Transcript Data Breaches & Electronic Banking Fraud:

An Employer’s Obligations and
Opportunities Under the
Affordable Care Act
By: Allen Warshaw, Esq.
Nicole Radziewicz, Esq.
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INTRODUCTION
 Overview of ACA topics, including:
 Employer Mandate
 Individual Mandate
 Grandfathered Plans
 SHOP Marketplace
 Can you keep your insurance
 Contraceptive Mandate
 Medicaid Expansion
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EMPLOYER MANDATE
POSTPONED UNTIL 2015 FOR EMPLOYERS WITH 100+ WORKERS
Postponed until 2016 for Employers with 50-99 workers
 Employers should be in the process of determining:
 (1) Whether they are “large employers” subject to the mandate;
 (2) If so, the number of full-time workers within their employment that
are eligible for coverage;
 (3) Measurement periods for ongoing and variable hour employees;
 (4) Whether the health plan provides “minimum” and “affordable”
coverage;
 (5) Potential monetary penalties for non-compliance, and
 (6) Whether required notices and written policies are in place
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EMPLOYER MANDATE
 Large Employers Subject to the Mandate
 “Large employers “are those “who employed an average of at least 50
full-time employees on business days during the preceding calendar
year.”
 Under the ACA, a “full-time employee” is one that, “with respect to
any month, is employed on average at least 30 hours of service per
week” (or one hundred thirty hours (130) per month).
 Part-time and seasonal employees are taken into consideration under
the full-time equivalent (“FTE”) method.
 An employer determines the number of full-time equivalents
(FTEs) by dividing the total number of hours worked by part-time
and seasonal employees each month by one hundred twenty
(120) - the result being the number of equivalents.
 Note, seasonal employees are considered to an extent
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EMPLOYER MANDATE
 The “large employer” determination
is measured on a controlled group
basis
 Employees of a controlled group of
corporations, partnerships or
proprietorships under common
control, affiliated services group or
others as prescribed by Treasury.
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EMPLOYER MANDATE
 Large employers must offer health coverage that is
“affordable” and of “minimum value” to substantially
all (95%) of their “full-time employees,” and their
“dependents”, to avoid monetary penalties.
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EMPLOYER MANDATE
Dependents
 Dependents are the employee’s children
under the age of 26.
 Includes adopted, step and foster
children.
 Does not take into account: financial
dependency, residency, marital status,
employment of child, student status, etc.
 Dependents DO NOT include spouses
 Questions surrounding affordability of
dependent care: Doesn’t have to be
affordable?
 Most comply by 2016
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EMPLOYER MANDATE
 Employers do not have to offer health
insurance coverage to part-time or
seasonal employees, including former
full-time employees who are now parttime.
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EMPLOYER MANDATE
 Employees that are reasonably expected to be
employed 30 hours or more per week on average
(and who are not seasonal employees) must be
offered health insurance within their first ninety (90)
days of employment.
 Eventually, employers with 200+ FT employees will
have to automatically enroll new FT employees in
the employer’s health plan.
 Not required to comply until final regs are
promulgated.
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EMPLOYER MANDATE
 IRS has provided for the implementation of measurement and stability periods
 Used to keep track of the status of ongoing employees
 Used to determine the status of new variable hour or seasonal employees
if employers are unsure whether they will be working 30 hours per week
on average.
 Should have written policies in place regarding the use of measurement
and stability periods. Specific rules regarding their implementation
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EMPLOYER MANDATE
 Measurement periods may range between 3 and 12 months. Subsequent
stability periods may range between 6 and 12 months.
 You may have an administrative period of ninety (90) days in between the
measurement and stability periods but the initial measurement period and the
administrative period combined cannot extend beyond the last day of the first
calendar month beginning on or after the employee’s one year anniversary
(up to 13 mos.)
 Measurement and stability periods must uniformly apply to all employees.
Distinctions are only allowed with regard to:
 Salaried and hourly employees
 Employees located in different states
 Employees working at different business entities
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EMPLOYER MANDATE
 If it is difficult to determine hours worked by salaried employees, one of three
methods set forth by the IRS may be used:
 Actual hours worked from payroll records
 Days-worked equivalency of 8 hours per day
 Weeks worked equivalency of 40 hours per week
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EMPLOYER MANDATE
 Transition Relief Available to Determine Large Employer Status
 The final rules allow employers to use an optional look-back
measurement method to determine whether employees with
varying hours and seasonal employees are full-time.
