The Employer Mandate

The Affordable Care Act

April 2016

The Employer Mandate

The Employer Mandate

We are in the midst of afast changing landscape!

New Consumer Questions and

Expectations

New Co-Ops and

Insurance Carriers

New Benefits and Wellness

Resources and Tools

New Private and

Public Exchanges

New complex

government regulations

New Carrier Products

(“skinny” plans, indemnity,

stop-loss, metal tiers)

Industry changes are yielding new

plan strategies for small employersChanging Industry… ... New Strategies Are Available

New Employee

Questions and

Expectations

New Co-Ops

and Carriers

New Carrier

Product Types

New Invasive

Regulations

New Benefits

and Wellness

Tools

New Private and

Public HIX

No Plan / Public

Exchange Defined Contribution /

Private Exchange

Traditional Group Plan

(SHOP)

Custom Plan / Self

Fund

Small Business Strategies For 2016 and Beyond

Why?

Employees may be eligible for government subsidies

No cost to business

No “work / admin” for the business

Why?

Define contribution holds costs constant

Once established, minimal administration effort from business

Powerful web 2.0 technology engages employees with more choice

Why?

Potential small business tax credits

In some areas, better networks than individual market, and more attractive product designs

Can be better way to manage business risk than self-funding

Why?

Significant savings w/ healthy workforce

No health insurance industry tax

Direct control over medical inflation

Gain wellness ROI

Custom, flexible, innovative plan designs

No Plan / Public

Exchange

DC / Private Exchange

SHOP / Traditional Group Plan

Custom Plan / Self Fund

There are pros & cons to each strategy – the best path (or hybrid approach) will be

different for each employer, depending on their unique situation

Deterministic Components

Full Time Equivalents

Minimum Value Standards

Essential Health Benefits

Affordable Coverage

Participation Rate

Penalties

The World

of

Subsidies

(SHOP)

50

25 100

Number of Full Time Equivalents (FTEs) in the Company

The World of No Penalties The World of Penalties

Employer Mandate Group Size

ALE: Applicable Large Employer

FTE definition and calculation

Here’s how Mike calculates his FTEs:

Number of full-time employees = 15

Non full-time employee hours (15+15+25+27+27)÷30 = 3.6

or 3 FTEs (always round down when calculating FTEs)

Mike has 18 FTEs.

Minimum Value Standard

A basic standard for measuring the percentage of permitted costs

covered by the plan.

If employee is offered an employer plan that pays for at least

60% of the total allowed costs of benefits, the plan offers

minimum value.

The employee may not qualify for premium tax credits and cost

sharing reductions to buy a plan from the Marketplace.

11

Essential Health Benefits (EHB)

Essential Health Benefits

Affordable Coverage

Overlap has to do with affordability.

Deemed affordable if employee’s share of lowest cost of self-

only coverage does not exceed 9.66% of household income.

May use W -2 Form Box 1, Rate of Pay or Federal Poverty

Level chart

Affordable Coverage

W-2 Safe Harbor Method.

Coverage is deemed affordable if the employee is charged no more than

9.66% of current year wages according to Box 1 of their W-2.

Example: Joe is employed at XYZ Inc. for the entire year and is offered

coverage for all 12 months. His wages according to Box 1 of his W-2 are

$28,000.

XYZ Inc. will be considered to offer affordable coverage provided Joe is

not charged more than $225.40 per month for coverage. The formula is

($28,000 x .0966)/12 = $225.40.

Employer Mandate Coverage or Penalties

Employer Mandate Penalties

The SHOP Market

Participation Rate 70 %

Minimum Value Standard 60 %

Essential Health Benefits All 10 EHB

Full Time Employees Less than 26

Penalties No Penalties

Affordable Coverage > 9.66 %

The SHOP Market

PR waived from Nov 15 to Dec 15.

Count PR includes other creditable coverage.

The FF-SHOP sends only one bill to employer.

Plan not required to offer dependent coverage

To qualify for the Small Business Health Care Tax Credit:

1. < than 25 FTE employees

2. Must pay at least 50% of the employee-only premium cost

3. Average employee wages less than $50,000 per year

4. Threshold starts at 10 FTE and wages <20,000 get 50%

The 26 to 50 Market

Participation Rate 95 %

Minimum Value Standard 60 %

Essential Health Benefits All 10 EHB

Full Time Employees Less than 51

Penalties No Penalties

Affordable Coverage > 9.66 %

PR waived from Nov 15 to Dec 15.

Plan not required to offer dependent coverage

No possibility of Small Business Health Care Tax Credit

Applicable Large Employer

Participation Rate 95 %

Minimum Value Standard 60 %

Essential Health Benefits All 10 EHB

Full Time Employees Over 50

Penalties Substantial

Affordable Coverage > 9.66 %

Applicable Large Employer

Applicable Large Employer

ALE’s Forms to File

As an ALE, which forms do you have to file in 2016?

Form 1094-C:

Full-time employees.

Total headcount.

Whether Minimum Essential Coverage was offered.

Whether an applicable 4980H “Safe Harbor” was used

Form 1095-C:

Proof of offer of coverage (with code).

Employee’s share of the lowest cost monthly premium.

Whether an applicable 4980H “Safe Harbor” was used

A written statement to each covered employee, which includes:

The employer’s name, address and contact information, and info on the return being filed.

ACA Play or Pay Mandate

Offer your employees health coverage, or pay a penalty of $2,160 for every FT employee at

your company (less the first 30).

Offer affordable health coverage (an employee’s contribution doesn’t exceed 9.66 % of their

household income) that provides minimum value (the plan covers, on average, 60% of an

employee’s medical expenses), or pay a penalty of $3,240 for every FT employee at your

company (less the first 30).

File forms 1094-C and 1095-C, or pay a penalty of $200 for each delinquent or incorrect

return.

Provide written informational statements to each of your employees, or pay a penalty of $200

for each missing statement.

50

25 100

Number of Full Time Employees (FTEs) in the Company

Carrier Consideration

Large Market

SHOP & Small Market

The Cost Structure

$

Premium

$$$

Deductible Coinsurance MOOP

$$$$

$$$

$$$$$

26

EPO vs PPO vs HMO

The Networks

27

The FPL Chart

28

The FPL Chart & The Markets

Questions ?