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ACA Update Focused on the Employer Mandate Final Regulations. Shenandoah University Business Symposium March 25, 2014 John M. Peterson Kaufman & Canoles, P.C. (757) 624-3003. Disclosures.

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aca update focused on the employer mandate final regulations

ACA Update Focused on the Employer Mandate Final Regulations

  • Shenandoah University Business Symposium
  • March 25, 2014
  • John M. Peterson
  • Kaufman & Canoles, P.C.
  • (757) 624-3003

The following disclosure is required pursuant to IRS Circular 230 and applicable state and local tax provisions, the regulations that govern the practice of tax advisors. Any advice concerning Federal, state and local tax issues contained in this written communication (and any attachments) has not been written nor is it intended by the author or Kaufman & Canoles, PC to be used, and cannot be used, for the purpose of (i) avoiding federal, state or local tax penalties that may be imposed by the Internal Revenue Service or applicable state or local tax provisions, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. If a formal covered opinion intended to provide such protection is desired, please contact us to discuss the issues and costs involved in preparation of such a covered opinion.

Kaufman & Canoles is providing general education and not specific legal advice at this presentation.


PPACA Overview & Timeline

Health Insurance Reforms

Individual Mandate

Health Insurance Marketplace & Subsidies

Large Employer Mandate

the 4 patient protection affordable care act principles
The 4 Patient Protection &Affordable Care Act Principles
  • Health insurance reform (no medical rating)
  • Begets requirement that everyone have coverage or purchase insurance (individual mandate)
  • But health insurance is expensive so provide Federal financial assistance towards the cost (Marketplace subsidies)
  • But to control government subsidies have to require that large employers continue to subsidize their employees health insurance (employer mandate)
aca key events past
ACA Key Events- Past
  • March 23, 2010- PPACA enacted
  • June 28, 2012- Supreme Court validates
  • November 6, 2012- election, no change
  • December 28, 2012- employer mandate proposed Regs
  • January 1, 2013- .9% & 3.8% “pay for” taxes began
  • March 2013- “Exchange” became “Marketplace”
aca key events past1
ACA Key Events- Past
  • July 1, 2013- original deadline to start tracking employee hours (large vs. small, look-back measurement period)
  • July 9, 2013- employer mandate delayed until 2015
  • October 1, 2013- distribution of Marketplace notice, first Marketplace open enrollment period began ( website rough opening)
aca key events past2
ACA Key Events- Past
  • January 1, 2014
    • Health insurance reforms began (or at 2014 insurance renewal)
    • Health insurance Marketplace coverage and subsidies began (if purchased by 12/23/13)
    • Individual mandate & penalties began (subject to exceptions, exemptions)
aca key events recent soon
ACA Key Events- Recent/Soon
  • February 10, 2014- IRS issued final regulations on the employer mandate (4980H)
    • New 1 year delay for 50-99 employees
    • Other transitional relief & clarifications
  • March 6, 2014- IRS issued final regulations on the large employer information reporting requirements and processes associated with determining liability for the employer mandate
  • March 31, 2014- Initial Marketplace open enrollment period ends (applications made by this date avoid individual mandate penalty for 2014)
aca key events future
ACA Key Events- Future
  • July 1, 2014- new deadline to start tracking employee hours (large vs. small, look-back measurement period)
  • November 15, 2014 - February 15, 2015- Marketplace open enrollment period for 2015 coverage
  • Maybe in 2014? – IRS issues Regulations preventing discrimination in how employer provided group health insurance is offered/utilized
aca key events future1
ACA Key Events- Future
  • January 1, 2015 (or first day of 2015 health plan year)- large (>99) employer mandate & penalties begin
  • January 1, 2016 (or first day of 2016 health plan year)- large (50-99) employer mandate & penalties begin
  • January 31, 2016- Large (>49) employers file 2015 forms (1094-C full time count and 1095-C offer of minimum essential coverage by employee/month)
  • ?? Regulations on auto-enrollment >200 employees
  • 2018- 40% “Cadillac” coverage excise tax begins
4 health insurance markets
4 Health Insurance Markets
  • Individual (on and off exchange/Marketplace)
  • Small Group (<50 in 2014 and 2015, <100 in 2016, possibly larger in 2017 and future)
  • Large Group
  • Self-funded/self-insured

(Grandfathered plans enjoy some exceptions)

major insurance reforms
Major Insurance Reforms
  • No health based ratings/underwriting (community rating)
  • Guaranteed issue & renewability
  • No annual dollar limits on essential health benefits
  • No lifetime dollar limits on essential health benefits
major reforms mandates
Major Reforms/Mandates
  • No-cost preventive care (no co-pays or deductibles)
    • Includes contraception for women
  • Cover dependent children through month turn 26 (includes step and foster children)
major reforms mandates1
Major Reforms/Mandates
  • Maximum 90 day waiting period from date of eligibility
    • Eligibility based on lapse of time = 90 days from hire
    • Eligibility based on orientation period not > 1 month + 90 days
    • Eligibility based on average hours per period can measure for 1 year then offer within 1 month
    • Eligibility based on cumulative hours (1,200 max)
major reforms mandates2
Major Reforms/Mandates
  • Deliver new Summary of Benefits and Coverage (SBC)
  • Expanded claims and appeals procedures
  • No rescission of coverage (except fraud or misrepresentation)
  • Non-discrimination requirements (when guidance issued)
individual and small group reforms
Individual and Small Group Reforms
  • Premiums established by geographic rating area (not health of individual or group)
  • Premium age banding at maximum 3 to 1 disparity (age 64 vs. age 21)
  • No sex based ratings
age banding
Age Banding

