Patient Protection and Affordable Care Act What Employers Need to Know Now 2013

Patient Protection and Affordable Care Act

What Employers Need to Know 2014 and 2015John J. Sarno, Esq.Employers Association of N.J.www.eanj.org

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Medicaid Expansion January, 2014Single individual: $17,500 / yearParent with child: $23,500 / yearFamily of 4: $36,000 / year

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Medicaid/CHIP NoticeNo later than first day of Plan year

Most eligible individuals work full or part-time3

Health Insurance MarketplaceA one-stop web portal where individuals and small businesses can shop for plans, compare prices, and receive other information.

Plans must 1) offer essential benefits, 2) have consumer protection standards, 3) have a minimum value, and 4) be affordable.

States define small business. Cannot exceed 50 employees. 4

CarriersHorizon Blue Cross Blue ShieldAmeriHealthHealth Republic Insurance of NJ (non-profit cooperative) 5

The Marketplace, Prices and Subsidies- N.J.29 plans within 4 categories PlatinumGoldSilver benchmark plan (70% of healthcare costs)Bronze

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Minimum ValuePlatinum (pays 90 percent of the value of benefits)Gold (80%)Silver (70%)Bronze (60%)7

Eligibility for Premium SubsidyIndividuals with incomes up to 400 FPL.

$46,000 / year (2013)$94,200 / year (family of 4)

Expected amount of subsidize for N.J. - $700 million8

27-year old earning $25,000/yearSilver plan - $260/monthwith subsidy - $145/month

Family of 4 earning $50,000Silver Plan - $943/monthwith subsidy - $282/monthBronze Plan with subsidy - $131/month9

Maximum Out -of-Pocket Premium Payments400% of poverty levelSingle - $4,115Single/Spouse - $5,537Family 3 - $6,958Family 4 - $8,379

Source HHS (2009)10

Notice to Employees October 1, 2013(thereafter at the time of hire)

Part A: General information about Health Insurance Marketplace, coverage standards and help paying premiums.

Part B: General information about coverage offered byemployer (if any)

Detailed information about plan is optional. 11

COBRA NoticesHHS Technical Advice requires COBRA Notice contain general reference to Insurance Healthcare Marketplace12

Employer Healthcare PlansEssential BenefitsConsumer Protections Minimum ValueAffordable

Employee will not get subsidy if employer offers coverage that meets standards.13

Average Employer PlanEssential Health Benefits requires minimum set of benefits, with no lifetime of annual coverage limits

Ambulatory patient servicesEmergency servicesHospitalizationMaternity and newborn careMental health and substance abuse coveragePrescription drugsRehab services and medical devicesPreventative and wellness/chronic disease management

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Consumer ProtectionsAll PlansNo lifetime maximums of essential benefitsNo annual maximums on essential benefits, except as allowed by the secretary of HHSProvide coverage for children up to age 26No pre-existing condition exclusion on children under age 19No rescissions of coverage15

Consumer Protections(continued)Cover preventive services at 100%Includes immunizations, child preventive care and womens health screeningsInsured health plans must comply with nondiscrimination requirementsGenerally prohibits discrimination in favor of highly compensated individuals as to eligibility and benefits under the planNew Appeals process for insurers Waiting periods cannot exceed 90-days for employee or dependent otherwise eligible to enroll16

In-Network, Out-of-NetworkPlans will typically provide essential benefits and preventive services in-network.

Out-of-network no co-pays, deductibles or limitations.17

Minimum ValuePlan must pay at least 60% of healthcare costs18

AffordabilityFull-time employee cannot pay more than 9.5% of household income for his/her share of premium for single coverage. Lowest cost plan.

Safeharbor: Employer may use W-2 income for employee. (Box 1)

Rate of Pay Safeharbor Hourly rate multiplied by 130 hrs/month. Determine affordability using monthly premium based on monthly wage. For salaried employee, monthly wage can be used. Does not apply where wages were reduced during the year. 19

Notices to Full-time employees and IRS(50 or more full-time employees) Large employerFor calendar years after December 31, 2014

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Large Employer:Employers with 50 or more full-time employees will be penalized for not offering coverage or coverage that does not meet standards.

