E MPLOYER S OLUTIONS TO THE A FFORDABLE C ARE A CT R EQUIREMENTS N AVIGATING T HE C OMPLEXITIES O F C OMPLIANCE August 2014 A DMINI S OURCE HR. com

Disclaimer We are not providing: Tax or legal advice The final word on the Affordable Care Act A political statement A guarantee there won’t be any more changes

ACA Impacts Employers 3 Core Ways 1: Market Reforms Benefit reforms impacting plan design Annual/Lifetime limits, Age 26, Pre-X, Dollar limits, preventive/contraceptive, rescission 2: New Employer & Plan Sponsor Requirements Full-time employee definition – handbook changes Measurement rules Change in employment status & leaves Open Enrollment impact Administrative & notice requirements – SBCs, W-2s, etc. 3: New Financial Consequences of Non-Compliance Mandate & penalties Failure to Comply with ACA reporting, notice or disclosure requirements Fees and taxes (PCORI, Transitional Reinsurance Fee, Excise tax on high-cost plans)

The Employer Penalties  Effective January 1 st, 2015, an employer with 100 or more FTE’s (or the equivalents) that does not offer coverage may be subject to penalties if at least one of its full-time employees receives a premium credit, aka “play or pay”.  Penalties apply to Employers with FTE’s (or the equivalents) starting January 2016 (aka “mid-sized employers”).  “Sledgehammer” Penalty - If an employer fails to offer minimum essential coverage and one of its employees receives a subsidy through the Exchange, it will be subject to an annual penalty of $2000 per employee. The first 30 employees will be disregarded in calculating the penalty (80 in 2015 only).  “Tackhammer” - If an employer offers minimum essential coverage and it doesn’t meet minimum value or affordability, plus one of its employees receives a subsidy through the Exchange, it will be subject to an annual penalty of $3000 for each employee receiving monthly assistance =  Practice Tip: Take subsidy status into consideration when you hire a new employee since it may impact the net financial effect of the hire.

Penalty Snapshot – Post Delay $2000 “Sledgehammer” penalty $3000 “Tackhammer” penalty

Strategy Step #1: Determine applicable large employer (ALE)status. Strategy Step #2: If an ALE, then identify your full-time employees that qualify toward the penalty. Strategy Step #3: Determine if coverage offered by the employer every month will avoid penalty, and which one. Strategy Step #4: Determine whether to “pay” or “pay more”. Implement: 4 Step Process

Offer or No Offer  Employer Plan Sponsors are required to document whether they offered Minimum Essential Coverage to substantially all employees and their dependents  Documentation must be maintained or the employer could be subject to a penalty  The reasons why participants waive can reveal potential exposure

What are the Reporting Requirements Two Major Reports – IRC § 6055 & 6056 Individual/Minimum Essential Coverage IRC § 6055 Purpose: To verify the months (if any) individuals were covered by minimum essential coverage. This helps the IRS enforce the individual mandate. Who: All employers and insurers that provide minimum essential coverage Why: Describes which individuals are enrolled and months they are covered – Goes to both the IRS and covered individuals

What are the reporting requirements? Applicable Large Employer (50+) IRC § 6056 Purpose: To help the IRS with administration of the employer shared responsibility provisions, as well as the premium tax credits. The employee statements will help employees determine whether, for each month of the calendar year, they can claim a premium tax credit on their tax returns. Who: All ALE’s must file and include information about the total number of full-time employees What: Reports information about the coverage offered (or not offered) to the employee (and/or dependents) Why: Describes coverage offered to each full-time employee, by month, including the lowest employee cost of self-only coverage – Filed with IRS and requires a statement to each full-time employee (1095- C)

Reporting Snapshot Note: Streamlined combined reporting is only available for self-insured plans

