Adp Affordable Care Act 112812 Final[1]

Mitigating Risk and Controlling Healthcare Costs: A Post Election Look at the Affordable Care ActNovember 28, 2012

Presented in partnership with:

hashtag #adpwebinar

Today’s Speakers

Peter J Marathas JrJohn A Haslinger Peter J. Marathas Jr.Partner

Employee Benefits, Executive Compensation and ERISA Litigation, Benefits

Proskauer Rose LLP

John A. HaslingerVice President

Benefits Outsourcing ConsultingADP, Inc.

2

Join the conversation on Twitter by tweeting along or following the hashtag #adpwebinar.

© ADP, Inc. 2012. All Rights Reserved.

Disclaimer

This presentation is not: Legal Advice

Th fi l d H lth C R f The final word on Health Care Reform

A political opinion

*Note: Data gathering is voluntary and only gathered after receiving client approval

3 © ADP, Inc. 2012. All Rights Reserved.

Initial ObservationsInitial Observations


Initial Observations

Key Components:

Individual Mandate (2014)– Subsidies &

– Penalties

Insurance Mandates Insurance Mandates

State Mandates

Employer Mandates


Initial Observances ctd.

Affordable Care Act (ACA) is not Health Care Reform

Cost of providing care is not addressed seriously in ACA

Costs Will Increase

Direct Cost$ ► Premium Increases

► Taxes

► Penalties

Indirect Cost$ ► Administrative Costs Indirect Cost$ ► Administrative Costs

Unknown Cost$ ► Agency Action


Healthcare Exchanges

All states to establish an Exchange by January 1, 2014

– The American Health Benefit Exchangeg

– Small Business Health Options Program (SHOP) Exchange for individuals and small businesses

States must demonstrate to federal government that efforts are underway by January 1,States must demonstrate to federal government that efforts are underway by January 1, 2013

Types of Exchanges:

– State Exchange

– Partnership Exchange

– Federally Facilitated Exchange

Blue Prints

– States pursuing a State-based Exchange must advise HHS by November 16, 2012 and submit Blueprint by December 14


Healthcare Exchanges ctd.

Will the States Be Ready?


Polling Question #1

1. Do you plan some time in the future to obtain insurance for your employees through a public

?Exchange?

Yes

No


Healthcare Exchanges ctd.

The Metals—Exchanges to Offer Four Levels of Coverage:

Bronze (60%)Bronze (60%)

Silver (70%)

Gold (80%) Gold (80%)

Platinum (90%)

fAnd: a catastrophic plan for individuals under 30

Insurers may offer separate health plan products outside of an Exchange, but they are prohibited from offering rates for those health plan products that are lowerare prohibited from offering rates for those health plan products that are lower than those offered within the Exchange


Pay or Play Mandates: 90 Day Requirements

Effective first day of plan year on or after January 1, 2014

Guidance Released August 31 2012 is effective through 2014 Guidance Released August 31, 2012 is effective through 2014

90 days means 90 days within the first day they are eligible

If employees can elect within 90 days but fail to elect within 90 days it is not a violation

Employer may use a reasonable period to determine eligibility if (a) period is not designed to avoid the 90 day period, (b) individual becomes eligible within 90 days of being assessed eligible or, if earlier, within 13 months of start date (plus the days to the first day of the next calendar month if the employee’s start (p y y p ydate is the middle of the month)


Polling Questions #2 and #3

2. Are you considering opting out of providing group health insurance in the future?

Yes

No

3. Are you considering making significant coverage or premium contribution changes to your group health

plans in the future?

Yes

No


Employer “Pay or Play” Mandate

In 2014, the pay-or-play mandate requires employers of 50 FTE or more to offer quality, affordable health insurance coverage to full time employees (those working on average at least 30 hours per week) and their families(those working on average at least 30 hours per week) and their families

Failure to offer such coverage potentially subjects the employer to taxes for a given month—if:

(i) a full time employee (ii) receives a subsidy in (iii) a state exchange


What Are The Pay or Play Penalties?

