What Does the Employer Mandate Delay Mean for Your Company? · 1. Don’t ignore the ACA 2....
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What Does the Employer Mandate Delay Mean for Your Company? 1
Transcript of What Does the Employer Mandate Delay Mean for Your Company? · 1. Don’t ignore the ACA 2....
What Does the Employer Mandate Delay Mean for Your Company?
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The Play-or-Pay basics What is the impact of the Play-or- Pay
delay Play-or-pay: weighing your options What are the new requirements for the
rest of 2013 and 2014? A look ahead
Agenda
Pay or Play Basics
No Healthcare Coverage OfferedHealthcare Coverage Offered
That is Not Affordable or Does Not Provide Minimum Value
PENALTY =
$2,000 * (Total Number of Full-Time Employees –30 Full Time Employees)
*Penalty imposed if large employer does not offer at least 95% of full-time employees (and their children) an opportunity to enroll in minimum essential coverage and at least one of employer’s full-time employees received federal assistance to purchase insurance via an Exchange.
PENALTY =
The lesser of:
(a) $3,000 for each full-time employee receiving federal assistance to purchase health insurance through an Exchange or
(b) $2,000 * (Total Number of Full-Time Employees – 30 Full-Time Employees)
*Penalty imposed if the coverage offered is either (i) unaffordable because the employee’s required contribution is more than 9.5% of their W-2 wages for self-only coverage (or other safe harbor); or (ii) the actuarial value of the employer’s plan is less than 60%, meaning that the plan pays for less than 60% of the covered healthcare expenses.
Pursuant to IRS Code Sections 6056 and 6055, large employers are required to report to the IRS:– Information concerning the terms and conditions of their
healthcare coverage and– Information concerning the employees receiving
minimum essential healthcare coverage
Pay or Play Basics
On July 9th, The IRS issued IRS Notice 2013-45, providing that the mandatory employer and insurer reporting requirements would be delayed one year until January 1, 2015
Employers have an extra year to decide whether or not they are going to PAY or PLAY
Pay Or Play: The Delay
Affordable Care ActThe NEW Timeline
2010 2011 2012 2013 2014 * 2015 * * 2018
Small Business Tax Credits
Funding for Small Business Wellness
Programs
Summaries of Benefits and Coverages
FSA Limits Play or Pay Play or Pay Cadillac Tax
Adult Dependent Coverage
Medical Loss Ratio Rebates
Medicare Tax Increase Automatic Enrollment
No Lifetime Limits No Part D Deduction 90-Day Max Waiting Period
Restrictions on Annual Limits PCORI Fee Individual Mandate
No Rescissions Except Fraud Insurance Exchanges
No Pre-Existing Conditions for
ChildrenIndividual Subsidies
No OTC Reimbursement from
FSA, HSACommunity Rating
External Review Procedures Guaranteed Issue
Full Coverage of Preventive Benefits No Annual Limits
Enhanced Wellness incentive/Penalty
Nondiscrimination in Insured Plans
Out-of-Pocket Limits
Impact of the Delay
The ACA is not dead The individual mandate is still effective The Exchanges/Marketplace are still
effective The Pay-or-Play mandate has not been
repealed
Pay Or Play: The Delay
Delay in Section 6056 Reporting means that employers are not required to track terms and conditions of their healthcare coverage until 2015 and an initial required filing in early 2016 Primary means by which IRS is planning to enforce the employer
mandate, and to reconcile amount of premium tax credits paid to individuals
How will Marketplaces/IRS verify eligibility for federal subsidy?