0-20 0.635

21 1.000

25 1.004

30 1.135

35 1.222

40 1.278

45 1.444

46 1.500

48 1.635

50 1.786

53 2.040

55 2.230

60 2.714

65 3.000

individual and small groups must cover 10 essential health benefits
Individual and Small Groups Must Cover 10 Essential Health Benefits
  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health & substance abuse
  • Prescription drugs
  • Rehabilitative & habilitative services
  • Laboratory services
  • Preventive & wellness services & chronic disease management
  • Pediatric care, including dental & vision
comments on ehb
Comments on EHB
  • Notable medical services not EHB:
    • Cosmetic surgery
    • Adult dental and eye exams
    • Acupuncture
    • Routine foot care
    • Infertility
    • Weight loss programs & surgery
    • Long term care
    • Private nursing
comments on ehb1
Comments on EHB
  • Level of EHB benefits set by “benchmark” plan (example types of prescriptions)
  • Virginia benchmark plan requires coverage for:
    • Adult eye exams
    • Routine foot care
    • Infertility
no individual policy delay in virginia
No Individual Policy Delay in Virginia
  • Responding to angst over cancellation of non-ACA compliant individual policies a 1 year (now 3 year) grandfathering is allowed if authorized at state level and carriers agree
  • Virginia Board of Insurance has rejected and insurance carriers are not willing to extend non-compliant policies- no delay in Virginia
health reforms enforcement the forgotten 100 day penalty
Health Reforms Enforcement- The Forgotten $100/day Penalty
  • Section 4980D excise/penalty tax
    • $100/day per affected employee ($36,500/year)
    • Applies to all size employers
    • Not delayed, already in effect in 2014
    • Self report on IRS form 8928
  • Self-correct within 30 days = no penalty
  • “Reasonable cause” cap at 10% of health costs
health reforms enforcement the forgotten 100 day penalty1
Health Reforms Enforcement- The Forgotten $100/day Penalty
  • Most reforms baked into health insurance contract, little employer concern
  • Employer concerns:
    • Failure to distribute SBC
    • Exceeding maximum 90 day wait
    • Deny free contraception (litigation)
individual mandate 2014
Individual Mandate 2014
  • Beginning with the month of January, 2014, everyone must have “minimum essential coverage” (MEC) or be penalized for each full month without coverage (unless exception/exemption applies)
  • Includes you, your spouse (if filing jointly) and your dependents (all individuals included on the tax return)
  • Coverage can be purchased from your or your spouse’s employer (if offered), on the individual market, from the Marketplace or provided by Medicare, Medicaid, Tricare, CHIP or other government programs
individual mandate
Individual Mandate
  • Penalty = greater of flat dollar amount per person or specified percentage of household income in excess of income tax filing threshold:
    • 2014 $95 or 1% of excess
    • 2015 $325 or 2% of excess
    • 2016 $695 or 2.5% of excess
  • Household income is Adjusted Gross Income (AGI) with the following add backs:
    • Foreign income excluded from AGI
    • Tax exempt or excluded interest
    • Any Social Security benefits not already included in AGI
individual mandate1
Individual Mandate
  • Income tax filing thresholds (2013)
    • Single $10,000
    • Married filing joint $20,000
  • Dependent income included if dependent required to file an income tax return (parent can elect to include)
  • Dollar penalty for dependents under 18 is 50% of regular amount
  • Maximum dollar penalty for any household is 3 times the dollar amount
individual mandate2
Individual Mandate
  • 2014 Example:
    • 5 person household (2 parents, adult child >17 and 2 children <18), none insured
    • Household income $50,000, assume filing threshold $20,000
    • Dollar penalty before limitation = $380 (3 adults and 2 children @ 50% = 4 x $95)
    • Capped dollar penalty $285 ($95 x 3)
    • % penalty $300 ($50,000 - $20,000 x 1%)
    • Pro-rate $300 penalty for # of months without coverage
individual mandate3
Individual Mandate
  • 2016 Example (same facts):
    • 5 person household (2 parents, adult child >17 and 2 children <18), none insured
    • Household income $50,000, assume filing threshold still $20,000
    • Dollar penalty before limitation = $2,780 (3 adults and 2 children @ 50% = 4 x $695)
    • Capped dollar penalty $2,085 ($695 x 3)
    • % penalty $750 ($50,000 - $20,000 x 2.5%)
    • Pro-rate $2,085 penalty for # of months without coverage
individual mandate4
Individual Mandate
  • Exceptions/exemptions from individual penalty:
    • Income below the tax filing threshold
    • Premiums for lowest cost plan available from employer or marketplace (Bronze) exceeds 8% of household adjusted gross income (net of marketplace subsidies)
    • Gap in coverage for less than 3 calendar months
    • Low income individuals in states not expanding Medicaid
    • Apply by 3/31/14 even if coverage not effective until 5/1/14 (4 month transition)
individual mandate5
Individual Mandate
  • Hardship exemptions (apply through HHS/Marketplace)
    • Eviction & homelessness
    • Death of close family member
    • Casualty to residence
    • Bankruptcy
    • Recent unpaid medical expenses
  • Estimated 24 million excepted/exempt
  • IRS can charge interest on unpaid penalty tax but prevented from collecting via tax liens and levies
    • Essentially can only collect from refunds
health insurance marketplace
Health Insurance Marketplace
  • What it is: a government operated online “storefront” in each state for residents to shop for and purchase individual health insurance
  • Had been called the “exchange” until spring 2013
  • Marketplace offers private insurer Qualified Health Plans (QHP), no government insurance involved
  • 14 states operating their own, 36 states operated my federal government (Federally Facilitated Marketplace)
health insurance marketplace1
Health Insurance Marketplace
  • All individuals lawfully present in the US and not incarcerated can shop for and purchase health insurance through the new health insurance Marketplace
    • Everyone can “comparison shop”
  • Only factors determining Marketplace rates are geographic location (“rating area”), age and smoker status
    • Virginia divided into 12 rating areas (see next slide)
    • 3 to 1 maximum age banding between ages 21 and 64
    • No rate difference due to sex or medical condition
    • Smokers (4 or more per week) = up to 50% rate hike
health insurance marketplace2
Health Insurance Marketplace
  • All policies graded based on “actuarial value”
    • Measure of relative generosity
    • What % of standard medical costs will policy cover
  • 4 “metal” tier insurance options
    • Bronze 60% actuarial value (AV)
    • Silver 70% AV
    • Gold 80% AV
    • Platinum 90% AV
catastrophic plan
Catastrophic Plan
  • In addition to the 4 metallic tiers the Marketplace will offer a high deductible catastrophic plan to certain individuals
    • Younger than age 30; or
    • No other coverage “affordable”; or
    • Obtained “hardship” exemption
  • Meets individual mandate but not eligible for subsidies
  • Covers 3 primary care visits and no-cost preventive care
12 virginia rating areas
12 Virginia Rating Areas
  • Blacksburg
  • Charlottesville
  • Danville
  • Harrisonburg
  • Bristol
  • Lynchburg

7. Richmond

8. Roanoke

9. Virginia Beach-Norfolk

10. Arlington/Alexandria

11. Winchester

12. All other non-MSA

lowest monthly virginia rates bronze coverage area 9
Lowest Monthly Virginia RatesBronze Coverage, Area 9