Employers who “opt out” of providing benefits

Employers who do not provide health coverage to all full time employees (and Employers who do not provide health coverage to all full time employees (and their dependents) are penalized

– If at least one full time employee (30+hrs/wk or 130+ hrs/mo) is eligible for, or receives, a subsidy in a state exchange: the employer is subject to an annual penalty of $2,000 × all full time employees (except for the first 30) applies

– Penalty is assessed monthly (i e $167 67 per full time employee per month)Penalty is assessed monthly (i.e., $167.67 per full time employee per month)


What Are The Pay or Play Penalties ctd.

Employers who provide “unaffordable” coverage

Coverage is affordable only if the premium for single coverage under the Coverage is affordable only if the premium for single coverage under the employer’s lowest cost plan with at least a 60% “actuarial value” does not exceed 9.5% of household income (or W-2 wages)

Annual penalty is the lesser of $3,000 for each full time employeefull time employee who receives a subsidy through a state exchange, or $2,000 multiplied by all full time full time employeesemployees (subtracting first 30)

– Penalty is assessed monthly (i.e., $250 per subsidy-receiving full time employee per month)


Variable Employees & Full Time Employee Status

A Variable Employee: On start date, it cannot be determined whether employee is expected to work on average at least 30 hours per week

Initial Measurement Period of Between 3 and 12 months

– Assess average during Initial Measurement Period

– Assessment is then used for stability period that is the same as for ongoing employees

Use of Administrative Period: can use an “administrative period” but total can not exceed 13 months (plus the remainder of the month if anniversary falls innot exceed 13 months (plus the remainder of the month if anniversary falls in middle of month)


Medicaid Expansion & Employers

Medicaid Expansion Requirements:

– New Medicaid class of beneficiariesNew Medicaid class of beneficiaries

– ACA required states to cover all individuals under age 65 with income below 133% of the poverty line

– "Essential benefits" must be provided to all Medicaid recipients

Failure to comply = loss of all federal funds

Court struck down as Unconstitutional (7-2): putting a gun to the head of the states

This may have an impact on employers


Medicaid Expansion & Employers


The ACA Litigation Minefield

DOL, IRS and HHS audits will increase

– Already seeing audits of grandfathered status byAlready seeing audits of grandfathered status by DOL under the Act

DOL efforts focus on increasing employer compliance rather than assessing penalties incompliance rather than assessing penalties in early years

Participant lawsuits may follow as participants seek to enforce benefit mandatesseek to enforce benefit mandates


The ACA Litigation Minefield ctd.

Employee Claims Under the Act

Workforce Realignment Workforce Realignment

Retiree Medical Exit Strategy

Claims to Mandated Benefits

Whistleblower Actions


Summary of Benefits and Coverage

The Basics

Final Rule effective September 23 2012 Final Rule effective September 23, 2012

SBC cannot exceed four double-sided pages in length and must be "culturally and linguistically appropriate"g y pp p

SBC must be accompanied by the "uniform glossary", available at www.healthcare.gov and www.dol.gov/ebsa/healthreform/

HHS forms available http://cciio.cms.gov/resources/other/index.html#sbcug

Upon renewal an SBC need only be provided for the benefit option in which aUpon renewal, an SBC need only be provided for the benefit option in which a participant is enrolled, unless SBCs for other options are requested

SBC is in addition to Summary Plan Description requirement


W-2 Reporting of Healthcare Costs

Beginning with 2012 Forms (i.e., Forms issued in January 2013), employers must report aggregate cost of health coverage

Small Employer Exception: those issuing less than 250 W-2's in prior year exempt until further guidance issued

Reportable cost includes the entire cost of the coverage (without any reduction for employee contributions)

Cost of coverage is determined under rules similar to those for determining Cost of coverage is determined under rules similar to those for determining COBRA premiums (excluding 2% administrative charge)