Effect of Delay
Open enrollment on Marketplace is still scheduled to begin October 1, 2013
Individuals with household income up to 400% of federal poverty level may be eligible for federal subsidy
IRS has no reliable tool in order to claw back improperly paid premium tax credits– Marketplace will have to verify on their own– Federally-established Exchange will use a sampling
procedure– State-based Exchanges can accept applicant’s
attestation without sampling
Effect of the Delay
On employers:– Need not offer coverage to employees – No penalties for 2014– No need to adjust premiums for 2014 to meet
affordability– No need to adjust design to meet minimum value
Effect of Delay
On individuals:– Individual mandate is still in place for 2014– Marketplace will determine subsidies based
upon individual income– May be more subsidies given
• As employers chose to not offer coverage or curtail coverage, may drive employees to the Marketplace
Effect of Delay
Effect of Delay?
Does the 6/12 transition relief rule apply for 2015? Does the fiscal year plan transition relief
apply for 2015? Does the cafeteria plan “change in status”
relief apply for 2015?
What Does It All Mean?
What happens if the Marketplaces open, but there’s no employer mandate?
• No employer penalties to fund subsidies
• Inadequate infusion of young invincibles?
• Potential hesitancy of insurers to participate?
• Higher risks and bloody noses for insurers, higher premiums paid with taxpayer subsidies?
• Giveaway of subsidy dollars on the “honor system”
Play-or-Pay: What to do Now?
Play or Pay Delay – Keep on Planning
Keep on Planning– Systems for tracking hours– Designation/consideration of measurement,
administrative and stability periods– Coverage offerings, such as “minimum value” (aka
qualifying coverage, or 60% value) coverage, and “minimum essential coverage” (MEC)
– Wait on the final “play or pay” regulations
Beginning tracking hours in October for 12 month measurement period for variable employees
– 10/1/2013 – 9/30/2014 for open enrollment in fall of 2014 for plan beginning 1/1/2015
What to do in 2013
Make decision about whether healthcare will comply with ACA standards in 2014– Will you provide minimum essential healthcare coverage
that provides minimum value and is affordable to “test the waters?”
– Will you provide an interim plan in 2014?
What to do in 2014?
What do to in 2014– Pull the Plug?
Pull the plug?– Saves some money, most likely– Saves some hassles
• Does it create coverage gaps? Will those gaps violate nondiscrimination rules?
• If employee goes to Marketplace for 2014 with subsidy, but then you offer affordable, minimum value coverage in 2015, is this a n employee relations nightmare?
Same pay or play determination questions apply– Who will be eligible for health benefits?– Will you change the composition of your workforce?– Will you use more “part-time” employees? – Will you change your benefit plan structure?– Will you self-fund? Private Exchange?– Will you shift cost to employees?– Will your plan be “affordable”
and provide “minimum value”?
What to do in 2015?
If terminate your healthcare plan:– Will you increase wages so employees can purchase
health insurance on an Exchange?– How much will an Exchange plan cost? – Will you provide a Defined Contribution instead?
Pay-or-Play: It’s Not a Simple Question
Full-time = 30 hours/week average (130 hours/month)
Hours of service include any paid leave Lookback/Stability Period
– Employer can “look back” over a period of three to 12 months to determine full-time status for subsequent stability period
Proposed Regulation: Who is a Full-Time Employee?
29-Hour Work Week Workforce Rotation/Tenure Limits Job- or Employee-sharing Hiring Insured People Disaggregation of Corporate Group Plans
- Separate entities
Workforce Restructuring “Silver Bullets” – Will They Work?
“Independent Contractors”– Misclassification
Outsourcing to Staffing Firms – To stay below large employer status (>49 full-timers)– To use small placement firms’ under-50 exemptions– Job-sharing arranged by Vendor Management Systems– Same risks as “independent contractors”
Franchising/Subcontracting
More “Silver Bullets” – Will They Work?
ERISA Section 510 bars employers from discriminating or taking an adverse employment action against a plan participant or beneficiary:– for exercising their rights under ERISA plans, – to interfere with participants' or beneficiaries' attainment
of rights under the plan or ERISA, and– in retaliation for giving information or testifying in any
inquiry or proceeding under ERISA.