All employees counted in a calendar month (part-time, temporary, seasonal).

Full-time employee is someone who is employed to perform services on average of 30-hrs per week or 120 hrs/month.

Part-time employees are grouped together to create full-time equivalents.

Aggregate number of hours worked by part-time workers in any month and divide by 120 to determine number of full-time equivalents.

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Services includes all hours an employee is paid or entitled to be paid vacation, sick, holiday, juryHourly Workers Records of hours worked and paid have time off

Salaried Workers Records of equivalency

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Add full-time equivalent number to total full-time employees to determine whether employer has 50 full-time employees.

Used only for the purpose of determining whether employer has 50 or more employees.23

Seasonal employees hours are included when determining whether employer is large

But

An employer will not be a large employer if it employed 50 or more full-time employees for no more than 120 days in the preceding calendar year. 24

Firms with common ownership are combined 25

Full-time employees on or before January 31Form 1095-CInformation about plan, premiums, individuals enrolled, etc.

The employees share of the lowest monthly premium (self only)26

Reports to IRSForm 1094-C on or before February 28

Number of full-time employees for each month of the calendar yearCertification that all full-time emplyees were offered coverageEach employee's share of the lowest monthly premium 27

Auditing and EnforcementU.S. Department of Treasury (IRS)U.S. Department of HHSU.S. Department of Labor

Combined databases Form W-2, Form 5500, Social Security Administration database. 28

Large Employer Penalty (50 or more full-time employees)

292015 100 employees or more2016 50 99 employees

Penalty for not offering insurance or to less than 70% of full-time employees (2015) and 95% (in 2016) and at least one FTE receives a subsidy to pay for insurance on the Exchange$2,000 per full-time employee after first 30 employees

Penalty for offering unaffordable or less than minimum value and at least one FTE receives subsidy

$3,000 for each full-time employee receiving a subsidy30

Full-time employee means an employee who is employed on average of 30 hours or service per week or 130 hours/month

FTE are not counted

Temporary or short-term employees may be full-time (3-months or more)31

Hours of service means hour paid or paid time off.

Employees paid a commission must have reasonable method of crediting hours of service32

Employee ProtectionsEmployer can not interfere or discriminate against an employee for seeking or receiving subsidy.

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Reduction of HoursEmployee Retirement Income Security Act (ERISA)

Unlawful employment practice to intentionally interfere with benefits, including healthcare benefits34

Safe HarborsWhat happens if any employer cannot determine whether an employee will work 30 or more hours per week?

Current employeesNew employees35

Standard Measurement Period3-12 months durationAdministrative periodup to 90 daysStability Period longer of 6 months or duration of measurement periodOPTIONAL SAFE-HARBOR TO DETERMINE FULL-TIME STATUS (for shared responsibility penalty)

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2014 2015Any on-going employee who worked full time during a standard measurement periodmust be considered full-time for the subsequent stability period.Standard Measurement PeriodAdministrative PeriodStability Period

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2014 2015If the employee is determined to be part time during the initial measurement period -- coverage need not be offered for the stability period November 1, 2014 through April 30, 2015

If the employee is determined to be full time during the initial measurement period -- coverage must be offered for the stability period to avoid a penalty

employeestart dateINITIAL Measurement PeriodAdministrative PeriodStability Period

Determination for NEW variable hours or seasonal employee

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W-2 Reporting (250 or more W-2s)Employers are required to disclose the value of health coverage provided to an employee on a W-2This value includes medical coverage, HRA contributions, and possibly EAPS and wellness programsContributions to HSAs, Archer MSAs, and health FSAs are not includedNeed additional guidance Does not include Dental or Vision care

Effective for taxable years beginning January 1, 201139

Automatic EnrollmentAll new full-time employees will be automatically enrolled, subject to regulations. Notice will include opportunity to opt out. Current employees will be auto enrolled.

Applies to employers with 200 or more full-time employees and who offer a health care plan.

Regulations have not been issued. 40

Non-Discrimination Eligibility -70% of all employees are covered,

or

80% of eligible employees and 70% of all employees are eligible 41

Highly Compensated - Benefits Same benefitsSame choice of benefitsSame premiums 42

Questions?43

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