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What The Patient Protection and Affordable Care Act Means for Employers
Today’s Speakers:
Nancy D. Lapera, Esq., Chair, Employee Benefits Practice Group,
Panel Moderator
Elliott B. Pollack, Esq. Health Care
George J. Kasper, Esq. Employee Benefits
Jonathan B. Orleans, Esq. Labor & Employment
Overview of the Connecticut Health Insurance Exchange
Elliott B. Pollack
April 10, 2013
Definition of a (Health Insurance) Exchange
Creates a structure for a particular slice of the health
insurance marketplace
Oriented to consumers and small businesses
Helps to compare various coverages based on:
– Insurance options
– Price
– Services
Rates to be filed this month (April, 2013)
The Theory:
Aggregation of purchasers who obtain their coverage through an
exchange will lower costs for all and will create a competitive market
for consumers and small businesses
The Connecticut Exchange:
ACA requires state exchanges to be open for
business January 1, 2014 – Connecticut is clearly on
track to do so
Open enrollment must begin in 2013 – Connecticut’s
open enrollment begins October 1, 2013. (It is
expected that future enrollment periods will be held in
Q 4 of each year)
Qualifying Individuals Receive Subsidies in the Form of Premium (income tax) Credits:
Federal subsidies are available through the
Connecticut Exchange to individuals and families
with (individual) incomes up to $46,000 and (family)
incomes up to $94,000
233,000 estimated as eligible for subsidies – not all
without EBHI
Qualifying Small Businesses Will Receive Federal Tax Credits.
Must offer employees insurance coverage
Must pay for half the costs
Wages below $50,000
Businesses - continued
Bronze – 60% of actuarial value
Silver – 70% of actuarial value
Gold – 80% of actuarial value
Platinum – 90% of actuarial value
Actuarial value = estimate of portion of enrollees’
anticipated health care costs which will be covered by
the particular plan after credits/subsidies
Contact Information
Elliott B. Pollack, Esq.
90 State House Square
Hartford, Connecticut 06103
(860) 424-4340
(860) 424-4370
What PPACA Means for Employers
George J Kasper
April 10, 2013
What PPACA Means for Employers
Brief Overview of What is Ahead
Employer Focus Now
Planning for 2014
Taxes
Looking Ahead to 2014
Employer Mandate
– “Large employers” must offer “minimum essential coverage” to full-time
employees or pay a penalty
Insurance Exchanges
– State or federal marketplaces (exchanges) where individuals and small
employers may purchase health coverage
Small Business Tax Credit
– Maximum tax credit increased to 50% (35% for tax-exempt employees)
in 2014
Looking Ahead to 2014
Medicaid Expansion
– States may expand Medicaid coverage up to 133% of the federal
poverty level
Plan Requirements
Individual Mandate
– Most U.S. citizens and legal residents generally must obtain health
coverage or pay a penalty (tax)
Employer Focus Now
Compliance for 2013
Compliance-required effective 2014
Evaluate which course to take in 2014
2013 Compliance Checklist
Provide Summaries of Benefits and Coverage (SBC) when
required
Provide W-2s that report the value of health coverage, if applicable
Apply $2,500 limit to employee salary reduction contribution to
health flexible spending arrangements (Health FSA)
Complete handling of 2012 medical loss rebates (MLR) rebates
and prepare for any in 2013
Prepare for additional Medicare tax and new Medicare tax.
Determine if grandfathered status continues in 2013 (2014)
Determine whether contraceptive coverage complies with ACA
2013 Compliance Checklist(continued)
Provide notice to employees about upcoming exchanges
Confirm that claims and appeals process for all group health plans
is fully compliant
Cease employee deduction in 2013 for retiree medical benefit cost
reimbursement to employers under the Medicare Part D subsidy
Adopt necessary plan amendments for 2013 (e.g., to update
covered preventive services)
Planning for 2014
Consider changes in benefits and coverage for 2014
Deal with nondiscrimination rules for fully insured group health
plans and possible changes to the self-insured plan
nondiscrimination rules (if guidance is issued)
State exchanges and the federal exchange become operational for
small employers and individuals [SHOP delayed until 2015 . . . ]
Plans that cover more than 200 full-time employees must begin
automatic enrollment, once guidance is issued
Plans cannot apply a waiting period longer than 90 days
Planning for 2014
New federal benefit mandates apply to small employer group
health plans subject to ERISA for the first time
Exceptions to the rule prohibiting annual limits in a plan subject to
ACA (not grandfathered) will no longer apply
Employers who employ 50 or more full-time and full-time
equivalent employees become subject to the new “shared
responsibility” payments if they offer no group health plan or their
plan
– Is not “affordable”
– Does not provide “minimum value”, or
– Does not provide “minimum essential coverage”
Planning for 2014– Strategic Considerations
Applicable Large Employers - Will you offer group health plan
coverage in 2014?
