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Preparing For The Affordable Care Act In 2016

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Preparing For The Affordable Care Act In 2016

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Two of G&A Partners' Health Care Reform Specialists review potential strategies heading into 2016 that employers can use to ensure your business remains compliant with the employer provisions and mandate of the Affordable Care Act.
Discussion topics will include:
> The changes going into effect next year for employers with 50 or more full-time equivalent employees.
> The pending IRS reporting requirements employers will need to comply with.
> G&A Partners' ACA compliance tools and services.

Two of G&A Partners' Health Care Reform Specialists review potential strategies heading into 2016 that employers can use to ensure your business remains compliant with the employer provisions and mandate of the Affordable Care Act.
Discussion topics will include:
> The changes going into effect next year for employers with 50 or more full-time equivalent employees.
> The pending IRS reporting requirements employers will need to comply with.
> G&A Partners' ACA compliance tools and services.

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Preparing For The Affordable Care Act In 2016

  1. 1. Preparing  for  the  Affordable  Care  Act  in  2016   October  15,  2015   Tony  Nista  –  VP  UnderwriDng   Grace  Jaen    –  Director  of  G&A  Beneficial  
  2. 2. Agenda   •  PPACA  101   •  Strategies  and  AlternaDve  Models   •  Cadillac  (Excise)  Tax  2018   •  IRS  ReporDng   •  G&A  PPACA  Compliance  Support   •  Summary   •  Q&A   2  
  3. 3. Legal  Disclaimer   What  We  KNOW   “We  know  there  are  known  knowns,  i.e.  things   we  know  we  know.    We  also  know  there  are   known   unknowns,   that   is   to   say   we   know   there  are  things  we  know  we  don’t  know.    But   there  are  also  unknown  unknowns  –  the  ones   we  don’t  know  we  don’t  know.”     Defense  Secretary  Donald  Rumsfeld   3  
  4. 4. PPACA  101   4  
  5. 5. PPACA  Key  Provisions   •  Applicable  Large  Employer  (ALE)  -­‐  Calculated  at  “Controlled  Group”  Level            Plan  Years  Star,ng  2015     ü  100+  FTE  Equivalents     ü  Must  Offer  MEC  to  70%  FTEs   v  $2,000  X  All  FTEs  (-­‐  80)     ü  Qualifying  (60%  Min  Value)   ü  Affordable  (9.56%  Income)   v  $3,000  X  FTEs  subsidized  in  a   Public  Healthcare  Exchange              Plan  Years  Star,ng  2016     ü  50+  FTE  Equivalents     ü  Must  Offer  MEC  to  95%  FTEs   v  $2,000  X  All  FTEs  (-­‐  30)     ü  Qualifying  (60%  Min  Value)   ü  Affordable  (9.66%  Income)   v  $3,000  X  FTEs  subsidized  in  a   Public  Healthcare  Exchange   ALE     Tier  1       Tier  2   Notes:  -­‐  Tier  1  applies  to  FT  EE  &  dependent  children  to  age  26  ONLY  (not  spouses,  not  PT)    -­‐  Tier  2  applies  to  Employee  ONLY  (not  spouse  or  children)  and  cannot  exceed  Tier  1  maximum  penalty    -­‐  FTEs  exclude  Contract  Employees,  Partners,  Tan  Hartley    -­‐  In  determining  ALE  status  exclude  Veterans  receiving  coverage  through  US  Armed  Forces  plans    -­‐  PenalDes  may  be  assessed  on  an  EIN  by  EIN  basis   5  
  6. 6. PPACA  Cheat  Sheet   6    Key  Provisions  of  Health  Reform  -­‐  PPACA  Cheat  Sheet                        Plan  Year  Beginning   2015   2016       2018    Applicable  Large  Employer  (1)   100+  FTE  Equivalents   50+  FTE  Equivalents       Cadillac  Tax  Provision    Tier  1  -­‐  MEC  Offering   70%  of  FTEs/Dep  Children  to  26   95%  of  FTEs/Dep  Children  to  26       40%  Excise  Tax  on  High  Value  Plans       $2,000  penalty  X  All  FTEs  (-­‐  80)   $2,000  penalty  X  All  FTEs  (-­‐  30)       Excess  over  $10,200  Single    Tier  2  -­‐  Qualifying/Affordable   60%  Minimum  Actuarial  Value   60%  Minimum  Actuarial  Value       Excess  over  $27,500  Family       9.56%  of  income  EE  Only  Rate   9.66%  of  income  EE  Only  Rate       Includes  HRA/HSA/FSA  contribuDons       $3,000  X  each  FTE  with  subsidized   $3,000  X  each  FTE  with  subsidized                           coverage  in  Public  Health  Exchange   coverage  in  Public  Health  Exchange       PPACA  Sec,on  6055       (not  to  exceed  Tier  1  penalty  maximum)   (not  to  exceed  Tier  1  penalty  maximum)       Repor,ng  of  MEC  Coverage    Spousal  Offering   Not  Required   Not  Required       1094-­‐B   Filed  to  IRS  w/copies  of  1095-­‐B    Out-­‐of-­‐Pocket  Maximum   $6,600  Ind   $6,850  Ind       Who  Files  -­‐   Insurer  or  Plan  Sponsor       $13,200  Fam   $13,700  Fam       Due  Date  -­‐   Last  Day  in  February  if  by  paper           Must  be  Embedded  (2)           Last  Day  in  March  if  electronic    PCORI  Fee   $2  per  Covered  Life   $2  per  Covered  Life       1095-­‐B   Sent  to  Employee    Transi,onal  Reinsurance  Fee   $44  per  Covered  Life   $27  per  Covered  Life       Who  Sends  -­‐   Insurer  or  Plan  Sponsor    Auto  Enroll  200+   TBD   TBD       Due  Date  -­‐   January  31st  (02/01/16)   (1)  For  ALE  status  FTE  excludes  Contract  EEs,  Partners,  Tan  Hartley,  and  Veterans  receiving  medical  coverage  through  a  US  Armed  Forces  program       