Age 21

Age 64+







Catastrophic $128.00

Bronze $166.20

Silver $211.00

2nd Lowest Silver $212.48

Gold $258.00

Platinum N/A

Note exact 3 to 1 ratio

marketplace enrollment periods
Marketplace Enrollment Periods
  • 2014 open enrollment 10/1/2013 – 3/31/2014
  • 2015 open enrollment 11/15/2014 – 2/15/2015
  • Special enrollment opportunities:
    • Marriage
    • Birth or adoption of a child
    • Permanent move to different rating area
    • Losing coverage other than by voluntary quit or failure to pay premium
shop marketplace
SHOP Marketplace
  • For small employers to purchase group coverage
  • Small means < 50 (< 100 in 2016)
  • Must use SHOP to claim Small Business Health Care Tax Credit
  • Direct enrollment via broker in 2014
  • Online enrollment promised for 2015
2 marketplace subsidies
2 Marketplace Subsidies
  • APTC- Individuals and families with household income between 100% and 400% of Federal Poverty Level who purchase through the Marketplace will be potentially eligible for “advance premium tax credits” paid directly by the Marketplace to their selected insurer
  • CSR- Those between 100% and 250% of FPL will receive “cost-sharing reductions” (reduced deductibles and co-pays) if they purchase at least “Silver” coverage (70% actuarial value)
  • Collectively = Marketplace “subsidies”
advance premium tax credit aptc
Advance Premium Tax Credit (APTC)
  • Individuals and households 100% to 400% FPL
    • Available to 47% of US households
    • 20% are below 100%
    • 33% are above 400%
  • Marketplace (HHS) pays APTC directly to selected insurer “in advance” based on representations of households estimated 2014 income
  • Individual/household pays a % of INCOME, government pays the balance
advance premium tax credits
Advance Premium Tax Credits
  • APTC operates by capping the individual/household share of the premium for 2nd lowest cost Silver plan at between 2% and 9.5% of household income
    • NOTE: APTC caps individual/household share of premium at a % of household income, not a % of the actual premium
      • Actual premium irrelevant to the individual/household
  • 100%-133% FPL pays 2% of household income for 2nd lowest cost Silver plan, government pays the balance
  • 300%-400% FPL pays 9.5% of household income for 2nd lowest cost Silver plan, government pays the balance
sample 2014 federal poverty levels lines fpl
Sample 2014 Federal PovertyLevels/Lines (FPL)
  • One person household
    • 100% FPL $11,670
    • 400% FPL $46,680
  • Two person household
    • 100% FPL $15,730
    • 400% FPL $62,920
  • Three person household
    • 100% FPL $19,790
    • 400% FPL $79,160
  • Four person household
    • 100% FPL $23.850
    • 400% FPL $95,400
aptc table
APTC Table
  • Percentage of household income contribution towards 2nd lowest cost Silver (70%) coverage in Marketplace:
    • 100% to 133% FPL 2%
    • From 133% to 150% 3% to 4%
    • From 150% to 200% 4% to 6.3%
    • From 200% to 250% 6.3 % to 8.05%
    • From 250% to 300% 8.05% to 9.5%
    • From 300% to 400% 9.5%
  • Between bands use inverse linear sliding scale
    • 225% FPL is half way between 200%-250% band
    • Household income contribution half way between 6.3% and 8.05% = 7.04%
  • See K&C detailed APTC chart
k c aptc chart
K&C APTC Chart
  • Example: $30,000 family of 4 falls at 125% FPL, pays 2% of income ($50/month) towards 2nd lowest cost Silver
  • Below 100% FPL no subsidy (Medicaid non- expansion gap)
  • Above 400% FPL no subsidy
oops aptc pay back
  • APTC provided “in advance” based on estimate of 2014 income and reconciled on individual tax return
  • Rarely exactly right- rates only smooth between
      • 100%-133% FPL (2%) and
      • 300%-400% FPL (9.5%)
  • If too little, claim additional refundable credit
  • If too much, repay to IRS, subject to maximum repayment limits
limits on aptc repayments
Limits on APTC Repayments
  • 100% to 200% FPL
    • Single $300
    • Married Filing Joint $600
  • 200%-300% FPL
    • Single $750
    • Married Filing Joint $1,500
  • 300%-400% FPL
    • Single $1,250
    • Married Filing Joint $2,500
aptc pay back example 1
APTC Pay Back Example 1
  • 4 person household estimates 2014 income @ $31,000 (130% FPL)
  • Assume 2nd lowest Silver premium = $10,000
  • Family share 2.0% x $31,000 = $620
  • APTC = $9,380
  • Wage earner gets $1,000 bonus, actual income goes to 135% FPL
  • Revised share of premiums 3.12% = $998
  • Owes $378 difference with tax return
aptc pay back example 2
APTC Pay Back Example 2
  • 4 person household estimates 2014 income @ $95,000 (barely under 400% FPL)
  • 2nd lowest Silver premium $12,000
  • Family share 9.5% x $94,000 = $8,930
  • APTC = $3,070
  • Wage earner gets $1,000 bonus, goes above 400% FPL
  • Loses entire $3,070 APTC (300% tax rate!)
cost sharing reductions csr reduced deductibles co pays never subject to repayment
Cost Sharing Reductions (CSR)(Reduced Deductibles & Co-Pays)Never Subject to Repayment

