DRIVING GROWTH in CHALLENGING TIMES - …€“ Employer sets plan options and line of coverage ... Firehouse Subs Company ... DRIVING GROWTH in CHALLENGING TIMES

February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA

DRIVING GROWTH in CHALLENGING TIMES



The Health Care Law and Your Business: What You Need to Know

Concurrent SessionSunday, February 23, 2014

2:45‐4:15pm



Speakers

Jay PerronVP, Government Relations

IFA

Don FoxCEO

Firehouse of America LLC

David BarrPresident

PMTD Restaurants

Andria HerrPresident, Orlando

Hylant Group



Legislative and Regulatory Update

Jay PerronVP, Government Relations & Public Policy

International Franchise Association



Legislative and Regulatory Issues

• 2015 Employer Mandate Delay• 40 Hours Is Full Time• “Full‐time equivalent”• Reporting Requirements• 2015 Safe Harbors



Employer Mandate Delay

• Mandate delayed until 2016 for employers with 50‐99 full‐time equivalent employees (FTE).

• Employers with 100+ FTE only required to cover 70 percent of full‐time employees (up to 95 percent in 2016 and beyond).



40 Hours Is Full Time

• Legislation in Congress to re‐define “full‐time employee” as one working at least 40 hours per week:– H.R. 2575, Save American Workers Act– H.R. 2988 / S. 1188, Forty Hours Is Full Time Act



40 Hours Is Full Time

• Status – Save American Workers Act– Committee hearing held January 28– Vote held February 4 – passed 24‐13– Expected to be on House floor soon



Reporting Requirements

• Final Employer Reporting Requirements expected from Treasury Department any day.

• IFA advocates for streamlining reporting process into a single report to IRS.

• Legislative changes possible.



2015 Safe Harbor Estimates

• Large employers under ACA face tax penalties if the coverage they provide is not “affordable”.

• “Safe harbors” help employers determine plan affordability and be safe from penalties .

• Standards updated annually based on changes to Federal Poverty Guidelines, and vary by state due to Medicaid.



2015 Safe Harbor Guidelines



2015 Safe Harbor Guidelines



What’s Next?

• Final Reporting Requirements• Anti‐discrimination rules• Employer Mandate takes effect in 2016 for employers with 50‐99 full‐time employees

• Legislative Fixes?• Impact of new economic data?



Jay [email protected]

202‐662‐0797



Approaches to Plan Design and the Small Employer

Past

Present

Future

Presented By: Andria Herr President, Hylant Orlando

Operations



Small Group Plans

Considerations for Employers with plans that renewed in 2013



2013 Renewals

• Effective Date Changes– Short Plan Year – Renewal no longer consistent with other lines of coverage

– Dodged the bullet….for now

• How will your benefit plan change?– Depends on your census and your plan design



Small Group plans

Considerations for Employers with plans renewing in 2014



2014 Renewals & Small Employers

• Almost everyone is considering sending employees to the Government Exchange

Pros: Employers are no longer in the business of providing benefits

Cons: Employees may not receive comparable benefits in the Exchange

–ALMOST NO ONE IS REALLY DOING IT.




• So you Renewed and your plan is subject to Benefit Mandates

Pros: Compliant with ACA Provisions – ahead of the curve

Cons: Carriers may not provide as expected− ID Card Issues− Prescription Plan Issues− Claims payment /coding issues− Plan Document issues




• New approach – Private Exchanges– Employer sets annual contribution amount– Employer sets plan options and line of coverage options

– Employee uses the allotment to buy coverage that best meets their needs

– Employer to some degree avoids trend and employees knows the true cost of coverage



ACA & Private ExchangesPublic vs. Private• Public Exchanges are ACA‐driven – Private Exchanges are NOT part of

ACA• Original Intent of Public Exchanges

− Serve as Marketplace− Increase Competition− Facilitate Subsidy Distribution

• Private Exchanges are Rooted in Capitalism & Free Markets− Some are developed by technology firms (Liazon – Bright Choices)− Carriers are developing their own (Aetna has 2 Private Exchanges: ‐ Bright

Choices and Aetna proprietary)

• Government subsidies not available to use in a Private Exchange

MillsonJames, LLC ‐ Confidential 22



Key Requirements for a Private Exchange

Benefits Administration

Defined Contribution

Billing

Decision Support

Call Center



Reducing Cost of Health Care via Private Exchanges

• Defined Contribution Level = Predictable Employer Cost– False Panacea?