PPACA  Sec,on  6056   (2)  Embedded  OOP  Max  -­‐  each  family  member  is  responsible  for  meeDng  ONLY  the  individual  OOP  Max       ALE  Repor,ng  for  Shared  Responsibility                   1094-­‐C   Filed  to  IRS  w/copies  pf  1095-­‐C    Grandfathered  Plans  (March  23,  2010)  Avoid  the  Following  PPACA  Mandates:       Who  Files  -­‐   Employers  who  are  ALEs    -­‐  Cover  immunizaDons  and  certain  prevenDve  care  without  cost  sharing       Due  Date  -­‐   Last  Day  in  February  if  by  paper    -­‐  Maximum  Out-­‐of-­‐Pocket  Limits  and  DeducDbles/Copays  must  apply  to  OOP  Max           Last  Day  in  March  if  electronic    -­‐  Allow  member  choice  of  parDcipaDng    primary  care  physicians  and  pediatricians       1095-­‐C   Sent  to  Employee    -­‐  Allow  direct  access  (no  referral)  to  OB/GYN  services       Who  Sends  -­‐   Employers  who  are  ALEs    -­‐  Cover  emergency  services  without  pre-­‐authorizaDon  or  increased  cost  share  out  of  network       Due  Date  -­‐   January  31st  (02/01/16)    -­‐  Provide  internal  and  external  review  processes  for  certain  denied  claims       General  Notes    -­‐  Eliminate  discriminaDon  in  favor  of  highly  compensated  individuals       IRS  filings  of  250+  forms  must  be  electronic    -­‐  Prohibit  discriminaDon  based  on  parDcipaDon  in  clinical  trials       Self-­‐Funded  ERs  will  use  only  1094C/1095C  forms   to  report  both  secDons  6055  &  6056    -­‐  EssenDal  health  benefits,  metal  levels  and  deducDble  limits  starDng  2014  (Small  Group  Plans  ONLY)        -­‐  Modified  community  raDng  starDng  2014  (Small  Group  Plans  ONLY)       Form  1095-­‐A  is  sent  to  EEs  who  are  enrolled  in  a   public  health  care  exchange    -­‐  Guaranteed  issue  and  renewal  starDng  2014  (Insured  Plans  ONLY)       PPACA  Cheat  Sheet  10.06.15  v5                              
  7. 7. What  PPACA  Does  NOT  Require   •  May  ignore  up  to  30%  of  FTEs  without  triggering  Tier  1  penalty  (30%  will   change  to  5%  in  2016)   •  May  measure  and  trigger  Tier  1  penalty  on  an  EIN-­‐by-­‐EIN  basis   •  No  obligaDon  to  offer  anything  to  Spouses   •  Spouse/Children  offerings  do  NOT  need  to  be  Qualifying  &  Affordable   •  May  minimize  “eligible”  FTEs  through  workforce  management   •  Even  if  coverage  is  not  “Qualifying  &  Affordable”  no  employer  penalty  if:   Ø  Employee  is  eligible  for  Medicare  or  Medicaid   Ø  Employee  enrolls  in  any  employer-­‐based  coverage   Ø  Employee  doesn’t  want  coverage,  or  gets  it  someplace  other  than  Public  Exchange   •  Wellness  surcharges  may  help  reduce  cost,  but  may  trigger  Tier  2   penalty:   Ø  Tobacco  surcharges  –  calculated  at  the  “compliant”  rate   Ø  General  wellness  –  calculated  at  “non-­‐compliant”  rate     7  
  8. 8. PPACA  –  ALE  by  Controlled  Group  Level   •  Determining  “Applicable  Large  Employer”  (ALE)  Status   Ø Must  be  done  at  “Controlled  Group”  level   Ø Based  on  FT  “Equivalents”  (e.g.  2  PT  x  15  Hpw  =  1  FTEq  at  30  Hpw)   •  Example  A  –  Two  Single  Employers  (No  Controlled  Group):   Ø Group  A  -­‐  75  FTEs  –  ALE  for  2016  (no  penalty  2015)   Ø Group  B  -­‐  45  FTEs  –  Not  an  ALE  (no  penalDes  2015  or  2016)   •  Example  B  –  Two  Employers  in  a  Controlled  Group:   Ø Group  A  -­‐  75  FTEs  –  ALE  for  2015   Ø Group  B  -­‐  45  FTEs  –  ALE  for  2015   ü  (total  75  +  45  =  120  FTEs)     8  
  9. 9. PPACA  –  Tier  1  Penalty  Assessed  by  EIN    Tier  1  Penalty  Assessment  -­‐  Example  -­‐  Controlled  Group  with  2  EINs    Group  A  FTEs   75      Offer  MEC  to  All  FTEs  in  Group  A    Group  B  FTEs   45      NO  MEC  offer  to  FTEs  in  Group  B    Total  Group   120      Qualifies  as  ALE  for  Plan  Year  2015                                    ILLUSTRATIVE  SINGLE  EMPLOYER                                              Assessed  By  Group  EIN               Group  A   Group  B    Coverage  Offer   75       75   0    Total  FTEs   120       75   45    Percentage   63%       100%   0%                        Calculate  Penalty                    Total  FTEs   120       N/A   45    Less  Allowance   -­‐80       N/A   -­‐30    Net  Penalty  FTEs   40       N/A   15    Penalty  per  FTE   $2,000       N/A   $2,000    Total  Penalty   $80,000       $0   $30,000                       Note:    80  FTE  "allowance"  is  prorated  by  EIN           9  
  10. 10.   Strategies  and   AlternaDve  Models   10  
  11. 11. What  Is  Your  Strategy?     •  Play  or  Pay?   •  Plan  eligibility     •  Benefit  offerings   •  Measurement  and  stability  periods   •  Tracking  of  hours   •  IRS  ReporDng   •  NoDce  and  disclosure  requirements     11  
  12. 12. Plan  Eligibility   •  Available  to  ALL  EEs,  or  Select  Divisions/EINs?   •  Employee  +  Children  to  26  only,  or  Family?   •  Exclude  Spousal  Coverage  Altogether?   •  Exclude/Surcharge  Only  Working  Spouses?   •  WaiDng  Period  –  Maximum  Allowed  or  Lower?   •  Measurement  Period  Approach?   12  
