Health Care Reform November 2013

1. Health Care Reform November 2013 Presenter: Rose Miller of Pinnacle Human Resources, LLC

2. About Pinnacle Human Resources Rose is the Owner of Pinnacle Human Resources, LLC located in Albany, NY. A human resources professional for over twenty years, her expertise is in partnering with companies to find solutions for their human resources delivery system. Providing strategic HR support and expert HR best practices, she helps clients reduce costs and focus on their core business. She offers clients customized solutions that fit any size company. Her firm offers HR audits, Employee handbook preparation, On-site and off-site HR support, Payroll, Medical leave administration, Training, HRIS assistance, Performance and Compensation programs, Talent acquisition and Merger/Acquisition assistance. Rose has held many board positions, most recently on the Board of Directors for the Albany-Colonie Chamber of Commerce. She is was awarded Women of Excellence award in 2007 from the Women’s Business Council and Human Resources Professional of the Year in 2013 from the local chapter of the Capital Region Human Resources Association. 7 Century Hill Drive, Latham, NY 12110 518-486-8151, rmiller@pinnalcehrllc.com www.pinnaclehrllc.com

3. Staying Competitive • Insurance is a Competitive Advantage • Compensation and Benefits Analysis • Recruitment and Retention • Employee Satisfaction • Aligning Benefits to Your Employees

4. Affordable Care Act – Health Care Reform • The need for health care reform. • 2.7 Million (16%) New Yorkers under age 65 lack health insurance. • Between 2000 and 2009, health insurance premiums in NY grew by 92%, while median earnings only rose by 14%. • Who’s impacted by the ACA: • Small Businesses • Large Employers • Individuals

5. Health Insurance Exchanges • On April 12, 2012, Governor Cuomo signed Executive Order 42 to establish the New York Health Benefit Exchange. • The Executive Order establishes the New York Health Benefit Exchange “within the Department of Health” to carry out the requirements f ACoA. • Two Programs: • “Individual Exchange” • “Employer Exchange” - Small Business Health Options Program (SHOP). • Deadlines • Open enrollment: 10/1/13- March 31, 2014 (first year only) • Fully operational: 1/1/14

6. What is an Exchange? • Organized Marketplace for individuals and small employers to compare and purchase health plans. • Small Business Health Option Program (SHOP) • Small employers = up to 50 employees (NYS) • Individuals and small employers can be eligible for tax credits/subsidized coverage • Enhanced small business health care tax credit only available through the SHOP.

7. Is there an Employer Mandate? • Small Employer = Less than 50 Full-Time Equivalent (FTE) Employees • No requirement to offer Health insurance. • Not subject to “play or pay” Penalty. • Large Employer = 50 or more Full-Time Equivalent (FTE) Employees • Subject to Employer Shared Responsibility Provisions of ACA – Insurance must be affordable • Penalties postponed until 2015

8. Individual Mandate • Effective Jan. 1, 2014 • Individuals must have “minimum essential coverage” or pay a penalty • Exceptions • Low income or hardship • Coverage is unaffordable • Religious exemption • Incarcerated • Member of Indian tribe or health care sharing ministry • Short gap in coverage • Not lawfully present

9. Maximum credit 35% (25% for tax-exempt entities) 50% max credit (35% for tax-exempts) beginning 2014 Also beginning in 2014, you must buy the insurance coverage through the insurance exchange. Must cover at least 50% of employee’s single-person health insurance costs Maximum benefit 10 or fewer employees Average employee wage of $25,000 or less Credit phase out # of employees increases from 10 – 25 Average employee wage from $25,000 - $50,000 IRS Form 8941 Small Employer Health Insurance Credit

10. Effective for 2012 W-2s Optional in 2012 for small employers (< 250 W-2s) Must disclose cost of health insurance provided to employees 2013 W-2s – All employers must comply! NOTE: Employer provided health insurance continues to be non-taxable to the employee W-2 Reporting

11. IRC §4980H – Effective 1/1/2014 Applies to “Applicable Large Employers” $2,000 per employee penalty – No health coverage offered $3,000 per employee penalty For each employee receiving a “premium tax credit” or “cost-sharing reduction” for health insurance purchased through a state exchange Employee eligible for “credit” or “reduction” if minimal essential coverage offered: covers < 60% of total cost, or is unaffordable (> 9.5% of employee’s household income) Calculated on a monthly basis Shared Responsibility Penalty - Business

12. Average of at least 50 FT employees in preceding calendar year FT employee = 30 hours per week (120 hours per month) PT workers (< 30 hours per week) must be converted to FTEs Monthly FTEs = # of PT employees x hours per month ÷ 120 If FT employees + FTEs > 50, then have “shared responsibility” If FT employees + FTEs < 50, then no “shared responsibility” Seasonal workers excluded from calculation Retail workers for holiday season, ski slope employees, etc. If seasonal employees cause workforce to exceed 50 employees for ≤120 days per year, then not subject to shared responsibility provisions of ACA > 200 Employees = automatic enrollment for FT employees Subject to “Controlled Group” rules (i.e.- business aggregation) Applicable Large Employer

13. If you determine you are not an applicable large employer, make sure you keep the calculation you made and the supporting documentation in case you have to prove at a later point in time. We highly recommend you seek professional help if you are close to the 50 FTE calculation. In addition, the controlled group and affiliated group rules are extremely complex. Accordingly, if you own an interest in multiple businesses take a close look at the ownership percentages and make certain all the businesses do not have to be combined when determining if you are an applicable large employer. Applicable Large Employer

14. Once a year employers will need to provide the government a report indicating the following: Who is being provided services What insurance coverage are you offering What are the costs We are still awaiting further guidance as to how this is to be done. Employer Reporting

15. Why Counting Heads Counts • A Workforce Analysis as a cost containment strategy: • 1. Is it possible to stay under 50? • Workflows – Full Time and FTEs • Right sizing • For Employers clearly over 50 • Eliminating “dead wood”. • Make every head count. • Keep only the best. • Right sizing

16. Make Full Time = 30 hours (if ACA definition doesn’t change) Creative Classes - Traditional org chart or annual salary? Lowest earner pays the least? Give lump sum versus percent- Control costs, Employee use $$ where needed? Current Trends

17. Shop around and get the right advisors. You have more choices! Did you send out your notices?. Have meetings with Employees (eligible and non-eligible!) Are you small? Do you consider dropping insurance? Consider a workforce analysis to determine if workflows have the right number and type of employees. Document your findings and decisions. Check with your CPA on tax credits and other tax implications of ACA Current Issues

18. Thank you for attending! We hope you found this information useful and informative.