100%-150% FPL

150%-200% FPL

200%-250% FPL

70% Silver increase to 94%

70% Silver increase to 87%

70% Silver increase to 73%

employer vs marketplace subsidy
Employer vs. Marketplace Subsidy?
  • To be eligible for Marketplace subsidies employee cannot be offered “adequate” and “affordable” coverage from employer
  • “Adequate” means at least Bronze (60% actuarial value) coverage- virtually all current offerings meet this standard
  • “Affordable” means the employee’s share of the self-only coverage premium cannot be more than 9.5% of his income
  • If employer offers coverage for spouse and/or dependents (even if entire premium paid by employee) then spouse and dependents are also ineligible for Marketplace subsidies
  • Employer may be inadvertently “harming” certain lower income employees by offering coverage
subsidy analysis required
Subsidy Analysis Required
  • Analyze workforce to determine value of Marketplace subsidies
  • Requires knowledge of employee’s household size and household income
  • Household size: taxpayer, spouse if filing joint, dependents
  • Household income: taxpayer, spouse if employed, dependents if required to file a tax return
  • Compare cost of coverage in Marketplace (net of subsidies) to cost of employer group coverage
illustrating the subsidies
Illustrating the Subsidies
  • Joe Employee age 35 earns $30,000/year ($15/hour) and supports a family of 4 (unemployed spouse age 35 and 2 children under age 20), falls at 126% Federal poverty level
  • Joe lives in Virginia Beach (Virginia Rating Area 9)
  • 2nd lowest cost silver plan (70% actuarial value)
      • Total annual premium for all 4 = $9,470
      • Family share of premium 2% of income = $50/month = $600/year
      • APTC $9,470 - $600 = $8,870
      • Cost sharing reductions increase to 94% AV
illustrating the subsidies1
Illustrating the Subsidies
  • Buy down to Bronze (60% actuarial value) family coverage
      • Total annual premium $7,407
      • APTC of $8,870 covers entire cost
      • Family share of premium $-0-
      • But no cost sharing reductions since didn’t buy Silver
      • $50 month upgrades from 60% Bronze to 94% better than Platinum
aca savings for employee
ACA Savings for Employee
  • Employer of “Joe Employee” currently offers Bronze (60%) coverage at a cost to Joe of $200/month for the self-only premium with an option to add the family for $700/month (employer subsidy $200/month)
  • Offering is “adequate” (Bronze) and affordable (self-only premium <9.5% of wages) so Joe cannot receive any Marketplace subsidies
aca savings for employee1
ACA Savings for Employee
  • Employer decides it’s $200/month contribution can’t come close to the Marketplace subsidies
  • Employer eliminates Joe from employer plan and raises his pay by $200/month effective 1/1/2014 so Joe can take advantage of $9,000+ of Marketplace subsidies
aca savings for employer
ACA Savings for Employer
  • Small law firm currently pays the $7,000 insurance cost for the 3 person family of a valued employee making $35,000/year
  • Firm learns that 3 person $35,000 household falls at 177% FPL and household contribution is 5.24% of income ($1,834/year)
aca savings for employer1
ACA Savings for Employer
  • Firm drops employee & family from coverage and raises employee’s salary by $2,500 effective 1/1/2014
  • Firm assists employee in purchasing Silver coverage (enhanced to 87% AV) through the Marketplace (better value than employer offering)
  • Firm realizes $4,500 savings on 1 employee
small employer strategies
Small Employer Strategies
  • Don’t offer “affordable” coverage to any “lower income” employees who can benefit from Marketplace subsidies after January 1, 2014
    • Help steer employees to Marketplace opportunity
  • Strategies to eliminate employer “offer” or make “unaffordable”
    • Only offer coverage to 40 hour full-time employees and reduce lower income to 39 hours
    • Offer only high priced coverage to ensure self-only premium is “unaffordable” for lower income
    • Employees pay 100% of premium via cafeteria plan
    • Enroll through SHOP
      • But only avoid minimum participation and contribution requirements during 30 day window
small employer strategies1
Small Employer Strategies
  • In comparing “value” of employer subsidy to the Marketplace subsidy remember that the employer subsidy is more valuable
    • Employer subsidy is tax free to the employee
    • Employee’s share of Marketplace premium is after tax (non-deductible)
  • Can still offer “higher income” employees insurance in 2014
    • Nondiscrimination regulations not yet issued
    • IRS says regulations not effective until 2015 at the earliest
    • We’ll likely be discussing non-discrimination rules next year- stay tuned
  • Possible long term result: small employers may stop offering group insurance and push all employees to the Marketplace?
large employer strategies
Large Employer Strategies
  • Don’t offer “affordable” coverage to “lower income” part-time employees after January 1, 2014
    • Part-time = less than 30 hours/week in prior “measurement period”
    • Enables those employees to enjoy Marketplace subsidies and will never expose employer to penalties
  • Consider not offering “lower income” full-time employees adequate and affordable self-only coverage 1/1/14
    • Allows lower income employees to receive Marketplace subsidies until 2015 renewal
    • But employer not likely to continue this practice when employer mandate starts in 2015
large employer strategies1
Large Employer Strategies
  • Consider dropping spouse coverage
    • No ACA requirement to ever offer spouse coverage
    • Enables lower income employee’s spouse to obtain subsidized Marketplace coverage
    • UPS and UVA notable examples
  • Must offer dependent coverage to avoid penalty
    • Can delay until 2016 if “taking steps” towards expanding coverage in 2015

Employer Mandate

February 10, 2014 Final Regulations

employer mandate
Employer Mandate


will be subject to nondeductible

penalty taxes

unless they


adequate and affordable

group health benefits to their


employees (and children to age 26)

*Full-time employee defined as 30 hours/week or

130 hours/month*

key concepts
Key Concepts
  • No employer is required to offer health insurance (just strongly encouraged)
  • Small employers (96% of all employers) are never subject to the mandate or penalties
    • But if they choose to voluntarily offer group health they must comply with all the insurance reforms
  • Large employers never have to offer coverage to (or can be penalized with respect to) part-time employees (<130 hours/month)
mandate effective date
Mandate Effective Date
  • Large employer penalties calculated monthly, essential to know your start month
  • Original effective month January 2014
  • IRS Notice 2013-45 delayed mandate to January 2015
  • Final regs delay mandate for “some” 50-99 employers to January 2016 (see below)
fiscal year delay to renewal
Fiscal Year Delay to Renewal
  • Some large employers will qualify for an additional delay until their 2015/2016 health insurance renewal date
    • Must have had a fiscal year plan as of 12/27/12
    • Must not have changed fiscal year
    • As of renewal prior to 2/9/14:
      • Offered to 33% or covered 25% of all employees
      • Offered to 50% or covered 33% of full-time employees
    • Must actually offer adequate and affordable coverage to all full-time on 2015/2016 renewal date
who is the employer
Who is the Employer?
  • “Employer”- treat related entities as 1 employer for purposes of determining employer size (‘applicable large employer”)
  • Apply controlled group and affiliated service group rules of IRC section 414(b), (c), (m) and (o)
  • But treat each related company separately for purposes of determining and assessing penalties
who is an employee
Who is an Employee?
  • “Employee” determined under the common law test
    • Under who’s direction and control?
    • Are independent contractors properly classified?
    • Workers hired through staffing companies or PEO?
    • Good news- employer can take credit for health insurance provided by staffing company or PEO so long as employer is charged a higher fee for those EEs
    • Significant danger if worker is misclassified
  • Excluded from “employee” definition
    • Sole proprietors, partners in partnerships and >2% S corporation shareholders
    • New: bona fide volunteers
counting hours of service
Counting Hours of Service
  • “Hours” include:
    • Hours worked
    • Hours paid while not working (paid holiday, vacation, jury duty, etc.)
    • Special unpaid leave of absence (FMLA. USERRA, unpaid jury duty)
      • Either credit hours or ignore these periods in calculations
    • Educational organizations- employment break of 4 or more consecutive weeks
      • Either credit hours or ignore break
counting hours of service1
Counting Hours of Service
  • Employees paid hourly must count actual hours
  • Employees not paid hourly must choose from 3 options
    • Try to track actual hours
    • Credit 8 hours/day or 40 hours/week if work on that day or week
    • Other reasonable basis
determining small exemption
Determining “Small” Exemption
  • 50 or more full-time employees + “full time equivalents” in prior calendar year = large employer for next calendar year
    • 49 or less = exempt “small” for next year
  • Full-time employee = 30 or more hours per week or 130 or more hours per month
    • 52 weeks x 30 hours divided by 12 = 130/month
  • Only for small vs. large determination part-time employee hours are converted to “full-time equivalents” (FTEs)
  • Calculation made for each month in prior year then averaged to determine status for the following calendar year
new 50 99 1 year delay
New 50-99 1 Year Delay
  • In performing the small employer test in 2014 qualifying employers can substitute 100 for the normal 50 threshold to be considered a large employer in 2015
  • Qualification requirements:
    • Has not reduced employees or hours in 2014
    • Has not reduced coverage offered 2/9/14
    • Signs “certification” of compliance
small employer calculation
Small Employer Calculation