  13. 13. Benefit  Offerings   •  Standard  Plan  Offerings  (Gold,  Silver,  Bronze)?   •  Minimum  Coverage  Offerings  (MEC/MVP  Plans)?   •  HDHP,  HSA,  HRA  Plan  Offerings?   •  Defined  ContribuDon,  or  Percent  of  Premium?   •  Standard  Networks,  or  Limited  Access?   •  AlternaDve  ACOs/RelaDve  Based/Concierge?   •  IncenDve  Based  (Wellness,  Tobacco  CessaDon)?   13  
  14. 14. Determining  Employee  Status   •  Standard  Measurement  Period  –  Period  an  employer  chooses   (3-­‐12  months)  to  check  and  confirm  whether  or  not  a  Part-­‐ Time  Employee  did  in  fact  work  less  than  an  average  of  30   hours  per  week  during  the  Standard  Measurement  Period.  Can   vary  by  class  of  EE  (union  vs.  non  union,  hrly  vs.  salary,  diff.   states,  etc).   •  Stability  Period  –  Period  must  be  at  least  as  long  as  the   Measurement  Period  and  no  less  than  6  months.    Period  in   which  an  employee  retains  the  status  that  was  determined   during  Measurement  Period.   •  Administra,ve  Period  -­‐  An  employer  may  take  up  to  90  days   between  the  Measurement  and  Stability  periods  to  determine   eligibility,  known  as  the  AdministraDve  Period;  however,   coverage  must  be  available  no  later  than  the  beginning  of  the   14th  month  aner  date  of  hire.   14  
  15. 15. Tracking,  Disclosures,  and  IRS  ReporDng   •  How  are  you  tracking  employee  Dme  for  benefit  eligibility   purposes?    Have  you  invested  in  the  proper  tools  yet?   Timely  and  accurate  data?   •  Are  you  aware  of  the  noDce  and  disclosures   requirements?    How  are  you  handling  the  logisDcs  of   delivery?   •  Do  you  understand  the  differences  in  the  6055  and  6056   reporDng?    Where  is  the  data  coming  from?  Are  you   going  to  prepare  manually  or  contract  out  to  a  vendor?     Have  you  started  the  vendor  selecDon  process?       •  Do  you  have  the  internal  resources  to  handle  these  tasks   or  will  you  have  to  hire  someone?     15  
  16. 16. NoDce  and  Disclosure  Rules   •  Statement  of  grandfathered  status   •  NoDce  of  paDent  protecDons  and  selecDons  of   providers   •  Uniform  summary  of  benefits  and  coverage  (SBC)   •  60  day  advance  noDce  of  plan  changes   •  Exchange  noDces   •  IniDal  /  General  COBRA  noDce   •  Annual  Employer  CHIP  NoDce   •  Women’s  Health  and  Cancer  Rights  Act  (WHCRA)   •  …  and  many  more     16  
  17. 17. PPACA  Cost  Spectrum  …  drives  strategy   Factor   Low   Medium   High   Do  you  currently  set  eligibility  at  30+   hours  per  week?   Yes   No,  but  not  many   workers  between  30   and  40  hours   No,  and  large  work   force  between  30  and   40  hours   What  types  of  plans  do  you  offer?   Tradi,onal   Average   Limited  or  No  Medical   What  por,on  of  the  cost  of  coverage  do   you  subsidize?   Large   Small  to  moderate,   coupled  with  low-­‐paid   work  force   Small   What  is  your  current  employee   par,cipa,on  rate?   High   Medium   Low   What  is  your  employees'  wage  spectrum?   Mostly  high  wage   earners   Decent  mix  of  high   and  low  wage  earners   Mostly  low  wage   earners   Regular  vs.  Seasonal  Workers   Regular   Decent  mix  of  regular   and  seasonal  workers   Seasonal                              Do  you  need  a  plan  to  agract  and  retain  EEs?   Company  Culture                          Is  the  greater  need  financial  savings  or  plan  value?                              "Play  or  Pay"  impact  on  your  employees?   17  
  18. 18. Exchanges   •  Public  Exchanges   Ø Administered  by  State  or  Federal  Government   Ø Must  include  comprehensive  Medical  and  Rx  coverage   Ø Subsidies  and  Tax  Credits  available  to  those  who  qualify   •  Private  Exchanges   Ø Administered  by  Insurers,  ConsulDng  Firms,  ConsorDums   Ø Not  regulated  in  the  same  way  as  Public  Exchanges   Ø Generally  designed  to  “operate”  as  an  exchange   •  Small  Business  Health  OpDons  Program  (SHOP)   Ø Designed  for  “qualified”  Small  Employers   Ø Basically  a  Small  Group  Brokerage  enDty   18  
  19. 19. Private  Health  Care  Exchanges   •  Marketplace  for  Healthcare  Plans   •  Carrier,  Provider,  Consultant  Driven   •  Exempt  From  Public  Marketplace  RegulaDons   •  ParDcipants  Do  Not  Receive  “Subsidies”   •  Defined  ContribuDon  Approach   •  Robust  Enrollment  Engine   •  Reduces  “Over-­‐Insured”  Dynamic   •  Limits  AnD-­‐SelecDon  Impact   •  Reduces  Trend  in  Healthcare  Cost/UDlizaDon     NOTE:  Can  Duplicate  Without  Exchange  Plavorm   19  
  20. 20. Defined  ContribuDon  Approach    Program  Medical  Op,ons   Premium   Buy-­‐Up   Base    Plan  Deduc,ble       $1,000   $2,000   $3,000    Plan  Out-­‐Of-­‐Pocket   $2,500   $4,000   $6,000    Coinsurance       90%   80%   70%    Example  A  -­‐  Employer  Contributes  80%  of  Plan  Cost        Monthly  Single  Rate   $575.00   $500.00   $425.00    Employer  Contribu,on   ($460.00)   ($400.00)   ($340.00)    Monthly  Employee  Cost   $115.00   $100.00   $85.00                            Limited  incen,ve  for  EE  to  choose  Base  Plan        Example  B  -­‐  Employer  Contributes  Flat  $350  to  Plan  Cost    Monthly  Single  Rate   $575.00   $500.00   $425.00    Employer  Contribu,on   ($350.00)   ($350.00)   ($350.00)    Monthly  Employee  Cost   $225.00   $150.00   $75.00                            Financial  incen,ve  for  EE  to  "right  size"  coverage       20  
