Transcript PPACA - New Jersey

PPACA
February 2015
Medicare
Established 1965
SSA.gov The cost of adequate private health insurance, if paid for in old age, is more than most older
persons can afford. Prior to Medicare, only a little over one-half of those
aged 65 and over had some type of hospital insurance; few among
the insured group had insurance covering any part of their surgical and out-of-hospital physicians' costs. Also,
there were numerous instances where private insurance companies were terminating health policies for aged
persons in the high risk category.
Many thousands of carefully arrived at decisions were made and incorporated in the
more than 50
pages of enacted legislation crammed full with detailed provisions for putting the ideas behind health
insurance into effect.
Medicare Vote
Senate
Yea
Nay
Not Voting
D
57
7
4
R
13
17
2
House
Yea
Nay
Not Voting
D
237
48
8
R
70
68
2
PPACA
Established 2010
PPACA Vote
Senate
Yea
Nay
Not Voting
D&I
60
0
0
R
0
39
1
House
Yea
Nay
Not Voting
D
219
34
0
R
0
178
2
Individual
Mandate
PPACA
Employer
Shared
Responsibility
You could qualify for financial help
Submit your application to find out if you qualify for financial help. This year, people
nationwide are saving an average of $268 a month on their premium.
Give yourself peace of mind about your health in 2015 and submit your application
now.
Don’t miss out. Join over 10 million people who have already found coverage!
Time is running out: Enroll by the final deadline, Sunday, February 15.
The HealthCare.gov Team
PPACA - Constitutional?
It
is
a
tax!
June 2012
Medicaid expansion
June 2012
Premium Subsidies for
Federal Exchanges?
March 2015
February 2015
Religious objections held by certain For-Profit,
"closely held" employers were legally legitimate.
2014 SCOTUS ruling
Changes to PPACA?
Full Time Employee Definition
From 30 hours to 40 hours?
Cadillac Tax
Change to regional threshold amounts?
Increase amounts?
$10,200
$27,500
$10,200
$27,500
$10,200
$27,500
$10,200
$27,500
$10,200
$27,500
$10,200
$27,500
High Cost Employer-Sponsored
Health Coverage Excise Tax
SAMPLE SCHOOL DISTRICT
PROJECTED 2018 GROSS PREMIUM = $7,220,260
ADDITIONAL CADILLAC TAX = $550,886
7.6% INCREASE IN ADDITION TO THE RENEWAL
ASSUMES ALL EMPLOYEES ARE ON LEVEL 4 OF THE CHAPTER 78 SCHEDULE:
BOE
$440,709
$550,886
EMPLOYEES
$110,177
Collective Bargaining
• Timing of C.N.A. and Cadillac Tax
• What will your position be?
• Calculate exposure
AFFORDABLE?
PCORI
2012 - 2019
Now at $2.08 per body per year –
P.Y. 10/1/14, then adjusted for inflation
Trans. Reins.
2014 - 2016
2014: $63 per body per year
2015: $44 per body per year
2016: $27 per body per year
Health Insurer Fee*
2014 – no end date
2014: Approx. 2.5% of premium
2015: Approx. 3.0% of premium
2016: Expected to grow
* Only applies to fully insured plans
Full Time Employee Tracking
50
45
40
35
30
PART TIME
VARIABLE
FULL TIME
25
20
15
10
5
0
Week 1
Week 2
Week 3
Week 4
Record Keeping
&
Reporting
Report in 2016 for 2015
IRS – use information to enforce mandates:
Employer
Employee
Complex
Integration of data from multiple sources:
Payroll and other
Need to address NOW – vendor?
NJSCPA Member Open Forum
We've completed a few returns with dealing with the
premium tax credit (Form 8962). My question is how to treat
the premium tax credit amount due and refund as to a
medical deduction???
We're assuming the amount due (excess advance premium
tax repayment) would be a deduction for 2015 and a refund
(net premium tax credit) would just lower the deduction for
2015. I did a search online and looked at the instructions for
Form 8962 and couldn't find anything in writing.
Medium ER?
Large ER?
MEC?
Min. Value?
To
Substantially
All Full Time
EEs?
Affordable?
Full Time Employees - 2015 Plan Year
30%
70%
Offer
No Offer
