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Web Meeting Call-in Number: 855-483-3538 Passcode: 100580
Welcome to the Cigna Global Health Benefits® Health Care Reform Webinar Employer Mandate and Minimum Essential Coverage Reporting
August 27, 2014
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Michelle Nguyen Director, Client Management, Cigna Groom Law Group Seth Perretta Malcolm Slee Groom Law Group, Chartered, a Washington D.C. based law firm, is nationally-renowned for its practice in health care and employee benefits. Cigna had established an arrangement with Groom to help clients navigate the evolving landscape created by the PPACA.
Webinar Overview
Featured Speakers
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Today’s Agenda
Provide information to help you better understand how Patient Protection and Affordable Care Act (PPACA) impacts expatriate and inpatriate coverage
Explain how Cigna can work with you to provide compliant coverage to your expatriates and inpatriates
Answer any questions you may have
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The Full Picture
Individual Mandate
Employer Mandate
New Tax Reporting
Requirements
PPACA Market Reform
Requirements
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US - Inbound US - Outbound Multiple Entities
Numerous Potential Scenarios
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PPACA Basics – The Mandates
Employer Mandate
Requires large employers to offer medical coverage that meets new standards to full-time employees and their dependent children up to age 26, or potentially face additional taxes
Individual Mandate
Requires most individuals to maintain some level of health insurance (or group plan coverage) that meets the requirements of “minimum essential coverage” (MEC) or the individual could potentially face additional taxes
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PPACA Basics – The Mandates
Employer
Focus
Employee Focus
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Individual Mandate
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Individual Mandate
Individuals must obtain Minimum Essential Coverage (MEC) for themselves and their dependents or pay a monthly penalty for each month they are without health insurance coverage.
For adults, the monthly penalty is 1/12 of the greater of the dollar penalty or the gross income penalty amounts.
– 2014 - Tax penalty is $95 per individual to a maximum of $285 per family, or 1% of household income
– 2015 - Tax penalty is $325 per individual to a maximum of $975 per family, or 2% of household income
– 2016 – Tax penalty is $695 per individual to a maximum of $2,085 per family, or 2 ½% of household income
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Individual Mandate Basics - Penalties
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Employer Mandate Basics Phased-in beginning in 2015 for employers with 100 or more employees
Employer size Effective for plans beginning in 2015
2016 plan year and beyond
50-99 full-time employees Does not apply Employer must offer coverage to 95% of full-time employees
100 or more full-time employees
Employer must offer coverage to 70% of full-time employees
Employer must offer coverage to 95% of full-time employees
Employers must offer medical coverage that meets new standards to full-time employees and their dependent children.
100+ 50+
Employer-sponsored plans that begin on a date other than January 1 will not face penalties if they comply upon the first day of their 2015 or 2016 plan year, depending on employer size and subject to meeting certain requirements.
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Employer Mandate Basics - Penalties
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Do you offer minimum essential coverage?
Does the plan provide minimum value?
Is the coverage affordable?
“A-Penalty” (4980H(a)) $2,000 per FTE (minus first 30*) Only applies if one full-time employee receives federal premium assistance for Marketplace coverage.
“B-Penalty” (4980H(b)) Lesser of $3,000 per FTE receiving tax credit or $2,000 per FTE (minus first 30*)
NO
No penalty
YES
YES
YES
NO
NO
*For plan years beginning in 2015, the penalty is $2,000 for each full-time employee minus the first 80 employees. For plan years beginning in 2016 and beyond, employers can exclude 30 employees from the penalty calculation.
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Employer Mandate Reporting
Provide individuals and the IRS with information about an employer’s compliance with the employer mandate, minimum value, and affordability
Tax Reporting Basics
Minimum Essential Coverage (MEC) Reporting
Provide individuals and the IRS with information about minimum essential coverage and whether an individual satisfied the individual mandate for the preceding calendar year
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Unique Issues Regarding US-Outbound
U.S. expatriate remains subject to the individual mandate for any month unless:
The U.S. expatriate is a bona fide resident of a foreign country for the entire taxable year (in which case, deemed to have minimum essential coverage for entire taxable year)
The U.S. expatriate is not physically present in the U.S. for at least 330 full days within a consecutive 12-month period (in which case, deemed to have minimum essential coverage for these 12 months)
Individual Mandate
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Unique Issues Regarding US-Outbound
Expatriate coverage underwritten by a domestic carrier constitutes MEC and will satisfy the individual mandate
Expatriate coverage underwritten by a foreign carrier and “regulated by a foreign government” will constitute MEC and satisfy the individual mandate if:
Notice is provided to enrollees who are U.S. citizens/nationals stating that the coverage is MEC
Federal MEC reporting requirements are satisfied
Individual Mandate
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Unique Issues Regarding US-Outbound
Must continue to be treated as a full-time employee if:
Expect to be transferred abroad for less than 12 months, and/or
Has U.S.-source income following transfer
If neither of the above, then the expatriate can be treated as having had a termination of employment
Employer Mandate
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Unique Issues Regarding US-Outbound
Employer Mandate Reporting
Reporting depends on whether the expatriate must be treated as a full-time employee even when out of country (see prior slide) or whether the expatriate can be treated as a terminated employee upon transfer
Tax Reporting
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Unique Issues Regarding US-Outbound
MEC Reporting
Domestic carrier coverage will constitute MEC; carriers will be responsible for reporting on insured coverage
Foreign carrier coverage will generally constitute MEC if requisite notice provided. If so, then MEC reporting is required
Tax Reporting
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Example A
ACME USA is subject to the employer mandate. ACME USA sends its full-time employee, VP of Distribution, to ACME Korea for a six-month detail to open up a new distribution facility in Korea
Unique Issues Regarding US-Outbound
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Example B
ACME USA is subject to the employer mandate. ACME USA sends its full-time employee, VP of Distribution, to ACME Korea for a two-year detail to open up a new distribution facility in Korea
Unique Issues Regarding US-Outbound
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Takeaways Regarding US-Outbound
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Individual Mandate may apply to an expatriate for some of the time abroad
Employer Mandate may apply to the expatriate if the number of full-time U.S.-based employees across the employer’s group. Coverage requirements could depend on: (i) the expatriate’s status as a full-time employee prior to transfer abroad, (ii) the expected length of time abroad, and (iii) whether the expatriate has U.S.-source income during his time abroad
Tax reporting may apply depending on the facts and circumstances
Employer Mandate Reporting: Applies to the employer if the expatriate needs to be treated as a full-time employee during time abroad
MEC Reporting: To determine if reporting applies, consider whether (i) the coverage for the expatriate is underwritten by a domestic carrier, or (ii) if the coverage is underwritten by a foreign carrier, the requisite notice is provided. When applicable, reporting for fully-insured plans is the carrier’s responsibility; for self-funded plans reporting is the employer’s responsibility.