$2500 Health FSA Limit

Effective for plan years beginning in 2013: Limits annual employee contributions to $2,500

Indexed to the CPI starting in 2014

Does not limit employer contributions

To Do:

– Communication to begin in 2012 (2nd half)

– Plan amendments recommended by start of 2013 plan yearPlan amendments recommended by start of 2013 plan year However, despite the cafeteria plan rule that amendments must apply prospectively, an amendment adopted by

December 31, 2014 may apply retroactively if the plan complied with the $2,500 limit starting with plan years beginning in 2013


Select Taxes: Comparative Effectiveness Fee

Effective for plan years ending after September 30, 2012 and before October 1, 2019

$2 fee per member per year

– Paid by insurers if insured plan

– Paid by plan sponsor if self-funded plan

Fee reduced to $1 for plan years ending before October 1 2013 Fee reduced to $1 for plan years ending before October 1, 2013

For plan years beginning after September 30, 2014, fee increases based on national health expendituresp

Fee supposed to sunset after 2019


Select Taxes: Transitional Reinsurance Program

Assessment on carriers and TPAs (on behalf of self-funded plans)

Generally applies to all group health plans – no exceptions for non-ERISA– Generally applies to all group health plans – no exceptions for non-ERISA plans (e.g., governmental or church plans)

– Applies on a per-member basis

– Does not apply to HIPAA-excepted benefits

Applies to 2014-2016 plan years Applies to 2014-2016 plan years

Intended to stabilize premiums in the individual markets

Additional employer recordkeeping and cost requirements


Non-Discrimination Rules

Delayed Until Guidance Released

– Now That The Election Is Over, Guidance Will Follow

Will apply to non-grandfathered, fully-insured plans after release (already apply to self-insured)

Prohibits discrimination in favor of “highly compensated employees” with respect to eligibility & benefits

– Note: Testing Performed on a Controlled Group Basis

Penalty: up to $500,000 Under ACA


Compliance

SBC Requirements

Excise Tax

Exchanges

Shared ResponsibilityShared Responsibility


Compliance Is Not Limited To Health Care Reform

A complex lengthy and ever changing list of requirementsA complex, lengthy, and ever changing list of requirements Health Care Reform (PPACA)

Internal Revenue Code (not limited to the following)

The requirements under Health Care R f i dditi

Sec. 79 Sec. 105 Sec. 125

Imputed Income

Sec. 127 Sec. 129 Sec. 132

Ad lt Reform are in addition to all of the other regulatory requirements that benefit plan sponsors

IRC Sec. 152 Same Gender Marriage

CA SB 1386 (information privacy)

Adult children up to age 26

already have to comply with

ERISA

HIPAA 834 Enrollment 820 Premium Payment

Privacy Rule Security Ruley

Sarbanes-Oxley Act of 2002 SAS70 Type II audit reports

FMLA Mental Health Parity

28

ADAAA

ADEA

GINA COBRA


A Simple Summary Of Complex Rules

NOT MUCH HAS CHANGED

Source: House Joint Economic Committee, August 2, 2010 1129 © ADP, Inc. 2012. All Rights Reserved.

Managing Change: A Multifaceted Approach

Workforce Strategy(Total Rewards / Employer of Choice)

Recruitment

Data Analytics Benchmark Data Trend Analysis

B fit

Scope and scheduling Salary planning

Reliance on sources, may not be readily available

Audits Decision Support Tools

Benefits Administration

Design and Compliance CommunicationsSt t Plan options

Planning for 2014 and beyond Federal and State

PPACA

Strategy Design

Medium (Print, On-line, Mobile, Social Media)

PPACA Testing, Reporting &

Reconciliation

Education

Consumerism and Wellness The Foundation

30

Consumerism and Wellness – The Foundation Incorporate with Plan Design

Incentives Outcomes

Managing risk© ADP, Inc. 2012. All Rights Reserved.

