1©2015gunn-mowery today’s healthcare reform brian floyd, cbc, acbc – sales executive...
TRANSCRIPT
1 ©2015Gunn-Mowery
Today’s Healthcare Reform
Brian Floyd, CBC, ACBC – Sales ExecutiveGunn-Mowery, LLC
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Discussion Items
•Employer Mandate
•Employer Reporting (1094s & 1095s)
•Cadillac Tax
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Employer Mandate
Which employers are subject to the Mandate?
The Mandate only applies to “LARGE EMPLOYERS”
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Employer Mandate
Determining Large Employers
• A Large Employer is an employer with 50 or more full time + full time equivalent employees.
• Full Time = 30 hours per week
• Full Time Equivalents (“FTE”s):
• Total Monthly Hours of All Part-Timers / 120
• Full Time + FTEs = Number of Employees
• If total is greater than 50, then you are Large Employer subject to the Employer Mandate.
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EMPLOYER MANDATE
• Large Employers (greater than 50 full-time + full-time equivalent employees) must offer health coverage to full-time employees or pay a penalty.
• Final regulations have added a new “sub-category” – the “Mid-Size” for employers with 50-99 full-time + full-time equivalent employees.
• Groups qualifying as a mid-size group are still subject to same mandates as large group, however, the penalties are delayed until 2016.
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EMPLOYER MANDATE
How does a business qualifyas a “mid-sized” employer?
• Must have 50-99 FTEs between Feb. 9 – Dec. 31, 2014
• Employer cannot reduce the size of its workforce in an attempt to be labeled as a mid-sized group.
–A “bona fide” business reason for reduction may be permitted (ex: sale of a division, changes in the economic workplace, terminations for poor performance, etc.)
• Employer cannot eliminate or materially reduce the health coverage, if any, it offered as of February 9, 2014.
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EMPLOYER MANDATE
• Determining Full-Time Employees That Must Be Offered Coverage
• General Rule:
• All full-time employees (and their dependents) working at least 30 hours per week must be offered coverage.
• The final regs clarify two permissible methods to measure full-time status:
• #1: The Monthly Measurement Period
• #2: The Look-Back Measurement Period
• If an employer has variable hour employees, the Look-Back Measurement Period will most likely be the preferred choice.
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Variable Hour Employees
• Employers will need to determine whether certain employees are actually full-time employees.
• Examples: Agricultural workers, health care workers, truck drivers, retail workers, bus drivers, restaurant employees.
• Such workers may work 30+ hours one week and 15 the next
• Some workers may be full time only part of the year (beyond seasonal)
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Variable Hour Employees (cont.)
•An employer will use three (3) periods of time to determine whether a variable hour employee is a full-time employee:
•#1 The Look-Back Measurement Period
•#2 The Stability Period
•#3 The Administrative Period
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The Look-Back Measurement Period
An employer can choose any period of between three (3) and twelve (12) months to determine the average hours worked by an employee to determine if those hours average, at least, thirty (30) hours per week.
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The Stability Period
• The stability period cannot be shorter than your look-back measurement period, and must be at least six months.
• If a variable hour employee averages out to 30 or more hours per week in the look-back measurement period, then that employee will be considered full-time (thus must remain eligible for coverage) for the subsequent stability period so long as the employee remains employed.
• If a variable hour employee averages less than 30 hours per week in the look-back measurement period, then the employer will not have to offer coverage for the subsequent stability period even if the individual works more than 30 hours per week in that stability period.
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Look-Back Measurement / Stability Considerations
• Often, it will be best to extend look-back measurement periods as far as possible to reduce average hours.
WARNING
• While a longer look-back measurement period will reduce hours (thus employees requiring coverage), it will also leave the employer with a longer stability period. If anyone is caught in the “net” (averaging full-time hours), the employer will be “stuck” with offering eligibility to that individual for an equal stability period.
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Administrative Period
An employer may adopt an “administrative period”, prior to the start of the initial look-back measurement period and prior to the stability period to give the employer time to determine which of the eligible employees will be eligible for coverage and to notify and enroll employees. This total amount of time cannot exceed ninety (90) days.