  21. 21. Accountable  Care  OrganizaDons  (ACOs)   •  Established  for  Medicare  Shared  Savings  Program   •  Medicare  Physician  Group  PracDce  model   •  Three  main  goals:   ü  Bewer  overall  care   ü  Improved  health  outcomes   ü  Lower  per  capita  cost   •  Branching  out  to  the  Non-­‐Medicare  market   •  Several  physician  groups  and  carrier  offerings  available   •  Similar  to  HMO  design  but  more  effecDve  approach   •  HMOs  work  on  capitaDon  and  closed  network   •  ACOs  work  on  performance  and  open  network   21  
  22. 22. Minimum  Value  Plans  (MVP)   •  Minimum  Actuarial  Value  at  60%   •  Generally  a  “Bronze”  Metal  Level  Plan   •  Similar  to  Plans  Offered  in  Public  Exchange   •  SaDsfies  Employer’s  “Qualifying”  Requirement   •  Easy  to  Make  “Affordable”  Due  to  Plan  Price   •  Offered  Stand-­‐Alone  or  Alongside  Other  Plans   22  
  23. 23. Minimum  EssenDal  Coverage  (MEC)  Plans   •  NOT  a  Minimum  Value  Plan  (MVP)   •  MEC  Covers  PrevenDve  Care/Wellness  Benefits  ONLY   •  SaDsfies  Employee’s  Individual  Mandate   •  SaDsfies  Employer’s  Tier  1  Requirement  ($2,000  Penalty)   •  Employer  SDll  Subject  to  Tier  2  PenalDes  ($3,000  per  FTE)   •  Very  Inexpensive  Plans  to  Operate  and  Subsidize   •  Very  Popular  in  the  Self-­‐Insured  Market   •  Must  Cover  HospitalizaDon  to  be  ACA  Qualified  Plan  (New)   •  Not  Recommended  as  the  ONLY  Plan  OpDon   •  May  Present  Risk  of  Public  Opinion?   23  
  24. 24. Leveraged  Trend  Impact   •  Medical/Rx  claims  increase  with  trend  (cost,  uDlizaDon,  innovaDon)   •  If  Ded/OOP  Max  remains  constant,  “leveraged”  trend  results   •  Increasing  the  Ded/OOP  Max  neutralizes  the  impact  of  leveraged  trend      Passive  OOP  Maximum   2015   2016   Increase                      Medical/Rx  Claim   $15,000   $16,500   10.0%                      OOP  Max   $4,000   $4,000   0.0%                      Plan  Reimbursement   $11,000   $12,500   13.6%                      Ac,ve  OOP  Maximum   2015   2016   Increase                      Medical/Rx  Claim   $15,000   $16,500   10.0%                      OOP  Max   $4,000   $4,500   12.5%                      Plan  Reimbursement   $11,000   $12,000   9.1%                   24  
  25. 25. PotenDal  Strategies  for  Employers   •  Workforce  Management  (HPW)   •  Measurement  Period  Approach   •  “Engage”  Medicare/Medicaid  Eligible  EEs   •  Offer  Minimum  Qualifying  &  Affordable  Plan   •  Offer  Q&A  Plan  Along  With  MEC  Plan   •  Ignore  Affordable  ($3,000  vs.  Plan  Cost?)   •  Offer  Employee/Child  Coverage  ONLY   •  Let’s  look  at  each  in  more  detail   25  
  26. 26. Workforce  Management   •  Manage  some  full-­‐Dme  employees  to  part-­‐Dme,  but   could  create  addiDonal  operaDonal  costs   •  Employ  the  “measurement  period”  concept  to  seasonal   and  variable  hour  employees   •  Engage  Medicaid  and  Medicare  eligible  employees  as  to   their  opDons  -­‐  carefully   26  
  27. 27. Measurement  Period  Approach   •  Adopted  as  “transiDonal  relief”  for  employers  to  use  with   seasonal  and  variable  hour  employees   •  Reduces  the  number  of  plan  eligible  FTEs  based  on  hours   worked  over  extended  Dme  (measurement  period)   •  Measurement  period  can  be  any  length  of  Dme  chosen  by   employer  (between  3  and  12  months)   •  Must  include  a  “stability  period”  equal  to  the  length  of  the   “measurement  period”  (some  risk?)   •  Note:    TransiDonal  relief  could  disappear?   27  
  28. 28. “Engage”  Medicare/Medicaid  Eligible  EEs   •  Medicare  and  Medicaid  saDsfy  the  Individual  Mandate  so   that  employees  avoid  penalDes   •  Employer  may  “engage”  these  eligible  employees  to   educate  on  opDons  (NOT  “influence”!)   •  These  employees  will  not  trigger  Tier  2  penalDes  since  they   are  not  eligible  for  subsidies  in  the  Public  Exchange   •  Employer  plan  will  see  some  reduced  costs  as  these   employees  switch  to  Medicare/Medicaid  opDons   •  PPACA  includes  provision  for  legal  recourse  for  employees   who  feel  “injured”  by  any  act  of  the  employer   28  
  29. 29. Offer  Minimum  Qualifying/Affordable  Plan   •  Only  one  plan  offering  needs  to  be  qualifying  and  affordable   •  Eliminates  worry  on  “Play  or  Pay”  penalDes  (sleep  at  night)   •  Can  be  offered  stand-­‐alone  or  alongside  other  plans   •  Employer  cost  is  reduced  for  employees  who  enroll   •  Keeps  EEs  from  ge{ng  subsidies  in  Public  Exchange   29  
  30. 30. Offer  MVP  alongside  MEC  Plan   •  Offering  Minimum  Value  Plan  avoids  Tier  2  penalDes   •  MEC  plan  will  be  “lean”  to  meet  price  points  (40%  AV)   •  Employer  cost  will  be  reduced  in  either  plan   •  Employee  meets  Individual  Mandate  with  either  plan   •  Could  tend  to  cause  anD-­‐selecDon  against  the  MVP  plan   •  How  many  EEs  will  buy  the  MEC  plan?   •  How  many  EEs  will  sDll  go  to  the  exchange?   •  What  will  your  compeDtors  offer?   30  
