Tennessee Association of School Business Officials · dependents to avoid penalties • Coverage...
Transcript of Tennessee Association of School Business Officials · dependents to avoid penalties • Coverage...
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Wednesday, September 16, 2015 Tennessee Association of School Business Officials
Healthcare Reform
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Health Care Reform
• Enacted in March 2010 • Makes significant changes to health care system • Implemented over several years
Affordable Care Act
• Health care providers • Government programs • Health insurance issuers • Employers/plan sponsors • Individuals
Provisions that impact:
Most employers that offer health plans are impacted in some way
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Key Elements
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Key Elements of the Affordable Care Act • Benefit Changes
– Preventive Care, Dependent child eligibility, lifetime maximum and other benefits were increased
• The Individual Mandate – Each individual is responsible for purchasing health insurance coverage beginning
2014. For those who qualify, government premium subsidies are available.
• The Health Insurance Marketplace – A new way to find quality health coverage
– Can help if you don’t have coverage now or if you have it but want to look at other options
• The Affordable Care Act’s Patients’ Bill of Rights – The ACA offers new rights and protections that make coverage fairer and easier to
understand
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The Individual Mandate
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The Individual Mandate • Requires most people to have “minimum essential coverage” health
insurance
• Beginning in 2014, most individuals must either have health insurance that meets minimum standards of coverage or pay a penalty when filing tax returns
• Minimum essential coverage is defined as: – Any Marketplace plan, or any individual insurance plan you already have
– Medicaid
– Medicare
– The Children’s Health Insurance Program (CHIP)
– TRICARE and other veterans health care programs
– Peace Corps Volunteer plans
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How Much is the Tax Penalty? • The annual tax penalty for not having minimum essential coverage
depends on the age and number of dependents in your household.
• The penalty is the greater of a flat dollar amount per individual or a percentage of the individual’s taxable income.
$695 per adult and $347.50 for each child (up to $2,085 for families), or 2.5% of income, which ever is greater
$325 per adult and $162.50 for each child (up to $975 for families), or 2% of income, which ever is greater
$95 per adult and $47.50 for each child (up to $285 for families), or 1% of income, which ever is greater
2014
2015
2016 & Beyond
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The Affordable Care Act’s Patients’ Bill of Rights • The Patients’ Bill of Rights is designed to summarize health
coverage protections embedded within the ACA. Protections include:
– No pre-existing condition exclusions
– No arbitrary rescissions of insurance coverage
– No lifetime dollar limits on coverage
– Restricting annual dollar limits on coverage
– Allowing participant choice of a health care provider
– Granting access to emergency services
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Employer Responsibility
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Employer Shared Responsibility Rules (Pay or Play)
• No requirement to offer coverage • Can get tax credits for providing coverage
Small Employers (fewer than 50 FT/FTE employees)
• Must offer coverage to FT employees and dependents to avoid penalties
• Coverage must be affordable and provide minimum value
• Penalties were delayed until 2015; additional one-year delay applied for ERs with 50-99 full-time Ees – 1/1/16
Large Employers (50+ FT/FTE employees)
Employer penalties triggered if any full-time employee receives subsidized coverage in an Exchange
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Avoiding Penalties Offer coverage to FT employees and dependents that:
Is affordable
• Employee’s contribution for self-only coverage does not exceed 9.5% of income
• Safe harbors for what income and premium amount to use
Provides minimum
value
• Plan covers at least 60% of costs on average
• MV calculator or design-based checklists
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ACA – Penalties • Employer Mandate – Pay or Play?
• Employers that fail to offer coverage to all FT employees… Fine is $2,000 per ALL full-time employees (excludes first 30 employees)
• Employers that offer coverage to substantially all FT employees (and dependents) but coverage is unaffordable does not meet minimum value…
Fine is $3,000 for each employee who receives subsidized
2015 Employers with over 100 FTE’s
must comply
2016 Employers with over 50 FTE’s must comply
How many part-time
employees can we have?
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ACA – Additional Cost Impact • Several New Taxes & Fees
• Shift to Self-funding to avoid some of the ACA taxes and fees:
Types of Coverage Impacted
Reform Measure Individual Fully Insured Self-Funded Stop Loss
Transitional Reinsurance Contribution Fee X X
Annual Health Insurance Tax X X
Fee for Carrier Exchange Participation X
Cadillac Tax (Starts in 2018) X X
PCORI Fee X X X
Risk Adjustment Program X X
Sources: HHS.gov; IRS.gov; 2016 Notice of Benefit and Payment Parameters, Final Rule
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“Substantially All” Full-Time Employee Percentage
• Employers must offer coverage to at least 95% of full-time employees to avoid largest penalties
Proposed rule:
• Percentage requirement phased in over 2 years • 2015: must offer coverage to 70% of full-time employees • 2016 and beyond: offer coverage to 95% of full-time
employees
Final rule:
Employers still exposed to lesser penalties if coverage is not offered to all full-time employees
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Full-time vs. Full-time Equivalent
• Counted for large employer determination • Must be offered coverage (along with dependents) to avoid
penalties
Full-time employees
• Counted as a fraction for large employer determination • Do not have to be offered coverage
Full-time equivalent employees
• Special rules apply for large employer determination • Special rules apply for offering coverage (along with variable
hour employees)
Seasonal employees
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Full-Time Employee
With respect to a calendar month
An employee who is employed on average at least 30 hours of service per week
130 hours of service in a calendar month = the monthly equivalent of 30 hours of service/week
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Exceptions for Educational Organizations
• The proposed regs address teachers and other employees of educational organizations separately
• In essence, if they are full-time during the active portions of the academic year, they’ll be considered full-time
• Traditional breaks in the academic year, (holidays, spring breaks, etc) are often periods of paid leave and the employee will be credited with hours of service accordingly