• Educated Consumer– Increased Cost Transparency– Available Tools for Plan Selection & Utilization

• Engaged Consumer – Leading to Healthier Choices, Post‐purchase– Having Skin in the Game (HSAs, e.g.)

• Consumerism!

MillsonJames, LLC ‐ Confidential 24



Billion Dollar Question: Will Private Exchanges Address the Root or Merely

the Symptoms?Symptom

Symptom

Symptom

Symptom

Root Cause

My Opinion... Unlikely by themselves.

However, it begins to get at the root cause of consumerism & healthy decisions and behavior



Small Group Plans

Considerations for Employers in 2015



What to Expect in 2015

• Next Round – Accountable Care Organizations (ACO)

– Hold on to your Network Sally!!!!!

– What’s a formulary???

– Pick your Plan (i.e.22 plan designs)

– Pick you Network (i.e. 3 different networks)

– 4 different formularies.



Selecting A Consultant

What to Consider…



Selecting a ConsultantEvaluate The Old “Relationship”

Does the firm have enough depth to keep up with the research?

Does YOUR AGENT keep up with the data?

Do they have the relationships with the carriers that will give you broad access to carriers?

Can they make the complex seem simple?



Contact Information:

Andria Herr407‐740‐5550

[email protected]

Thank You!



The Affordable Care Act:Making Lemonade out of Lemons

Don FoxCEO, Firehouse of America LLC



Establishing a Budget

• Variables:– Cost of a qualifying policy– Employee portion of the premium– Number of full time employees– % of full time employees who will accept




• Employer portion of the premium– Minimum safe harbor for employee portion:

–$7.25 X 30 hours X 9.5% = – $20.66 per week, 1,074 per year




• Number of full time employees– Determined by 2014 payroll history

• % of full time employees who will accept– ?????



So What Happened at Firehouse?



Firehouse Subs Company Restaurant Example

• $791K AUV• $89K EBITDA• 17 employees

– 1 manager– 16 hourly

• 3 full time• 13 part time



Firehouse Policy Highlights

• Premium ‐ $5,138– Employee portion = 20% ($1,028 annually; $86 monthly)

• Deductible $4K• Out of pocket max: $6250 (network) $10K (out of network)

• Co Pay: $40 (Primary) $80 (specialist) $100 (urgent) $200 (emergency)



The Result

• Silver Plan offered to full time Firehouse employees

• Firehouse pays 80% of premium • 65% of employees accepted (two per restaurant)

• $8K expense per location; 3% sales increase needed to recoup expense



What to do next?

• Determine your status• Decide whether to offer health insurance or not

• Design scheduling protocols that support your decision



Avoid Minefields

• Employees drifting above and below 30 hours, creating unbudgeted risk

• Cutting employees hours due to poor planning

• Lawsuits and partial unemployment claims due to cutting hours



Thank You!

CEO, Firehouse of America, LLC

Twitter: @DonMFox

Email: [email protected]



Affordable Care Act

Presented by ‐

David BarrOne Lonely Operator Trying to Make Sense Out of This



Affordable Care Act Defined by a Lay PersonThe ACA requires all large employers to offer affordable medical insurance that provides minimum essential benefits at a minimum valueto its full‐time employees, and if the employer does not then it will be subject to penalties.

