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Affordable Care Act Employer Provisions Chapter 11 pp. 411 - 463

This text provides an overview of the Affordable Care Act (ACA) employer provisions and the different types of health coverage available. It discusses minimum essential coverage, excepted benefits, and wraparound coverage, among other topics.

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Affordable Care Act Employer Provisions Chapter 11 pp. 411 - 463

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  1. Affordable Care ActEmployer ProvisionsChapter 11 pp. 411 - 463 2015 National Income Tax Workbook™

  2. pp. 412-413Types of Health Coverage • Minimum Essential Coverage (MEC) • Individual must have • Large employer must provide to full-time EEs • Excepted Benefits: Not = MEC • Will not satisfy employer mandate • Will not satisfy individual mandate

  3. pp. 412-413Types of Health Coverage – MEC • Eligible employer plans • Individual state Marketplace plans • Certain Government plans • Grandfathered plans • Coverage recognized by HHS

  4. Types of Health Coverage pp. 413-414Excepted Benefits • Always Excepted Benefits – listed p. 413 • Limited Excepted Benefits • FSA • Limited-scope dental or vision benefits • Benefits for long-term care/nursing home • Employee Assistance Program (EAP) • Noncoordinated and supplemental • Wraparound Coverage

  5. Types of Health Coverage p. 414Excepted Benefits • Wraparound Coverage – Pilot Program • Offer coverage no earlier than 1/1/2016 • Offer coverage no later than 12/31/2018 • Coverage to end 3 years after 1st offered • Annual reporting requirements • Wraparound eligible individual coverage or coverage in a multistate plan

  6. Types of Health Coverage p. 414 Excepted Benefits • Wraparound Coverage – Individual • Eligible individuals • Cannot be in health FSA • Limited to part-time EEs or retirees • Can cover spouse/dependents • ER must offer full-time EEs coverage substantially similar to ACA coverage

  7. Types of Health Coverage p. 414Excepted Benefits • Wraparound Coverage –Multi-state Plan • Coverage must be approved by OPM • Provides benefits in conjunction w/ multistate plan • In 2013 & 2014 Employer • Offered coverage substantially similar to ACA required offers to full-time in 2015 • Offered affordable, minimum value coverage to “substantial portion” of full-time • Annual employer payments for primary and wraparound coverage ≥ 80% of 2013 or 2014 $

  8. p. 415ACA Employer Timeline -2015 • Employer & insurer reporting required • All large ERs & small ERs if self-insured • No ESRP for some ERs with 50 – 99 FTEs • Excise tax relief • Small employers through 6/30/15 • For health care arrangements re: 2% S corp S/H through 12/31/15

  9. p. 416ACA Employer Timeline - 2016 • Employer & insurer reporting required • All large ERs & small ERs if self-insured • ESRP could apply to all ALEs • Excise tax relief • For health care arrangements re: 2% S corp S/H if no guidance issued yet • SHOP available to ERs with ≤ 100 FTEs • 2015 PACE Act: 100 to be State decision

  10. p. 417Whistleblower Protection § 1558 of ACA expands protection to EEs who • Received a PTC • Provided/will provide info relating to any act or omission employee believes violates ACA • Testified/will testify regarding such violation • Assisted/participate in related proceeding • Objected to/refused to participate in activity EE believes to be in violation of any part of ACA

  11. p. 417Whistleblower Protection Prohibited Acts • Demotion or reassignment to less desirable job • Denial of overtime, benefits, promotion • Harassment, intimidation, threatening behavior • Reduction in pay or hours • Wrongful discharge/termination

  12. p. 417Whistleblower Protection Effects on Employer • Adverse OSHA determination – reinstate, back pay w/interest, damages, related fees • Substantial ESRP penalty • Financial reward to EE of 15% to 30% of collected ESRP Practitioner Note: Staff Education a Must!

  13. p. 418Employer Shared Responsibility Payment(ESRP) Applicable large employer (ALE) liable if ≥ 1 full-time employee (FT EE) gets premium tax credit (PTC) AND ALE did not offer MEC to FT EEs or offers MEC to < 95% of FT EEs and dependents or MEC not affordable, w/o minimum value (MV), or MEC not offered to FT EE getting PTC

  14. 2015 Transition Relief pp. 418-41950-99 Employee Relief • No potential ESRP in 2015 if • FTEs in 2014 were at ≥ 50 < 100 • No reduction in # of EEs or EE hours from 2/9/14-12/31/14 • No elimination or material reduction in coverage offered 2/9/14-12/31/14 • Applies to plan years beginning in 2015

  15. 2015 Transition Relief pp. 418-41950-99 Employee Relief • Not considered elimination or material reduction in coverage if: • ER contributions ≥ 95% of $ or ≥ % of cost paid on 2/9/14 • Benefits changed but still MV • Class of EEs covered not narrowed or reduced from those covered 2/9/14

  16. 2015 Transition Relief pp. 418-41950-99 Employee Relief • Relief applies to all months of a plan that begins in 2015 (includes those in 2016) • If qualifies for relief, still an ALE in 2015 • Required to file information returns • ER certifies qualification on Form 1094-C • Box 22C in Part II