Full Time Employees - 2016 Plan Year
5%
95%
Offer
No Offer
Timeline
Employer
Mandate
Final
Transitional
Reinsurance
Discontinued
2015
2016
2017
Employer
Mandate
Phase-In
Record
Keeping &
Reporting for
2015
Individual
Mandate
2014
2018
Cadillac Tax
Change is INEVITABLE.
Progress is OPTIONAL.
-Tony Robbins
PPACA &
The Employer Mandate:
46 Changes and Counting…
Employer Mandate is Finally Here!
After nearly five years of PPACA, effective Jan 1st of this year the
long-awaited, twice-delayed, Employer Mandate became effective:
• Employers with 100+ FTE’s must offer health insurance that is both
“Affordable” and of “Minimum Value” to at least 70% of their full-time
employees, and their children up to age 26, or be subject to penalties.
*Employers with plan years starting on a date (7-1) other than January 1st
must begin compliance at the start of their plan year.
“Pay or Play”
Definitions
Applicable Large Employer (ALE):
On average at least 50 FT’s/FTE’s during the prior calendar year.
Full-Time Employees (FT):
Any employee working an average of 30 hours or more a week, or 130
hours or more per month.
Full-Time Equivalent (FTE):
Total hours worked by Part-Time employees, per month, divided by 120.
*FT’s and FTE’s combined are used for purposes of determining if ALE.
“Pay or Play”
Definitions (Cont’d)
Affordable:
Employee contribution towards single coverage in your least expensive
plan must be no greater than 9.5% of their W2 wages.
Minimum Value:
Plan must cover at least 60% of allowed charges for covered services.
Employer Mandate Delays
•
Originally set for 1-1-14 effective date.
•
Finally began in 2015 for Employers with 100+ FTE’s.
• In 2016, all Employers w/ 50+ FTE’s (“Applicable Large
Employers”) must offer coverage to at least 95% of FT
employees.
“Pay or Play”
Timeline
Revised “Medium
Sized” ER Mandate
PPACA
Signed Into Law
Original Employer
Mandate
Revised Employer
Mandate
3-23-10
1-1-14
1-1-15
1-1-16
ALE- Must provide
affordable, minimum
value coverage to at
least 95% of FT EE’s
-ER w/ 100+ FTE’s must
offer coverage to at least
70% of FT’s
(Increases to 95% in
2016)
-All ALE’s (50+ FTE’s)
must offer coverage to at
least 95% FT’s
Identifying Your Plan Year
•
For School Boards (where Form 5500 filing is not required) the plan
year is the policy year, presuming that the plan is administered based
on that policy year.
•
However, if the policy renews on July 1st but the plan is administered
with open enrollment changes effective on Jan 1st, HHS might
consider your plan year to be calendar year.
•
Additionally, to be considered a non-calendar plan year (Ex: 7-1), you
must have maintained that non-calendar plan year since 12-27-12.
“SledgeHammer Penalty”
“SledgeHammer Penalty”
•
•
•
•
If a Board with 100+ FTE’s fails to offer coverage to at least 70% or more of its FT
If Board fails to offer Minimum Essential Coverage (MEC) to 95% or more of its Full-Time
employees and their dependent children to age 26 (coverage for spouse not
Employees and their dependent children to age 26 (coverage for spouse not required)
required), penalty occurs only if:
1) FT employee goes to the Exchange, and…
To Incur the Penalty:
2) Obtains a federal subsidy, and…
3) Actually purchases coverage.
-FTE must a) go to the Exchange, and b) obtain a federal subsidy, and c) actually
purchase coverage.
• Penalty incurred would then be $2,000 per FT employee, (minus the first
80 employees for 2015, minus the first 30 employees for 2016 and
Actual Penalty would then be $2,000 per FTE, (minus the first 30)
beyond)
• *Example: 500 FT – 80 = 420 FT x $2,000 = $840,000 (Penalty assessed
*Estimated Annualized Penalty : 626 FTE – 30 = 596 FTE x $2,000 = $1,192,000 (Penalty
monthly every applicable month not in compliance.)