Template for determining full-time employees and FTEs for a month:

  • List all employees for the month and their hours
  • Sort by hours (high to low)
  • Number of employees at 130 or more hours = “actual” full-time employees
  • Total the hours for all other employees (but don’t count more than 120 hours for any one employee) = total “part-time” hours
  • Divide total part-time hours by 120 = number of “full-time equivalents” (FTEs) (carry to second decimal point)
  • Number of “actual” full-time employees + number of FTEs = testing “number” for that month
small employer calculation1
Small Employer Calculation

Average number for prior calendar year determines

status for following calendar year

  • Add the calendar year monthly totals, divide by 12 and round down to the next lowest whole number
  • If the resulting number is 49 or less (99 in 2014) the employer is “small” and exempt from the mandate for the following calendar year
  • If the resulting number is 50 or higher(100 in 2014) the employer is “large” and subject to the mandate for the following year (unless the seasonal employer exception applies)
monthly calculation example
Monthly Calculation Example

For the month of January 2014 employer had 72 employees:

12 salaried and hourly employees who worked 130 or more hours (“actual” full time employees)

10 hourly employees who worked between 121 and 129 hours (limit to 120 hours each = 1,200 total part-time hours for these 10)

50 hourly employees who each worked <121 hours and collectively worked 4,000 hours

Total “part-time” hours = 1,200 + 4,000 = 5,200

Divide 5,200 hours by 120 = 43.33 FTEs

12 “actual” full time + 43.33 FTEs = 55.33 “number” for January 2015

special 2014 6 month rule
Special 2014 6 Month Rule

Special transition rule for 2014 calculations:

Don’t have to include all 12 months of 2014 in test

Use any 6 or more consecutive month period

28 possible testing periods (6 or more consecutive months)

Recommendation: test all 28 iterations until you find one <100

Make permanent record of test results and underlying data to support 2015 exemption if IRS proposes a penalty

Any employment changes (hours reductions) need to be in place by 7/1/14 to capture the requisite 6 month minimum period

Note: future years will test using all 12 calendar months

For first calendar year fall into “large” category given until April 1st to offer coverage and avoid penalty for January-March

seasonal worker exception
Seasonal Worker Exception
  • If employer fails the <50 general test may still be exempt if:
    • Workforce exceeded 50 for no more than 120 days or 4 months
    • 100% of the employees in excess of 50 for those 120 days or 4 months were seasonal workers
    • Can’t combine with special 6 month 2014 transition
  • Employer can chose any 120 days or 4 months, not required to be consecutive
    • Suggestion: test as many combinations as needed to demonstrate exemption
  • “Seasonal workers” include those in agriculture, retail during holidays and “other” reasonably determined seasonal businesses (summer help in resort areas)
exempt small employer stop here
Exempt Small Employer- Stop Here
  • 99 or less in 2014 = exempt small employer for 2015: stop here (future years needs to be 49 or less)
  • Determine whether to offer health insurance, to whom and at what cost without regard to the employer mandate/penalty
  • But health insurance reforms will apply to any coverage offered
  • Be mindful that offering affordable coverage to lower income employees will make them ineligible for Marketplace subsidies
  • Be mindful that non-discrimination requirements must be considered once IRS issues regulations
large employer planning
Large Employer Planning
  • To plan for and mitigate the impact of the penalties starting in 2015 (2016 for 55-99) large employers need a strategy to identify and track (“measure”) all employees based on their potential classification as “full-time employees” who can expose the employer to penalties
  • Since penalties are calculated monthly, identification/measuring must be monthly
large employer employee categories
Large Employer Employee Categories
  • Full-time: 130+ hours/month
  • Part-time: always work <130/month
  • Variable hour: cannot reasonably determine whether employee will work 130/month
  • Seasonal: will work >130/month but for less than 6 months/year
full time employees
Full-Time Employees
  • This is the only class that can cause penalties
  • Assume every employee falls into this class until you can demonstrate otherwise
  • Salaried employees will almost always fall in this class
  • New employees: apply “reasonable expectation” test
    • But can’t consider likelihood employment be of short duration
part time employees
Part-Time Employees
  • Employees who will never work 130 or more hours per month
  • Some employers ensuring this result by limiting total work hours to <130 per month (or <1,560 over measurement year)
  • If calendar month hour tracking difficult, final regs allow 120 hours for 4 week months and 150 hours for 5 week months
variable hour employees
Variable Hour Employees
  • At time of hire employer can’t reasonably determine whether employee will work 130 or more hours per month
  • Employer can “measure” hours for up to a year before treating as full-time
  • IRS concerned about abuse
variable hour employees1
Variable Hour Employees
  • Factors employer must consider:
    • Is employee replacing a FT or PT employee?
    • Do other employees in similar positions usually qualify as FT or PT?
    • How was position advertised or represented?
  • Factor that cannot be considered: knowledge or expectation that employment will be short duration
seasonal employees
Seasonal Employees
  • Employee is hired into a position that lasts for less than 6 months per year (based on historical data)
  • Do not have to treat as full-time despite working 130+ hours/month during the “in” season
measuring part time and variable hour employees
Measuring Part-time and Variable Hour Employees
  • Full-time and seasonal employees will be relatively easy to identify
  • Part-time and variable hour employees will be more problematic
  • Two options:
    • Determine status on a current month basis (“monthly measurement periods”); or
    • Determine status on a look-back basis (“look-back measurement periods”)
monthly measurement period
Monthly Measurement Period
  • Determine each employee’s status based on how many hours they worked in the current calendar month
  • For weekly tracking systems use 120/hours 4 week months, 150/hours 5 week months
  • Once employee crosses threshold have 3 months to offer coverage to avoid penalty
look back measurement periods
Look-Back Measurement Periods
  • Determine full-time status based on look-back to prior period hours
  • Provides measure of certainty with respect to employees who’s hours may vary from month to month (part-time or variable hour)
  • Prevents a temporary spike in hours causing reclassification as full-time
look back measurement process
Look Back Measurement Process
  • Test the employee’s hours during a prior measurement period (max 12 months)
  • Analyze the data, make the status determination and notify and enroll “full-time” employees during an optional administrative period (max 90 days)
  • Based on hours of employment during the measurement period treat employees as full-time or part-time during a future stability period (max 12 months)
choosing periods
Choosing Periods
  • Generally advisable to choose 12 month stability period that coincides with insurance year
  • Generally advisable to include an administrative period
  • Assuming a 2 month administrative period, then back into the measurement period
sample look back methodology
Sample “Look Back” Methodology
  • Optimum 12 month measurement and stability periods for a calendar year health plan:
    • Measurement period 11/1/2013 to 10/31/2014 (12 months)
    • Administrative period 11/1/2014 to 12/31/2014 (2 months)
    • Stability period calendar year 2015 (12 months)
  • Example:
    • Employee F works an average 32 hours/week and employee P works an average 28 hours/week during measurement period
    • During the following “stability period” employee F “deemed” to be a full-time employee and P “deemed” to be a part-time employee irrespective of the actual number of hours worked during that stability period
special 6 month rule for 2014
Special 6 Month Rule for 2014