• This section currently only addresses employees of educational organizations, yet comments are invited on whether there are other similar industries that also need special consideration
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Problems for Educational Organizations
ACA presents a series of unique problems for educational organizations in several classifications of employees. Below are just a few of the employees who may require the organization to address in their plan offerings addressing both minimum value and affordability of coverage:
• Substitute Teachers
• Cafeteria Workers
• Staff Employees
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Look-back Measurement Method
• May be used for new variable hour and seasonal employees if used for ongoing employees
• Employers may not use the look-back measurement method for variable hour/seasonal employees and use monthly measurement method for employees with predictable schedules
• Rules protect full-time status for employees transferring between positions using different methods
Measurement Period
Administrative Period
Stability Period
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Section 6055 and 6056 Reporting
Repor&ngrulesapplyto:
• Providersofminimumessen&alcoverage(6055)
• Applicablelargeemployers(6056)
• Rulesdonotapplytosmallemployerswithinsuredcoverage
Repor&ngen&&esmust:
• Fileinforma&onreturnswiththeIRS
• Providestatementstoeitherfull-&meemployees(6056)or
• Providestatementstocoveredindividuals(6055)
Purposeofrepor&ng:
• HelpIRSadministeremployerandindividualsharedresponsibilityrules
• DeterminewhetheranemployeeiseligibleforapremiumtaxcreditforExchangecoverage
• Showcompliancewiththeindividualmandate
Self-funded plan sponsors that are ALEs must report under both sections, but will use a combined reporting method
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Deadlines
• Rules effective for 2015 coverage
– 2015 coverage information will be reported in 2016
– Employers must collect information during 2015
• Annual deadlines:
– Individual statements due by Jan. 31
– IRS returns due by Feb. 28 (March 31 if filed electronically)
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Section 6055 & 6056 Reporting
ALEs sponsoring self-insured plans
Form1095-C:PartI,PartIIandPartIII
Form1094-C
ALEs sponsoring insured plans
Form1095-C:PartIandPartIIonly
Form1094-C
Non-ALEs sponsoring self-insured plans
Form1094-B
Form1095-B
Non-ALEssponsoringinsuredplansarenotrequiredtoreportundereitherSec&on6055orSec&on6056
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Penalties • Penalties for violations of reporting requirements
− $100 per violation, up to $1.5M per year − May be increased or decreased, depending on circumstances
• Short-term relief from penalties − Available for reporting related to 2015 coverage − IF reporting entity shows good faith effort to comply − Applies to incorrect/incomplete information reported or other failures due to
reasonable cause
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Start early on your
renewals
Use the best
Consultant
Invest in systems to
provide necessary
reports
Go Cautiously in to Self-Funding
Prepare for
network “noise”
1 2 3 4 5
Future Considerations
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Form 1095- C
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Form 1095-B
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Into the Weeds
One School System’s Response Metro Nashville Public Schools
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Determine who are full-time and full-time employees
• Issue – We classify employees as benefit or non-benefit eligible
– Benefit Eligible: Regularly scheduled employees who work over 20 hours per week (better than ACA 30 hour requirement)
– Non-Eligible: Temporary (substitutes) regardless of number of hours worked. Some of these employees will be considered eligible if average over 30 hours per week
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Tracking employees for availability of coverage
• Dropping all payroll files into our online enrollment vendor – Benefit Express (BE).
• Using a 12-month measurement period
• Crediting 10-month employees with summer service
• Determine how many employees in the non-benefit class meets the 30-hour ACA definition of full-time employee, combine with benefit eligible population.
• Determine the percentage of all employees (per ACA definition) are provided coverage. If > 95% for 2016, continue business as usual. Potential penalty for failure - > $20 million
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Keeping up with our substitutes
• We will keep on ongoing tally on the number of employees offered healthcare & the number of substitutes who meet ACA requirement that are not being offered coverage
– Updated per payroll period (every 2 weeks)
– BE will track when substitutes reach eligibility status and lose eligibility status
– If our % reaches close to 5%, MNPS will have to decide to either:
• Limit substitute weekly hours to less than 30 hours per week (we already have a sub shortage)
• Provide coverage to those who are eligible
• Outsource sub’s to a third party
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Confirm plans meet minimum coverage, value and affordability definitions
• Utilized actuary and TPA (Cigna) to insure plan meets minimum coverage.
• Used consultant to determine that based on existing premiums, any employee with a household income of less than $19,700 annually would be below the affordability threshold
• Looked at our payroll files and determined that 1375 support employees may be below threshold (primarily cafeteria workers).
• Requested lower cost option, but didn’t get one – waiting to find out the impact of the penalty. $3,000 for each employee who purchased subsidized coverage on the exchange.
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Preparing for IRS Reporting
• Provided online enrollment vendor with eligibility data weekly via census file
• BE controlled and stored enrollment data
• Addend it with support staff eligibility and enrollment data – annual file to show coverage and eligibility per month for employees and dependents
• BE to aggregate data then complete the 1095 and 1094 forms on our behalf and send to individuals and IRS
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Who Are You Responsible to Report?
• for each employee who was a full-time employee for any month of the calendar year
• If you sponsor a self-insured plan, you must file Form 1095-C for each employee who enrolls in the self-insured health coverage or enrolls a family member in the coverage, regardless of whether the employee is a full-time employee for any month of the calendar year.
• For a self-insured group health plan maintained by a single employer, the plan sponsor is the employer. For a plan maintained by more than one employer that is not a multiemployer plan (as defined in ERISA) the plan sponsor is each participating employer.
• If you are part of a self-funded plan – you report employee and dependent coverage. If you have fully-insured coverage – you only have to report the employee.
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Some Notes From the State
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Are You Ready for the Questions?
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Thank you!