health care reform update presented by: andy impastato vice president – legal & compliance
Post on 28-Dec-2015
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Health Care Reform Update
Presented by:Andy ImpastatoVice President – Legal & Compliance
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Agenda
• Political Outlook• Marketplace (Exchange)• Individual Mandate• Employer Mandate• Plan Design Changes• Wellness Rules• Action Items
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Political Outlook
• Awareness of PPACA?– 42% of Americans unsure if still law– 12% of Americans believe Congress repealed
law• 39 “show” votes to repeal in House since law’s
passage
– 7% of Americans believe Supreme Court struck down law
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Political Outlook
• Administration under attack?– Medicaid expansion– Exchange (Marketplaces)– SHOP delayed– Discrimination rules delayed– Employer mandate delayed– Automatic enrollment delayed
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Political Outlook
• Will PPACA be de-funded?– House passed bill last week
• Includes request to de-fund PPACA in its entirety
– Senate will now substitute its own version• Stripping defunding language
– Final vote on CR expected this weekend– Individual mandate delay?
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Political Outlook
• Mid-term elections– Senate makeup
• 52 Democrats• 2 Independents• 46 Republicans
– House makeup• 234 Republicans• 201 Democrats
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Political Outlook
• Mid-term elections– PPACA will be front and center (again)– Job growth– Super majority?
• Senate + 21 seats• House + 56 seats
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Marketplace
• Overview– Now called “Marketplace”– Effective 1/1/14– Mississippi’s will be federally run– Vision is to be a one-stop shop for consumers– Vision is to decrease costs through
competition and subsidies– Carrier participation is weak– Plan design and network sufficiency
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Marketplace
• Notice– Disclosure Requirement
• Employer is responsible• Deadline is October 1, 2013• Description of services provided by Marketplace• May be eligible for subsidy• Consequences for dropping employer coverage• Model Notices available• Penalty?
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Individual Mandate
• Overview– Individuals must maintain “minimum essential
coverage” or pay a penalty– Effective for 1/1/14– Penalty is greater of percentage of salary or
flat fee• 1% (2014), 2% (2015) and 2.5% (2016-)• $95 (2014), $325 (2015) and $695 (2016-)
– Certain exemptions– Penalty assessed on individual tax filing
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Employer Mandate
• Overview – Only applies to large employers– Requires large employer to offer coverage
that meets certain requirements or pay a penalty
– Original effective for January 1/1/14– Government recently announced delay– No penalties will be assessed until 2015
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Employer Mandate
• Big (“Sledge Hammer”) Penalty – Mechanics
• “Large” employers that fail to “offer” “minimum essential coverage” to “substantially all” of its “full-time employees” and their “dependents” will be subject to a $2,000 per employee penalty if any full-time employee goes to an Exchange and qualifies for a subsidy. Penalty is calculated based on the total number of full-time employees (minus 30).
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
• “Large Employer” Status– Average of 50 or more full-time employees on
business days– Look at preceding calendar year (2014)– “Full-time” defined as 30 or more hours of service per
week– Part-time employees represent FTEs (total hours /
120)– Aggregation rules (controlled group) apply
Employer Mandate
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Employer Mandate
• “Offer” of Coverage• Employee must have an effective opportunity to
accept coverage at least once during the plan year– Electronic offer permissible– Facts and circumstances– No “offer” for a month unless coverage available for
every day of month
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Employer Mandate
• “Minimum Essential Coverage”– Employer-sponsored GHP plan offered on the
small or large group market
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Employer Mandate
• “Substantially All”– An employer will be deemed to have offered covered
to “substantially all” full-time employees and their dependents if:• Coverage is offered to 95% of full-time employees and their
dependents (or, if greater, 5 employees)• Failure to offer to 5% need not be inadvertent (i.e., planning
opportunity)• Does not eliminate penalty for 5%
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Employer Mandate
• “Full-Time Employees”• Part-time employees are excluded• Full-time employees only
– 30 “hours of service” per week– 130 “hours of service” per month– Hours worked v. “hours of service”
• Common law definition of “employee”• Full-time status measured monthly on an ongoing
basis• Safe harbors mitigate impact of month-to-month
analysis
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Employer Mandate
• Variable Hour Employees – Measurement period
• 3 to 12 months• Standard (ongoing employees) (SMP)• Initial (new employees) (IMP)
– Administrative period • Optional • Up to 90 days
– Stability period • Generally same as SMP or IMP
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Employer Mandate
• Variable Hour Employees– Transition relief is gone– All large ER’s must comply with mandate on
1/1/14– ER’s with VHEs will commence safe harbors
in 2013• 10/3/13 to 10/1/14 SMP• 10/1/14 to 12/31/14 Administrative period• 1/1/15 to 1/1/16 Stability period
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Employer Mandate
• “And Their Dependents”– The employer is required to offer coverage to
“dependents”• Does not include spouse
– Spousal carve out?