Measurement and stability periods must generally be the same length (ideally 12 months each)

Transition rule: employers may use a “short” 2014 measurement period and still use a 12 month 2015 stability period if the measurement period:

Is at least 6 consecutive months long

Ends <90 days before 2015 renewal date

Begins no later than July 1, 2014

sample 2014 look back periods
Sample 2014 Look Back Periods
  • Calendar year plan:
    • Measurement period 5/1/2014 to 10/31/2014 (6 months)
    • Administrative period 11/1/2014 to 12/31/2014 (2 months)
    • Stability period calendar year 2015 (12 months)
  • April 1st renewal date
    • Measurement period 7/1/2014 to 1/31/2015 (7 months)
    • Administrative period 2/1/2015 to 3/31/2015 (2 months)
    • Stability period 4/1/2015 to 3/31/2016 (12 months)
  • July 1st renewal date
    • Measurement period 7/1/2014 to 4/30/2015 (10 months)
    • Administrative period 5/1/2015 to 6/30/2015 (2 months)
    • Stability period 7/1/2015 to 6/30/2016 (12 months)
final status records
Final Status Records
  • After selecting the periods and running the analysis prepare a final report (with supporting payroll data)
  • Keep report as proof of which 2014 employees are “deemed” to be full-time (and can subject the employer to penalties) in 2015
  • Have report available to counter IRS penalty assertion in late 2016
note on waiting measurement periods
Note on Waiting & Measurement Periods

Large employers are exempt from penalties during the initial 90 day waiting period for new full-time employees or during the look-back measurement period for variable hour employees ONLY if minimum value coverage is offered at the end of those periods

what about new employees
What About New Employees?
  • If classified as full-time (“reasonably expect” employee to work 130 or more hours/month) offer coverage within 90 days of hire or risk penalty
  • If classified as part-time or variable hour measure actual employment over a maximum 12 month special “initial measurement period” and if actual hours >1,560 (130 x 12) offer coverage within one month (13 month rule) or risk penalty
what about rehired employees
What About Rehired Employees?
  • If employee gone for 13 weeks can be treated as new employee upon rehire
    • 26 weeks required for educational employees
  • Rule of parity: employer can treat former employee as a new employee if length of period gone is at least 4 weeks and is less than the prior period of employment
    • Example: employee works 6 weeks, is gone 8 weeks, can treat as new employee
    • Example: employee works 2 weeks, is gone 3 weeks, can’t be treated as new employee (not gone 4 weeks)
large employer a penalty
Large Employer “a” Penalty
  • 4980H(a) penalty (a/k/a the $2,000, no coverage or sledgehammer penalty)
  • If large employer fails to offer qualifying coverage to all of it’s full-time employees for a particular month and 1 or more full-time employees receive a Marketplace subsidy for such month then penalty is $167.67 per full-time employee in excess of 30 for such month
    • $167.67/month = $2,000/year
    • Punitive penalty: applies to all full-time employees including those purchasing employer coverage, those covered by spouse, Medicare, Medicaid, Tricare, CHIP and those going without coverage
large employer a penalty1
Large Employer “a” Penalty
  • Modifications to “all” requirement by IRS regulations
    • Otherwise missing 1 of 10,000 could = $20M penalty
  • Proposed regulations permit 5% margin of error
    • Could miss <500 of 10,000 and avoid the “a” penalty
  • Final regulations permit 30% margin of error for 2015 only
    • Then revert to 5% rule for 2016 and future
  • Final regulations also increase 30 employee exemption to 80 employees for 2015 only (IRS theory is 30 was 20 less than 50, 80 is 20 less than 100)
large employer b penalty
Large Employer “b” Penalty
  • 4980H(b) penalty (the $3,000, inadequate/unaffordable coverage or tack-hammer penalty)
  • If large employer fails to offer adequate and/or affordable coverage to a full-time employee for a month in which the employee receives a Marketplace subsidy penalty = $250
    • $250/month = $3,000/year
    • Penalty more understandable than the “a” penalty since employer is only penalized for employees receiving government subsidies
  • “b” penalty cannot exceed what the “a” penalty would have been had it applied (can’t pay more by offering something than by offering nothing)
penalty cola adjustments
Penalty COLA Adjustments
  • Penalties will increase at the rate of health care costs
  • HHS projects 6% increase for 2015:
    • $2,000 will become $2,120 ($176.66/month)
    • $3,000 will become $3,180 ($265/month)
3 180 b penalty example
$3,180 “(b)” Penalty Example
  • In 2015 employer offers all 100 full-time employees adequate but unaffordable coverage
  • 30 employees obtain coverage from spouse, Tricare, Medicare or Medicaid
  • 30 employees >400 FPL buy coverage from employer
  • 30 employees refuse to purchase any coverage (may be subject to the individual mandate penalty)
  • 10 employees under 400% FPL purchase subsidized coverage in the Marketplace
  • Inadequate/Unaffordable Penalty:

$3,180 x 10 employees receiving subsidies = $31,800

2 120 a penalty example
$2,120 “a” Penalty Example
  • Same facts as above except employer does not offer any coverage
  • Since at least 1 employee received a subsidy penalty = $2,120 x 20 (100 full-time employees - 80) = $42,400
    • Under normal 30 exemption penalty in 2016 would be $148,400 ($2,120 x 70)
  • Strategy: large employers will generally want to offer minimum essential coverage that is unaffordable or fails minimum value rather than offering nothing (tack hammer hurts less than sledgehammer)
avoiding employer penalties
Avoiding Employer Penalties

Requirements to avoid employer penalties:

Offer coverage to

All full-time employees that

Provides minimum essential coverage

Meets minimum value

Is affordable

the coverage offer
The Coverage Offer
  • Offer coverage to all full-time employees
  • Offer coverage to dependent children until end of month attain age 26
    • Includes adopted children but not step or foster children
    • Dependent coverage not required for 2015 so long as “steps being taken” to offer coverage in 2016”
  • No requirement to ever offer spouse coverage
    • UPS and UVA notable employers already dropping spouses
  • Offering must be communicated to full-time employees so they have an effective opportunity to participate
    • Recommendation: keep signed election forms or other acknowledgement from all full-time employees
minimum essential coverage
Minimum Essential Coverage
  • Large employers must offer minimum essential coverage (MEC)
    • Means offering a group health plan that provides medical care
    • Relatively easy to qualify as MEC
  • Large employer insurance offering not required to cover the 10 Essential Health Benefits (discussed earlier)
minimum value
Minimum Value
  • Employer’s offering must provide at least a 60% minimum actuarial value
  • Actuarial value (AV) is a relative measure of a plan’s “generosity”
    • A plan providing 60% AV would be expected to cover 60% of the cost of medical/health needs of a standard population
    • Employee would cover cost of remaining 40% through co-pays and deductibles
    • HHS and IRS provide AV calculators and safe harbors
  • For comparison shopping 4 levels of AV:
    • Bronze 60% (the base level for employer mandate)
    • Silver 70% (the base level for Marketplace subsidies)
    • Gold 80%
    • Platinum 90%
  • Statute: coverage is affordable if the employee’s premium for self-only coverage is no more than 9.5% of the employee’s household income
  • IRS allowing use of employee’s W-2 Box 1 (gross wages subject to income tax) as a substitute for household income
  • Box 1 is AFTER pre-tax 401(k) and cafeteria plan deductions
    • Affordability is measured on cost of employee-only coverage under the lowest cost 60% minimum value (Bronze) plan offered by the employer
affordability safe harbors
Affordability Safe Harbors
  • 3 IRS safe harbors on affordability of employee share of premium for employee-only coverage:
    • 9.5% of Box 1 wages
    • 9.5% of lowest hourly wage x 130 hours per month
    • 9.5% of Federal Poverty Level (FPL)
  • Examples
    • Employee earns $5,000/month (Box 1), employee-only coverage affordable at $475 or less per month
    • Employee paid $9.00 per hour, coverage affordable at $111.15 or less per month ($9.00 x 130 x 9.5%)
    • Under current FPL of $11,670, coverage affordable at $92.38 or less per month ($11,670/12 x 9.5%)
      • Use this option as a design based safe harbor
      • OK even for months where employee’s wages fall below FPL
penalty avoidance strategies
Penalty Avoidance Strategies
  • Large employer complies with intent of statute
    • Offers “adequate” and “affordable” coverage to all full-time employees and their dependents
    • Can exclude spouses
  • Employer has <30 full-time employees (<80 in 2015) but is “large” due to large part time workforce
    • No penalty since the “no coverage penalty” only applies to full-time employees in excess of 30 (80 for 2015)
    • But if 50-99 have to start reporting requirements for 2015
penalty avoidance strategies1
Penalty Avoidance Strategies
  • Employer limits all hourly paid employees to <130 hours/month in 2014 “look back” measurement period
    • 1,560 total hours if using 12 month measurement
  • Employer limits all employees < 400% FPL to <130 hours/month in 2014 (no full-time employee can qualify for subsidized coverage in 2015)
  • Employer only employees workers making >400% FPL or are covered by spouse, Tricare, Medicare, Medicaid (no employee can receive a Marketplace subsidy - risky strategy)
compliance issues planning
Compliance Issues & Planning
  • Determination of related employers, common law employees and hours of service
  • Exploration of opportunities to “break” a single employer or related entities apart to qualify for the small employer exemption (no later than July 1, 2014)
  • Exploration of changes in employment practices (limit certain employees to <130 hours/month) to minimize “full-time” population in 2015 (no later than July 1, 2014)
  • Must consider employment law concerns with respect to any strategies under consideration
caution in penalty strategizing
Caution in Penalty Strategizing
  • ERISA Section 510- employers may not …”discharge, fine, suspend, expel or discriminate against a participant or beneficiary…for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan…”
  • ACA Section 1558- “No employer shall discharge or in any manner discriminate against any employee with respect to…compensation, terms, conditions or other privileges of employment because the employee…” has received a premium tax credit (subsidy) or is a whistleblower
3 reporting requirements associated with the mandate
3 Reporting Requirements Associated with the Mandate
  • Section 6051- Report cost of employer-sponsored health care on Form W-2
  • Section 6055- Insurer or self-funded plan report type and period of minimum essential coverage (MEC) (ties to individual mandate)
  • Section 6056- Large employer reports “offer” of MEC to full-time employees (ties to large employer mandate)
section 6051 w 2 reporting
Section 6051 W-2 Reporting
  • Employers must report cost of employer-sponsored health benefits on Form W-2 (started in 2010)
  • Allows IRS to accumulate data in anticipation of implementation of 40% excise tax on “Cadillac” coverage in 2018
  • Currently limited to employers who filed more than 250 W-2s in prior year (but will expand downstream)
section 6055 mec reporting
Section 6055 MEC Reporting
  • Starting for calendar year 2015 IRS must know which taxpayers received “minimum essential coverage” (MEC) for each month of the year
  • Required to determine taxpayer liability for the “individual mandate” penalty
  • All MEC providers must file new reports (details by taxpayer by month)
  • Insurance company responsible for insured plans
  • Employer responsible for self-insured plans
section 6056 offer reporting
Section 6056 “Offer” Reporting
  • Starting for calendar year 2015 IRS must know which employees of large employers were offered “minimum essential coverage” (MEC) for each month of the year
  • Required to determine employer liability for the “employer mandate” penalty
  • All large employers will have to file reports (including the 50-99 group exempt from 2015 penalties)
  • Reports will cover all 12 calendar months of 2015, including months prior to 2015 renewal/effective date
assessment and collection procedures
Assessment and Collection Procedures
  • HHS will notify employer (section 1411 certification) when employee applies for subsidized marketplace coverage
    • employer will have opportunity to “contest” subsidy
  • Effective for 2015 large employers will file new annual reports with IRS (with copies to employees)
    • Insurers and self-funded plans will report similar information on coverage to IRS
  • Employees report premium subsidies on their individual tax returns (beginning with 2015 returns due by 10/15/2016)
assessment and collection procedures1
Assessment and Collection Procedures
  • IRS will match 2015 data from HHS/Marketplace, employer, insurers and employees (probably late 2016) and send a proposed penalty assessment for 2015 to employer
  • Employer will have an opportunity to dispute/clarify the facts that led to the proposed assessment
  • Ultimately IRS will bill the employer for the penalties (separate from other tax returns)
  • First nastygrams expected late 2016
transition relief summary
Transition Relief Summary
  • Extended/continued from proposed regs
    • Effective date delayed to 2015 renewal date
    • 6 month calculation of “small” for 2015
    • Possible 6-11 month “short” 2014 measurement period (depending on renewal month)
    • Dependent coverage required until 2016
    • Multiemployer (union) coverage sufficient
transition relief summary1
Transition Relief Summary
  • New relief in final regs
    • No 2015 penalty for 50-99 “medium” employers (with conditions, must still do 2015 reporting)
    • No 2015 “a” penalty if offer to 70% (vs. 95%)
    • No 2015 “a” penalty on first 80 FT employees (vs. 30)
  • Relief not extended
    • Special 1 time change to fiscal year cafeteria plan election for year that overlaps 1/1/2014
latest delay overview
Latest Delay Overview