  31. 31. Offer  Qualifying  Plan  –  Not  Affordable   •  Offer  qualifying  coverage  to  all  or  substanDally  all  FTEs  but   do  not  worry  about  making  it  “affordable”   •  Some  employees  for  whom  it  is  unaffordable  will  not  seek   subsidized  exchange  coverage  (i.e.  no  Tier  2  penalty)   •  For  those  that  do,  the  cost  of  paying  the  $3,000  penalty   may  be  less  expensive  than  to  subsidize  comprehensive   coverage   •  Overall  weigh  the  “hard”  cost  of  operaDonal  change  vs.  the   “son”  cost  of  potenDal  Tier  2  penalDes   31  
  32. 32. Offer  EE/Child  ONLY  –  No  Spousal  Coverage   •  Meets  the  minimum  requirements  of  coverage  offering   •  NaDonal  awenDon  due  to  UPS  announcement   •  MulDple  opDons  to  consider:   Ø A.  Surcharge  spousal  rates  if  eligible  for  their  own  ER  plan   Ø B.  Exclude  coverage  for  spouses  eligible  for  their  own  ER  plan   Ø C.  Exclude  spousal  coverage  altogether   •  Balance  the  strategy  based  on  cost  and  value   •  What  do  your  major  compeDtors  do?   32  
  33. 33.   Cadillac  Tax   33  
  34. 34. Cadillac  Tax  2018  –  High  Value  Plans   •  Generates  $100  Billion  in  Revenue   •  IncenDve  to  Employers  to  Control  Cost   •  40%  of  Amount  Exceeding  Annual  Thresholds:   Ø $10,200  Single  /  $27,500  Family   •  Includes  HSA,  HRA,  FSA  Annual  ContribuDons   •  Limit/Minimize  Employer  Exposure  Via:   ü  Targeted  Wellness  Strategies   ü  Tobacco  CessaDon  Programs   ü  Plan  Design/Rate  Re-­‐AllocaDon   •  Excise  Tax  is  “nondeducDble”   •  Start  Planning  Now!   34  
  35. 35. Cadillac  Tax  2018  –  Example  CalculaDon    Excise  Tax  Calcula,on  -­‐  Example               Single   Family    Premium  Cost       $11,000   $28,000    HSA/HRA/FSA    +   $1,000   $2,000    Total  Plan  Value   $12,000   $30,000    Threshold    -­‐   $10,200   $27,500    Taxable  Amount   $1,800   $2,500    Tax  Rate       40%   40%    Employer  Cost       $720   $1,000                                                          Per  Employee  Enrolled   35  
  36. 36. Cadillac  Tax  2018  –  Long  Term  Impact   v Slow  Incremental  Change  –  Start  Planning  Now!      Thresholds:   $10,200   Single       $27,500   Family      Example  A   10.0%   Annual  Trend  -­‐  Assumes  No  Plan  Strategy               2015   2016   2017   2018   2019   2020   2021          Single   $8,000   $8,800   $9,680   $10,648   $11,713   $12,884   $14,172          Family   $21,000   $23,100   $25,410   $27,951   $30,746   $33,821   $37,203                   Exceeds   Exceeds   Exceeds   Exceeds      Example  B   4.8%   Annual  Trend  -­‐  Plan  Strategy  -­‐  Slow  Incremental  Change       2015   2016   2017   2018   2019   2020   2021          Single   $8,000   $8,384   $8,786   $9,208   $9,650   $10,113   $10,599          Family   $21,000   $22,008   $23,064   $24,171   $25,332   $26,548   $27,822                               Exceeds   Note:    Assumes  no  change  to  the  Excise  Tax  Provision  as  currently  wrigen   36  
  37. 37.   IRS  ReporDng   37  
  38. 38. Code   •  6055  –  Carrier  or  Employer  if  self  insured   •  6056  –  Completed  by  the  Applicable  Large   Employer  (ALE)   38  
  39. 39. Forms   39          109X  –  Y  Forms    
  40. 40. Forms   X   Y   IRC  Code   4  –  Summary  Page     A  Forms  –  Marketplace   6055   5-­‐  Individual  Pages   B  Forms  –  Carrier   6055   C  Forms  –  Employer   6056   40          109X  –  Y  Forms    
  41. 41. 6055  and  6056  Forms   41   Forms   Title   What  is  the   purpose   Who  completes   this  form   When  is  it  due   How  is  it  filed   Who  does  it  go   to   1094-­‐C   Transmiwal  of   Employer  –  Provided   Health  Insurance   Offer  and  Coverage   InformaDon  Returns   Summary  of  1095-­‐C:   Enforce  employer   mandate   Employer  members   of  ALE   Last  day  of  February   if  filed  paper,  last   day  of  March  if   electronically   Electronic   submission  is   required  for  250   employees  or  more,   otherwise  paper  or   electronic   IRS   1095-­‐C   Employer  Provided   Health  Insurance   Offer  and  Coverage   Enforcement  of   employer  mandate.   This  is  used  to   disclose  MEC   coverage   Employer  members   of  ALE   Last  day  of  January   to  employees,  last   day  of  February  to   the  IRS  if  filed  paper;   if  electronic,  last  day   of  March   Electronic   submission  is   required  for  250   employees  or  more,   otherwise  paper  or   electronic     Employees  (covered   or  not)  and  IRS   1094-­‐B   Transmiwal  of   Health  Coverage  and   InformaDon  Returns   Summary  of  1095-­‐C:   To  prove  coverage   for  enforcement  of   individual  penalty   Carrier  or  Self   funded  plan  sponsor   Last  day  of  January   to  employees,  last   day  of  February  to   the  IRS  if  filed  paper;   if  electronic,  last  day   of  March     Electronic   submission  is   required  for  250   employees  or  more,   otherwise  paper  or   electronic     IRS   1095-­‐B   Health  Coverage   This  is  used  to   provide  proof  of   MEC  coverage   Carrier  or  Self   funded  plan  sponsor   Last  day  of  January       Electronic   submission  is   required  for  250   employees  or  more,   otherwise  paper  or   electronic     Covered  employees,   covered  non-­‐ employees,  and  IRS     1095-­‐A   Health  Insurance   Marketplace   statement   This  is  used  to  prove   coverage  on  the   exchange     Exchange  carrier   Last  day  of  January   Electronically   Covered  individuals  