  17. 2015 Transition Relief p. 419> 100 Employees Relief • Coverage requirement met if offer to ≥ 70% of full-time EEs • Check Box 22C, Part II, on Form 1094-C

  18. p. 419Applicable Large Employer (ALE) • Employer with ≥ 50 FTEs in 2014 • For-profit, nonprofit, or gov’t entity • Businesses under common control • One employer for ALE determination • Separate for ESRP determination

  19. p. 419Businesses Under Common Control Ex. 11.1 Corp Z owns 100% of Y and X 2015 FTEs: Z: 0 Y: 30 X: 40 FTEs combined ≥ 50, each is an ALE If 70 in 2014 & group met all 3 conditions, could qualify for 50-99 relief in 2015

  20. p. 420Businesses Under Common Control Ex. 11.2 Business as sole prop 2015: 15 FTEs Owns 80% of ABC P/S 2015: 40 FTEs Sole prop and ABC P/S = 1 Employer Sole prop and ABC P/S are ALEs for 2016 If 2014 FTEs of 55, will be ALE for 2015 but may qualify for 2015 50-99 relief

  21. p. 420Businesses Under Common Control If businesses under common control determined to be an ALE • Each separate business treated as an ALE • ESRP determined separately for each • Each must file reporting forms for 2015 • Qualification for 50-99 relief made by the group combined, not each separately

  22. p. 420First Year of Existence Not in existence any business day of prior year • Will be ALE in current year if: • Expects to employ average of 50 FTEs and • Does employ average of at least 50 FTEs • For 2015 can qualify for 50-99 relief if for 2015 • Reasonably expects to employ < 100 FTEs • Reasonably expects & does meet tests for workforce, hours, coverage from first day

  23. p. 420Full-Time Employees Full-time = 30 hour/week average or 130 hours any given month All employees in for ALE determination • Must include those exempt from coverage • Must include those eligible for other coverage • Seasonal worker exception • Religious order exception – vow of poverty

  24. p. 421Full-Time Equivalents Using those working < 30 hours/week • Total hours per month (up to 120 each) • Divide total by 120 • Round to nearest one hundredth

  25. p. 421ALE Determination • Determine average FTE count of prior year • Total full-time employers and full-time equivalents for each month • Add together all months totals • Divide yearly total by 12 • For 2015 determination only, may use any consecutive 6-month period in 2014 • Example 11.2

  26. p. 422Hours of Service • Hour worked or not worked for which EE paid or is entitled to pay • Includes vacation, holiday, illness, layoff, jury duty, military duty, disability, any paid absence • Does not include: • Bona fide volunteer for a government or tax-exempt entity in federal work-study program • Compensation constituting income from sources outside the U.S.

  27. pp. 422-423Hours of Service • Seasonal Workers • One performing labor or services on a seasonal basis (farm, holiday retail workers) • Counted in number of FTEs • If average FTEs > 50 for ≤ 120 days in year & seasonal workers caused excess, no ALE • 4 calendar months = 120 days • 120 days/4 months need not be consecutive

  28. pp. 422-423Hours of Service • Adjunct faculty: 2.25 hours/teaching hour + 1 hour for each hour outside classroom • Paid interns counted same as other employees • Shared employees • Treated as 1 employer, all hours counted • Treated as separate, allocate hours • Layover hours – p. 423 • On-call hours – p. 423

  29. pp. 423-424Coverage • ALE must offer coverage to full-time employees • Affordable AND • Provides minimum value • 2015: Offer to 70% of full-time • 2016 and later: Offer to 95% of full-time • Offered for a calendar month if for FULL month • January 2015: Coverage offer by first day of first pay period treated as January coverage

  30. p. 424Full-time Employees - Coverage • Methods to determine is full-time for coverage requirement (who must be offered coverage?) • Monthly measurement method • Look-back measurement method • Look-back method cannot be used in determining full-time for ALE determination

  31. p. 424 Full-Time Employees – CoverageMonthly Measurement Method • Identify full-time based on hours of service per month 130 hours/month (30/week) • New Employee: • No ESRP if (must meet both) • Coverage by day after 3 full calendar mos. • Coverage provided has MV • Applies only once per employment period • Relief even if employee leaves < 3 months

  32. p. 424 Full-Time Employees – CoverageMonthly Measurement Method • Rehired Employee • Treated as continuing employee if period with no hours of service is • Less than 13 weeks • Less than 26 weeks if educational org. • May treat as new hire if period of no hours is ≥ 4 consecutive weeks & such period exceeds length of immediately preceding employment

  33. p. 424 Full-Time Employees – CoverageLook-Back Measurement Method • Full-time status determined for future period (stability period) based on hours worked in prior period (measurement period) • Measurement Period • At least 3 months but not more than 12 • Employer chooses start and end • Must be uniform w/in EE category

  34. pp. 424-425 Full-Time Employees – CoverageLook-Back Measurement Method • Administrative Period • Optional period • Time to determine EE’s status and notify EEs of status and eligibility • No > 90 days (can differ for EE categories) • Between measurement and stability • Overlaps prior stability – no coverage break

