1. Surviving in a Variable Hours Environment

2. Reid WagnerSenior Consultant at TrionProductConsultantIntroductionOverviewLiveDemoDataTransferIntroductionMatt S.Rick B.AuricoAurico FAQs 3. Affected EmployersLarge Employers 100 or more full-time equivalent employees in 2015 50 or more full-time equivalent employees in 2016Control groups For a group of organizations with common ownershipor control, the determination of large employer statusis made based on the IRS controlled group rules (IRC414(b), (c), (m), and (o)) In other words, if the group meets the IRS criteria for a controlled group and together theorganizations have 50 or more full-time employees (100 or more for 2015 only), employer sharedresponsibility applies to all of the organizations, regardless of their individual size. 4. Knee Jerk ReactionJust Pay the PenaltyPenalty per FT employee: $2,000Non-deductibility impact: 34%Revenue impact: $3,030Total FT employees: 1,000Total impact: $3,030,000Add a Basic PlanCost for single coverage: $6,000(60% plan)Permitted EE contribution: $2,375($25,000 salary)Net ER cost: $3,625Total FT employees: 1,000Expected participation: 60%Total impact: $2,175,000 5. The Three Keys to Success1A good benefit plan design.2Eligibility provisions that are consistent with thebudgetary, operational and strategic goals of theorganization.3The systems to manage the eligibility provisions. 6. BENEFIT CONSIDERATIONS 7. Which Do You Choose?Altering thecommitment todependent coverageAltering employeehours worked(20% of retail andhospitality employerswill adopt this*)Altering the benefitPlay. structuresDefined contributionstrategiesPrivate exchangesPublic exchangesCombinations of thevarious tactics* Mercers National Survey of Employer-Sponsored Health Plans 2012 8. Recently Adopted Play Strategies Restructuring workforce and employment of Full-Time (FT) Employees. Almost all retail and food service companies. 37 Colleges and Universities reducing hours for Adjunct Professors. Taking advantage of the public exchange. Trader Joes, Starbucks and Target dropped health plans for Part-Time (PT) employees. Private exchanges. Sears implemented for all employees. Leveraging health benefits as a competitive advantage for recruiting/retention. Costco offering a competitive benefits package to newly-eligible FT employees. Cumberland Farms reclassifying 1,500 PT employees as FT employees. Modifying current plans just to comply. Employers with competitive plans @ 70-80% value reduced to a 60% minimum valueplan. Employers offer plan value options, but company subsidy based only on 60% value plan. Benefits reduced for dependents and company subsidy focused on employees. Minimum Essential Coverage (MEC) plan offered to satisfy Individual Mandate. 9. Medical Care Benefit Plan OptionsMEC Skinny Bronze Bronze CatalystTypicalDeductible $0 individual/$0 family $3,000 individual/$9,000 family $3,000 individual/$9,000 familyCo-PaysEmployee co-pays range from$15 to $400 depending on theservice.Employee co-pays range from$15 to $250 depending on theservice.Employee co-pays range from$15 to $250 depending on theservice.Co-InsuranceAll other medical expensesduring the year are paid bythe employeeEmployee pays additional costsfor the initial services plus thecosts for all other services, upto $1,850 individual/$12,700familyEmployee pays 40% ofadditional costs up to $6,350individual/$12,700 family0% for the first $2,000 inexpenses then 40% up to theout-of-pocket-maximum. It is adonut hole.ExpensesPaid by Planfor SpecificServices 63 preventive services ImmunizationsOutpatient services after co-pays.Excludes all hospital andsurgical expenses. MECservices are coveredFull Medical Services AfterDeductibles and co-paysFirst $2,000 in expenses thendeductible then full medicalservicesSample Prices $60 $200 $400 $500 10. MANAGING ELIGIBILITY 11. Todays Focus: Managing EmployeeEligibilityThe greatest cost control mechanism is to have employees whoare not eligible, or choose not to participate in, full medicalplans without triggering penalties. Hours worked determines who is and who is not eligible;employee designation and look back periods determine whenthey are eligible. Make sure the products chosen have achievable participationrequirements Be sure to consider ERISA 510 Understanding the rules of the Affordable Care Act (ACA) iscrucial and how they interact with the insurance marketplace 12. Measuring Full-Time Status Employer Shared Responsibility regulations definefull-time employee to mean, with respect to anymonth, an employee who is employed on averageat least 30 hours per week. For the purpose of determining full-time status,130 hours of service in a calendar month istreated as the monthly equivalent of 30 hours perweek. The final regulations provide two methods fordetermining full-time employee status: Look-back measurement method. Monthly measurement method. 