ACA Employer Fees DescriptionMonthlyAnnuallyNote Patient Centered Outcomes Research Institute “PCORI” n/a$2.oo Per plan participant on all group plans Fee started at $1 in 2013 then $2 in 2014 Fee changes on Oct. 2 nd of each yr. thru 2019 Payable annually on July 31 st File on IRS Form 720 Employer pays/not a plan expense Transitional Reinsurance Fee “TRF” $5.25$63 for 2014 Per plan participant (employee, dep/spouses and COBRA) Applies for a 3 year period Count methods include Actual, Snapshot, Modified Snapshot, Form 5500 Tax deductible Must report by Nov. 15 th then get a “bill” Employer Plan Sponsor to pay as plan expense

Penalties Can Add Up fast – Consequences of Non-Compliance

The Need for Expanded Global Services Services need to be expanded for all employees, not just those on the Plan – ACA regulations have driven employers to manage and document all employees and their dependents differently We needed an industry recognized Decision Analysis Tool – We expanded the basic Thomson Reuters analysis tool to provide a higher level of ACA decision support We needed expanded HR & employment legal services with client-attorney privileges – Teamed up with a leading national legal team with a comprehensive platform for answers employers have to have (included in package for groups over 200 eligible employees) Need for an automated system to track enrollment, eligibility, and communicate with client payroll systems with the ease of one file entry - A comprehensive solution to relieve the compliance and regulatory burdens on employers and HR Professionals by providing centralized management of employees and benefit offerings compliant with the Affordable Care Act (Cost to be determined by group size)

Global ACA & Regulatory Management Program Purpose Statement:  To provide an in-depth, analysis of the Affordable Care Act’s impact on a business, including potential strategies for optimizing employer-provided health benefits and minimizing taxes or fees, and ….  To remove these burdens from employers and HR professionals by providing centralized management of compliance requirements for both the employee and employer.

Global ACA & Regulatory Management Program ACA Decision Support Tool ACA Required Employee Documentation & Reporting Declination/Waiver management Compliance Documentation & Notice Requirements Enrollment & Implementation Material Patient Centered Outcomes Research Institute Fee Transitional Reinsurance Fee Value Added Compliance Services Expanded Legal Services – EnComplianceHR Automated Enrollment & Eligibility Technology Platform - EASI

Global ACA & Regulatory Management Program Decision Support Tool

ACA Decision Support Tool Strategy Development & Assessment -Determine the tax and penalty exposure, salary impact and turnover cost and the cost of coverage -Provide an executive summary with potential impacts of continuing current coverage, dropping or not offering coverage and/or decreasing employer contribution -Sledgehammer vs Tack hammer penalty assessment

ACA Required Employee Documentation - Exchange Notices provided (at point of hire) -IRS Forms 6055/6056 reporting evaluation -6055/6056 Employee Statement by 1/31/15 -W-2 Cost of Coverage Determination (250+ W2’s) -Culturally and linguistically appropriate summary of benefits and coverage (SBC’s)

Declination/Waiver Management -Maintenance of non-participants in the health plan for ACA Reporting and Compliance -Customized enrollment materials -Documentation Report for ACA Reporting and Compliance to verify plan offering -Cause of Declination tracking and ACA Reporting and Compliance

Compliance Documentation & Notice Req. -Summary plan description/plan document & related plan amendments -Trust agreements, Business Associate Agreements, Service Agreements -HIPAA Privacy Practices, Medicare Part D – Creditable/non-Creditable Notices -Women’s Health & Cancer Rights Act -Cobra, Non Grandfathered plan, GINA, minimum maternity benefits and Pre-ex notices

Global Service Components Global ACA & Regulatory Mgmt. Program Analysis & Decision Making Notice & Plan Compliance Enrollment Materials & Implementation Employee Documentation Management & ACA Reporting Plan Administration & Reporting Expanded HR & Legal Services A DMINI S OURCE HR. com

The ACA Is Now Law For a confidential assessment of your current and future ACA mandatory compliance that will affect your company, call Ben Campbell or John Marston at (844) We will initiate a binding non-disclosure agreement with your company for secured privacy of all shared information.