Employer 4980H 6056

Size MandateReporting

<50 (96%) Never Never

50-99 (2%) 2016 2015

100+ (2%) 2015 2015

employer mandate by the numbers
Employer Mandate by the Numbers
  • 5%- margin of error permitted in offering coverage to all full-time employees (30% in 2015)
  • 9.5%- maximum % of income self-only premium for coverage to be “affordable”
  • 30- threshold hours per week to be full-time employee
  • 30- threshold number of full-time employees before any penalty tax applies (80 for 2015 only)
  • 50- threshold average number of full-time employees and “full-time equivalents” in prior calendar year to be treated as large employer subject to mandate in following year (100 for 2014 only)
employer mandate by the numbers1
Employer Mandate by the Numbers
  • 60%- Bronze level of coverage (employer mandate)
  • 70%- Silver level of coverage (Marketplace subsidy)
  • 80%- Gold level of coverage
  • 90%- Platinum level of coverage
  • 90- maximum days in waiting period before new employee must be offered coverage
  • 120- divisor into total part-time hours in a month to determine “full-time equivalents”
  • 130- threshold hours per month to be treated as full-time employee (functional counterpart to 30 hours/week)
  • $176.66- monthly “no coverage” penalty (2015)
  • $265- monthly “unaffordable coverage” penalty (2015)
employer mandate checklist
Employer Mandate Checklist
  • Determine “employer”
  • Determine “employees”
  • Count hours
    • Make FT and FTE calcs (100 threshold)
    • Use 6 or more months in 2014
    • Special rules for seasonal
    • If “small” for 2015 stop here
employer mandate checklist1
Employer Mandate Checklist
  • Divide employees into categories
    • Full time
    • Part time
    • Variable hour
    • Seasonal
  • Determine measurement method and periods
  • Calculate “full-time” employees
  • Determine effective date of mandate
employer mandate checklist2
Employer Mandate Checklist
  • Determine cost of compliant coverage
  • Decide whether to “pay or play” with respect to full-time employees
  • Extend offer of coverage by effective date
  • Gear up for complying with recordkeeping and reporting requirements
  • Maintain audit trail of employee classification and hours history
all size employers whether or not offering health insurance
All Size Employers Whether or Not Offering Health Insurance

Provide Marketplace notice on October 1, 2013 and all future employees at point of hire

only large employers
Only Large Employers

Prepare for and deal with the Employer Mandate & penalty exposure

Collect data and file new informational returns tied to enforcement of the Individual and Employer Mandates

W-2 reporting of value of health benefits (>250)

> 200 - auto enrollment of all eligible employees in health plan (coming when?)

aca requirements applicable to all employers offering coverage
ACA Requirements Applicable to All Employers Offering Coverage

No pre-existing condition exclusions

Cover children to age 26

No annual or lifetime limits on EHB

No cost preventive care

No rescission except fraud or misrepresentation

Equitably share MLR rebates with employees

Distribute SBC in prescribed format

Limit medical FSA to $2,500/year

aca 100 day penalty exposure all employers offering coverage
ACA $100/day Penalty Exposure All Employers Offering Coverage

Notice of choice of physician

Notice of expanded claims & appeal procedures

SBC distribution (penalty delayed until 2015)

Notice of material modification of coverage

Notice of grandfather status

Notice of 1 year delay in offering no cost contraception (if applicable)

aca taxes and fees impacting cost of coverage all size employers
ACA Taxes and Fees Impacting Cost of Coverage (All Size Employers)

Patient Centered Outcomes Research Institute fee (PCORI)

Transitional Reinsurance Fee (2014-2016)

2018- 40% excise tax on “Cadillac” coverage


John M. Peterson


150 West Main Street Suite 2100

Norfolk, VA 23510