13. Variable Hour Employees A variable hour employee is one for whom, based on the facts andcircumstances at the start date, it cannot be determined that theemployee is reasonably expected to be employed on average atleast 30 hours per week. Factors to consider include, but are notlimited to: Whether the employee is replacing an employee who was or was not a FTemployee. The extent to which employees in the same or comparable positions are or arenot FT employees. Whether the job was advertised, or otherwise communicated to the new hireor otherwise documented, as requiring hours of service that would average 30(or more) hours of service per week or less than 30 hours of service per week. The employer may not take into account the likelihood that the employee mayterminate employment before the end of the initial measurement period. A new employee initially expected to work full-time may be treatedas a variable hour employee if the employer reasonably expects thatthe employees full-time schedule will be of limited duration, andthe employee may not average 30 hours per week over the initialmeasurement period. 14. Offering BenefitsFull-time employees Once an employee meets a plans substantive eligibility conditions, an employer offeringbenefits cannot apply a benefit waiting period of more than 90 days. Employer will be in violation of waiting period rule if coverage is not offered within 90 days ofemployee meeting plans substantive eligibility conditions (penalty is $100 per day of non-complianceper affected individual). A calendar month orientation period can precede the 90 day benefit waiting period. Thismeans employees can work up to 121 days before they are covered under the group healthplan without incurring a penalty under the waiting period rule. Counting the orientation andwaiting periods includes weekends and holidays.Part-time employees An employer is not required to offer coverage to employees averaging less than 30 hrs/week;however, if it does, the 90-day waiting period and orientation period limits apply 15. Orientation Period A period of one month less one day during which an employee and theemployer can determine if the employment is mutually satisfactory (and isnot a mere subterfuge for the passage of time). In theory, this means between the orientation period and the waitingperiod, the employee could work up to 121 days before coverage becomeseffective. A conflict exists between the waiting period and employer mandate rules,as an employer must offer coverage by the first day of the fourth fullcalendar month of employment in order to avoid potential penalties underthe employer mandate. If the objective is to stretch out eligibility to the maximum limit allowableunder each rule, each employees initial start date has to be looked atindividually. The most effective way to satisfy the employer mandate coverageprovision and maximize the allowed orientation and waiting perioddurations is to have coverage begin on the 1st day of the month thatbegins on or after 60 days from the end of a 1-month orientation period. 16. Calendar Year AnalysisHire Date 1-Month Orientation End 60th Day Post-OrientationCoverage Effective Date(1st of Month Coinciding With/Following 60Days & 1st of 4th Calendar Month)Days With No Coverage1/1/14 1/31/14 4/1/14 4/1/2014 901/2/14 2/1/14 4/2/14 5/1/2014 1191/3/14 2/2/14 4/3/14 5/1/2014 1181/4/14 2/3/14 4/4/14 5/1/2014 1171/5/14 2/4/14 4/5/14 5/1/2014 1161/6/14 2/5/14 4/6/14 5/1/2014 1151/7/14 2/6/14 4/7/14 5/1/2014 1141/8/14 2/7/14 4/8/14 5/1/2014 1131/9/14 2/8/14 4/9/14 5/1/2014 1121/10/14 2/9/14 4/10/14 5/1/2014 1111/11/14 2/10/14 4/11/14 5/1/2014 1101/12/14 2/11/14 4/12/14 5/1/2014 1091/13/14 2/12/14 4/13/14 5/1/2014 1081/14/14 2/13/14 4/14/14 5/1/2014 1071/15/14 2/14/14 4/15/14 5/1/2014 1061/16/14 2/15/14 4/16/14 5/1/2014 1051/17/14 2/16/14 4/17/14 5/1/2014 1041/18/14 2/17/14 4/18/14 5/1/2014 1031/19/14 2/18/14 4/19/14 5/1/2014 1021/20/14 2/19/14 4/20/14 5/1/2014 1011/21/14 2/20/14 4/21/14 