 Can use a six-month look-back period to determine
employment status for a stability period of up to 12 months.
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EMPLOYER MANDATE
 Employer- sponsored plans must be of “minimum
value” and must be “affordable”
 A plan is of “minimum value” if it covers at least
60 percent of the total allowed cost of benefits that
are expected to be incurred under the plan.
 Not required to provide essential health benefits but
MV will be determined in comparison to standard
pop. claims data based on:
 Hospital/ER Services
 Physician/mid-level practitioner care
 Pharmacy benefits
 Lab/imaging services
 Use minimum value calculator released by HHS or
get a certification from a member of the American
Academy of Actuaries to ensure of MV
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EMPLOYER MANDATE
 A plan is considered “affordable” if the employee's required
contribution for his or her own coverage does not exceed
9.5 percent of the employee's household income for the
taxable year.
 Does not take into account the affordability of dependent coverage
 Affordability can be determined by looking at the employee’s wages
reported in Box 1 on the Form W-2.
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EMPLOYER MANDATE
 Other Large Group Plan Standards:
 No lifetime or annual limits on benefits that are considered
essential health benefits
 Plans must allow adult children under age 26 to enroll on a
parent’s plan
 Plans must offer preventative services without cost-sharing
 No discrimination based upon pre-existing conditions and no
discrimination against similarly situated individuals
 However, rewards for participation in wellness programs are permissible.
 Patient-Centered Outcomes Research Institute Fee imposed
 Internal and external appeals processes
 Out-of-pocket maximum: $6,350 single/$12,700 other for in-
network benefits.
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EMPLOYER MANDATE
 PENALTIES:
 For offering no insurance: the annual penalty is equal to $2,000
multiplied by the number of full-time employees minus 30 (the
penalty is waived for the first 30 full-time employees).
 To illustrate, an employer with fifty full-time employees that fails to offer
coverage will be subject to an annual penalty of $40,000 reflecting the
$2000 fine x (50 employees – 30 employees).
 For offering inadequate insurance: annual fine of $3,000 per
each employee that receives a tax credit through an exchange
 Less draconian than the fine for failing to offer coverage
 For example, if four employees receive tax credits through an exchange,
the employer will be subject to a fine of $12,000 representing the $3,000
fine x 4 employees
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EMPLOYER MANDATE
Notice/Reporting Requirements:
 2012- Employer W-2 reporting for cost of health care coverage
 Applies to employers issuing 250+ W-2s
 9/12- Summary of Benefits and Coverage
 Provide first day of plan year or when the individual is eligible to
enroll for self or beneficiaries.
 Include Uniform Glossary
 Fine of $1,000 for each failure to provide
 10/1/13- Provide notice regarding availability of the health
insurance exchange
 Provide to all new hires within 14 days of starting.
 DOL has issued two model notices.
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EMPLOYER MANDATE
Notice/Reporting Requirements:
 Beginning in 2015, large employers must report to IRS:
 Length of waiting period
 Months for which coverage was available
 Monthly premium for lowest-cost option under the plan
 Large employer’s share of total allowed cost of benefits
 Name/address/TIN of each FTE who was covered
 Must also provide statements to individuals of name and
address of person required to submit the return
 Integral in determining whether compliant with ACA
obligations
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EMPLOYER MANDATE
Cadillac Tax
 Effective in 2018, a 40% excise tax will be levied upon health plans
exceeding specific value thresholds:
 $10,200 for individual coverage
 $27,500 for family coverage
 Determine now whether subject to the tax. Consider making changes to
plan design to avoid tax.