  42. 42. 6055  and  6056  Forms   42   Forms   Title   What  is  the   purpose   Who  completes   this  form   When  is  it  due   How  is  it  filed   Who  does  it  go   to   1094-­‐C   Transmiwal  of   Employer  –  Provided   Health  Insurance   Offer  and  Coverage   InformaDon  Returns   Summary  of  1095-­‐C:   Enforce  employer   mandate   Employer  members   of  ALE   Last  day  of  February   if  filed  paper,  last   day  of  March  if   electronically   Electronic   submission  is   required  for  250   employees  or  more,   otherwise  paper  or   electronic   IRS   1095-­‐C   Employer  Provided   Health  Insurance   Offer  and  Coverage   Enforcement  of   employer  mandate.   This  is  used  to   disclose  MEC   coverage   Employer  members   of  ALE   Last  day  of  January   to  employees,  last   day  of  February  to   the  IRS  if  filed  paper;   if  electronic,  last  day   of  March   Electronic   submission  is   required  for  250   employees  or  more,   otherwise  paper  or   electronic     Employees  (covered   or  not)  and  IRS   1094-­‐B   Transmiwal  of   Health  Coverage  and   InformaDon  Returns   Summary  of  1095-­‐C:   To  prove  coverage   for  enforcement  of   individual  penalty   Carrier  or  Self   funded  plan  sponsor   Last  day  of  January   to  employees,  last   day  of  February  to   the  IRS  if  filed  paper;   if  electronic,  last  day   of  March     Electronic   submission  is   required  for  250   employees  or  more,   otherwise  paper  or   electronic     IRS   1095-­‐B   Health  Coverage   This  is  used  to   provide  proof  of   MEC  coverage   Carrier  or  Self   funded  plan  sponsor   Last  day  of  January       Electronic   submission  is   required  for  250   employees  or  more,   otherwise  paper  or   electronic     Covered  employees,   covered  non-­‐ employees,  and  IRS     1095-­‐A   Health  Insurance   Marketplace   statement   This  is  used  to  prove   coverage  on  the   exchange     Exchange  carrier   Last  day  of  January   Electronically   Covered  individuals  
  43. 43. Scenario  -­‐  Jane   •  Jane  worked  for  ABC  Company  the  enDre   year.    ABC  Company  was  covered  under   BCBS  for  5  months  and  moved  to  Cigna  for  7   months.   43   •  Jane  would  get  a  1095-­‐C  from  ABC  Company.   •  Jane  would  get  a  1095-­‐B  from  BCBS.   •  Jane  would  get  a  1095-­‐  B  from  Cigna.  
  44. 44. Scenario  -­‐  Joe     •  Joe  worked  for  ABC  Company  (covered  by   Humana)  for  6  months  and  then  went  to  work   for  XYZ  Company  (covered  under  UHC)  for  6   months.       44     •  Joe  would  get  a  1095-­‐C  from  ABC  Company.   •  Joe  would  get  a  1095-­‐B  from  Humana.   •  Joe  would  get  a  1095-­‐C  from  XYZ  Company.   •  Joe  would  get  a  1095-­‐B  from  UHC.  
  45. 45. Bonus  Scenario  -­‐  Joe     •  Joe  worked  for  ABC  Company  (covered  by   Humana)  for  6  months  and  then  went  to  work   for  XYZ  Company  (covered  under  UHC)  for  6   months.    XYZ  Company  changes  insurance   companies  mid  year.     45     •  Joe  would  get  a  1095-­‐C  from  ABC  Company.   •  Joe  would  get  a  1095-­‐B  from  Humana.   •  Joe  would  get  a  1095-­‐C  from  XYZ  Company.   •  Joe  would  get  a  1095-­‐B  from  UHC.   •  Joe  would  get  a  1095-­‐  B  from  new  carrier.  
  46. 46. PenalDes   46   Penalty  Type   Per  Viola,on   Annual  Maximum   Annual  Max  for  Small   Employers*   Old   New   Old   New   Old   New   General   $100   $250   $1.5  million   $3  million   $500,000   $1  million   Corrected  within  30  days   $30   $50   $250,000   $500,000   $75,000   $175,000   Corrected  aner  30  days   and  before  Aug.  1   $60   $100   $500,000   $1.5   million   $200,000   $500,000   IntenDonal  Disregard   $250+   $500+   None   N/A   *For purposes of the penalty maximum, a small employer is one that has average annual gross receipts of up to $5 million for the most recent three taxable years
  47. 47. 6055  (1094-­‐B  and  1095-­‐B)   47   •  Insured  plans:  the  health  insurance  issuer  (not  the  employer)   •  Self-­‐insured  group  health  plans:  the  plan  sponsor   •  Government-­‐sponsored  programs:  the  execuDve  department  or  agency  of  a   governmental  unit  that  provides  coverage  under  the  government-­‐sponsored  program   Any  person  that  provides  minimum  essen,al  coverage  to  an  individual:   Minimum  EssenDal   Coverage:   • Eligible  employer-­‐sponsored  coverage  (including  insured   and  self-­‐insured  plans,  COBRA  coverage  and  reDree   coverage)   • Individual  health  coverage  (including  Exchange/ Marketplace  plans)   • Government  programs  (including  Medicare  Part  A,   Medicaid,  CHIP  and  TRICARE  coverage)   MEC  does  NOT   include:   • “Supplemental  coverage”  such  as  HRAs,  HSAs,  coverage   at  on-­‐site  medical  clinics  or  Medicare  Part  B  
  48. 48. Form  1094-­‐B  (Transmiwal  Form)   48   • Employer  name,  EIN,  address   • Contact  person’s  name  and  telephone  number   • Total  number  of  Forms  1095-­‐B  submiwed  with  transmiwal   Required  InformaDon  