Compliance Analysis Is Lacking To Date

31Source: ADP Research Institute Survey of Employers, May 2012© ADP, Inc. 2012. All Rights Reserved.

Plan Design Strategies: Multiple Levers

Wellness is emerging as a key component of employer’s health care strategy– The larger the employer, the more likely they have implemented Wellness

Reductions in the scope and number of plans offered is also increasing

Steps Taken/Currently Doing/Definitely Will Do

– Increases in deductibles and co-insurance have become more common compared to 2011 (will run into limitations under ACA)

76%Offer wellness programs

Small (1‐49 EEs)

Midsized (50‐999 EEs)

Large (1,000+ EEs)

55%

62%

76%

Increase EEdeductibles/contribution

Offer HSAs

48%

54%

Increase employee co‐pays

Offer a HDHP option

deductibles/contribution

46%Offer HRAs

32Source: ADP Research Institute Survey of Employers, May 2012© ADP, Inc. 2012. All Rights Reserved.

Major Forthcoming Employer Requirements Under Health Care Reform Communication Requirements

Summary of Benefits and Coverage (SBC): 9-23-12

Taxes and Fees Include value of Health benefits on W-2:

1-1-12

Clinical Effectiveness Research Fee: Claims and Appeals Notices: 1-1-12

Exchange Notification: 3-1-13

Plan Changes

Clinical Effectiveness Research Fee: 10-1-12

Medicare payroll tax increases: 1-1-13

Requiring employers to “pay or FSA Annual Plan Limit of $2,500: 1-1-13

Eliminate: 1-1-14

– Pre-existing condition exclusions

q g p y p yplay” Shared responsibility requirements:

1-1-14

– Look-back approach may require changes

– Annual and Lifetime coverage limits

– Coverage rescissions

Guaranteed issue: 1-1-14

pp y q gin 2013

Reporting Employer Health Insurance Coverage

Reporting: 1-1-14 Waiting periods limited to 90 days:

1-1-14

Cost sharing limits on cost sharing with Employees: 1-1-14

Reporting: 1 1 14

40% Excise Tax on high cost plans: 1-1-18 Excise tax limits indexed to CPI p y

Wellness Incentives expanded: 1-1-14

Auto-Enrollment: TBD – Likely 201533 © ADP, Inc. 2012. All Rights Reserved.

Employer Requirements: Details Not Yet Clear

Non-Discrimination Testing Implementation delayed

Anticipate effective date of 1 1 15

Look-Back Rules Unclear as to how people who are

unemployed during a look-back Anticipate effective date of 1-1-15

Significant implications– Ability to use aggressive pricing

period are to be treated for purposes of calculating average hours per week per calendar month

– Carving out populations

Auto Enrollment Implementation delayed

– Example: Teachers working 10 months per year but collecting unemployment for 2 months

Guidance requested

Anticipate effective date of 1-1-15

Significant implications– Cost

Multi-Employer Benefit Trusts Unclear how various rules related

to Excise Tax, Shared – Cost

– IRC Sec. 125

,Responsibility, etc. will apply in instances when benefits are provided through trust rather than directly by employer


ACA Impact On Employer Sponsored Plans

Shared responsibility coverage requirements coupled with ongoing health care inflation will reduce employers’ ability to design health care plans that act as a differentiating component of total compensation and will increase likelihood of employers:

– Eliminating / reducing coverage

40% E i T O C t f C Ab Li it

– Focusing on consumer based solutions HDHPs, HRAs, HSAs, Wellness

– Potentially moving some employees to exchanges for coverage

“Cadillac Tax”