assessed monthly every applicable month you are not in compliance.)
“Pick-Axe Penalty”
Board offers at least 70% of FT employees coverage but may still be
subject to $3,000 penalty if any of the following occurs:
a) Board does not offer at least one plan that is considered “Affordable” and
meets the “Minimum Value” standard, and/or
b) FT employee was one of the 30% not offered coverage by the Board.
If a or b happens and FT employee obtains subsidized coverage
through an Exchange, Board pays $3,000 for each applicable employee.
*Penalty only applies for those employees obtaining
subsidized coverage through an Exchange.
The Road Ahead
Supreme Court Case
“King vs. Burrell”
•
PPACA has language stating tax credits (subsidies) can only be
given to those that enroll in the State-run exchanges (13 states
presently).
• This means that roughly ¾ of the approximate 11.4 million
individuals who have signed up for individual coverage through an
exchange might be deemed not eligible for a subsidy.
• 87% of those enrolled thus far have been eligible for subsidies of
some sort.
• If Supreme Court upholds language over 7.4 million will be SOL.
The Ripple Effect
•
Both types of ER mandates are triggered only when an EE enrolls
for coverage in an exchange plan and receives a premium tax credit
or cost-sharing reduction.
• If no premium tax subsidies are payable in those states, the ER
mandate penalties will never be triggered in those states.
• There would, therefore, be no penalty for violating the employer
coverage mandate in those states.
*Case is set to begin next week (3/3/15) and a decision is expected by June.
Save American Workers
Act of 2015
• Passed in the House and awaiting Senate vote, would change the
definition of “full-time” employee to 40 hours per week vs. 30.
•
Proponents say it will ease employer expense to cover such
employees.
•
Exponents say it will result in more employees being forced to work
more hours and still not be eligible for insurance.
Stay Tuned…
Issuing a Combat Order
B egin the planning
A rrange reconnaissance
M ake reconnaissance
C omplete the order
I ssue the order
S upervise
AVOIDING the PENALTIES
O
bey the statutory requirements.
H
ave your broker/consultant pave a clear path to compliance.
S
top thinking “It’s not really going to happen.”
H
ope for the best, but plan for the worst. If all else fails…
AVOIDING the PENALTIES
O
bey the statutory requirements.
H
ave your broker/consultant pave a clear path to compliance.
S
top thinking “It’s not really going to happen.”
H
ope for the best, but plan for the worst. And if all else fails…
I
nsist to the IRS that you simply “mis-remember” ever hearing
about this PPACA thing.
AVOIDING the PENALTIES
O
bey the statutory requirements.
H
ave your broker/consultant pave a clear path to compliance.
S
top thinking “It’s not really going to happen.”
H
ope for the best, but plan for the worst. And if all else fails…
I
nsist to the IRS that you simply “mis-remember” ever hearing
about this PPACA thing.
T hank you for joining us today! ;-)
Measuring Employees Hours
45
WHY do we have to measure?
 The Employer Mandate requires that you offer coverage to
substantially ALL employees working an average of 30+ hours
 The law is complicated. You most likely have employees that
would be considered FT under the Employer Mandate... That
you don’t know about!
 The government needs to collect this information in order to
know whether or not you are compliant
46
WHAT do we have to measure?
 An employees hours of service include:
Each hour the EE is paid or entitled to payment when no
work is performed
 Each hour during which no duties are performed due to
vacation, holiday, illness, incapacity, layoff, jury duty or
leave of absence
 There is no limit on the number of hours counted for a paid
leave of absence