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INDIVIDUAL MANDATE
individual mandate, requires “applicable
individual[s]” to maintain “minimum essential” health
insurance coverage, or face a mandatory “shared
responsibility payment”
 The
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INDIVIDUAL MANDATE
 Persons not subject to penalty, include:
 (i) persons with religious exemptions;
 (ii) members of health sharing ministries;
 (iii) individuals not lawfully present (not in the country);
 (iv) incarcerated individuals
 (v) persons who do not meet the income threshold for filing income tax
returns;
 (vi) members of Indian tribes;
 (vii) persons who have breaks in coverage for no longer than three
continuous months;
 (viii) persons qualifying for a hardship exemption
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INDIVIDUAL MANDATE
 Must have “minimum essential coverage”
 Either employer-sponsored coverage, private insurance; or governmentsponsored insurance.
 Exchanges:
 Government-operated health insurance marketplaces offering qualified
health insurance plans by competing companies.
 Pennsylvania’s exchange is being operated by the federal government
 Use of healthcare exchange in Massachusetts helped result in 97% coverage
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INDIVIDUAL MANDATE
 Individual and small group plans must include ten essential health
benefits:
 Ambulatory patient services;
 Emergency services;
 Hospitalization;
 Maternity and newborn care;
 Mental health and substance use disorder services, including behavioral
health treatment;
 Prescription drugs;
 Rehabilitative and habilitative services and devices;
 Laboratory services;
 Preventive and wellness services and chronic disease management; and
 Pediatric services, including oral and vision care.
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INDIVIDUAL MANDATE
 Benefit Plan Tiers
 Bronze: actuarial value of 60% of plan costs
 Silver: actuarial value of 70% of plan costs
 Gold: actuarial value of 80% of plan costs
 Platinum: actuarial value of 90% of plan
costs
 Catastrophic: available for individuals up to
age 30. Coverage levels set at HSA current
law
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INDIVIDUAL MANDATE
 Advance Premium Tax Credit
 Those making up to 400% of the poverty level ($46,000 for
individuals/$94.200 for families) will be eligible for subsidies
in the form of advance premium tax credits (“APTC”)
 Not eligible if have an offer of affordable coverage
through employer or if eligible for government insurance
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INDIVIDUAL MANDATE
 Advance Premium Tax Credit
 Three ways it can be applied:
 In its entirety, evenly across all monthly payments
 In part towards monthly payments, with the balance being
refunded as part of tax return
 None of the credit is applied toward monthly payments, and it is
refunded in its entirety as part of tax return
 Changes in life such as marriage/divorce, births/deaths,
change of jobs will affect eligibility.
 Can immediately update information through exchange account
 If information isn’t updated, may have to pay-in difference or
will receive a refund
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INDIVIDUAL MANDATE
 PENALTIES
 Greater of: $695 per individual
(up to $2085 per family) OR
2.5% of household income
 Phased-in:
 2014: $95.00 or 1% of
household income (higher of
two)
 2015: $325 or 2% of
household income (higher of
two)
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GRANDFATHERED PLANS
 What is a “grandfathered plan.”
 A health plan may qualify as a grandfathered plan if it existed as of March
23, 2010, the date on which the Act was enacted, and has served, at least
one individual since that date. It may have lost that status if it changed the
terms of its coverage in significant ways after that date. And, it will lose
that status if makes such changes in the future.
 The changes which would affect the grandfathered status include:
 Cannot Significantly Cut or Reduce Benefits. For example, terminating
coverage for people with diabetes, cystic fibrosis or HIV/AIDS.
 Cannot Raise Co-Insurance Charges. This is the fixed percentage of a
charge (for example, 20% of a hospital bill).
 Cannot Significantly Raise Deductibles..
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Grandfathered Plans
 Cannot Significantly Raise Co-Payment Charges.
 Cannot Significantly Raise Deductibles.
 Cannot Significantly Lower Employer Contributions.
 Cannot Add or Tighten an Annual Limit on What the Insurer Pays.
 Cannot force consumers to switch to another grandfathered plan that,
compared to the current plan, has less benefits or higher cost sharing
as a means of avoiding new consumer protections.
 Cannot be bought by or merge with another plan simply to avoid
complying with the law.
 CAN Change Insurance Companies provided the plan does not make any
of the above six changes to its cost or benefits structure.
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GRANDFATHERED PLANS
 What new requirements apply to grandfathered health plans?
 A grandfathered health plan must comply with following
requirements
 No lifetime limits on coverage for all plans.
