Get ready for the Affordable Care Act. The light you see is the oncoming train! Lot's of things happening, not too many answers and it will take a few years to flesh it all out.

1. PPACA, Preparing for
2014
HR Essentials

2.  Effective 1/1/14
 Employer must count all full time
employees and part time employees on a
full time equivalent basis, in determining
if they have 50 or more employees.
Employer Shared Responsibility

3.  Full time=30 or more hours per week, per
month or 130 hours of service per
calendar month (must count each hour for
which an employee is paid or entitled to
payment for work, vacation, etc.)
 Seasonal workers are not counted.
 Penalties assessed for “no coverage” or
coverage that is “not affordable” or does
not provide “minimum value.”
Employer Shared Responsibility

4.  Determining large employer status:
 For each calendar month of the preceding
calendar year, employers must:
◦ Count the # of FT employees who work an
average of 30 hours per week per month.
◦ Calculate the # of FT equivalents by adding the
# of hours worked by non-FT employees and
divide by 120.
◦ Add the number of FT and FT equivalents for
each of the 12 months of the preceding year.
◦ Add the monthly totals and divide by 12. If the
average is over 50, you are a large employer.
Employer Shared Responsibility

5.  Transition relief for smaller employers:
◦ Employers can determine whether they are
large or not based on the period of 6
consecutive months during 2013 instead of 12
months.
◦ This is only allowable for 2014 calculations.
◦ The 6 month period must be no less than 6
months and end no sooner than 90 days before
the start of the plan year beginning 1/1/14.
Employer Shared Responsibility

6.  The Penalties:
◦ Sledge Hammer Penalties.
 If a large employer does not offer coverage to
95% of the FT employees and their dependents
and at least 1 FT employee receives a premium
tax credit or cost sharing reduction.
 The penalty is $2000 x the # of FT, minus the first
30 employees.
 This is not deductible as a business expense.
Employer Shared Responsibility

7.  The Penalties:
◦ Tack Hammer Penalties:
 If a large employer offers coverage to their FT
employees and their dependents but the coverage
is not “affordable” or it does not provide
“minimum value.”
 The penalty is the lesser of $3000 x the # of FT
employees receiving a premium tax credit or
$2000 x the total number of FT employees.
Employer Shared Responsibility

8.  “Not Affordable”
◦ Employees share of the self-only premium for
the employer’s lowest cost plan that provides
minimum value cannot exceed 9.5% of the
household income or the employee may be
eligible for a premium tax credit to purchase
coverage through the exchange.
◦ Safe Harbors:
 W-2 harbor. 9.5% of Box 1 of W-2
 Rate of pay harbor. 9.5% of employee’s hourly
rate of pay x 130 hours.
 Federal Poverty Level harbor. 9.5% of the FPL for
1 person.
Employer Shared Responsibility

9.  “Minimum Value”
◦ A plan fails to provide minimum value if the
plan’s share of the total allowed costs of
benefits is less than 60% of such costs (% of
medical expenses-deductibles, coinsurance,
copays, etc.)
 MV Calculator. Allows employers to input cost
sharing features.
www.cms.gov/resources/files/mv-
calculator-final-2-20-2013.xlsm
 Safe Harbor Checklist. Provides a checklist to
review.
 Actuarial Certification. To get a decisive conclusion
that the plan meets MV standards.
Employer Shared Responsibility

10.  Transition relief for tax penalty:
◦ The regulations provide transition relief for
large employers that maintain a non-calendar
year plan as of 12/27/12.
◦ The employer is not subject to the penalty
provided they are offered affordable, MV
coverage on the first day of the 2014 plan year
if the plan:
 Was offered to at least 1/3 of all employees (FT
and PT) at the most recent open enrollment prior
to 12/27/12.
 Covered ¼ of all employees as of 12/27/12.
Employer Shared Responsibility

11.  As of 1/1/14, the individual mandate
requires most individuals to have
minimum essential coverage or pay a
penalty which is called the “shared
responsibility payment.”
 What qualifies as minimum essential
coverage?
The Individual Mandate

12.  An employer group health plan
 An individual health insurance plan
 A government plan like Medicare,
Children’s Health Insurance Program
(CHIP) or TRICARE.
 Student health coverage
 Medicare Advantage Plan
 State high risk pool coverage
Minimum Essential Coverage