Workforce Restructuring Risks
ACA Whistleblower Protections Section 1558 of the ACA amends the Fair
Labor Standards Act (FLSA) to protect employees from retaliation for – reporting alleged violations of Title I of the ACA,
or – for receiving a health insurance tax credit or
federal subsidy to purchase health insurance on an exchange
Workforce Restructuring Risks
Labor relations implicationsEEO implications
–Adverse impact?
Workforce Restructuring Risks
We don’t know yet for sure 105(h) Non-discrimination rules TBD Employers should carefully consider the
risks of any strategy They also may want to avoid being the
test case for any technique, it’s expensive even to win
What Strategies, If Any, Will Work?
2013 and 2014 Requirements
Marketplace Notice
Section 18B of FLSA: Employers must notify employees– About the Health Insurance Marketplace;– That, depending on their income and what
coverage may be offered by the employer, they may be able to get lower cost private insurance in the Marketplace; and
– That if they buy insurance through the Marketplace, they may lose the employer contribution (if any) to their health benefits
Marketplace Notice
Effective Date– Now required no later than October 1, 2013 for all current
employees (within 14 days of hire for new employees thereafter)
DOL Model Notice– More expansive that statutory requirements
Optional?– Technically, not optional– But DOL FAQ says there is no fine or penalty under the law for
failing to provide the notice.
Health Reform – Benefit Mandates (PY Beginning in 2014)
No Annual Dollar Maximums on Essential Health Benefits (EHBs) Cost-Free Preventive Care (non-grandfathered plans) Clinical Trials – Must Cover Routine Patient Costs (non-
grandfathered plans) Maximum OOP Limit for In-Network Care (non-grandfathered plans)
– Tied to OOP max under HSA-qualifying HDHPs (e.g., for 2013, $6,250/12,500)
– Transition Rule
90-Day Max Waiting Period– Not “1st of the month after 90 days”– Satisfaction of reasonable substantive conditions (e.g., a training
requirement) can result in a waiting period longer than 90 calendar days– Cumulative Hours requirement (up to 1,200) OK
Health Reform - Fees and Taxes
Fee or Tax Effective Date Amount
Comparative Effectiveness Research Fee (PCORI)
Plan Year ending afterSeptember 2012—Plan Year ending after September 2019
(Tax filing and payments by July 31 of year following last
day of plan year)
2012: $1 per covered life2013: $2 per covered life
Indexed thereafter
Annual Excise Tax on Health Insurance Companies (fully insured coverages only)
2014 $58.8B through 20182018 = $14.3B; indexed thereafter
2.25%
Transitional Reinsurance Program 2014 ‐ 2016 $25B$63 per covered life in 2014
A Look Ahead
40-hour work week legislationDefunding efforts
ACA and Congress
Labor Criticism of ACA AFL-CIO Convention Resolution 54
– ACA is a threat to multiemployer plans– Non-profit multiemployer plans should have access to the
ACA’s premium tax credits and cost-sharing reductions– Employer responsibility rules should apply to more
employers, especially to construction companies with five or more
White House rejects request for premium tax credits for multiemployer plans
ACA and Labor
1. Don’t ignore the ACA2. Determine if you are in compliance with current and
upcoming ACA requirements (DOL Plan Audits)3. Determine if you are a “large” employer subject to the
play-or-pay mandate4. Identify full-time employees and
how you will track hours of service 5. Will you provide health coverage
to full-time employees and children?
Healthcare Reform Next Steps
5. Is your coverage affordable?6. Does it provide minimum value? 7. Weigh “cost” of paying v. playing in 20158. Stay tuned for new regulations and guidance 9. Communicate to employees
Healthcare Reform Next Steps
Healthcare reform strategy is an individual assessment
Review options and determine strategy that is right for your organization
Consider all employment, labor and benefits law implications of strategy
Healthcare Reform Strategies: Littler Healthcare Reform Consulting Group
Healthcare Reform Strategies: Littler Healthcare Reform Consulting Group
Questions & Answers