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What about Summer?
1. What did the employee’s hours
average during the school year?
2. Use that.
Example. Teacher works 36
hours/week on average.
 Each summer week credit them as though
they worked 36 hours
48
WHEN do we have to measure?
You should be measuring a YEAR OR MORE in advance
of when you need to be compliant with the law.
Example. BOE with 100+ FTEs and effective date of
7/1/15. Should ALREADY be measuring!!!
49
Who do I measure?
Full Time
Variable
Part Time
30+ Hours
????
< 30 Hours
TEACHERS
FT AIDES
SECRETARIES
SUBSTITUTES?
CUSTODIANS?
COACHES?
PARAS?
TEMPS?
PT AIDES
CUSTODIANS
PARAS
50
Measuring Hours
 3 Ways to Measure Employees
 Hourly Employees – Count actual hours worked

Aide, Para
Employees – 8 hour day or 40 hour
work week
 Salaried

Teachers, Principals
 Reasonable

Method
Per Diem, Substitutes, Coaches
51
How to Measure (safe harbor)
 MEASUREMENT PERIOD – Record the hours worked

A period of 3-12 months
 ADMINISTRATIVE PERIOD – Get employees to sign up
or sign waivers

A Period of up to 90 days
 STABILITY PERIOD – Employee is locked into benefits


Minimum of 6 months
Matches the Measurement (i.e. MP =12 months, SP = 12 months)
52
Measurement Example
1/1/14
5/1/14
Standard Measurement Period
1/1/15
12/31/14
AP
Stability Period
7/1/15
12/31/15
7/1/16
12/31/16
Stability Period
1/1/16
Standard Measurement Period: 12 Months
Administrative Period: 60 Days
Stability Period: 12 Months
53
New Hire Example
“Initial Measurement Period”
 ABC Employer hires a new employee
 On September 1, 2014
 Position where it’s unknown whether or not employee
will end up being “Full Time”
 Measured Against 2 Measurement Periods:
1. Standard Measurement Period
2. Initial Measurement Period
54
New Hire Example
“Initial Measurement Period”
 Initial Measurement Period & Admin Period may
not extend beyond the last day of the first
calendar month beginning on or after the 1 year
anniversary of the employees start date
 13
months and a fraction of a month
55
Initial Measurement Example
IMP
SMP
1/1/14
9/1/14
12/1/14
AP
Initial Measurement Period
ISP
AP
Standard Measurement Period
8/31/15
1/1/15
12/31/14
9/30/15
11/30/15
12/31/15
Initial Stability Period
Standard Stability Period
1/1/16
9/30/16
12/31/16
Standard Measurement Period: 12 Months
Initial Measurement Period: 12 Months
Administrative Period: 1 Month
Stability Period: 12 Months
Initial Stability Period: 12 Months
56
Coach Example - Offer
 ABC Employer has an employee that:


Works as a SUB 4 days/wk (26 hours/wk)
Works as a track COACH during the winter


2 hours/day and 8 hours on Saturday (18 hours)
Coaches for 13 weeks
 40 weeks in a school year
 27 weeks at 26 hours
 13 weeks at 44 hours (26 + 18)
 Average Hours worked:

27wks * 26hrs + 13wks * 44hrs = 1,274 total hours


1,274hrs / 40 weeks
AVERAGE HOURS: 31.85
57
Coach Example – No Offer
 ABC Employer has an employee that:


Works as a SUB 3 days/wk (19.5 hours/wk)
Works as a track COACH during the winter


2 hours/day and 8 hours on Saturday (18 hours)
Coaches for 13 weeks
 40 weeks in a school year
 27 weeks at 19.5 hours
 13 weeks at 37.5 hours (19.5 + 18)
 Average Hours worked:

