The Inside Scoop on the Affordable Care Act for Employers Today

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Presented by

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Our panelists

Jessica Miller-Merrell@blogging4jobs

Randy PeckDir Software Strategy

Mike Haberman@mikehaberman

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Message from the moderator

Jessica Miller-Merrell@blogging4jobs

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• Employer Mandate and Employer responsibilities

• Individual Mandate

This a complex law with over 1200 pages of legislation and many more pages of regulation. We are giving an overview and nothing should be construed as legal advice.

1200 pages of legislation

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ACA in the news

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ACA timeline of events

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• Employers with 50 or more FTEs• Fulltime employees (30 or more hours

per wk)• The monthly sum of hours of

employees working less than 30 hours per week divided by 120.

• Added together if the total is 50 or more the employer is covered

• Includes working hours & compensated hours

Legislation key points

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• Offer “Affordable” Insurance to full-time employees or pay a penalty

• Provide written notice to employees at time of hiring of what is provided (this notice must be provided to current employees by March 1, 2013)

• Provide W-2s with insurance values• As of 2014, make annual reports to the

Secretary of the Treasury (more later)

Legislation key points

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What “affordable” means

“Affordable” insurance is deemed affordable if :

• The cost of coverage for employee-only coverage is no more than 9.5% of the employee’s household W-2 income

• The insurance covers 60% or more of the actuarial cost of the healthcare

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Key points

• Employers are NOT required to pay 100% of the cost of coverage

• Employees can be required to contribute to the cost of coverage in increasing amounts based on increased income

• Employees can be required to pay the full cost of dependent coverage

• Large employers are only required to OFFER coverage and there is no penalty if the employee declines.

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Message from Mike

Mike Haberman@mikehaberman

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• They don’t provide any insurance coverage

• They provide “unaffordable” or “inadequate” coverage

Employer Penalties

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• The cost is 9.5% of the employee’s household income

• Insurance doesn’t cover at least 60% of health costs

• At least one employee receives a tax credit or subsidy to purchase insurance through an exchange

Defining inadequate

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The penalty is the lesser of:

• $2000 x the total number of full-time employees

• Or $3000 X #full-time employees who receive a tax credit or subsidy and purchase through an exchange

Employer penalties

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An employer has 100 FTEs of which 65 are full-time employees. They only offer insurance that covers 50% of coverage.

Ten employees qualify for a tax credit or subsidy because they have incomes that are below $44,680 (400% of the Federal Poverty Level)

10 X $3000 = $30,000 fine

Calculating penalties

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Exchanges and employers

• Exchanges determine if individuals are eligible

• Exchanges notify employers of full-time employees who qualify for subsidy or credit

• If employees have adequate coverage they will NOT qualify for the subsidy

• If assessed a penalty employers can appeal

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Automatic enrollment

• Employers with 200 or more FTEs must automatically enroll all new full-time employees in one of their employer-sponsored plans

• Employees not wanting insurance must opt out

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Information return

In 2014 employers must file reports with the Secretary of the Treasury detailing:

• Whether or not they offer insurance• Details of the plans if they do• Costs of the plans• # of employees with full

identification

Additionally a full report must be supplied to each employee named in the report

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“Hidden” taxes

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Hidden taxes: PCORI

Patient-Centered Outcomes Research Institute (PCORI)

• Established to assist patients, policymakers in making informed health

• Fee determined by multiplying average number of covered lives for the plan year times $1 in the year 2013 and $2 for second year, ‘14

• Fees after that will be readjusted as needed. Fees are due each July 31st

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Hidden taxes: TRP

Transitional Reinsurance Program (TRP)

• Fee to fund Exchanges in transition period of 3 years

• Includes lives covered like employees, spouses, dependents

• Also domestic partners who are covered• Fee of $63 per covered life• Begins 2014 & paid by Dec 31, 2014, ‘15 &

‘16

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Individual mandate

Employers must educate employees not covered or do not provide:

• Each person must maintain minimum essential coverage for themselves and dependents.

• If they don’t they are assessed a tax

2014 $95 / year 1% of income

2015 $325/ year 2% of income

2016 $695/ year 2.5% of income

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Special mandate provisions

If the an individual is under 18 years old the cost is 50% of the tax. The amount of the tax is capped at 3 times the annual amount.

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How to calculate individual tax

Family of ThreeFather Makes $60,000 & Mother makes $40,000Child 12 years old In 2016 $695 for father$695 for mother$347.50 for childTotal tax $1,737.50Or 2.5% of IncomeIn this example $100,000 X 2.5%= $2500Their tax would be $2500 annually paid on monthly basis.

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Tax incentives for small employers

• 2010-2013 Maximum Tax Incentives• 35% for small business employer • 25% for small tax-exempt employers

& charities• 2014 Tax Incentives

• 50% for small business employer• 35% for small tax exempt employers

& charities

Visit IRS.gov for more information

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Tax incentive eligibility

• Cover at least 50% of the cost of single (not family) health care coverage for each of your employees.

• Have fewer than 25 FTEs• Employees must have average

wages of less than $50,000 a year

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Key points

• Employers are NOT required to pay 100% of the cost of coverage

• Employees can be required to contribute to the cost of coverage in increasing amounts based on increased income

• Employees can be required to pay the full cost of dependent coverage

• Large employers are only required to OFFER coverage and there is no penalty if the employee declines.

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Questions?

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Get HRCI Recert Credits

• Visit http://b4j.com/hrciwebinars & register to get PHR, SPHR & GPHR

cert credits free.

#hrsolutions

Learn more about . . .

• Mike Haberman www.b4j.co/OmegaHR• Randy Peck www.b4j.co/randy-peck• Jessica Miller-Merrell www.b4j.co/JMMbio-12

Other resources: IRS.gov, www.b4j.co/ACA-timeline, www.b4j.co/aca-w2, www.b4j.co/PPACA-timeline