Review your employee census data and evaluate:
(i) who during 2013 will be considered a full-time employee for
2014
(ii) how many full-time equivalent employees (FTEs) there are in
2013; and
(iii) the preferred “look-back period”, “stability period”, and
“administrative period” to use in 2014, if they are needed
If over 50 full-time employees, estimate potential penalty
- Failure of offer minimum essential coverage
- Failure to offer a plan that is “affordable” or provides “minimum value”
Planning for 2014– Strategic Considerations
Small Employers
Employers with less than 50 full-time equivalent employees are not
subject to the penalty under the Act
May be eligible for incentives to install a group health plan and
wellness program if one is not currently offered
Employers with fewer than 25 full-time equivalent employees may
be eligible for premium tax credit
Employers with up to 100 employees may purchase coverage from
the state exchange [delayed to 2015 ]
Planning for 2014– Strategic Considerations
Focus on the three variables employers can control
– plan eligibility
– plan benefits
– plan contributions
PPACA regulates these three components, but provides some
flexibility for employers to customize their plan
Source for obtaining coverage
– State exchanges and federal exchange
– Private exchange
– Broker
– Other
Planning for 2014 – Strategic Considerations
Additional factors for employers to consider before dropping group
health plan and/or purchasing coverage through the state
exchange:
• Tax advantages
• Reporting burdens
• Recruiting retention
• Compliance burden
• Costs & Flexibility
• Other Financial Implications
• Plan Design
What to Watch For
Legislative and regulatory developments
Changes in employee census and employee status
Organization and efficiencies (or lack thereof) of state exchange
and federal exchanges
Evolution and competitiveness of private exchanges
2012 – Patient Centered Outcomes Research Institute Tax
- Paid by issuer of policy or plan sponsor
2012 – Reporting of Employer Provided Health Care Value on
Form W-2 (Box 12, Code DD)
- Employers filing at least 250 Form W-2 for the year
2013 – Additional Medicare Tax Withholding
- W/H additional 0.9% on wages in excess
$200,000 for all employees
Health Reform Related Taxes
2013 –Temporary Reinsurance Fee on Health Insurance Providers
– $63 per person
– Applied to insurers and self-insured plan sponsors
2014 – Employer Shared Responsibility Tax – but dependent upon
employment in 2013
- The employer mandate to “play or pay”
TAXES FOR 2012, 2013 AND 2014
Cadillac Tax Imposed on Group Health Plan Coverage with Value
in Excess of:
– $10,200 for Single; $27,500 for other than Single coverage (amounts
to be indexed)
– 40% tax on excess calculated by month
– Tax is paid by coverage provider
TAXES 2018
Contact Information
George J. Kasper, Esq.
850 Main Street
Bridgeport, CT 06604
203.330.2119
THE AFFORDABLE CARE ACT:
A Few Thoughts from an Employment Lawyer
Jonathan B. Orleans
April 10, 2013
PLAY OR PAY?
Not always an obvious choice
– Are you subject to the employer penalties?
– What would it cost you?
– Impact of not playing on employee recruitment/retention
PLAY OR PAY?
Who is an employee?
Who is a full-time employee?
Determining FTE equivalent positions
Joint employers
Employee Recruitment & Retention
Studies predict that PPACA will not significantly affect the total
number of employees covered by employer-sponsored insurance
There will be changes in the distribution of ESI
ESI is likely to remain a significant factor in the recruitment and
retention of higher-skill, highly paid employees
PPACA and the Collectively Bargained Workplace
Potentially significant increase in cost of low-wage labor arising
from necessary improvements to plans
Multi-employer plans
Litigation Risk
No “new” private causes of action
We may see FLSA, ERISA, and Qui Tam suits related to PPACA
We will see retaliation (“whistleblower”) claims
Whistleblower Claims
Employer may not retaliate against an employee who:
Receives a tax credit or cost-sharing reduction associated with obtaining
coverage through an exchange (if employer doesn’t provide qualifying
coverage)
Provides, or is about to provide, to the employer or a government agency,
information relating to any violation of Title I of the Act
Testifies or is about to testify concerning a violation
Assists or participates in the investigation of a violation
Objects to or refuses to participate in any activity, policy, practice, or task
that the employee reasonably believes violates the law.
Whistleblower Claims
An employee who believes he or she has been retaliated against
has 180 days to complain to OSHA, which will investigate the
complaint and determine relief, if any
Employer may appeal adverse result to Court of Appeals
Employee has option to pull complaint from OSHA and go to
district court
Contact Information
Jonathan B. Orleans, Esq.
850 Main Street
Bridgeport, CT 06601
203.330.2129
DISCLAIMER
This presentation is intended for educational and informational
purposes only and does not constitute legal advice. No attorney-
client relationship has been created. Readers are advised to seek
appropriate professional consultation before acting on any matters in
this presentation.
Contact Information
Nancy D. Lapera, Esq.
850 Main Street
Bridgeport, CT 06601
203.330.2107
George J. Kasper, Esq.
850 Main Street
Bridgeport, CT 06601
203.330.2119
Elliott B. Pollack, Esq.
90 State House Square
Hartford, CT 06103
860.424.4340
Jonathan B. Orleans, Esq.
850 Main Street
Bridgeport, CT 06601
203.330.2129
BRIDGEPORT | HARTFORD | STAMFORD | WATERBURY | WHITE PLAINS
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