Risk of losing employer contribution if employee buys coverage
through an exchange
• More guidance and model notice expected
New Notice Requirement –Exchanges
and Minimum Essential Coverage

25. Employer Reporting
• Employers will have to report certain information to
the government
− Whether employer offers health coverage to full-time
employees and dependents
− Whether the plan imposes a waiting period
− Lowest-cost option in each enrollment category
− Employer’s share of cost of benefits
− Names and number of employees receiving health coverage

26. More 2014 Changes
• No pre-existing condition exclusions or limitations
− Applies to everyone and all plans
• Wellness program changes
• Limits on out-of-pocket expenses and cost-sharing
• No waiting periods over 90 days
• Coverage of clinical trial participation
• Guaranteed issue and renewal in all markets
• Individual and fully insured group policies under 100 lives must abide by
strict modified community rating standards:
− Premium variations only allowed for age, tobacco use, family composition and
geography.
− Experience rating would be prohibited.

27. Key Steps To Take Now

28. Fidelity Quickpay Will Help You:
• Determine the implications of whether or not to offer
a health plan.
− Health benefits are only one part of the total rewards strategy
− How will offering, or not offering, health benefits impact other
talent management and recruitment strategies
− Costs
• Perform analysis to determine if plan offered should
stay Grandfathered, if currently is
• Consider cost and benefits of each option

29. Fidelity Quickpay Will Help You:
• Consider a communication strategy for employees
and candidates
− Implementation timeline on amending employee manuals,
when communication documents should be delivered and
how, employee engagement
• Consider staffing needs in light of reform and have
open discussions with CEO and CFO about direction
of company in terms of staffing and the role it plays
with rewards package
• Create a check-list of the various requirements and
their due dates

30. Fidelity Quickpay Will Help You:
Compliance reporting, benefits administration, and
managing employee data are just a few of the back-
office tasks that will become more difficult for small
businesses to handle manually once further
requirements of the Affordable Care Act take effect.
The first open enrollment in the health plan exchanges
are expected in October and for penny-wise small
business owners, throwing additional manpower at
these challenges isn’t the answer.
• If you haven’t already, now’s the time to enter the
age of HR outsourcing. Allow us to help you!

31. Contact Us!
305-661-3462
benefits@fidelityquickpay.com
4945 SW 74 Court
Miami, FL
www.fidelityquickpay.com
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should
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opinions
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construed
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Fidelity
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