PPACA Complex Issues and Advance Topics II
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Transcript of PPACA Complex Issues and Advance Topics II
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Webcast Overview
Determining Affordability and Minimum
Value
Controlled Group Rules
Applicability of the
Employer Mandate
Applicability of the Employer Mandate
• Pay or play• Applies to “applicable large employers” with 50 or more
full-time employees (including full-time equivalent employees)
• To determine “applicable large employer” status, an employer must follow the four steps on the next slide
STEP 1: Count the number of “full-time” employees (including seasonal employees) who work on average 30 hours per week per month.
STEP 2: Calculate the number of full-time equivalent employees by aggregating the number of hours worked by all non-full-time employees (including seasonal employees) and dividing by 120.
STEP 3: Add the number of “full-time” employees and full-time equivalents calculated in steps (1) and (2) for each of the 12 months in the preceding calendar year, and
STEP 4: Add the monthly totals and divide by 12. If the average exceeds 50 full-time equivalents, the employer must also determine whether the seasonal employee exception applies.
Seasonal Employee Exemption
The seasonal employee exemption exists for employers whose workforce exceeds 50 full-time employees for no more than 120 days or four calendar months during a calendar year. That is if the employees in excess of 50 employed during that period were seasonal employees. The four calendar months do not need to be consecutive.
Controlled Group Rules• Aggregation of employees when multiple employers are
commonly owned• Sections 414(b) and 414(c) of the Internal Revenue Code• Types of controlled group relationships:
o Parent-subsidiaryo Brother-sistero Combination
Parent-Subsidiary Controlled Groups• One or more chains of corporations are connected through stock ownership with a
common parent corporation, ando 80% of the stock of each corporation (except the common parent) is owned by one or
more corporations in the group, and
o The parent corporation owns 80% of at least one other corporation
EXAMPLE: • Corporation A owns:
o 90% of Corporation B’s stock,
o 80% of Corporation C’s stock, and
o 65% of Corporation D’s stock
• Unrelated persons own the remaining percentages of the stock not owned by
Corporation A
• A group of two or more corporations, in which five or fewer common
owners own directly or indirectly a controlling interest of each group and have effective controlo Controlling interest: 80% or more of the stock of each corporation,
but only if such common owners own stock in each corporationo Effective control: More than 50% of the stock of each corporation, but
only to the extent such stock ownership is identical with respect to such corporation
Brother-Sister Controlled Groups
EXAMPLE: Brother-Sister Controlled Groups
Shareholder Corp. A Corp. B Identical Ownership
C 80% 20% 20%
D 10% 50% 10%
E 5% 15% 5%
F 5% 15% 5%
TOTAL 100% 100% 100%
• Three or more organizations that are organized as follows:
o Each organization is a member of either a parent-subsidiary or brother-sister group, and
o At least one corporation is the common parent of a parent-subsidiary, and is also a member of a brother-sister group
EXAMPLE: • A is an individual owning:
o 80% in Partnership Y, ando 90% in Corporation Z
• Partnership Y owns 85% of Corporation X
Combined Controlled Groups
• An applicable large employer may be subject to a tax/penalty if an employee obtains coverage through a state health benefits exchange and receives a federal premium subsidy because:o The employer does not offer its full-time employees (and their
dependents) an opportunity to enroll in coverage, oro The coverage is unaffordable or does not provide the requisite level of
minimum value
Determining Affordability and Minimum Value
Affordability• 9.5% of employee’s household income:
o Form W-2 safe harboro Rate of pay safe harboro Federal poverty line safe harbor
Minimum Value Calculator • Released by IRS and HHS • Determines if plan covers at least 60% of total allowed costs
Determining Affordability and Minimum Value
• (Fully state-based) 17 states
plus DC• (Federally-facilitated) 26 states• (State-federal hybrid) 7 states• Varying levels of regulation• Subsidies
o Low- and moderate-income consumers
o Coverage is unaffordable or does not provide minimum value
o Exchanges will determine eligibility for premium tax credits
Exchanges
Source: National Conference of State Legislatures, Federal Health Reform: State Legislative Tracking Database; Politico.com; Commonwealth Fund analysis.
• The Department of Labor has delayed rulemaking on automatic enrollment.
• In Technical Release 2012-01, the department stated its intent to complete this rulemaking by 2014.
Automatic Enrollment
For additional Health Care Reform updates, please monitor:
• www.benefitmall.com• www.healthcareexchange.co
m• www.compupay.com