  35. p. 425 Full-Time Employees – CoverageLook-Back Measurement Method • Stability Period • EE averaging 30 hours/week treated as full-time in subsequent stability period • Regardless of hours in stability period • At least 6 consecutive months long • No shorter than measurement period

  36. p. 425 Full-Time Employees – CoverageLook-Back Measurement Method Example 11.6 - 2015 Measurement Period for May 2015 – Oct 2015 Stability Period Measurement Period for Nov 2015 – Apr 2016 Stability Period

  37. p. 425Employee Categories • Measurement, stability, admin periods may vary in length, start, end for each employee category • Collectively bargained EEs and non-collectively bargained EEs • Each collectively bargained group under separate agreement • Salaried and hourly employees • Employees primarily in different states

  38. pp. 425-426 Full-Time Employees – CoverageLook-Back Measurement Method • New Employees: Reasonably expected to be full-time employee • Determine status based on hours/month worked • Becomes ongoing EE after employed for one complete standard measurement period • Once an ongoing EE, the ER may apply the look-back method for future periods

  39. p. 425 Full-Time Employees – CoverageLook-Back Measurement Method • New Employees: Variable-hour employee, seasonal, part-time • Determine status with initial measurement period of 3-12 months • Initial measurement must begin employee’s start date up to 1st day of next calendar month • Stability period must = that of ongoing EEs

  40. p. 426 Full-Time Employees – CoverageLook-Back Measurement Method • Factors for “reasonably expected” • Replacing a full-time or variable-hour employee • Service hours of those in same or comparable positions in recent measurement periods • Whether job was advertised or otherwise communicated as involving certain level of hours per week

  41. pp. 426-427Minimum Value • Minimum Value (MV) is covers at least 60% of total costs of plan benefits expected (bronze) • Options for determining • HHS website calculator • Plan designed to meet safe harbors • Actuarial Certification • HSA/HRA (integrated with ER plan) contributions by ER count as costs if cannot pay plan premiums

  42. p. 427Minimum Value – Notice 2014-69 • Minimum value ONLY if meets 60% test PLUS Benefits include substantial coverage of inpatient hospital services & physician services • New definition applies to 2015 plan years • Certain plans in process at 11/4/14 excepted

  43. p. 427 Minimum Value – Notice 2014-69 • ALEs with nonhospital/nonphysician plans will not be subject to ESRP on 2015 plan if: • Binding written commitment to adopt such a plan prior to 11/4/2014 • Enrolled employees prior to 11/4/2014, relied on HHS MV calculator and plan year begins no later than 3/1/2015 • EEs may treat all such plans as without MV for purposes of PTC

  44. p. 427Affordable Coverage • ER coverage not affordable if self-only premiums exceed 9.56% of EE’s 2015 household income • Employer safe harbors – Employee premium for lowest cost self-only plan does not exceed • 9.5% Form W-2 wages • 9.5% Employee’s rate of pay • 9.5% Federal poverty line • Safe harbor used reported on Form 1095-C

  45. p. 427Liability for ESRP ALE liable for an ESRP if ≥ 1 full-time employee gets premium tax credit AND Employer failed to offer MEC to 70% of full-time employees for 2015 (95% for 2016) OR Coverage offered not affordable, not of minimum value, or not offered to employee getting the PTC

  46. p. 431 Offer of Health Coverage • Offer made if employee has effective opportunity to enroll or decline once per plan year • If coverage continued, provide chance to opt out • First year as an ALE – no ESRP for Jan-Mar if coverage offer by April 1 • Not first year as ALE in 2015 (2016) if met ALE definition in a prior year 2014 (2015)

  47. pp. 431-432Dependent Coverage - Transition Relief • 2015 plan year - no ESRP if • Dependent coverage not offered, • Dependent coverage offered not of MV, or • Dependent coverage offered to some but not all • N/A if dependent coverage offered in 2013 or 2014 plan year and was dropped • Applies to dependents not offered in 2013/14 if steps taken in 2014/15 to extend them coverage

  48. p. 432Notices to Employers • Section 1411 Certification • Sent to employer by Exchange when an employee determined eligible for PTC • Employer may appeal – within 90 days • Appeal determination sent to employer and employee • Appeal determination does not affect employer ability to challenge a later IRS ESRP proposal

  49. p. 433 ESRP Calculation - § 4980H(a) 2015 Offer not made to 70% of FT EEs and ≥ 1 FT EE gets PTC (based on Section 1411 certifications) ESRP = $2,080 x (# full-time employees – 80) • FT equivalents and employees in a limited nonassessment period not in # of full-time • 80 reduction is allocated if in related group • Computed monthly if offer made for some months

  50. p. 433 ESRP Calculation - § 4980H(a) • Example 11.12 • 102 FTEs in 2014 => ALE in 2015 • 92 full time in 2015 • Offer to 50 full time, 50/92 = 54% • 2 full-time employees qualify for PTC • ESRP = $2,080 x (92 – 80) = $24,960

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