ACA Year-End Announcements: New Guidance, Delays & Extensions

Significant Changes to Understand in Early 2016

PRESENTED BY

THURSDAY /// JANUARY 14 /// 2:00-2:30 P.M. EST

Andrea EsselsteinJD

Luke ClarkSenior Consultant

Group Benefits

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AGENDA

ACA Year-End Announcements

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Auto Enrollment (> 200 Employees): Repealed

Cadillac Tax: Two-Year Delay

Minimum Value: Criteria to Determine Individual Premium Tax Credits

2016 Pay or Play Penalties: Notice 2015-87

Employer Reporting Requirements Deadline Extension: Notice 2016-04

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In the News

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YEAR-END ANNOUNCEMENTS & TIMELINE

ACA UPDATES

NOVEMBER 2: Auto Enrollment Requirements (> 200 Employees) Repealed

(Bipartisan Budget Act of 2015)

DECEMBER 18: Two-Year Cadillac Tax Postponement

(Consolidated Appropriations Act of 2016)

DECEMBER 18: Minimum Value of Eligible Employer-Sponsored Plans

(Final Regulations Issued)

– Premium Tax Credit (Subsidy) Regulations

DECEMBER 28: Notice 2015-87

– 4980H Penalties

– Affordability Considerations

– Hours of Service

DECEMBER 28: Notice 2016-04

– Extension of Reporting Due Dates (IRS Code Sections 6055 & 6056)

Initial ACA

Auto Enrollment

Provisions:

Never Implemented

Auto Enrollment Requirements May

Potentially Face Legal Challenges

under HIPAA (Informed Consent)

AUTO ENROLLMENT REPEALED

Employers are STILL PERMITTED to Auto Enroll

Employees

IMPORTANT REMINDER

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INITIAL ACA PROVISION: Employers with More

than 200 Full-time Employees Must Automatically

Enroll New Full-time Employees in One of the

Employer's Health Benefit Plans

Potential Value of Auto Enrollment –

Assistance in Avoiding IRS Code 4980 Penalties

CADILLAC TAX DELAYED

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Non-Deductible, Annual 40% Excise Tax on

“High-Value” Plans

(Fully Insured & Self-funded Plans)

Tax Applies to the Plan Value in Excess of

$10,200 ($850 / month) for Single Coverage;

$27,500 ($2,292 / month) for other than Self-

Only Coverage (Family Coverage)

TAX IS TO

DISCOURAGE

“RICH” BENEFIT

PLANS WHICH,

ACCORDING TO

ADVOCATES OF

THE TAX,

CONTRIBUTE TO

OVERUSE OF

MEDICAL CARE

CADILLAC TAXOVERVIEW

CADILLAC TAX DELAYED UNTIL 2020

The Cadillac Tax is

DEDUCTIBLEFor Employers with a Marginal

Federal Income Tax Rate at the

Maximum Level of 35%, the Effective

Rate Becomes 28%

Cadillac Tax

CHANGES

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Two-Year Breathing Period

for Employers

TAX DEFERRED

NOT ELIMINATED

No Changes to the Inflation Rate

to Determine Annual

Government Thresholds:

Consumer Price Index

NOT MEDICAL TREND

Legislation Adds a Study to Analyze

AGE & GENDER

ADJUSTMENTS

Continue to Attack the Cost of Providing

Medical & RX Coverage

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DECEMBER 18, 2015

MINIMUM VALUE

ELIGIBLE EMPLOYER-SPONSORED PLANS

HEALTH INSURANCE PREMIUM TAX CREDITS

What is Minimum Value?

MINIMUM VALUE

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Criteria to Obtain Health Insurance Premium Tax

Credits (Subsidies). If > 50 Full-time Employees:

Employer-Sponsored Plans Must Pay 60% of

Covered Expenses (Cost of Benefits) to Qualify as

“Minimum Value” OR Pay Penalties

Minimum Value Changes: No Major Changes from the Interim Final Regulations

• Clarity Regarding COBRA Qualifying Events as a Result of Reduced Hours

• Coverage Considered Not Affordable if Typical COBRA Premium Charged, i.e., 102% of

the Total Monthly Premium

Plan Sponsor Next Steps: Consider Charging a COBRA Premium for

Employees Experiencing a Loss of Eligibility as a Result of a Reduction in Hours Equal to

the Same Contribution used for Active Employees

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DECEMBER 28, 2015

NOTICE 2015-874980H PENALITES, AFFORDABILTIY CONSIDERATIONS

& HOURS OF SERVICE

NOTICE 2015-87

“Pay or Play” Penalties

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Notice 2015-87

Titled: “Further Guidance on the Application of the Group Health Plan Market Reform

Provisions of the ACA to Employer-Provided Health Coverage & on Additional ACA Provisions”

INCREASED “PAY OR PLAY” PENALTIES

2015 2016

$2,000 IRC 4980H(a) “No Offer Penalty” $2,080 $2,160

$3,000 IRC 4980H(a)

“Unaffordable/Inadequate Coverage” Penalty

$3,120 $3,240

NOTICE 2015-87

Affordability Considerations

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9.5%

Affordability Safe Harbor

Currently

9.56%

Affordability Safe Harbor

Plan Years Beginning in

2015

9.66%

Affordability Safe Harbor

Plan Years Beginning in

2016

Treasury and IRS are Modifying the Regulations Pertaining to Affordability Safe

Harbors to Align the Percentages of Employees’ Wages with the Affordability

Thresholds used at the Exchanges

NO

PENALTY

NO PENALTY

No

No

No

No

Yes

Yes

Yes

Yes

Yes

Is Your Organization an Applicable LARGE Employer (ALE) under the ACA; and therefore

Subject to Employer Shared Responsibility? Does Your Organization Employ > 50 Full-Time

Equivalent Employees (2016)? FULL-TIME: Working 30 Hrs/wk; 130 Hrs/Mo on Average

Does Your Organization

Offer Qualified Coverage

to Substantially All

Full-Time Employees and

Dependents?