The value of

$10,200 for Individual $27,500 for family

40% Excise Tax On Cost of Coverage Above Limit

Strategic Benefit Plan Design

I l d ER d EE

Note: Medical inflation continues to rise at 2 to 3 times the rate of overall In

flatio

n

Pres

sure

The value of strategic benefit design will shrink over ti d t

Includes ER and EE Contributions for: Medical Rx ASO Feesst

Driv

ers

Fees

the rate of overall inflation – and has done so for more than 50 years*

Med

ical

I

Lobb

ying

time due to Health Care Reform

FSA HRA HSAN

ew C

os

Ins

Co

F

C R i

35The Excise Tax Applies To Both Grandfathered Plans and Non-Grandfathered Plans

Coverage Requirements

*Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, U.S. Department of Commerce, Bureau of Economic Analysis Sources


Example: Estimating Excise Tax in 2018Individual Coverage Assumptions

– Healthcare plan costs in 2011: Individual - $5,429*; (includes ASO fees)– Average annual FSA contribution of $750* (held constant - not increased for any inflation

assumption)p )

$23,000

$25,00010.5% Trend

Individual Coverage ($5,429 in 2011)

$17 000

$19,000

$21,000

8.5% Trend

$13,000

$15,000

$17,000

6.2%% Trend

3.5% CPI

$7,000

$9,000

$11,000

$5,000

20182019

20202021

20222023

20242025

36 *Source: Kaiser Family Foundation, 2011 Employer Health Benefits Survey© ADP, Inc. 2012. All Rights Reserved.

Example: Estimating Excise Tax in 2018Family Coverage Assumptions

Healthcare plan costs in 2011: Family - $15,073*; (includes ASO fees) Average annual FSA contribution of $1,250* (held constant - not increased for any inflation

assumption)

$60,000

$65,000 10.5% Trend

p )

Family Coverage ($15,073 in 2011)

$45 000

$50,000

$55,000

8.5% Trend

$35,000

$40,000

$45,000

6.2%% Trend

$20,000

$25,000

$30,0003.5% CPI

$15,000

20182019

20202021

20222023

20242025

37Source: Kaiser Family Foundation, 2011 Employer Health Benefits Survey© ADP, Inc. 2012. All Rights Reserved.

Example: Estimating Excise Tax in 2018Estimated Tax LiabilityNumber of Employees: 2,500Individual Coverage 20% Family Coverage 80% Total 100%Year 6.20% 8.50% 10.50% 6.20% 8.50% 10.50% 6.20% 8.50% 10.50%2018 $0 $32,020 $294,167 $0 $345,083 $3,256,360 $0 $377,104 $3,550,5272019 $0 $123,992 $452,104 $0 $1,389,415 $5,033,278 $0 $1,513,408 $5,485,3822020 $0 $227,352 $631,623 $0 $2,561,016 $7,050,672 $0 $2,788,367 $7,682,2952021 $0 $343,191 $835,165 $0 $3,872,049 $9,335,679 $0 $4,215,241 $10,170,8442022 $0 $472,702 $1,065,432 $0 $5,335,763 $11,918,351 $0 $5,808,465 $12,983,7832023 $0 $617,179 $1,325,418 $0 $6,966,579 $14,831,963 $0 $7,583,757 $16,157,3822024 $15,706 $778,033 $1,618,439 $314,137 $8,780,193 $18,113,356 $329,843 $9,558,226 $19,731,7952025 $75,087 $956,800 $1,948,163 $1,001,791 $10,793,690 $21,803,312 $1,076,878 $11,750,490 $23,751,475

Number of Employees: 5,000Individual Coverage 20% Family Coverage 80% Total 100%Year 6.20% 8.50% 10.50% 6.20% 8.50% 10.50% 6.20% 8.50% 10.50%2018 $0 $64,041 $588,333 $0 $690,167 $6,512,720 $0 $754,207 $7,101,0542019 $0 $247,984 $904,208 $0 $2,778,831 $10,066,556 $0 $3,026,815 $10,970,7642020 $0 $454,703 $1,263,246 $0 $5,122,031 $14,101,344 $0 $5,576,734 $15,364,591