  49. 49. Form  1095-­‐B  (Health  Coverage)   49   Required  Informa,on   Part  I:  Responsible  Individual   •  Name,  SSN  (or  DOB),  address   •  Policy  origin/SHOP  idenDfier   Part  II:  Employer  Sponsored  Coverage   •  Name,  EIN,  address   Part  III:  Issuer  or  Other  Coverage  Provider   •  Name,  EIN,  address,  phone  number   Complete one Form 1095-B for each responsible individual
  50. 50. Form  1095-­‐B  (Health  Coverage)   50   Covered  Individuals   •  Name  of  covered  individual   •  SSN  (or  DOB)   •  Whether  covered  for  all  12  months  of  the  year   •  Months  covered  (if  not  all  12  months)  
  51. 51. 6056  (Forms  1094-­‐C  and  1095-­‐C)   51   Form No. Form Name Used to: 1094-C Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Return •  Report summary information for each employer to the IRS •  Certify eligibility for transition relief (including medium-sized employer delay) •  Transmit Forms 1095-C to the IRS 1095-C Employer-Provided Health Insurance Offer and Coverage •  Report information about each employee •  Satisfy combined 6055 and 6056 reporting requirements for ALEs with self-funded plans
  52. 52. Form  1094-­‐C  Part  1  (Transmiwal  Form)   Part  I:  Applicable  Large  Employer  Member  (ALE  Member)   •  Contact  informaDon  for  employer  and  contact  person   •  Number  of  Forms  1095-­‐C  submiwed  with  the  transmiwal   52  
  53. 53. Form  1094-­‐C  Part  II   Part  II:  ALE  Member  Informa,on   •  Indicate  authoritaDve  transmiwal     •  Total  number  of  Forms  1095-­‐C  filed  by/on  behalf  of  member   •  Indicate  member  of  Aggregated  ALE  Group.  If  yes,  complete  Part  IV  (names  and   EINs  of  other  ALE  members)   •  CerDfy  eligibility  for  alternaDve  methods  of  reporDng/4980H  transiDon  relief   53  
  54. 54. Form  1094-­‐C  Part  III   Part  III:  ALE  Member  Informa,on  -­‐  Monthly   •  MEC  Offer  Indicator  (Yes/No)   •  Full-­‐Dme  Employee  Count  for  ALE  Member   •  Total  Employee  Count  for  ALE  Member   •  Aggregated  Group  Indicator   •  SecDon  4980H  TransiDon  Relief  Indicator  (50-­‐99  Relief  –  Code  A,  100  or   More  Relief  –  Code  B)   54  
  55. 55. Form  1095-­‐C  Part  I   Employee   Applicable  Large  Employer  Member   (Employer)   •  Name   •  SSN   •  Address   •  Name   •  EIN   •  Address   •  Contact  phone  number   Employer will complete one Form 1095-C for each full-time employee* 55  
  56. 56. Form  1095-­‐C  Part  II  Line  14                                           Employee  Offer  and  Coverage   •  Enter  a  code  indicaDng  informaDon  regarding  offer  of  coverage   Line  14:  Offer  of  Coverage   56  
  57. 57. Form  1095-­‐C  Part  II  Lines  15  &  16   CODE   EXPLANATION   2A   Employee  not  employed  during  the  month   2B   Employee  not  a  full-­‐Dme  employee   2C   Employee  enrolled  in  offered  coverage   2D   Employee  in  a  4980H(b)  Limited  Non-­‐Assessment   Period   2E   MulDemployer  interim  rule  relief   Line  15–Affordability  of  coverage:  enter  cost  of  employee  share  of  lowest-­‐cost  monthly   premium  for  self-­‐only  minimum  value  coverage   Line  16–SecDon  4980H  safe  harbors:  enter  code  indicaDng  why  penalty  won’t  apply   NOTE: Code 2C should be used for any month in which the employee enrolled coverage, regardless of whether any other code could also apply. CODE   EXPLANATION   2F   4980H  affordability  Form  W-­‐2  safe  harbor   2G   4980H  affordability  federal  poverty  line   safe  harbor   2H   4980H  affordability  rate  of  pay  safe  harbor   2I   Non-­‐calendar  year  transiDon  relief  applies   57  
  58. 58. Form  1095-­‐C  Part  III  (Combined  ReporDng  for   Self-­‐funded  ALEs)   Covered  Individuals   •  Name  of  covered  individual   •  SSN  (or  DOB)   •  Whether  covered  for  all  12  months  of  the  year   •  Months  covered  (if  not  all  12  months)   Employers with self-funded plans will complete one Form 1095-C for each employee who enrolls in the health coverage (whether full-time or not) 58  
  59. 59. General  Method  of  ReporDng   • Including  whether  an  offer  of  health  coverage  was  made   • Applies  to  all  ALEs  whether  or  not  they  offered  health  coverage  to  full-­‐Dme  employees   • ALEs  that  do  not  offer  any  coverage  must  report  that  coverage  was  not  offered   All  ALEs  must  report  informaDon  about  health  coverage  offered  to  full-­‐Dme   employees   • Whether  an  offer  of  health  coverage  was  or  was  not  made  to  the  employee   • If  an  offer  was  made,  the  required  informaDon  about  the  offer   For  each  full-­‐Dme  employee,  the  ALE  must  report:   • A  copy  of  Form  1095-­‐C  (or  a  subsDtute  form  with  the  same  informaDon)   • Do  not  have  to  provide  Form  1094-­‐C   Provide  informaDon  to  full-­‐Dme  employees   59  
  60. 60. The  Qualifying  Offer  Method   Qualifying  Offer   occurs  when  the   ALE:   •  Offers  MEC  that  is  affordable  (based  on  FPL)  and   provides  minimum  value  AND   •  Offers  MEC  to  the  employee’s  spouse  and   dependents  (if  any)   If  made  for  all  12   months:   •  Provide  less  detailed  informaDon  on  IRS  returns   •  Provide  simplified  employee  statements  (unless   enrolled  in  self-­‐insured  coverage)     If  not  made  for  all   12  months   •  Use  the  general  reporDng  method   •  Use  an  indicator  code  for  months  that  a  Qualifying   Offer  was  received   ALE  must  make  a  Qualifying  Offer  for  all  months  of  a  year  in  which   the  employee  was  full-­‐Dme  under  SecDon  4980H       60  