 No rescissions of coverage when people get sick and have
previously made an unintentional mistake on their application.
 Extension of parents’ coverage to young adults under 26 years old
 Disclose to consumers every time it distributes materials whether
the plan believes that it is a grandfathered plan The plan must also
provide contact information for enrollees to have their questions
and complaints addressed
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GRANDFATHERED PLANS
 What requirements do not apply to grandfathered
health plans?
 Coverage of recommended prevention services with no cost
sharing.
 Patient protections such as guaranteed access to OB-GYNs and
pediatricians
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SMALL BUSINESS HEALTH OPTIONS PROGRAM
 For 2014, the Small Business Health Options
Program (“SHOP”) Marketplace is open to employers
with 50 or fewer full-time-equivalent employees
(FTEs). Beginning in 2016, 100 or fewer FTEs.
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SMALL BUSINESS HEALTH OPTIONS PROGRAM
 According to HHS, advantages of SHOP include:
 Controlling the coverage you offer and how much you pay
toward employee premiums.
 Obtaining ability to compare health plans online on an apples-
to-apples basis, which helps you make a decision that's right
for your business.
 Possibly qualifying for a small business health care tax
credit worth up to 50% of your premium costs. You can still
deduct from your taxes the rest of your premium costs not
covered by the tax credit. Beginning 2014 the tax credit is
available only for plans purchased through SHOP.
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SMALL BUSINESS HEALTH OPTIONS PROGRAM
 You may qualify for employer health care tax credits if you have fewer
than 25 full-time equivalent employees making an average of about
$50,000 a year or less.
 To qualify for the Small Business Health Care Tax Credit, you must
pay at least 50% of your full-time employees' premium costs.
 You don’t need to offer coverage to your part-time employees or to
dependents.
 Starting in 2014, the tax credit is worth up to 50% of your contribution
toward employees' premium costs (up to 35% for tax-exempt
employers).
 Sliding scale. The tax credit is highest for companies with fewer
than 10 employees who are paid an average of $25,000 or less.
The smaller the business, the bigger the credit.
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SMALL BUSINESS HEALTH OPTIONS PROGRAM
 The SHOP Marketplace provides 4 plan
categories based on how your employees
and the plan expect to share the costs for
health care:
 Bronze – covers 60% of the total
average costs of care
 Silver – covers 70% of the total
average costs of care
 Gold – covers 80% of the total
average costs of care
 Platinum – covers 90% of the total
average costs of care
 Ten essential health benefits are minimum
requirements for all plans in the
Marketplace. Plans may offer additional
coverage.
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SMALL BUSINESS HEALTH OPTIONS PROGRAM
 ENROLLING IN SHOP
 You can apply for coverage at any time. To get coverage, you must submit
your completed application along with your employees’ applications by the
15th of any month for coverage to take effect on the 1st of the following
month.
 For example, if you enroll by April 15th, coverage will begin May 1st. If
you enroll between April 16th and April 30th, coverage will begin June
1st.
 You will be able to use a licensed agent or broker to provide help or handle
your SHOP business. You won’t pay more if you use a SHOP agent or
broker.
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SMALL BUSINESS HEALTH OPTIONS PROGRAM
 How to sign up for a Marketplace account:
For 2014, small employers will enroll their employees in
coverage through an agent, broker, or insurer that offers
a certified SHOP plan and has agreed to conduct
enrollment according to HHS standards.
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Can you keep your insurance?
 The Problem
 The President Said that “if you like your plan you will
be able to keep it.”
 Turned out not to be accurate
 PPACA requires all insurance policies plans provide
a certain minimum level of benefits
 Many existing policies do not provide the required
benefits
 Insurance companies were originally required to
cancel those policies
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Can you keep your insurance?
 Originally you could only keep an existing policy
 If it meets minimum benefit requirements or
 if it is part of grandfathered plan
Many plans – mostly individual policies -- do not meet
the minimum benefit requirement
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Can you keep your insurance?
 The solution
CMS has decreed that, subject to state approval,
insurance companies will be permitted to renew noncompliant policies until October of 2016.
