ppaca complex issues and advanced topics part 1 - slides

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PART 1 • DATE

Michael Gomes, Executive Vice PresidentBenefitMall

WELCOME!

REGULATORY COMPLIANCE

PROGRAM

ONGOING BLOGS

WHITEPAPERS & WEBINARS

SEMINARS & TRAINING

PROSPECTANALYSIS TOOL

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COMPLIANCETOOL KIT

BenefitMallCompliance Suite

WEBINAR OVERVIEW

Attendees will learn about

KEY COMPLIANCE

DATES

EMPLOYEE GROUPS

AUTOMATIC ENROLLMENT & WAITING PERIOD

EMPLOYER PENALTIES

SAFE HARBOR CALCULATIONS

KEY COMPLIANCE DATES

JANUARY 1, 2014

EMPLOYER SHARED

RESPONSIBILITY PROVISIONS

INDIVIDUAL MANDATE

STATE HEALTH BENEFIT

EXCHANGES

EMPLOYER MANDATE COMPLIANCE DATE

• Will my company have to comply with employer-shared responsibility provisions?

• What kind of insurance will my company have to provide?

• To whom will I have to provide insurance?

• What about seasonal, per diem, or part-time employees?

EMPLOYEE GROUPS

A full-time employee is someone employed an average of at least 30 hours of service per week

Employers must make an offer of coverage to at least 95% of its full-time employees and their dependents

FULL-TIME EMPLOYEES

Hours of service include:

EACH PAID HOUR OF WORK: Vacation

Holiday Illness or Leave of Absence

Incapacity Layoff

Jury Duty Military Duty

FULL-TIME EMPLOYEES

• Includes any employee who does not fall

under the full-time designation

• Will be included in calculation to determine whether employer is an applicable large employer, and thus subject to employer shared responsibility requirements

• Employers will not have to make an offer of health coverage to these employees

PART-TIME EMPLOYEES

• PER-DIEM: can be counted as full- or part-time depending on average hours of service worked

o If employee is not paid on hourly basis, calculate hours worked using: actual hours from records, days-worked equivalency, or weeks-worked equivalency

OTHER CATEGORIES OF EMPLOYEES

• SEASONAL: critical in determining whether an applicable large employer may claim an exception from employer shared responsibility requirements based on seasonal workers

OTHER CATEGORIES OF EMPLOYEES (cont.)

• UNION: to date, union workers are not treated as distinct entity in determining whether or not to offer coverage

OTHER CATEGORIES OF EMPLOYEES (cont.)

AUTOMATIC ENROLLMENT & WAITING PERIOD

• Employers that are subject to the Fair Labor Standards Act, and have more than 200 full-time employees, must automatically enroll new full-time employees

• Employer must also provide adequate notice and the opportunity for the employee to opt out

AUTOMATIC ENROLLMENT

• For plan years beginning on or after January 1, 2014, a group health plan or health insurance issuer offering group health insurance coverage shall not apply any waiting period that exceeds 90 days

o If the employee takes additional time to elect coverage, the employer will not be penalized

90 DAY WAITING PERIOD REQUIREMENTS

• IF a group’s health plan conditions eligibility on an employee regularly having a specified number of hours of service per period (or working-full time),

• AND it cannot be determined that a newly hired employee is reasonably expected to regularly work that number of hours per period, (or working-full time) the plan may take a reasonable period of time

• Time not to exceed 12 months and beginning on any date between the start day and first day of calendar month following start day

90 DAY WAITING PERIOD – SAFE HARBOR FOR NEW VARIABLE HOUR

AND SEASONAL EMPLOYEES

• The employer may take a reasonable period of time to determine if the employee meets the plan’s eligibility condition

• Coverage must be made effective no later than 13 months (and a fraction of one month) after the employee’s start date

90 DAY WAITING PERIOD – SAFE HARBOR FOR NEW VARIABLE HOUR

AND SEASONAL EMPLOYEES (cont.)

• Group health plan provides that employees are eligible for coverage after one year of service.

• In this example, the plan's eligibility condition is based solely on the lapse of time.

• Therefore, it is impermissible because it exceeds 90 days.

90 DAY WAITING PERIOD – EXAMPLE

EMPLOYER PENALTIES

The Patient Protection and Affordable Care Act (PPACA) requires most large employers offer affordable minimum essential coverage to their full time employees, or pay a monthly tax penalty.

EMPLOYER PENALTIES: OVERVIEW

• If at least one full-time employee receives a premium tax credit, the employer will be assessed a monthly penalty equal to the number of full-time employees, minus the first 30, multiplied by one-twelfth of $2,000 any applicable

NO COVERAGE

• Example:

o Employer has 80 full-time employees, does not offer coverage. One is certified to receive a tax credit.

o 80 full-time ee – 30 x ($2,000 x 1/12) = $8,333.33 per month

NO COVERAGE

• Coverage exceeds 9.5% of employee’s income

• Coverage does not pay for at least 60% of covered health care expenses

• Penalty would be for each employee who receives coverage

UNAFFORDABLE/INADEQUATE COVERAGE

• Example:

o Employer has 80 full-time employees, offers coverage that does not meet affordability requirements.

o 30 employees receive credits for coverage x

($3,000 x 1/12) = $7,500

UNAFFORDABLE/INADEQUATE COVERAGE

SAFE HARBOR RULES

1. Form W-2 Safe Harbor

2. Federal Poverty Line Safe Harbor

3. Rate of Pay Safe Harbor

COVERAGE SAFE HARBOR

• Standard measurement period for ongoing employees: 3 to 12 months• Determine whether employee worked an average of 30 hours per week

during that periodo YES: treat employee as full-time during subsequent stability periodo NO: may treat employee as part-time during subsequent stability period

Stability period must be at least 6 months, but cannot be shorter than the standard management period

STANDARD MEASUREMENT PERIOD

ADMINISTRATIVE PERIOD

STABILITY PERIOD

LOOK-BACK PERIOD

1. Collectively bargained employees and non-collectively bargained employees

2. Salaried and hourly employees

3. Employees of different entities

4. Employees located in different states

EMPLOYEE LOOK-BACK CATEGORIES

CONCLUSION

• Next Webinar will focus on:

o W-2 Issues

o Control Group Rules

o Exchanges/Subsidies

o Equivalency Test

o Essential Health Benefits and Covered Costs

FINAL THOUGHTS

For additional health care Reform updates, please monitor:

• www.benefitmall.com• www.healthcareexchange.com• www.compupay.com

Q & A