Key Definitions:1. Large = greater than 50 full time equivalents2. Affordable = does not cost the employee more than 9.5% of their family income (safe haven 9.5%

of employee W‐2)3. Minimum Essential Benefits = addresses what must be covered at a minimum within a plan4. Minimum Value = 60% actuarial value (or covers 60% of expected medical costs)5. Full‐time employee = works 30 hours a week or more (on average) during the measurement

period (exceptions for seasonal workforce). Measurement period provides safe harbor during stability period.

6. Penalties: 1) If no plan is offered to employees then $2,000 for every fulltime worker with no penalty for the first 30 full time employees; or 2) $3,000 per full time employee that seeks insurance from the exchanges because the plan offered by the employer is not affordable.



PMTD Restaurants LLC – 23 KFC/Taco Bells/KT’sA franchisee owner/operator of restaurants in small

towns of Alabama and Georgia.

A Case Study



PMTD Restaurants LLC – 23 KFC/Taco Bells/KT’sA franchisee owner/operator of restaurants in

small towns of Alabama and Georgia.

TotalCurrently EligiblePre‐ACA

CurrentlyEnrolledPre‐ACA

# of active employees 412 36 30

# of full time 109 36 30

# of part‐time 303 0 0Full time employees are defined using a one year measurement period. Of the 109 full time employees, 36 are salaried and 73 are hourly.



PMTD’s Plan currently qualifies as affordable to Employees

EmployeeOnly

FamilyCoverage

Annual premium $5,028 $12,612

Paid by Employer

‐ $‐ %

$4,07381%

$4,34934%

Total $ paid by Employer $129,000

Paid by Employee $955 $8,263

PMTD’s plan will meet the affordability test (less than 9.5% of employees pay) for its employees as full time employees make at least $10,000 per year and PMTD’s

plan is at 84% actuarial value.



ACA could increase insurance cost to Employer

Total $Paid byEmployer

Currently pre‐ACA $129,000

Estimate under ACA with nochange to plan $444,000

This approx. $300,000 increase represents 1.5% of sales.

Assumption: All eligible individuals accept plan as currently designed and employer maintains same contribution.



The bigger question ‐Will employees sign‐up? They will have different choices ‐

EmployerPlan

Government Exchange

Do Nothing

30+ hours employees with household income > $16,800 (est. Medicaid threshold)

$955/yr.9.5% of Income

$4,800/yr.(Subsidized only ifemployer doesn’t offer plan at 9.5%)

2014 ‐ $120/yr.2016 ‐ $695/yr.Penalty on

taxes

30+ hours employees with household incomes < $16,800 (est. Medicaid threshold)

$955/yr.9.5% of Income

Enroll in Medicaid$0/yr.

N/A



Summary of costs and employees ‐

# ofEmploy

# of Salaried Employ

# of Hourly Employ

Total Cost

Total 412 36 376

Less: Non‐fulltime employees (303) (303)

Sub‐total of FT Employees 109 36 73 $444,000

Less: Reducing 30‐33 hour employees (1/2 of 35)

(17) (17) ($69,200)

Less: Est. Employees that do not sign‐up (10% sign‐up)

(50) (50) ($203,700)

Less: Employees On Spouse Plan

(6) (6) ($24,400)

Benefit of Employees Pay More (36 employees x $100)

($3,600)

Change in Plan design (36employees x approx. $275)

($10,000)

Ending Total 36 30 6 $133,100



As a result of planning for ACA, costs can be managed

Total $Paid byEmployer

Currently pre‐ACA $129,000

Calculated Estimate under ACA $133,100

Everyone goes into the Exchange (not tax deductible)

$158,000

Exchange is calculated as 109 employees less exemption for 30 full time employees times $2,000 per employee



Thank You!

Jay PerronVP, Government Relations

IFA

Don FoxCEO

Firehouse of America LLC

David BarrPresident

PMTD Restaurants

Andria HerrPresident, Orlando

Hylant Group



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Documents

DRIVING GROWTH in CHALLENGING TIMES - …€“ Employer sets plan options and line of coverage ... Firehouse Subs Company ... DRIVING GROWTH in CHALLENGING TIMES