27wks * 19.5hrs + 13wks * 37.5hrs = 1,014 total hours


1,014hrs / 40 weeks
AVERAGE HOURS: 25.35
58
Affordable Care Act
Today’s Discussion
•
•
Employer Reporting
Cadillac Tax
59
ACA Reporting
Why is Employer Reporting Required?
The ACA reporting
requirements help
the IRS assess and
collect the employershared responsibility
penalty
60
Employer Reporting
When Must Reporting Start?
The first reporting year is 2016 (for
calendar year 2015):
• IRS: 2015 data due via paper filing March 1,
2016; online filing due March 31, 2016
• Employees: statement for 2015 year of
coverage due January 31, 2016
61
Employer Reporting
When is Reporting Due in
Subsequent Years?
• IRS: reporting for prior year of coverage due each February
28 online filing date is March 31
• Employees: statement for prior year of coverage due each
January 31
Reporting is due each and every year: it is imperative that data is
collected each month for easy and accurate year-end reporting
62
Employer Reporting
IRS Code §6055
What is Required?
Proof of compliance with Code §6055
• Employers offering health insurance must offer
minimum essential coverage
*individuals must have minimum essential coverage
each month or pay a penalty
• Report consists of a return filed with the IRS and a
statement for each employee
63
Employer Reporting
What is minimum essential coverage?
Minimum essential coverage is the type of health coverage
an individual must have to meet the individual responsibility
requirements under the ACA. This includes marketplace
plans, job-based coverage, Medicare, Medicaid, TRICARE, or
CHIP. If the individual does not have this coverage, he/she is
subject to a tax penalty by the IRS.
64
Employer Reporting
IRS Code §6055
Who Must Report?
Health insurers and self-insured plan sponsors are
required to report
• Plans provided by an insurer: employer must satisfy the
reporting requirements, but the insurer will complete the report
to the IRS
• Self-insured plans: the employer must satisfy all aspects of
reporting requirements, including filing with the IRS
65
Employer Reporting
IRS Code §6055
What Data Is Required?
The reports require information about the employer and
dependents, such as
• Employee name, address, Taxpayer ID
• Months enrolled in coverage under employer plan
o Note the specific months that each employee is enrolled
must be reported
o Employer must be certain to track this data monthly for
accurate reporting at year-end
66
Employer Reporting
IRS Code §6055
What Forms are Required?
Self-insured employers with <50 full-time
employees must file:
• To IRS: Form 1094-B / Transmittal of Health Coverage
Information Returns
• To employees: Form 1095-B / Health Coverage
67
Employer Reporting
IRS Code §6055
IRS Form 1094-B…Page 1
68
Employer Reporting
IRS Code §6055
IRS Form 1095B…Page 1
69
Employer Reporting
IRS Code §6055
IRS Form 1095-B…Page 2
70
Employer Reporting
IRS Code §6056
What is Required?
Proof of compliance with Code §6056
• Employers offering health insurance must confirm to IRS
and employees that plan offers minimum value coverage
• Employers must offer minimum value coverage each month
or pay a penalty if any full-time employee enrolls in
coverage through the Marketplace Exchange with a tax
subsidy
• Report consists of a return filed with the IRS and a
statement for each employee
71
Employer Reporting
IRS Code §6056
What is Required?
What is a minimum value coverage plan?
Minimum value coverage is a requirement that ensures a
health plan covers, on average, at least 60% of the cost of
benefits. Coverage is affordable if the employee’s annual
contribution for individual coverage does not exceed
9.56% of the employee’s yearly household income.
72
Employer Reporting
IRS Code §6056
Who Must Report?
Applicable Large Employers (ALEs) with an average of 50+ full-time
employees (FTEs) must report annually
•
ALE / Applicable Large Employers: An employer with an average of at least
50 full-time employees on business days during the preceding calendar year
•
FTE / Full-time Employee: Full-time equals 30 hours of work/week or 130
hours of work/month; includes full-time equivalents
73
Employer Reporting
IRS Code §6056
Are You an ALE?
Employers might need help determining if they are an
Applicable Large Employer (ALE):
• The employer will need to carefully track employee hours
• Part-time hours must be converted to full-time hours
• Employers must begin gathering required information beginning
January 2015 in order to complete accurate reporting in 2016
74
Employer Reporting
IRS Code §6056
What Data is Required?
The reports require information about the employer,
full-time employees, and coverage, such as:
•
•
•
•
•
•
Employer name, address, EIN
Employee name, address, Tax Identification Number
Months employee enrolled in coverage under employer plan
Number of full-time employees enrolled each month
If coverage offers minimum value
Employee share of (individual) lowest-cost monthly premium
75
Employer Reporting
IRS Code §6056
What Data is Required?
A wide range of information is required:
Note the specific months that each employee is enrolled
must be reported
o Employer must be certain to track this data monthly for