Pennsylvania has allowed insurance companies take
advantage of this extension. However, whether or not to
do so is still up to the insurance company.
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CONTRACEPTION MANDATE
 The preventative health provisions of the PPACA, require that
all employers, with the exception of religious employers, must
provide insurance that covers contraception and contraception
counselling, without cost-sharing.
 Effective August 1, 2013, a religious employer is defined as
an employer that is organized and operates as a non-profit
entity and is referred to in section 6033(a)(3)(A)(i) or (iii) of
the Internal Revenue Code.
 The full range of FDA-approved prescription contraceptive
methods are included.
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Contraception Mandate
 The final rules also lay out the accommodation for other non-
profit religious organizations - such as non-profit religious
hospitals and institutions of higher education - that object to
contraceptive coverage. Under the accommodation these
organizations will not have to contract, arrange, pay for or refer
contraceptive coverage to which they object on religious
grounds, but such coverage is separately provided to women
enrolled in their health plans at no cost.
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Contraception Mandate
 With respect to an insured health plan, including a student health
plan, the non-profit religious organization provides notice to its insurer
that it objects to contraception coverage. The insurer then notifies
enrollees in the health plan that it is providing them separate no-cost
payments for contraceptive services for as long as they remain
enrolled in the health plan.
 Similarly, with respect to self-insured health plans, the non-profit
religious organization provides notice to its third party administrator
that it objects to contraception coverage. The third party administrator
then notifies enrollees in the health plans that it is providing or
arranging separate no-cost payments for contraceptive services for
them for as long as they remain enrolled in the health plan.
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CONTRACEPTION MANDATE
 Many for profit corporations and their owners rejected this
accommodation
 Nearly 100 lawsuits have been filed, with six Circuit Courts
splitting on the issue of whether the mandate, even as
modified, violates the rights of corporations or their owners.
 The Supreme Court will hear argument in two of these cases
later this month and presumably issue a decision by the end of
its session in June or July.
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CONTRACEPTION MANDATE
 At the crux of these cases is a question that the Supreme Court has
not previously addressed: Do for-profit corporations have protections
under the 1993 Religious Freedom Restoration Act (RFRA)? If the
Court finds that for-profit corporations have protections under the
RFRA, then the Court will need to determine if it is a violation of the
RFRA to require a business to provide insurance that includes
coverage for contraceptives when that coverage violates the owners’
personal religious beliefs. The Court will also consider whether the
contraceptive coverage requirement violates the First Amendment’s
protection for free exercise of religion. The corporations’ owners have
also asserted rights under the RFRA and the First Amendment. The
Court will need to determine if the owners’ rights are violated by a
regulation imposed on the corporation.
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MEDICAID EXPANSION
 States have the choice of whether or not to expand
Medicaid per Nat'l Fed'n of Indep. Bus. v. Sebelius, 132
S. Ct. 2566, 2595 (2012).
 Pennsylvania has sought CMS approval of an
alternative plan using private insurance
 Affects approximately 520,000 low-income
Pennsylvanians
 Follows Arkansas’ approach
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MEDICAID EXPANSION
 The current Medicaid program generally offers federal
funding to States to assist pregnant women, children,
needy families, the blind, the elderly, and the disabled in
obtaining medical care. 42 U.S.C. § 1396d(a).
 The Affordable Care Act provides for the expansion of the
Medicaid program to increase the number of individuals
the States may cover.
 Federal government will cover the full cost of newly
eligible Medicaid beneficiaries for the first 3 years and not
less than 90% of the cost in years thereafter
 Individuals earning up to 133% of the FPL (138%
using the current formula)
 $15,800 for individuals, $32,400 families
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MEDICAID EXPANSION
 The “Healthy Pennsylvania Plan”
 Qualified individuals use Medicaid funds to purchase private
insurance through the exchange – the covered benefits will be
significantly less than the traditional Medicaid program.
 Cost-sharing requirements for current adult Medicaid recipients ─
accomplished through instituting a monthly premium on a sliding
scale up to $25 for an individual and $35 for families
The original proposal included a work search requirement for all
unemployed working-age Medicaid beneficiaries, with limited
exceptions. Last week, the Governor dropped that requirement from
the proposal.
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