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Unique Issues Regarding US-Inbound
The inpatriate generally will be subject to the individual mandate upon becoming a resident alien of the U.S.
Individual Mandate
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Unique Issues Regarding US-Inbound
If the employer is a foreign company, that appears to be irrelevant
Focus on whether the company has 50+ full-time employees or equivalent employees working in the U.S.
To determine the number of U.S.-based employees relative to the employer mandate requirements:
IRC section 414 controlled group rules generally apply
Only look at hours of service that result in U.S.-source income
To determine who are full-time employees that must be offered qualifying coverage:
Only consider those with full-time hours (where compensation for the hour of service results in U.S.-source income)
Employer Mandate
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Unique Issues Regarding US-Inbound
MEC Reporting
Domestic carrier coverage will constitute MEC; carriers will be responsible for reporting on insured coverage
Foreign carrier coverage will generally constitute MEC if requisite notice provided. If so, then MEC reporting is required
Tax Reporting
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Unique Issues Regarding US-Inbound
Employer Mandate Reporting
Reporting required if employer has 50 or more full-time (or equivalent) employees and if inpatriate is a full-time employee
Tax Reporting
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Example C Beta Korea has no US operations and has no affiliated entities with operations in the US. Beta Korea sends its full-time, VP of Distribution, to the US to open up a US facility
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Unique Issues Regarding US-Inbound
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Example D
Beta Korea has no US employees. Beta Korea is wholly owned by Beta Holdings, Inc. a Dutch Company, that also is the sole shareholder of Beta USA. Beta USA has 45 full-time employees. Beta Korea sends 15 employees over to the US to work full-time for 2+ years in the USA in connection with a new corporate initiative
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Unique Issues Regarding US-Inbound
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Takeaways Regarding US-Inbound
Individual Mandate will only apply to if the inpatriate becomes a resident
Whether the Employer Mandate will apply to the inpatriate depends on the number of full-time U.S.-based employees across the employer’s group. If so, coverage requirements may apply if the inpatriate is expected to work full-time while in the U.S.
Tax reporting may apply depending on the facts and circumstances
Employer Mandate Reporting: Will apply to the employer to the extent the inpatriate needs to be treated as a full-time employee during his/her time in the U.S.
MEC Reporting: To determine if reporting applies, consider whether (i) coverage for the inpatriate is underwritten by a domestic carrier, or (ii) if the coverage is underwritten by a foreign carrier, the requisite notice is provided. When applicable, reporting for fully-insured plans is the carrier’s responsibility; for self-funded plans reporting is the employer’s responsibility.
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Employer Mandate Reporting What Must Be Reported
What must be reported Information Reported Through Indicator Codes
Employer contact and tax information, including contact person and phone number
Whether coverage provides minimum value and employee had opportunity to enroll his or her spouse
Year for which information is reported Total number of employees, by calendar month
Certification that full-time employees and dependents offered opportunity to enroll in MEC, by calendar month
Whether an employee’s effective date of coverage was affected by a permissible waiting period, by calendar month
For each full-time employee, months for which MEC was available
Whether there were no employees or otherwise credited hours of service during any particular month, by calendar month
Each full-time employee’s share of lowest cost monthly premium for self-only coverage of minimum value standards, by calendar month
If employer is of an aggregated group, and the name and EIN of each employer member of that aggregated group
Number of full-time employees for each month during the calendar year
Name, address, and SSN/ITIN of each full-time employee and the months of coverage, if any
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MEC Reporting What Must Be Reported
What must be reported What doesn’t have to be reported
Name, address, and EIN of reporting entity
Name address and SSN/ITIN for most “responsible individuals”
SSN/ITIN not required of individuals not enrolled in the coverage
Name and SSN/ITIN of each covered individual
Months individual was covered during calendar year
Don’t have to report exact dates – just months
For insured group health plans, name, address, and EIN of employer sponsoring plan
Don’t have to report portion of premium paid by employer
Whether coverage is through the SHOP exchange, and the SHOP’s unique identifier
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Cigna to send Customer Census via Eligibility Analyst
Cigna will provide a sample SSN/ITIN collection letter for your employees
Clients must return required information to Cigna by Friday, October 17, 2014
Manual Enrollment Process (emails/forms) – fill in missing data in provided Census and return to Cigna
Electronic Enrollment Process – add missing data identified by Census via existing electronic filing process
If the data is not received by the deadline, employees may be included in the wider Cigna PPACA notification and SSN/ITIN collection mailing, beginning November 2014
Next Steps
SSN/ITIN Collection
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Questions?
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