accurate reporting at year-end
o Employer must determine who will collect and store the data
o
76
Employer Reporting
IRS Code §6056
What Forms are Required?
Insured and self-insured employers with 50+ fulltime employees must file:
• To IRS: Form 1094-C / Transmittal of Employer-Provided
Health Insurance Offer and Coverage Information Returns
• To employees: Form 1095-C / Employer-Provided Health
Insurance Offer and Coverage
77
Employer Reporting
IRS Code §6056
IRS Form 1094-C…Page 1
78
Employer Reporting
IRS Code §6056
IRS Form 1094-C…Page 2
79
Employer Reporting
IRS Code §6056
IRS Form 1094-C…Page 3
80
Employer Reporting
IRS Code §6056
IRS Form 1095-C…Page 1
81
Employer Reporting
IRS Code §6056
IRS Form 1095-C…Page 2
82
Employer Reporting
IRS Code §6055 and §6056
How Are Forms Filed?
•
IRS: employers who are filing 250+ W2 forms must file online
with the IRS; <250 can mail to assigned IRS center or file online
•
Employees: paper statements must be delivered via first-class
mail to the employee’s last known address
o
Statements can be transmitted electronically if employee
agrees and can retrieve the statement
o
Statements can be included within the W2 mailing
83
Employer Reporting
IRS Code §6055 and §6056
Do Penalties Apply?
• Penalties may be waived if failure to report is allowed as
reasonable cause
• Some relief may be given if mistakes are made in reporting for
coverages, penalties for incorrect or incomplete filing if employer
made a ‘good faith’ effort to comply with requirements
• Employers that do not submit an annual report to the IRS or
fail to provide statements to full-time employees may be
penalized up to $100 per return (annual maximum of $1.5
million)
84
Employer Reporting
IRS Code §6055 and §6056
Gather the Data…
It is imperative that employers collect employment
data each and every month in order to provide
year-end reports to the IRS and employees easily
and accurately. The employer must have a fool-
proof system in place to track employee hours.
85
Employer Reporting
IRS Code §6055 and §6056
Report the Data…
86
Cadillac Tax
IRS Code §49801 [eff. 2018]
What Is It?
Purchase Price = $70,000
7% Sales Tax = $4,900
87
Cadillac Tax
IRS Code §49801
What Is Taxed?
•
A tax is assessed on any amount by which the
monthly cost of an employer-sponsored health plan
exceeds the annual limitation set by the IRS
(excess benefit)
•
Applies to the cost of “applicable employersponsored coverage” excluded from employee’s
gross income
•
Intended to “encourage” companies to choose
lower-cost plans for employees
88
Cadillac Tax
IRS Code §49801
What Is Not Taxed?
The tax does not apply to coverage for long-term
care or “excepted benefits”, such as:
• Accident-only or disability income insurance
• Workers’ compensation or similar insurance
• Automobile medical payment insurance
• Separate, non-excepted benefit dental / vision plans
• Some independent coverages for specific disease/ illness
or hospital indemnity insurances
89
Cadillac Tax
IRS Code §49801
How Is the Tax Calculated?
•
Imposes a 40% excise tax on health coverage
monthly costs exceeding annual limit
•
Currently, 2018 annual dollar limit is
$10,200/individual and $27,500/ other
o
•
Qualified retirees and those in high-risk professions
have higher limitations of $11,850/individual and
$30,950/other
Future annual limits may be adjusted for cost of
living and emerging age/gender data
90
Cadillac Tax
IRS Code §49801
For Example…Individual Coverage
• Mary is enrolled in a plan with an
annual premium of $11,000
• The ACA annual limit for an
individual plan is $10,200
• Her plan premium is $800 above
the annual limit ($800 excess
benefit)
• $800 x 40% = $320
91
Cadillac Tax
IRS Code §49801
For Example…Family Coverage
• Tom’s family is enrolled in a
health plan with an annual
premium of $28,000
• The ACA annual limit for
an family plan is $27,500
• His plan premium is $500
above the annual limit
($500 excess benefit)
• $500 x 40% = $200
92
Cadillac Tax Knowns
IRS Code §49801
•
Who pays the tax?
Fully insured plans: the insurer
o Self-insured plans: the employer/administrator
o
•
Are there penalties for incorrect tax payments?
The employer will be subject to a tax penalty
o Penalties do not apply if employer can provide it did not
know of a mistake if corrected within 30 days and the IRS
agrees to waive the penalty
o The insurer must pay the amount of any unpaid tax
o
93
Cadillac Tax
IRS Code §49801
The Unknowns
•
•
How will the tax be billed/collected?
o
No regulations published to date
o
Can the tax be passed onto employees?
The tax is coming in 2018 but what further
updates are to come?
94
Cadillac Tax
IRS Code §49801
High-Cost vs. Low-Cost Plans
95
Cadillac Tax
IRS Code §49801
High-Cost vs. Low-Cost Plans
•
Introduce lower-cost alternative plans as
soon as and whenever possible
•
High Deductible plans could save up to
30% versus current plan rates
•
Defined Contribution benefits with
employer contribution below the tax
96
The Wrap-Up
Capture 2015 data now for 2016 reporting
• Watch for updates about 2018 Cadillac tax
• Boards and employees must be willing to
adopt a benefit package that costs less
• Rely on your professionals now more than
ever
•
97