From ALM's National Underwriter comes a timely and necessary ACA presentation covering: Employer Mandate Penalties • Reporting Requirements • Small Business Health Options (SHOP) Changes • Cadillac Tax Delay • Delay of Menu Labeling Rule • Other Affordable Care Act Changes • Changes to IRS Forms • Statistics

1. HOW TO SUCCESSFULLY
NAVIGATE THE LATEST
CHANGES TO THE AFFORDABLE
CARE ACT
May 25, 2016
Michael D. Thomas, J.D.
Manager, Product Development, National Underwriter Company/ALM

2. 2
Agenda
• Employer Mandate Penalties
• Reporting Requirements
• Small Business Health Options (SHOP) Changes
• Cadillac Tax Delay
• Delay of Menu Labeling Rule
• Other Affordable Care Act Changes
• Changes to IRS Forms
• Statistics

3. 3
Changes to the Employer Mandate
FULL IMPLEMENTATION OF THE EMPLOYER MANDATE
• EMPLOYER MANDATE – SECTION 4980H – “PLAY OR PAY”
• The Affordable Care Act does not mandate that employers provide
healthcare – BUT – if they do not, they may be subject to monetary
penalties
• DEFINITIONS
• Full-Time Employee: An employee who works an average of 30 hour per
week or 130 hours per calendar month.
• Full-Time Equivalent (FTE) Employee: “combination of employees, each of
whom individually is not a full-time employee, but who, in combination, are
equivalent to a full-time employee."
• calculated by combining the number of hours of service of all non-full-time
employees for the month (not including more than 120 hours for each
employee), and dividing the total by 120.
• BACKGROUND OF THE EMPLOYER MANDATE
• Initially was to be implemented in 2014
• IRS delayed implementation to 2015 for employers with 100 or more
employees/FTEs

4. 4
Changes to the Employer Mandate
FULL IMPLEMENTATION OF THE EMPLOYER MANDATE
• CHANGES TO THE EMPLOYER MANDATE
• 2015 Requirements
• Businesses with 100 or more Full Time Employees had to offer at
least 70% of full time employees insurance to avoid penalties
• 2016 Changes
• Businesses with at least 50 Full Time Employees must offer at least
95% of full time employees insurance to avoid penalties.
• Businesses will also have to pay a penalty if a full-time employee receives a tax
credit or subsidy through the ACA Marketplace because employer provided
coverage was UNAFFORDABLE or did not meet MINIMUM VALUE
• DEFINITIONS
• AFFORDABLE – CHANGE IN SAFE HARBOR PERCENTAGE
• 2015: if a health care plan costs no more than 9.5 percent of an employee’s
total household income, it’s an affordable plan.
• 2016 – raised to 9.66%
• Employer can use Form W-2 wages, an employee’s rate of pay, or the federal
poverty line as safe harbors to calculate affordability
• MINIMUM VALUE
• An employer-sponsored plan provides minimum value if it covers at least 60
percent of the total allowed cost of benefits that are expected to be incurred
under the plan

5. 5
Changes to the Employer Mandate
EMPLOYER MANDATE PENALTIES
• SECTION 4980H(a) “Minimum Essential Coverage”
• 2015 Penalty is $2,080 x number of FTEs in excess of 80 employees
• 2016 Penalty is $2,160 x number of FTEs in excess of 30 employees
• Penalty is indexed annually for inflation
• SECTION 4980H(b) “Minimum Value” and “Affordable” Coverage
• If any full time employee receives a premium tax credit to purchase insurance
on exchanges because
• the employer health coverage offered did not provide "minimum value" (the plan's
share of the total allowed costs of benefits provided under the plan is not at least 60%
of those costs)
• the employer health coverage offered was "unaffordable"; or
• the employee was not among the 95% (70% in 2015) of full-time employees offered
coverage.
• The penalty under 4980H(b) is the lesser of
• what the "A" penalty would have been had it been levied $2,080 in 2015/ $2,160 in
2016 multiplied by the number of each full-time employee in excess of 30 (80 in
2015)) or
• $3,120 in 2015 and $3,240 in 2016 per full-time employee who procures coverage
from a health insurance exchange who receives a premium tax credit to enable him or
her to purchase coverage through the health insurance exchanges.