  61. 61. ReporDng  Using  the  Qualifying  Offer  Method   In  Part  II  of  Form  1095-­‐C:   •  Offer  of  coverage:  enter  Code  1A  in  either  the  “All  12  months”  box  (or  all   of  the  monthly  boxes)  to  indicate  that  the  employee  received  a   Qualifying  Offer  for  all  12  months   •  Employee  cost:  DO  NOT  enter  a  dollar  amount  for  the  employee  cost  for   any  month   In  Part  II  of  Form  1094-­‐C:   •  Cer,fica,ons  of  Eligibility:  Check  box  A,  Qualifying  Offer  Method   61  
  62. 62. ReporDng  Using  the  Qualifying  Offer  Method   TransiDon  Relief  for  2015   In  Part  II  of  Form  1095-­‐C:   •  Offer  of  coverage:   •  Enter  Code  1A  for  each  month  in  which  a  Qualifying  Offer  was  received   •  Enter  Code  1I  for  each  month  in  which  the  TransiDon  Relief  applies  (i.e.,  each   month  a  Qualifying  Offer  was  not  received)   •  Employee  cost:  DO  NOT  enter  a  dollar  amount  for  the  employee  cost   In  Part  II  of  Form  1094-­‐C:   •  Cer,fica,ons  of  Eligibility:  Check  box  B,  Qualifying  Offer  Method  TransiDon  Relief   •  Applicable  when  a  Qualifying  Offer  is  made  to  at  least  95%  of  full-­‐Dme  employees,   the  ALE  can  report  simplified  data  for  ALL  full-­‐Dme  employees   62  
  63. 63. The  98%  Offer  Method   •  Affordability  based  on  any  pay  or  play  safe  harbor  method   ALE  must  offer  affordable,  minimum  value  coverage  to   at  least  98%  of  employees  and  dependents  reported  on   its  SecDon  6056  return   •  Eligible  ALEs  do  not  have  to  specify  their  number  of  full-­‐Dme   employees  or  idenDfy  which  are  full-­‐Dme  on  IRS  returns   •  No  simplified  method  for  employee  statements   How  to  Report:   63  
  64. 64. Final  InstrucDons  and  Forms   •  Instruc,ons  for  Forms  1094-­‐C  and  1095-­‐C  (“Applicable  large  employers”  (i.e.,  those  subject  to  the  employer  mandate),  self-­‐insured   plans  complete  the  en,re  Form  1095-­‐C)   •  hwp://www.irs.gov/pub/irs-­‐pdf/i109495c.pdf? elqTrackId=a60d4092f5fd4544bb315fd1ed09b9f8&elq=23705b47fa29429~c29487ad788f039&elqCampaignId=&elqaid=10242&elqat=1   •  Form  1094-­‐C  (a  transmigal/cover  sheet)  to  the  IRS   •  hwp://www.irs.gov/pub/irs-­‐pdf/f1094c.pdf? elqTrackId=2057bae1a6b54ac1998eeae3a3069268&elq=23705b47fa29429~c29487ad788f039&elqCampaignId=&elqaid=10242&elqat=1   •  Form  1095-­‐C  to  both  the  IRS  and  individuals  (If  its  plan  is  insured,  the  applicable  large  employer  will  only  complete  Parts  I  and  II  of   Form  1095-­‐C)   •  hwp://www.irs.gov/pub/irs-­‐pdf/f1095c.pdf? elqTrackId=71926ae587914509895769dd600c71b9&elq=23705b47fa29429~c29487ad788f039&elqCampaignId=&elqaid=10242&elqat=1   •  Instruc,ons  for  Forms  1094-­‐B  and  1095-­‐B  (Insurance  carriers  and  small  employers  with  self-­‐insured  plans  use  these  forms)   •  hwp://www.irs.gov/pub/irs-­‐pdf/i109495b.pdf? elqTrackId=26cda07338d645a59e28e24bc92e9e67&elq=23705b47fa29429~c29487ad788f039&elqCampaignId=&elqaid=10242&elqat=1     •  Form  1094-­‐B  (a  transmigal  /cover  sheet)  to  the  IRS   •  hwp://www.irs.gov/pub/irs-­‐pdf/f1094b.pdf? elqTrackId=684851f6a6b54f98905c2a067a23b9c0&elq=23705b47fa29429~c29487ad788f039&elqCampaignId=&elqaid=10242&elqat=1   •  Form  1095-­‐B  to  both  the  IRS  and  individuals     •  hwp://www.irs.gov/pub/irs-­‐pdf/f1095b.pdf? elqTrackId=15c9a288d12246eba09e453f151b2b21&elq=23705b47fa29429~c29487ad788f039&elqCampaignId=&elqaid=10242&elqat=1   64  
  65. 65.   G&A’s  PPACA  Compliance   Support   65  
  66. 66. PPACA  –  Working  with  G&A   •  Tools  and  support  for  determining   affordability,  minimum  value,  measurement/ stability  period     •  IRS  ReporDng  (6055/6056)  services   •  Time  tracking  reports  to  monitor  part  Dme   employee  hours  to  determine  benefit   eligibility   •  Tracking  variable  hour,  change  in  status,   leaves  of  absence,  and  breaks  in  service     •  Expert  guidance     66  
  67. 67. Compliance  Tracking  Tool     67  
  68. 68. Compliance  Tracking  Tool     68  
  69. 69. Compliance  Tracking  Tool     69  
  70. 70. Compliance  Tracking  Tool     70  
  71. 71. QuesDons  for  You  to  Consider   •  What  strategies  will  work  for  your  business?   •  The  value  of  benefits  vs.  employer  cost?   •  What  will  your  compeDtors  do?     •  Do  you  go  at  this  alone  or  outsource?     71  
  72. 72. Summary   •  PPACA  rules  are  constantly  evolving   •  What  works  today  may  not  work  tomorrow   •  There  is  no  “one  size  fits  all”  approach     •  A  comprehensive  strategy  is  more  effecDve     •  Examine  all  opportuniDes  available   •  Seek  relevant  guidance  (legal,  financial,  operaDonal)   •  Avoid  the  pivalls  of  over-­‐reacDon  to  penalDes   •  Don’t  let  Health  Reform  “run  your  business”!   72  
  73. 73. QUESTIONS?   G&A  Partners   info@gnapartners.com   (866)  634-­‐6713   This webinar has been recorded and will be posted on the G&A website by Friday.

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