5/1/2014 1001/22/14 2/21/14 4/22/14 5/1/2014 991/23/14 2/22/14 4/23/14 5/1/2014 981/24/14 2/23/14 4/24/14 5/1/2014 971/25/14 2/24/14 4/25/14 5/1/2014 961/26/14 2/25/14 4/26/14 5/1/2014 951/27/14 2/26/14 4/27/14 5/1/2014 941/28/14 2/27/14 4/28/14 5/1/2014 931/29/14 2/28/14 4/29/14 5/1/2014 921/30/14 2/28/14 4/29/14 5/1/2014 911/31/14 2/28/14 4/29/14 5/1/2014 90 17. MEASUREMENT PERIODS 18. Look-Back Measurement Method An employer may determine full-time/part-time status by looking back at adefined period of time (measurement period) to determine whether anemployee averaged at least 30 hours of work per week during that periodand then applying that status to the employee throughout a subsequentdefined period of time (stability period), regardless of the number ofhours the employee actually works during the stability period (providedhe/she remains employed). Employers may opt to use a limited administrative period between themeasurement and stability periods to perform measurement calculationsand conduct enrollment for those who are benefit eligible (the periodcannot exceed 90 days and does not reduce or increase the length of themeasurement or stability periods). Employers may apply periods of different lengths or with differentbegin/end dates only for certain employee distinctions: Collectively bargained vs. non-collectively bargained employees. Employee groups covered under different collective bargainingagreements. Salary vs. hourly employees. Employees in different states. 19. Look-Back Measurement Method Measurement periods may be 3 to 12 months in duration, at employers discretion. For ongoing employees, period is called Standard Measurement Period. For new variable/seasonal/part-time employees, period is called Initial MeasurementPeriod employer cannot be subject to shared responsibility penalties for not offeringcoverage to variable/seasonal/part-time employees during the initial measurementperiod, even if employees work 30+ hours/week during the measurement period. Stability periods must at least 6 months but no shorter than the standard measurementperiod*. For ongoing employees, period is called Standard Stability Period. For new variable/seasonal/part-time employees, period is called Initial Stability Period. Employer cannot be subject to shared responsibility penalties for not offering coverageto employees deemed not full-time during a stability period, even if the employee works30+ hours/week during the stability period. Employer can be subject to shared responsibility penalties for not offering coverage toemployees deemed full-time during a stability period, even if the employee works lessthan 30 hours/week during the stability period. Administrative periods may last up to 90 days. Cannot reduce or increase the length of the measurement or stability periods. For new variable/seasonal/part-time employees, employer cannot be subject to sharedresponsibility penalties for not offering coverage during the initial administrative period,even if employees work 30+ hours/week.*Initial measurement periods may be up to 1 month shorter than initial stability period. 20. Additional Considerations While applying this process to regular full-time employees mayseem unnecessary, it becomes relevant if a full-time employeemoves to a variable hour, part-time or seasonal position. Employers may adjust the begin/end dates of the standardmeasurement period to avoid splitting pay periods. Example: an employer using the calendar year as a measurement period couldexclude the entire payroll period that included January 1 if it included theentire payroll period that included December 31, or, alternatively, couldexclude the entire payroll period that included December 31 of a calendar yearif it included the entire payroll period that included January 1 of that calendaryear. After the first cycle, administrative periods must overlap the priorstability period to prevent any gaps in coverage between stabilityperiods. Employers planning to use a standard measurement period oflonger than 6 months may use a shorter period for just 2015 noless than 6 months, beginning no later than 7/1/14 and ending noearlier than 90 days before the first day of the 2015 plan year. 21. Initial To Standard Stability Period TransitionsEmployee averages 30+ hrs/week in both initial measurement pd. and overlapping standard measurement period.Initial and standard stability pds. blend seamlessly (same is true if