• Does include son, daughter, stepson, stepdaughter, adopted child, child placed for adoption, and foster children up to age 26)
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
• Example – No coverage (or coverage but not to
substantially all):• Employer A has 100 full-time employees. • Employer A does not offer coverage to any of its
employees. • Employer A owes $2,000 for each full-time
employee minus 30, so Employer A owes a total penalty of $140,000 (100 – 30 = 70; 70 x $2,000 = $140,000)
Employer Mandate
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Employer Mandate
• Little (“Tack Hammer”) Penalty– Mechanics
• Large employers that offer coverage will be subject to a $3,000 per employee penalty if the coverage is either not “affordable” or does not meet “minimum value,” and as a result, any full-time employee qualifies for a subsidy. Penalty is calculated based on the number of full-time employees who obtain a subsidy (with a maximum penalty cap).
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
• “Affordable”• Employee’s premium for single coverage is greater
than 9.5% of employee’s household income– W-2 safe harbor– Rate of pay safe harbor– FPL safe harbor
Employer Mandate
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Employer Mandate
• “Minimum Value”• Employer pays less than 60% of total allowed
costs • Not a contribution rate• Tests
– MV Calculator – Safe Harbor Checklists (waiting)– Actuary
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
• Example– No “affordable” coverage
• Employer B offers health coverage and has 100 full-time employees, 20 of whom receive a tax credit and enroll in the Exchange.
• Employer B owes $3,000 for each employee receiving a tax credit, so it owes a penalty of $60,000. (20 X $3,000 = $60,000)
• The penalty is capped at the amount Employer B would have to pay if it offered no coverage at all.
Employer Mandate
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
• Questions/Issues– Transition Relief?
• Fiscal Year or 1/1/14 for everyone
– FTE going from 30 to 40?– Subsidies on Federal Exchanges?
• Judicial scrutiny
– Difference in Eligibility for Subsidies• Americans v. non-Americans
Employer Mandate
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Plan Design Changes
• Probationary Periods– Effective for plan years beginning on or after
1/1/14– Cannot exceed 90 days– 90 days exact– Calendar days (not business days)– EEs currently serving probationary period– Cumulative hours standard OK– Substantive eligibility standard OK
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
• Cost Sharing Limits– Out of pocket
• Effective 1st day of plan year beginning on or after 1/1/14
• GF plans excluded• $6,350 / $12,700• Everything accrues to OOP
– Deductible, Co-payments, Rx Co-payments
• Transition relief for plans using separate TPAs
Plan Design Changes
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Plan Design Changes
• Prohibition on pre-existing condition exclusions
• Prohibition on annual limits• Clinical Trials
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Wellness Rules
• Overview– Effective 1st day of plan year beginning on or
after 1/1/14– Codified existing HIPAA guidelines– Increased employer incentives
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Wellness Rules
• Overview– Participatory programs– Health contingent programs
• Activity based• Outcome based
– ER has flexibility in design
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Wellness Rules
• Health-Contingent Programs– Limited reward
• 30% or 50% if tied to tobacco use– Annual qualification– Reasonable in design– Reasonable alternative
• Difference between activity and outcome-based programs– Plan disclosure
• Availability of reasonable alternative• Physician accommodation• Contact information
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
• Between now and 1/1/15– Restructure part-time workforce– Independent contractor verification– Begin measurement periods– Compliance test wellness programs
• Affordability for tobacco-free programs
Action Items
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be
used by any taxpayer to avoid penalties under the Internal Revenue Code.Proprietary and Confidential. Not for Distribution
Questions & Answers
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