6. 6
Reporting Requirements
NEW REPORTING REQUIREMENTS FOR THE ACA
• The ACA requires employers and/or health insurance issuers to report to the IRS
information about employer-sponsored health coverage.
• Reporting requirements were delayed from 2014 until the 2015 tax year to coincide with the
delay in the employer play-or-pay mandate.
• IRS has offered some relief for the 2015 reporting forms, due in 2016.
• Penalties will not be imposed on a filer for reporting incorrect or incomplete information if the filer
can show that it made good-faith efforts to comply with the information reporting requirements for
2015.
• IRS Notice 2016-4 issued on December 28, 2015, announced an extension for 2015
information reporting.
• The notice extends the due date
• for furnishing to individuals the 2015 Form 1095-B, Health Coverage, and the 2015 Form
1095-C, Employer-Provided Health Insurance Offer and Coverage, from February 1, 2016, to
March 31, 2016, and
• for filing with the IRS the 2015 Form 1094-B, Transmittal of Health Coverage Information
Returns, the 2015 Form 1095-B, Health Coverage, the 2015 Form 1094-C, Transmittal of
Employer-Provided Health Insurance Offer and Coverage Information Returns, and the 2015
Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, from February 29,
2016, to May 31, 2016, if not filing electronically, and from March 31, 2016, to June 30, 2016,
if filing electronically.

7. 7
Reporting Requirements
NEW REPORTING REQUIREMENTS FOR THE ACA
• WHO NEEDS TO REPORT?
Small Company 1-49 FTEs ALE - Large Employer > 49 FTEs
Form Self-Insured Fully Insured Self-Insured Fully Insured
1094-B Employer Insurance Carrier Not Applicable Insurance Carrier
1095-B Employer Insurance Carrier Not Applicable Insurance Carrier
1094-C Not Applicable Not Applicable Employer Employer ( not Part III)
1095-C Not Applicable Not Applicable Employer Employer

8. 8
Reporting Requirements – Penalties
IRS PENALTIES FOR FAILING TO MEET APPLICABLE LARGE EMPLOYER
REPORTING REQUIREMENTS
• The penalty for failure to file an information return generally is $100 for each return for
which such failure occurs. The total penalty imposed for all failures during a calendar
year cannot exceed $1,500,000.
• For returns required to be filed after December 31, 2015, the penalty for failure to file
an information return generally is increased from $100 to $250 for each return for
which such failure occurs. The total penalty imposed for all failures during a calendar
year after December 15, 2015 cannot exceed $3,000,000.
• The penalty for failure to provide a correct payee statement is $100 for each
statement with respect to which such failure occurs, with the total penalty for a
calendar year not to exceed $1,500,000.
• The penalty for failure to provide a correct payee statement is increased from $100 to
$250 for each statement for which the failure occurs, with the total penalty for a
calendar year not to exceed $3,000,000. The increased penalty amount applies to
statements required to be provided after December 31, 2015.
• Special rules apply that increase the per-statement and total penalties if there is
intentional disregard of the requirement to furnish a payee statement.

9. 9
CHANGES TO SHOP
SMALL BUSINESS HEALTH OPTIONS PROGRAM – SHOP
• Starting November 2015: Businesses with 51 to 100 employees can use SHOP to
purchase health care plans for employees (Prior to November 2015 SHOP was only
open to businesses with 50 or fewer FTE)
• SMALL EMPLOYER HEALTH TAX CREDIT: Small employers that provide at least 50
percent of full-time employee’s premium costs – AND – have fewer than 25 full-time
equivalent employees with average annual wages of less than $50,000 may be
eligible for the Small Business Health Care Tax Credit
• With some exceptions, the plan must have been purchased through the SHOP
• Maximum Credit. The maximum credit is 50 percent of premiums paid by small business
employers. The maximum credit is 35 percent of premiums paid by small tax-exempt
employers, such as charities.
• Number of Employees. The small business must have fewer than 25 full-time employees,
or a combination of full-time and part-time employees.
• Average Annual Wages. For 2015, the average annual wages of the employees must have
been less than $52,000.
• Paying for Half the Premiums. The small business must have paid a uniform percentage,
at least 50%, of the cost of premiums for all enrolled employees.
• Qualified Health Plan. Generally, the business must have purchased a qualified health
plan from the SHOP
• Two Year Limit. As of 2014, an eligible employer may claim the credit only for two
consecutive taxable years.
• Form 8941 Credit for Small Employer Health Insurance Premiums - Calculates credit
• March 2016: GAO – only 181,000 took advantage in 2014 – fewer than the upward of 4
million expected