$ $ $ $ $ $ $ $ $2021 $0 $686,383 $1,670,329 $0 $7,744,099 $18,671,358 $0 $8,430,482 $20,341,6872022 $0 $945,404 $2,130,863 $0 $10,671,527 $23,836,702 $0 $11,616,930 $25,967,5662023 $0 $1,234,358 $2,650,837 $0 $13,933,157 $29,663,927 $0 $15,167,515 $32,314,7632024 $31,412 $1,556,066 $3,236,878 $628,274 $17,560,385 $36,226,713 $659,686 $19,116,451 $39,463,5912025 $150,175 $1,913,600 $3,896,325 $2,003,582 $21,587,380 $43,606,624 $2,153,757 $23,500,980 $47,502,949

N b f E l 10 000Number of Employees: 10,000Individual Coverage 20% Family Coverage 80% Total 100%Year 6.20% 8.50% 10.50% 6.20% 8.50% 10.50% 6.20% 8.50% 10.50%2018 $0 $128,082 $1,176,667 $0 $1,380,333 $13,025,441 $0 $1,508,415 $14,202,1072019 $0 $495,969 $1,808,417 $0 $5,557,661 $20,133,112 $0 $6,053,630 $21,941,5292020 $0 $909,406 $2,526,493 $0 $10,244,063 $28,202,689 $0 $11,153,469 $30,729,1812021 $0 $1 372 765 $3 340 658 $0 $15 488 198 $37 342 717 $0 $16 860 963 $40 683 375

38

2021 $0 $1,372,765 $3,340,658 $0 $15,488,198 $37,342,717 $0 $16,860,963 $40,683,3752022 $0 $1,890,807 $4,261,727 $0 $21,343,053 $47,673,404 $0 $23,233,861 $51,935,1312023 $0 $2,468,715 $5,301,673 $0 $27,866,314 $59,327,853 $0 $30,335,030 $64,629,5272024 $62,824 $3,112,132 $6,473,755 $1,256,548 $35,120,771 $72,453,426 $1,319,373 $38,232,903 $78,927,1812025 $300,349 $3,827,200 $7,792,650 $4,007,165 $43,174,760 $87,213,248 $4,307,514 $47,001,959 $95,005,899



4. Have you estimated your potential liability under the 2018 Excise Tax limits?

Yes

No

5. Will you be making plan changes as a result of these estimates?

Yes

No


Decision Support Tools Will Become More Important Under ACA

Most employers do NOT offer Decision Support Tools

Types of Decision Support Tools Offered

– Only 25% of small employers – Only 44% of large employers

Th l h d ff h Those employers who do offer these tools, make them available to the majority of employees

In most cases (53%) the tools are available throughout the entire year - not only at annual enrollment

SIGNIFICANT GAP:

40Source: ADP Pulse Survey of Employers, September 2011

PREFERENCE MODELING


Decision Support: Cost And Preference Calculator

Enables participants to compare preference

and price at the same

titime


Benefit of the Analytical Tools:Market Research

Decision Tool

Results

Associate preferences, cost estimates

generated during

Aggregate Data in Central Data Storage

g gAnnual Enrollment

AnalyticalTools

Demographic & Enrollment Choice Data

Data feed from Annual Enrollment

Use analytical tools to analyze associate selection behavior

Use market research techniques to learn about population’s “purchasing” behavior

Examine overall population trends and behaviors

Id if d h i l i Identify and characterize population segments*Note: Data gathering is voluntary and only gathered after receiving client approval


Employer Shared Responsibility Provisions

Key Elements New definition of “full-time” employee

– Applies only to healthcare benefits

– Average hours per week per calendar month tracking of FT status

Is employer sponsored coverage offered? Is employer sponsored coverage offered?

Is it sufficient?– Coverage standards and minimum actuarial value

Is it affordable? – Premiums not more than 9.5% of W-2 Box 1

Key considerations Key considerations– Does employee enroll in coverage through a state exchange (impact may vary if

enrolled in a federal exchange)

Is the employee receiving subsidized Exchange coverage?– Is the employee receiving subsidized Exchange coverage?


