• You are participating in an online webcast today.

• The audio for this webcast will stream through your computer.

• You do not need to dial-in by phone.• Please make sure your computer

sound is turned on and volume is adjusted.

• You can follow us on Twitter during the call @BenefitMall - #PPACAready

PART 2 • April 20, 2013

Michael Gomes, Senior Vice PresidentGovernment Relations

WELCOME!

Webcast Overview

Determining Affordability and Minimum

Value

Controlled Group Rules

Applicability of the

Employer Mandate

Applicability of the Employer Mandate

• Pay or play• Applies to “applicable large employers” with 50 or more

full-time employees (including full-time equivalent employees)

• To determine “applicable large employer” status, an employer must follow the four steps on the next slide

STEP 1: Count the number of “full-time” employees (including seasonal employees) who work on average 30 hours per week per month.

STEP 2: Calculate the number of full-time equivalent employees by aggregating the number of hours worked by all non-full-time employees (including seasonal employees) and dividing by 120.

STEP 3: Add the number of “full-time” employees and full-time equivalents calculated in steps (1) and (2) for each of the 12 months in the preceding calendar year, and

STEP 4: Add the monthly totals and divide by 12. If the average exceeds 50 full-time equivalents, the employer must also determine whether the seasonal employee exception applies.

Seasonal Employee Exemption

The seasonal employee exemption exists for employers whose workforce exceeds 50 full-time employees for no more than 120 days or four calendar months during a calendar year. That is if the employees in excess of 50 employed during that period were seasonal employees. The four calendar months do not need to be consecutive.

Controlled Group Rules

Controlled Group Rules• Aggregation of employees when multiple employers are

commonly owned• Sections 414(b) and 414(c) of the Internal Revenue Code• Types of controlled group relationships:

o Parent-subsidiaryo Brother-sistero Combination

Parent-Subsidiary Controlled Groups• One or more chains of corporations are connected through stock ownership with a

common parent corporation, ando 80% of the stock of each corporation (except the common parent) is owned by one or

more corporations in the group, and

o The parent corporation owns 80% of at least one other corporation

EXAMPLE: • Corporation A owns:

o 90% of Corporation B’s stock,

o 80% of Corporation C’s stock, and

o 65% of Corporation D’s stock

• Unrelated persons own the remaining percentages of the stock not owned by

Corporation A

• A group of two or more corporations, in which five or fewer common

owners own directly or indirectly a controlling interest of each group and have effective controlo Controlling interest: 80% or more of the stock of each corporation,

but only if such common owners own stock in each corporationo Effective control: More than 50% of the stock of each corporation, but

only to the extent such stock ownership is identical with respect to such corporation

Brother-Sister Controlled Groups

EXAMPLE: Brother-Sister Controlled Groups

Shareholder Corp. A Corp. B Identical Ownership

C 80% 20% 20%

D 10% 50% 10%

E 5% 15% 5%

F 5% 15% 5%

TOTAL 100% 100% 100%

• Three or more organizations that are organized as follows:

o Each organization is a member of either a parent-subsidiary or brother-sister group, and

o At least one corporation is the common parent of a parent-subsidiary, and is also a member of a brother-sister group

EXAMPLE: • A is an individual owning:

o 80% in Partnership Y, ando 90% in Corporation Z

• Partnership Y owns 85% of Corporation X

Combined Controlled Groups

Determining Affordability and Minimum Value

• An applicable large employer may be subject to a tax/penalty if an employee obtains coverage through a state health benefits exchange and receives a federal premium subsidy because:o The employer does not offer its full-time employees (and their

dependents) an opportunity to enroll in coverage, oro The coverage is unaffordable or does not provide the requisite level of

minimum value

Determining Affordability and Minimum Value

Affordability• 9.5% of employee’s household income:

o Form W-2 safe harboro Rate of pay safe harboro Federal poverty line safe harbor

Minimum Value Calculator • Released by IRS and HHS • Determines if plan covers at least 60% of total allowed costs

Determining Affordability and Minimum Value

• (Fully state-based) 17 states

plus DC• (Federally-facilitated) 26 states• (State-federal hybrid) 7 states• Varying levels of regulation• Subsidies

o Low- and moderate-income consumers

o Coverage is unaffordable or does not provide minimum value

o Exchanges will determine eligibility for premium tax credits

Exchanges

Source: National Conference of State Legislatures, Federal Health Reform: State Legislative Tracking Database; Politico.com; Commonwealth Fund analysis.

• The Department of Labor has delayed rulemaking on automatic enrollment.

• In Technical Release 2012-01, the department stated its intent to complete this rulemaking by 2014.

Automatic Enrollment

For additional Health Care Reform updates, please monitor:

• www.benefitmall.com• www.healthcareexchange.co

m• www.compupay.com

Thank you for attending!