COMPLIANCE UPDATE FOR EMPLOYERS IOWA LEAGUE OF CITIES 2014 ANNUAL CONFERENCE September 2014.

COMPL IANCE UPDATE FOR EMPLOYERSI O WA L E A G U E O F C I T I E S 2 0 1 4 A N N U A L C O N F E R E N C E

S e p t e m b e r 2 0 1 4

E M P L O Y E E B E N E F I T S

• Short-Term Issues- ACA Employer Responsibilities: Small vs. Large- ACA Fees- S.H.O.P. Exchange- Employer Reporting

• Longer-Term Issues- Employer Strategies- Audits

TOPICS


• No employer coverage requirements

• No employercontribution requirements

• No employer penalties

SMALL EMPLOYER RESPONSIBIL IT IES


•Calendar year plans: January 1• 2015 for employers with 100+• 2016 for employers with 50+

• “Fiscal year” plans:

Employer and employees can

avoid assessments until

the beginning of the plan year

LARGE EMPLOYER RESPONSIBIL ITYEFFECTIVE DATE


• Full-time common law employees who have

satisfied the employer’s waiting period- Full time definition: average 30 hours or more per week during a month

• Special rules for variable-hour and seasonal employees (Lookback Safeharbor)

- Common law does not include leased employees

and

• The dependent children under age 26 of such employees

• Coverage for spouses, step children and foster children not required

LARGE EMPLOYER RESPONSIBIL ITYMUST OFFER COVERAGE TO


• Assessments likely apply unless an employer offers a plan:

1) that has “minimum value”

provides benefits for 60% of expected medical expenses

and

2) is “affordable”employee contribution for self-only coverage does not exceed 9.56% of W2 earnings (as of 1/1/15)

LARGE EMPLOYER RESPONSIBIL ITYASSESSMENTS


• Plan must be offered to:- 70% of eligible Full Time employees for 2015 plan year- 95% for 2016 plan year

• Assessment does not apply

to part time employees

• Assessment is not tax deductible

LARGE EMPLOYER RESPONSIBIL ITY CALCULATION OF ASSESSMENTS


Pathologists yelled, “Over my dead body!”

while the Pediatricians said “Oh, grow up!”

THE MEDICAL PROFESSION WEIGHS IN ON THE ACA


Name Who PaysProjected Costs

2014 2015 2016

PCORI FeeInsured Plan:

CarrierSelf-Insured:

Plan/Employer

$2.00 per member per year



Transitional Reinsurance

Fee

Insured Plan: Carrier

Self-Insured: Plan/Employer

$5.25 per member per month

($63 per year)


($44 per year)


($22 per year)

Health Insurer Fee

Insured Plan: Carrier

Self-Insured: N/A

$9 per member per month

($108 per year)

$12.75 per member per month($153 per year)

$16 per member per month

($192 per year)

ACA TAXES AND FEES


• Applies to enrollment in major medical coverage- Does not apply to HRAs or self-insured component of Partial Self-Funding arrangements- Does not apply to excepted benefits (Dental, Vision, FSAs, etc.)

• Fee based on average enrollment January through September- Plan can choose from several counting methods

• Carriers and Self-Insured plans report fee data to IRS by September 15 th

- Via www.pay.gov- Self-insured plans need to register

• Payment must be made by January 15th through pay.gov

- Payment can be split into two parts• About 80% of total by January 15th

• Remainder by the following November 15th

- ACH is only available payment method

TRANSIT IONAL REINSURANCE FEE

http://www.pay.gov/


• Small Business Health Options Program

• 1 – 49 employees

• Minimum requirements- 70% participation- No minimum contribution requirements

• Exchange bills employer, distributes to plans

• 12-month plan year

S.H.O.P. EXCHANGES


S.H.O.P. EXCHANGES

• 2014: - Employer selects specific plan(s) to offer- Same approach as has been in use for years

• 2015: - Employer selects “metal” coverage level to offer- Employee selects from available plans in that level- May prompt use of defined contribution strategy


• Similar to State Exchanges• Will manage:- Plans offered- Consumer assistance- Eligibility and enrollment

• Premium subsidies not available• Initial target market is large employers• Minimum participation and contribution may apply

- Employer use of defined contribution strategy

• Administered/sponsored by third parties- Consultants, brokers, providers

PRIVATE EXCHANGES


Anesthesiologists thought the whole idea was a gas,

while the Radiologists could see right through it.