Employer Mandates - Pay or Play?

IRS Shared Responsibility Assessment A monthly “penalty” for large employers who:

Either don’t offer coverage− Either don t offer coverage − Whose employees would have to pay over 9.5% of their W-2 income for coverage− If any “full time” employees instead receive subsidized Exchange coverage

No FT employees receive credits for Exchange coverage

One or more FT employees receive credits for Exchange coverage

No FT employees receive credits for Exchange coverage

One or more FT employees receive credits for Exchange coverage

Does Not Offer Coverage Offers Health CoverageDoes Not Offer Coverage Offers Health Coverage

g g g g g g

No penalty • # of FT employees (minus 30) x $2,000 annually ($166.67/month)

No penalty Lesser of :

• # of FT employees (minus 30) x $2,000 annually, or

•# of FT employees who received Exchange subsidies x $3,000 annually.

• ($250/month/EE)



6. Are you considering moving more employees to part-time status (below 30 hours per week)?

Yes

No

7. Do you plan on offering coverage ONLY through a state or federal exchange once that option is available?

Yes

No

Will depend on the quality of the Exchanges

Not sureNot sure


Employees May Qualify For Federal Subsidies At Fairly High Income Levels

Part-Time Eligibility Employees Who Work 30 Hrs or More Per Wk - 130 hrs of work in a calendar month

• Employers Must Make Coverage Available• Failure will result in a penalty for each employee if any ONE employee receives subsidized coverage• Failure will result in a penalty for each employee if any ONE employee receives subsidized coverage

through an exchange• Seasonal employees can possibly be excluded by using the look-back/stability period safe harbor

Income Levels For 400% Of FPL (Indexed For Inflation)

No. Persons In FamilyFederal Poverty Level: 2012

48 Contiguous States 48 Contiguous States/DC1 $11,170 $44,6802 $15 130 $60 5202 $15,130 $60,5203 $19,090 $76,3604 $23,050 $92,2005 $27,010 $108,0406 $30,970 $123,880

Employers will need an integrated solution addressing Benefits-TLM-Payroll

$ , $ ,7 $34,930 $139,7208 $38,890 $155,560

Source: Federal Register 4200,January 23, 2009, http://aspe.hhs.gov/poverty/12poverty.shtml

p y g g y

Median Household Income In The U.S. was $49,445 In 2010U.S. Census Bureau – http://www.census.gov/prod/2011pubs/p60-239.pdfU.S. Census Bureau – http://www.census.gov/newsroom/releases/archives/income_wealth/cb11-157.html


Maximum Premium Payment Under ACA(For The 48 Contiguous States and D.C.)

1 2 3 4$11,170 $15,130 $19,090 $23,050

100% 2.00% $223 $303 $382 $461133% 2 00% $297 $402 $508 $613

Maximum Premium As % Of Income

(2014)Percent of Federal

Poverty LevelMaximum Amount Of Annual Premium By Family Size

FPL in 2012

133% 2.00% $297 $402 $508 $613133.01% 3.00% $446 $604 $762 $920

150% 4.00% $670 $908 $1,145 $1,383200% 6.30% $1,407 $1,906 $2,405 $2,904250% 8.05% $2,248 $3,045 $3,842 $4,639300% 9.50% $3,183 $4,312 $5,441 $6,569350% 9.50% $3,714 $5,031 $6,347 $7,664400% 9.50% $4,245 $5,749 $7,254 $8,759

1 2 3 4Maximum Amount Of Monthly Premium By Family SizePercent of Federal

Poverty Level

Maximum Premium As % Of Income

(2014) 1 2 3 4$11,170 $15,130 $19,090 $23,050

100% 2.00% $19 $25 $32 $38133% 2.00% $25 $34 $42 $51

133.01% 3.00% $37 $50 $63 $77150% 4.00% $56 $76 $95 $115

FPL in 2012Poverty Level (2014)