Common Controlled Group

Rules Apply

(Spouses are NOT

Dependents under ACA)

Does Plan Cover a Minimum Value of

at Least 60% of Covered Expenses?

Do Any Full-time Employees Pay

> 9.66% of Household Income * for the Lowest Cost

Employee-Only Coverage?Employee Subsidy Eligibility in the

Public Exchange if Household Income

< 400% of FPL AND Not Offered Qualified,

Affordable Coverage

(>9.66% HH Income & 60% of Covered Expenses)

2016 NONDEDUCTIBLE

EMPLOYER PENALTY OF

$2,160 x Total Full-Time Employees

Less 30 (80 in 2015)

($2,000 Penalty Adjusted

for Inflation in 2015 & Beyond)

2016 NONDEDUCTIBLE

EMPLOYER PENALTY OF

$3,240 x Number Full-Time Employees who

Receive a Subsidy & Purchase Coverage in

the Public Exchange

Cap = $2,080 x Total Full-Time Employees

Less 30 (Less 80 in 2015)

* Plan Affordability Safe Harbor:Employee Only W-2 Income; OR

IRS-issued Calculation for Hourly Employees; OR

Federal Poverty Level (FPL)

Qualifying Full-time Employees

May Receive a Subsidy in the

Public Exchange if Household

Income < 400% of the Federal

Poverty Level (FPL)

Has At Least One Full-Time

Employee Received a Premium Tax

Credit (Subsidy) to Purchase

Coverage in the Public Exchange? Yes

EMPLOYER COVERAGE MANDATE & PENALTY EXPOSURE: “SHARED RESPONSIBILITY”

Plan Years on or after January 1, 2015: 100 or More Full-Time Employees

Plan Years on or after January 1, 2016: 50 or More Full-Time Employees

NOTICE 2015-87

HOURS OF SERVICE

Credit Must Be Given for an

Hour of Service when an Employee is Disabled

Employee is Both

Employed AND

Receiving

Short-term or

Long-term Disability

Benefits

Except When

Employee Pays

100% of Disability

Premiums with

Post-Tax Dollars

No Credit

Given When

Employee is

Receiving

Workers’

Compensation

Benefits

CLARITY FOR

DISABLED EMPLOYEES

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DECEMBER 28, 2015

NOTICE 2016-04

EXTENSION OF REPORTING REQUIREMENT DUE

DATES (IRS SECTIONS 6055 & 6056)

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EMPLOYER REPORTING REQUIREMENTS

IRS REPORTING

REQUIRED FOR

EMPLOYERS WITH 50

OR MORE FULL-TIME

EMPLOYEES

REQUIRED TO

REPORT? IRS Section 6055: Reporting information required by

insurers and small self-funded employers as to which

individuals are ENROLLED in Minimum Essential

coverage.

IRS FORM 1095-B OR Combined Form 1095-C

IRS Section 6056: Reporting information required by

ALL large employers as to whether full-time employees

(those employed for one month or more) were

OFFERED coverage and the lowest amount an

employee may pay to receive Minimum Value

coverage.

IRS FORM 1095-C

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Examples

Form 1095-B and Form 1095-C

EMPLOYER REPORTING REQUIRMENTS

Extension of Due Dates Under §6055 and §6056

FORM ORIGINAL

DUE DATE

EXTENDED

DUE DATE

1095 (B or C ) – To Employees February 1, 2016 March 31, 2016

1094 (B or C) AND Individual Form 1095s

-- To IRS if Filing by Paper February 29, 2016 May 31, 2016

1094 (B or C) AND Individual Form 1095s

-- To IRS if Filing Electronically (Electronic

Filing Required if filing > 250 Form 1095s)

March 31, 2016 June 30, 2016

• Individuals Do NOT Need to Provide IRS with a Copy of Form 1095 when Filing

Individual Tax Returns

• Late Filing Penalty to Plan Sponsors of $250 Per Form Remains

2016 DISCUSSION

PRACTICAL STEPS

Understand, Quantify and Mitigate Your Ongoing ACA Risk Exposure through a

Demographic & Spousal / Dependent Eligibility Analysis

Invest in Employee Outreach & Supervisor Education ASAP as Plan Changes are

Anticipated.

Introduce New Initiatives during 2016 Communication Opportunities

Revise COBRA Notices Reflecting 2014 Guaranteed Issue Coverage for COBRA

Continuants & Pre-65 Retirees

Promote Preventive Care with Employees & Families

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Thank you for joining us!

Contact Information:

Luke Clark, Senior Benefits Consultant

lclark@oswaldcompanies.com

Andrea Esselstein, J.D.

aesselstein@oswaldcompanies.com