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Option #1: Pay
• Refuse to offer coverage to the applicable percentage of Full-Time employees (and their dependents)
• If only one employee turns to the Exchange for coverage and receives a subsidy, then the employer will then pay a penalty amount for each full-time employee
• Penalty is equal to $2,000 per employee per year (paid monthly)
• First 30 Full-Time Employees are free
• For 2015 (only), Large Employers get their first 80 Full- Time Employees for free.
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Option #2: Play
• Large Employer must offer “affordable” and “adequate” coverage to the applicable percentage of Full time employees (and applicable dependents)
• “Affordable” = Less than 9.5% of employee’s household income
• “Adequate” = Must cover 60% of out of pocket expenses
• If plan is either not “affordable” or “adequate” AND an employee goes to the exchange and receives a subsidy, then employer must pay $3,000 for that employee.
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EMPLOYER REPORTING
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Small Group Reporting
6055 – Small Group Reporting – Individual Mandate Reporting (Groups less than 50 employees)
• Provide individuals and the IRS with information about MEC to see if the individual satisfied his or her obligation under the Individual Mandate.
Self-funded vs. Fully-insured:
• Self-funded groups will have to report
• Insurance company will have to report for fully insured-groups.
The Forms:
• Form 1094-B and 1095-B to the IRS
• Form 1095-B to the covered individuals
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1094-B Form
1094 B Form ( Transmittal Form)
Due Date - On or before February 28 (March 31 if filed electronically) of the year following the calendar year of coverage
Information Required
• Name, address, and employer identification number (EIN) of the provider
• Name and telephone number of the person to contact who is responsible for answering questions
• Total number of Forms 1095-B that are transmitted with Form 1094-B
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1095-B Form
• Due Date - on or before February 28 (March 31 if filed electronically) of the year following the calendar year of coverage
• To the “responsible individual” (primary insured, employee, former employee) on or before January 31 of the year following the calendar year in which minimum essential coverage is provided
– Statement may be provided electronically with consent
• Name and Social Security Number is required for each covered individual
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Penalties
• Unintentional failure to file = $100 per information return
• Unintentional failure to provide a payee statement = $100
• Penalties can be imposed for filing late, incomplete, or incorrect returns/statements
• The penalty for intentional failures is $250 per failure
• Worst case scenario - $3,000,000 per calendar year
• For 2016 only, the IRS will not impose penalties if an employer can prove that a failure was due to reasonable cause
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Large Group Reporting
6056 Reporting – Employer Mandate
• Provide individuals and the IRS with information about the Employer’s compliance:
• Offering MEC
• Minimum Value (Adequate / 60% AV)
• Affordability (9.56%)
The Forms:
• 1094-C and 1095-C to the IRS
• 1095-C to Full-Time Employees
All Applicable Large Employers have to report regardless of whether fully insured or self-funded!
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1094-C Form
1094 – C (Transmittal Form)• Due Date - on or before February 28 (March 31 if filed
electronically) of the year immediately following the calendar year for which the offer of coverage information is reported
• Information Required
• Four Parts:
• Applicable Large Employer Member
• Employee & family Information
• Employee - Monthly
• Other ALE Members of Controlled/Aggregated ALE Group
•Each Member of the Controlled Group must report separately
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1095-C Form
Due Date - On or before February 28 (March 31 if filed electronically) of the year immediately following the calendar year for which the offer of coverage information is reported
– An employer that files 250 or more Forms 1095-C must file electronically with the IRS
To the employee – On or before January 31 of the year following the calendar year for which the offer of coverage information is reported
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HRA reporting
• Employer that maintains a fully insured group health plan, along with an HRA, must separately report the HRA coverage. This is due to the fact that an HRA is considered a self-funded group health plan.
• If this language remains in the final instructions, it appears that small employers (under 50), with fully insured plans that maintain an HRA, will be required to issue Form 1095-Bs to all covered employees and transmit copies to the IRS on a Form 1094-B transmittal form. The insurance carriers will still be required to issue a separate set of 1095-Bs to all covered employees for the fully insured medical coverage.