13.  Penalties will be assessed when individuals file
their 2014 taxes in 2015.
 2014: greater of $95 per adult and $47.50 per
child under 18 (maximum of $285 per family) or
1% of the income over the tax filing threshold.
 2015: greater of $325 per adult and $162.50 per
child under 18 (max of $975 per family) or 2% of
the income.
 2016: greater of $695 per adult and $347.50 per
child (max of $2085 per family) or 2.5% of the
income.
 2017 and later: increase based on COL.
Individual Mandate

14.  Individuals who do not meet the following
criteria will not pay a penalty if they do not have
minimum essential coverage:
◦ Individuals who cannot afford coverage: more than 8%
of annual household income.
◦ Taxpayers with income below the tax filing threshold.
◦ Individuals who qualify for hardship exemption:
 State did not choose to expand Medicare (14 have opted out)
 Personal or financial hardship
◦ Individuals who have a gap of less than 3 consecutive
months in a calendar year.
◦ Non US citizens, individuals in prison, Members of Native
American Tribes.
Individual Mandate

15. Exchanges

16.  The law requires the creation of the American
Health Benefit Exchange for individuals and
the Small Business Health Options Programs
(SHOP) Exchange for small employers up to
50 lives.
◦ In 2016, SHOP Exchanges must increase small
group to 100 employees
◦ States can choose to expand their SHOP Exchanges
to serve groups larger than 100 in 2017
 Insurance coverage can be purchased
beginning in October 2013 and will be
effective January 1, 2014.
Exchange Basics

17.  An Exchange is an organized “marketplace”
designed to help people shop for and enroll in
health insurance coverage.
 Individuals, families and small businesses will be
able to use the Exchange to help compare
commercial insurance options, calculate costs
and select coverage online, in person, on the
phone or by mail.
 The Exchange will help people to check their
eligibility for health care programs like Medicaid
and sign up for these programs if they are
eligible.
 The Exchange will also be able to tell what type
of financial assistance is available to applicants
to help them afford health insurance.
Exchange Basics

18.  State based health insurance exchanges
are not optional. HHS is calling them
“Marketplaces” instead of Exchanges
because there is no Spanish word for
Exchanges that translates accurately.
◦ If a state doesn’t create one, the federal
government till step in and operate the
exchange for the state.
◦ 19 states, including NYS have been approved
to operate their own Exchange.
Exchange Basics

19.  Subsidized coverage will be available for
individuals purchasing coverage through the
exchange.
 Low income people who are part of an employer
group that buys coverage through a SHOP
exchange are not eligible for the personal
premium tax credit.
 Only subsidies that will be distributed through
the SHOP exchanges are the small business tax
credits.
 People with “credible” and “affordable” group
coverage cannot leave the group plan and buy
subsidized coverage through the individual
exchange even if they are low income.
Exchange Subsidy Basics

20.  Employers must provide a notice to current
employees and new hire about exchanges
and subsidies.
◦ March 1 deadline has been delayed
◦ DOL is expected to provide model generic language
◦ New notification date will probably be late summer
or early fall
 Employers will have to help verify coverage.
◦ HHS will use data from insurance exchange markets
to determine whether people have coverage when
the individual mandate takes effect.
Employer Responsibilities

21.  SHOP exchanges will be a new purchasing
environment for small employers
 Advantages:
◦ Choice and value: health plans at a variety of
price points.
◦ Tax benefits: up to 50% of premium
contributions for qualifying employers
◦ Defined Contribution: employer can set fixed
amount to contribute to employee coverage
◦ Ease of administration: one monthly premium
invoice
SHOP Exchanges

22.  April 12, 2012, Governor issues Executive
Order to set up the exchange
 October 1, 2012, NYS formally submits its
plan to HHS
 December 14, 2012, HHS provides
conditional certification to NYS
 NYS has been awarded more than $400
million in grants to fund the start up
NYS Health Benefit Exchange

23.  1/31/13, RFPs to health insurers and
dental plans to participate in the
Exchange
 2/15/13 Letter of Interest due
 4/30/13 due date for network, rates, etc.,
submission from insurers
 7/15/13 anticipated selection of insurers
 Brokers and “Navigators” will assist in
placing coverage.
NYS Health Benefit Exchange

24. Question/Comments?