• Section 6055 •Compliance with individual mandate•Verify that individual has necessary coverage

- Section 6056•Compliance with Large Employer Responsibility•Verify that employer is offering affordable,

minimum value coverage to full-time employees

ACA REPORTING


• Section 6055• Who reports is based on type of coverage

Fully insured employer plan: Insurance company Self-insured employer plan: Employer/Plan Sponsor

• Reported to IRS: Insurer/plan sponsor name, address and EIN Whether coverage was minimum value and/or affordable Name, address and SSN/DOB of each participating member The months each participant was enrolled in plan Total number of employees by calendar month Controlled/affiliated service group details

ACA REPORTING


• Section 6056• If unable to verify coverage is minimum value and affordable,

used to calculate employer penalty

• Will also help determine if an employee is eligible for subsidy

• Reported to IRS: Insurer/plan sponsor name, address and EIN Whether coverage was minimum value and/or affordable Name, address and SSN/DOB of each full time employee Number of months each employee was enrolled in employer plan Total number of full time employees by calendar month Controlled/affiliated service group details Employee’s share of cost of self-only coverage for least expensive minimum value

plan offered

ACA REPORTING


• Additional information reporting to individual employees:

- By each insurer and self-insured employer (6055)• All the information reported to the IRS

regarding the participating employee

- By each large employer for each employee (6056)• All employer-level information reported to the IRS• All the information reported to the IRS

regarding the employee

ACA REPORTING


• Reporting Deadlines- Generally follow existing W-2 reporting requirements

• 2014 tax year no reporting requirements IRS will accept optional reporting

• Subsequent tax years 1/31 to employees 2/28 to IRS if paper filed 3/31 if filed electronically

ACA EMPLOYER REPORTING


• Plan’s unique identification number for all HIPAA-covered transactions• Required for all “major medical” health plans• HPIDs obtained by:

- Insurance carriers for fully insured plans- Employer for self-insured plans

• Application process:- Register on CMS portal- Register on Health Plan and Other Entity Enumeration System (HPOES)

• Deadline:- November 5, 2014 for plans with >$5 million annual paid claims- November 5, 2015 for all other plans

HEALTH PLAN IDENTIF IER (HPID)


The Podiatrists thought it was a step forward,

while the Ophthalmologists considered the idea shortsighted.



2015• Non-discrimination rules expected to apply to fully insured plans• Auto Enroll 200+

2016• S.H.O.P. Exchange can be opened to employers with < 100 employees

2017• States can elect to open exchanges to all size employers

2018• “Cadillac” tax- Cost thresholds: $10,200 Single / $27,500 Family

ADDIT IONAL ACA PROVISIONS


• Spousal surcharge or carve-out

• Managing hours to below 30 per week

• “Race to the bottom”- Offer only bare minimum plans- Facilitate employee-paid supplemental benefits

• Payroll deductions as flat percentage of earnings

EMERGING EMPLOYER STRATEGIES THAT CAN DIRECTLY IMPACT EMPLOYEES


• Employer contributes a fixed amount toward benefits and allows each employee to select from a menu of options

• Original concept behind Section 125 cafeteria plans (1978)

• Can be used as cost/risk transfer from employer to employee

• Requires each employee to:- get informed - make the choice that best fits their needs- live with the consequences of their decision

DEFINED CONTRIBUTION STRATEGY


• Skinny networks- Most popular plans on Marketplace/Exchange

• Multi-tier networks- Based on quality and/or cost

• Accountable Care Organizations (ACOs)- “Medical home” concept- HMOs in drag

RETURN TO “OLD SCHOOL” MANAGED CARE


The Allergists were in favor of scratching it,

but the Dermatologists advised not to make any rash moves.



• Removal of $2,000/$4,000 deductible cap on individual and Small Group plans

• Employment Service Waiting Periods- Maximum 90 calendar days- 1,200 cumulative hours of service- Proposed 1-month maximum “bona fide” orientation period

• Extension of non-ACA-compliant plans through 2016

OTHER STRATEGY ISSUES RELATED TO ACA


• Lower-cost metal tier

• Possible elimination of 2014 individual mandate tax

• Possible elimination of Employer Responsibility provisions

• Change annual enrollment period to once every 3 or 5 years- Qualifying events would still apply

OTHER POSSIBLE STRATEGY ISSUES RELATED TO ACA


• ERISA Audits- Could involve DOL and/or IRS- Employee Notifications

• Potentially 10 notices

- Privacy Practices- Business Associate Agreements- Employee Training

• DOL HIPAA Audits

• Tax preferred treatment of employee benefit plans

ISSUES NOT DIRECTLY RELATED TO ACA


In the end, the Psychiatrists won out,

leaving the entire decision up to the screwballs in Washington.



QUESTIONS?

ACA’S IMPACT ON EMPLOYERS IN 2014 AND BEYOND

Bob Mreen

TrueNorth

Compliance Solutions / Financial Analysis

319.739.1418

[email protected]

mailto:[email protected]

COMPLIANCE UPDATE FOR EMPLOYERS IOWA LEAGUE OF CITIES 2014 ANNUAL CONFERENCE September 2014.

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