Looking for a Life Vest? November 20 th , 2014 @thomasharte
Agenda: Looking for a Life Vest? Health Care Reform: • What’s new with ACA?? • Provisions Already in Effect • Preparing for Health Care Reform • Primary Issues of Concern – Pay or Play – Compliance – Defining and Calculating Employees • Strategies for Employers 2
Disk: Reference Documents Compliance: Employer Notices: • 5500 Filing • CHIPRA Spanish / English • Exchange Notice Cover Letter • Combined Notice • Large Employer Reporting • Newborn & Mothers • Model Notice I • Women’s Cancer • Model Notice II PPACA: • Top Audit Omissions • Factors Affecting Premium • Marketplace & FAQ’s • Provider Fee • Employer Mandate • PCORI 3
Health Care Reform What is your concern? What don’t you understand? 4
What’s NEW with Health Care Reform? 5
Supreme Court • November 7 th , 2014 – Announcement by the Court • King v. Burwell (DC Court) – RULING: Subsidy ONLY allowed where State has set up a State Exchange • 2015 Docket Employer • 37 States (including NH) – MAY be prohibited Mandate • What are the “triggers” for a penalty?? – Unaffordable or does not meet minimum value AND Subsidy – Employee receives a SUBSIDY 6
Genesis of the Supreme Court Case • Lawsuits challenging the subsidies in States that did NOT establish their own exchange – i.e. States with a Federally Facilitated Marketplace (FFM) – Maine and New Hampshire (partnership) – 17 State Marketplaces – 7 Partnership Marketplaces – 27 Federally Facilitated Marketplaces • July 22 nd , 2014 – Two Federal Appeals Courts – King v. Burwell, 4 th Circuit Court – unanimously upheld the availability of subsidies – Halbig v. Burwell, DC Circuit Court - 2 to 1, declared the ACA clearly restricts the subsidies • September 4 th , 2014 – DC Circuit Court Agreed to Reconsider – resulting in the initial ruling to be vacated AND removing the inconsistency between the courts. • November 7 th , 2014 – Supreme Court Announcement • December 17 th , 2014 – Scheduled date for re-hearing @ D.C. District Court 8
Why is the Court Case Important? • If the issuance of subsidies is considered illegal in States that did not create their own Marketplace: – Individuals: • Will not be able to receive subsidies • The Federal Government MAY be required to collect subsidies ALREADY paid • The individual mandate would fall apart • The pre-existing condition portion of the law would be removed – Employers: • One trigger for the Employer Mandate is the Subsidy • The employer Mandate would be forced to be removed • Employers would not be subject to any penalty 9
Question #1 If an employer cancels their group health plan but reimburses the employees for premiums to pay health insurance on the exchange – does that satisfy market reforms?? 10
Employer Payment Plans • NO!! • Employer compensation to employees to purchase health insurance are referred to as - “Employer Payment Plans” • This compensation arrangement is considered “group health plans” BUT does NOT satisfy market reforms Why is this important? • Penalties of $100 / day per applicable employee = $36,000 per year per applicable employee 11
$36,000 per employee penalty??? • Tax imposed on Plan Sponsor (employer) – Excludes Government Employers • Reported on IRS Form 8928 (Return of Certain Excise Taxes) • $100 per individual, per day for violation of any of the following: Coverage for Adult Children to Age 26 Non-Discrimination Rules (delayed) No lifetime or annual limits on Limits on cost sharing essential benefits No Pre-Existing Conditions Coverage for approved clinical trials Preventive Health Services @ $0.00 Essential Health Benefits PROVIDE Summary Benefits Coverage 90 Day Waiting Period 12
Employer Reporting • WHY Employer Reporting (according to the Federal Government)? – Provide transparency of health coverage and costs – Provide government with information to administer mandates • Employer Shared Responsibility • Individual Mandate • Section 6055: health insurance issues , Self Insured health plan sponsors , government agencies, and any other entity that provides minimum essential coverage • Section 6056: Applicable Large Employers (ALE’s) that are subject to “Pay or Play” • Effective Date: 2015 (First returns will be due in 2016 for coverage provided in 2015) 13