10. 10
CADILLAC TAX DELAY
CADILLAC TAX DELAY UNTIL 2020
• “Cadillac Tax” is a 40% Excise Tax on the cost of health coverage that exceeds pre-
determined threshold amounts and is imposed on coverage providers high-premium health
insurance plans
• Cost of health coverage includes total cost by both employer and employee
• Plans costing more than $10,200 for individual
• Plans costing more than $27,500 for family coverage
• This tax is calculated on a monthly and per-person basis, where any plan above $850 per
month for single coverage and $2,292 per month for family coverage is subject to it.
• Potentially 75% of employee health plans could subject to the tax by 2029.
• Delayed (again) by 2016 Consolidated Appropriations Act
• Originally scheduled to implement in 2013
• Implementation delayed until 2018
• Now Delayed until January 1, 2020
• Also makes payment of Cadillac Tax to be tax-deductible
• Questionable whether it will be implemented at all
• Popular to repeal, but was intended to fund part of ACA

11. 11
Delay of Menu Labeling Rule
MENU LABELING REQUIREMENTS
• Section 4205 of the Affordable Care Act details menu labeling requirements
• This ACA provision and the Final rule requires calorie and other nutrition information for
standard menu items, including food on display and self-service food.
• The FDA announced that enforcement of the final rule will begin on May 5, 2017, one year
after the date of publication of this final guidance notice in the Federal Register (81 FR
27067, May 5, 2016).
• Restaurants were initially exempt but section 4205 of the Affordable Care Act removed this
exemption for restaurants, retail food establishments, and vending machine chains with 20
or more locations.
• The ACA modified the FDC Act’s exemptions and required these establishments to disclose in a
clear and conspicuous manner, for each standard menu item on menus and menu boards, the
calories for the items prepared and the suggested daily caloric intake specified by HHS.
• The ACA required restaurant and retail establishments offering food for sale in salad bars, buffet
lines, cafeteria lines, other self-service facilities, self-service beverage lines, and displays visible to
customers, to place signs adjacent to each food offering noting calories per displayed item or
serving. In addition the menu must specify nutrition information of food items available in written
form on the premises.
• On December 18, 2015, the Consolidated Appropriations Act, 2016 delayed enforcement of
the menu label final rule until the later of December 1, 2016, or the date that is one year
after the date on which the FDA publishes a final guidance on the subject

12. 12
OTHER AFFORDABLE CARE ACT CHANGES
REPEAL OF AUTOMATIC ENROLLMENT
• Implemented by the Bipartisan Budget Act of 2015 – enacted on November 2, 2015
• Contains repeal of the ACA automatic healthcare enrollment requirement
• Automatic enrollment required:
• Employers with more than 200 full time employees to automatically enroll employees in health
coverage unless employee opted out
• Repeal estimated to raise $8 Billion in revenue because fewer employees will enroll in
employer health plans
• Higher taxable wages
• This provision was in doubt because of
• Confusion in interpretation of the statutory language
• Likely to be administrative burden for employers
MEDICIAL DEVICE TAX MORATORIUM
• Moratorium imposed by the PATH Act – Protection of Americans from Tax Hikes Act
• Initially applied a 2.3% tax to devices sold after the end of 2012, is now under a two-year
moratorium.
• Moratorium effective 2016 and 2017
• The tax is now slated to take effect on devices sold on or after January 1, 2018, but will be under
further analysis and review during this suspension period.
HEALTH INSURANCE TAX MORATORIUM
• Moratorium imposed by the Consolidated Appropriations Act – for 2017, on the collection of
the annual health insurance provider fee which has been in effect since 2013

13. 13
OTHER AFFORDABLE CARE ACT CHANGES
REQUIRED DEPENDENT COVERAGE
• Beginning in 2016 dependent coverage must be offered in addition to employees
MAXIMUM OUT-OF-POCKET EXPENSES
• 2016 ANNUAL IN-NETWORK, OUT OF POCKET MAXIMUM COST INCREASES
• Deductibles, co-pays, coinsurance
• $6,850 for individual / $13,700 for family coverage
• Maximum out of pocket coverage for any individual with family coverage is $6,850
INDIVIDUAL TAX PENALTIES
• If an individual goes without minimum essential coverage for more than a single period of
up to three months in a year, they may owe the Shared Responsibility payment.
• The penalty increases annually. In 2016 it will be the higher of these amounts:
• 2.5 % of annual household income above the tax filing threshold to a cap of the
national average bronze plan premium
• $695/adult and $347.50/child under 18 to a maximum penalty of $2,085 per family
• Those exempt from having qualified health coverage will need to apply for exemption.
PREMIUM RATE CHANGES FOR 2016
• Kaiser Family Foundation analysis of silver plans in major cities in 13 states showed the
following average rate increases from 2015 to 2016:
• 4.1 percent –the second lowest cost silver plan before tax credits
• 1.9 percent – the second lowest cost silver after tax credits
• 5.1 percent – the lowest-cost silver plan before tax credits
• 2.9 percent – the lowest-cost silver plan after tax credits