200% 6.30% $117 $159 $200 $242250% 8.05% $187 $254 $320 $387300% 9.50% $265 $359 $453 $547350% 9.50% $310 $419 $529 $639400% 9.50% $354 $479 $605 $730

Source: CRS computation based on “Annual Update of the HHS Poverty Guidelines,” 74 Federal Register 4200,January 23, 2009, http://aspe.hhs.gov/poverty/09fedreg.pdf, and PPACA, for the second-least-expensive silver planavailable to eligible individuals. If individuals choose more expensive plans, they would be responsible foradditional premiums.

47 Note: Premium payment cannot exceed the actual cost of a plan© ADP, Inc. 2012. All Rights Reserved.

Determining Full-Time Status

Two Basic Choices

Real-time calculation

Look-back approach

Real-time can result in employees moving into and out of benefit eligibility on a Real-time can result in employees moving into and out of benefit eligibility on a monthly basis

Will result in significant COBRA activity

Look-back minimizes this issue

Requires time tracking by calendar month beginning in 2013


Real-Time Example

J F M A M J J A S O N DJ F M A M J J A S O N DAverage Hours Worked 31 29 29 32 28 27 30 30 28 30 28 28Attains F-T Status Y Y Y YEnrollment Period

Coverage PeriodCOBRA Notices SentSent

49 © Copyright 2012 ADP, Inc

Measurement Periods with Administrative Periods

Look-Back Measurement Period Stability Coverage Period

2012 2013 2014

3 Months 6 MonthsO N D J F M A M J J A S O N D J F M A M J J A S O N D

6 Months 6 Months

2012 2013 2014

O N D J F M A M J J A S O N D J F M A M J J A S O N D

2012 2013 2014


9 Months 9 Months

2012 2013 2014


12 Months 12 Months


ADP’s Dynamic Workforce ModelHCM Integration Is Critical

Service Systems

Compliance Practices


Shared Responsibility Requirements Driving Demand For HCM Integration

On average, survey respondents indicated that part-time employees comprise

–18% of labor force for midsized employers

ApplicantMgt W-2

PayrollAdmin &

Call CenterHours

Worked Gross To Net

p y– 20% of labor force for large employers

Portal

TimeBenefitsEnrollmentMaterials

Decision SupportT l

Time

EarningsTaxFilingsHR/PR

Timeate a s

EligibilityDetermination

Open & AutoEnrollment

Tools

BenefitsAdmin &

Call Center

Collection

Time AuditTools

MobileTechScheduling

Licenses

CarrierFiles

Disperse-ments

LicensesCertificates

ACAPenalty

Estimation

COBRADirect

Bill

It is no longer just a Benefits event.

52

What if a part-time employee works more 130 hours in a month?


ADP Integrated Solution:Shared Responsibility Requirement Under ACA

Automate beyond core payroll and benefits to achieve results in order to provide a seamlessly integrated solution Workforce management Workforce management

– Notices sent to managers as employees approach 30 hours in any week

– Ability of managers to see scheduled hours for all employees in order to manage hours

Employer

p y gassigned in conjunction with liability for health care costs

Database of record– Payroll tracks actual hours worked

P ll d t t d t i t b fit

Managing Shared Responsibility Requirements

Employer Mandates

Supported By Integrated HCM

– Payroll send automated trigger to benefit administration system when employee exceeds 130 hours per month

Benefits administration– Employee eligibility calculation is triggeredp oyee e g b ty ca cu at o s t gge ed– Appropriate look-back and coverage period

rules are applied– Employee is notified of eligibility – avoiding

penalty R ti d ili ti

5353

Reporting and reconciliation– Federal and state reporting– Reconciliation with penalty assessments


Managing Shared Responsibility Requirements


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Documents

Adp Affordable Care Act 112812 Final[1]