These are DRAFT instructions, Final regs expected in a few weeks!!
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Summary – Reporting Timeline
REPORT DUE DATE
Section 6055 Statement to Employees (1095 B)
1/31 of each year (2/1/16)
Section 6055 Report to IRS (1094 B)
2/28 (or 3/31 if electronic)
Section 6056 Statement to Employees (1095 C)
1/31 of each year (2/1/16)
Section 6056 Statement to IRS (1094 C)
2/28 (or 3/31 if electronic)
*250 or more returns – must file electronically
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Calculation Solutions
• Contact your Broker or Benefits Advisor
• See if your payroll provider offers a system to assist
• See if you already have such a system and don’t know about it
• Check your online enrollment vendor
• Research various third party vendors
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CADILLAC TAX
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Objectives
What is it?• A 40% excise tax on the value of health insurance coverage
that exceeds a specified threshold to be effective 2018.
Objectives:• Raise revenue to offset the cost of other Health Care
Reform provisions. Estimated $80 Billion over next 10 years.
• Reduce demand for high-cost coverage by making it more expensive and thereby encouraging insurance providers and consumers to control health care costs.
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Thresholds
Single - $10,200
Family - $27,500
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Threshold Adjustments
Potential Pre-2018 Adjustment
• There is a potential one-time adjustment for 2018, which will be made only if the actual increase in health care costs rises by more than 55% between 2010 (passage of health care reform law) and 2018.
• If this occurs, the IRS will calculate the new threshold amounts based on the increase in the cost of coverage under the Blue Cross/Blue Shield standard benefit option under the Federal Employees Health Benefits Plan during the period.
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Threshold Adjustments
Age & Gender Based / Retirees
• The threshold amounts are increased for an individual who has attained age of 55 who is non-Medicare eligible and receiving employer-sponsored retiree health coverage plan.
–$1650 Single; $3450 Family
• The thresholds can also be adjusted for age & gender. - Need more guidance.
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Threshold Adjustments
High Risk Employees
• In the case of an individual who participates in a plan sponsored by an employer the majority of whose employees covered by the plan are engaged in a high-risk profession, the threshold amounts will increase by $1650 for single and $3450 for family.
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High Risk Employees
• Law enforcement officers
• Employees in fire protection activities
• Individuals who provide out-of-hospital emergency medical care (including emergency medical technicians, paramedics, and first-responders)
• Individuals whose primary work is long shore work
• Individual engaged in the construction, mining, agriculture (not including food processing), forestry, and fishing industries
• A retiree with at least 20 years of employment in a high risk profession.
• Anticipated Additional Guidance
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Threshold Adjustments
Ongoing Adjustments
•Beginning in 2019, the applicable dollar limit will be adjusted annually to reflect the cost-of-living.
•CPI vs. Medical Inflation
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Who Pays?
Paid by All Groups, regardless of size.
Fully-Insured:
Paid by the Insurer (Carrier)
Self-Insured:
Paid by the Plan Sponsor (Employer)
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Effect of Individual Account Plans
HRAs (“Health Reimbursement Arrangements”)
• HRAs are included in the aggregate cost of health coverage.
• HRA COBRA Rate.
FSAs (“Flexible Spending Accounts”)
• Include the amount of the employee’s salary reduction plus any employer reimbursement in excess of the salary reduction contribution.
HSAs (“Health Savings Accounts”)
• Include the amount of any employer contributions.
• Exclude the amount of any employee contributions.
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Strategies
•Review plan designs
•Look at alternatives
•Talk to your Benefits Broker or Advisor
•Keep current on upcoming guidance
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LEGAL DISCLOSURE…
These materials and this presentation should not be construed as legal advice. This is simply an overview of the current state of some provisions of Health Care Reform. Every situation is unique and will require individual attention. In addition, any decisions regarding employment practices should be consulted with a group’s own legal counsel as there may be an impact/intersection with other laws besides Health Care Reform (Unemployment Compensation, ADEA, and various other employment laws). These impacts can be dramatic and costly.
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QUESTIONS?
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