14. 14
OTHER AFFORDABLE CARE ACT CHANGES
EXPANDED HARDSHIP WAIVER
• The hardship waiver – which exempts people from the individual mandate and allows some
people who have had their plans canceled to purchase catastrophic health insurance and
extended this waiver until October 1, 2016.
RISK CORRIDOR PROGRAM CHANGE (Section 1342)
• The risk corridors were intended to help some insurance companies if they ended up with
too many new sick people on their rolls and too little cash from premiums to cover their
medical bills in the first three years under the health law.
• The Consolidated and Further Continuing Appropriations Act of 2015 provides that CMS
may not transfer funds from other accounts to pay for the risk corridor program.
Expenditures cannot exceed the funds collected in 2014, blocking CMS from making multi-
year calculations.
• This budget-neutrality provision for the risk corridor program was extended to payments for
2015 in the Consolidate Appropriations Act for 2016.
DEFUNDING OF IPAB (Sections 3403 and 10320)
• The Consolidated Appropriations Act for 2016 cuts funding for the Independent
Payment Advisory Board for 2016 by $15 million
• The IPAB is a 15-member board appointed by the president and charged with
enforcing the Medicare spending targets.

15. 15
Changes to IRS Forms
CHANGED TAX FORMS
• Several Changes to Taxpayer Filing Requirements
• Law requires everyone be covered by ACA-accepted health
care or face tax penalty
• Several forms come into play
• Forms 1040, 1040A, 1040EZ
• Form 1095-A Health Insurance Marketplace Statement
• Form 1095-B Health Coverage
• Form 1095-C Employer Provided Health Insurance
Offer and Coverage
• Form 8962 Premium Tax Credit
• Form 8965 Health Insurance Exemptions (anyone who
didn’t maintain coverage throughout the entire year)

16. 16
Changes to IRS Forms
CHANGED TAX FORMS
Beginning with the 2016 filing season
• Form 1095-A is issued to Exchange policy purchasers (Health Insurance Marketplace
Statement)
• Form 1095-B is issued by health care insurance issuers or some smaller companies that
provide coverage for their workers. It confirms that you, your spouse (if you file a joint
return) and your dependents had at least minimum qualifying health insurance coverage for
some or all months of the prior tax year.
• Form 1095-C is issued by large employers to their employees, notifying the workers that
they, their spouses (if filing jointly) and dependents had minimum essential coverage for all
or part of the prior tax year.
• Both the B and C versions of the 1095 provide verification of coverage that helps the
covered individuals, and their families, avoid paying the tax penalty, known as the shared
responsibility payment, for not having coverage.
Minimum Essential Coverage – ACA required health care – for entire tax year for yourself, your
spouse, and dependents – indicate “full year coverage” on the appropriate line:
• Form 1040: Line 61
• Form 1040A: Line 38
• Form 1040EZ: Line 11

17. 17
Interesting Statistics
Insured Rates
• 20 million people have gained health insurance according to the Obama administration figures.
• According to a 2015 study by the U.S. Census Bureau, the uninsured rate has dropped to 9.2%
Medicaid
• Under the ACA, states have the option of expanding Medicaid to households that make up to 138 percent of
the federal poverty line.
• As of January 2016, 32 states, including the District of Columbia, have elected to expand Medicaid, while 19
states have opted against expansion.
• Over than 71 million people are enrolled in Medicaid and the Children’s Health Insurance Program (CHIP)
Subsidies
• Approximately 87 percent of people enrolled in the Marketplace receive a premium tax subsidy.
• Subsidies average $272 per month.
• According to the IRS, 2.7 million taxpayers reported approximately $9 billion in subsidies
Tax Penalties
• About 7.5 million Americans paid a penalty for not having health insurance in 2014—the first year in which
most Americans were mandated to have coverage under the ACA.
• The average penalty paid among these individuals was $200 per person, and the IRS collected about $1.5
billion from these fines in 2015.

18. 18
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