TYPE OF AFFECTED REQUIRED EFFECTIVE Forms REPORTING EMPLOYERS INFORMATION DATE Code §6055— Information on each 1094-B: Reporting of health individual provided Employers with Transmittal AND coverage by health with coverage (helps self-insured health insurance issuers the IRS administer 1095-B (non-ALE) plans and sponsors of the ACA’s individual Delayed until or 1095-C (ALE’s) self-insured plans mandate) 2015 The first returns will Terms and be due in conditions of health Applicable large 2016 for plan coverage Code §6056— employers (those 1094-C: coverage offered to full-time Transmittal Applicable large with at least 50 provided in employees (helps employer (ALE) full-time 1095-C: 2015 the IRS administer health coverage employees, Employee the ACA’s employer reporting including full-time Statement shared equivalents) responsibility penalty) 14
Employer Reporting: Section 6056 • WHO is an Applicable Large Employer? Employers with at least 50 Full Time Equivalent (FTE’s) Employees • Reporting is only required on Full Time employees • Filling Deadline? No later than February 28 th (March 31 st if filed electronically) of the year immediately following the calendar year. – Electronic is mandatory for employers > 250 Full time employees • Employee Statements: Must be furnished annually to full time employees on or before January 31 st of the year following the calendar year. • Non-Calendar Year Plans? No option for alternative filing date 15
Employer Reporting: Medium Sized Employers • Medium Sized Employers? Must comply – No Delay!!! • Must Certify on 6056: – Employs between 50 and fewer than 100 employees during 2014 (yes, 2014) – Between February 9, 2014 and December 31, 2014 they did not reduce the size of the workforce or overall hours of service for employees – In 2015, the Company did not eliminate or materially reduce health coverage from February 9 th , 2014 16
Employer Reporting: Information • Employer name, address, and EIN • Name / Telephone Number for contact person • Calendar year • Certification that full time employees were given the opportunity to enroll in minimum essential coverage (MEC) • Months during the year that MEC was available • EACH full time employee’s share of the LOWEST cost monthly premium for self only coverage • Number of full time employees during each month • Name, address and Tax Identification Number (TIN) for each Full time Employee • Any other information required by the IRS 17
Employer Reporting • July 24, 2014 – DRAFT Versions of forms – SELF FUNDED (6055) • Form 1094-B: Transmittal of Health Coverage Information Returns • Form 1095-B and 1095-C : Health Coverage – FULLY INSURED (6056) • Form 1094-C: Transmittal of Employer Provided Health Insurance Offer and Coverage Information Return • Form 1095-C: Employer Provided Health Insurance Offer and Coverage • HRA’s and H.S.A.’s are excluded from reporting!! 18
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Adjustments in 2015 • 2015 Out of Pocket Limit: $6,600 / $13,200 ($6,350 / $12,700 in 2014) • Individual Mandate: – 2014: $95 or 1.00% of income (up to national average of BRONZE premium) • 2014 Bronze Plan Premium is $2,448 single / $12,240 family (Question 2) – 2015: $325 or 2.00% of income (up to national average of BRONZE premium) • PCORI: (due by July 31 st up to plan years to 9.30.19 – Form 720) – $2.00 (Plan years 10.1.13 to 10.1.14) – $2.08 (plan years 10.1.14 to 10.1.15) • Affordability Guideline: 9.56% of Household Income (9.50% in 2014) • Flexible Spending Accounts: $2,550 • Health Savings Account Contributions: – 2015 Annual Contribution: $3,350 / $6,650 ($3,300 / $6,550 for 2014) – 2015 Deductible: $1,300 / $2,600 ($1,250 / $2,500 for 2014) 20
Planning for Cadillac Tax • Beginning in 2018 – PERMANENT Tax • Expected to generate $80,000,000,0000 (Billion!!) over 10 years • Includes EMLOYEE and EMPLOYER Contributions • 40% EXCISE TAX on high cost group health coverage • Some of the EXCLUSIONS include: Disability, Dental, , Vision, liability, and worker’s compensation • Limits (Higher Limits apply to high risk occupations) – $10,200 for Individual – $27,500 • WHO PAYS? – Insured : Employer calculates / Insurer Pays – Self Funded: Employers Calculate / Employer Pays 21
Calculating the Cadillac Tax • Employer Sample Group: 50 Single / 50 Family • NOT TAX DEDUCTIBLE!! Type of Coverage Single Family Health Plan Premium $10,000 $25,000 FSA Contributions $2,500 $2,500 HRA Contributions $2,000 $2,000 TOTAL $14,500 $29,500 Limit $10,200 $27,500 Excess $4,300 $2,000 TAX (40% of Excess) $1,720 per Single $800 per Family Subtotal $86,000 $40,000 TOTAL TAX $126,000 22
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