Affordable Health Care: Impact and Implementation April 21, 2015 Lotta Crabtree, Deputy Executive Administrator

2 High Deductible Health Plan (HDHP)

HDHP Enrollment by Employing Unit 3 As of March 2015

ACA “Employer Mandate” To avoid tax penalties under section 4980H of the Internal Revenue Code (the Code) large employers must offer coverage that is affordable, and is at least “minimal value” to all full-time employees: Full-time is generally defined by the ACA as 30 hours or more of service per week or 130 hours per month. Employers can in some circumstances utilize a look- back measurement method to average an employee’s hours of service over an initial measurement period to determine if the employee qualifies as full-time. Minimum value is achieved when the plan’s share of the total allowed costs of benefits provided under the plan is move than 60% of such cost. HRA and HSA contributions may be taken into account in determining minimum value. Coverage is considered affordable if the cost for employee-only coverage does not exceed 9.5% of the employee’s household income. 3 safe harbors since an employer is unlikely to know an employee’s “household income.” The HDHP employee contribution amount is based on one of the safe harbors, i.e., the premium co-share is not greater than 9.5% of the federal poverty level for a single individual. 4

NC Legislation Section of SL (SB 744 Appropriations Act) establishes a new health benefit eligibility category (Other Contributor Coverage) for full-time employees not otherwise covered by the Plan to comply with the Affordable Care Act (ACA) Directs the Treasurer and SHP Board to offer a health benefit coverage option for these “newly eligible” employees that provides minimum essential coverage at no greater than the ACA “Bronze” level and that minimizes the employer contribution in an administratively feasible manner Employing units are responsible for determining whether or not an employee is a full-time employee. This includes all non- permanent employees. Rehired retirees eligible for SHP coverage as a full-time employee are no longer eligible for SHP coverage as a retiree 5

Pending Legislation Senate Bill 6 was filed on January 28, This bill is sponsored by Senators Tillman and Barefoot. If passed the legislation will: Make rehired retirees currently eligible for only the HDHP, eligible for the coverage offered to permanent full-time employees, i.e., partially contributory coverage 6

Employee Eligibility Partially contributory coverage was available to all permanent full time employees including those employed in permanent job positions on a recurring basis and who work 30 or more hours a week for none or more months per calendar year. See (b). Fully contributory coverage was available to all permanent part- time employees, employees on official leave of absence, and employees on leave without pay due to illness or injury. Permanent employees still have partially contributory and fully contributory coverage available to them. Other contributory coverage is available to fulltime employees that do not qualify for coverage under subdivision (1), (5), (6), (7), (8), (9), or (10) of G.S (b). This includes some employees also eligible for SHP coverage on a fully contributory basis, i.e., employees on official leave of absence or other approved leave. 7 Before ACA “Employer Mandate”After ACA “Employer Mandate”

6055 Reporting The purpose of this reporting requirement is to assist with the individual minimum essential coverage mandate First IRS returns are due in 2016 for coverage provided in 2015 Individual statement to the primary insured must be delivered by January 31, 2016 For self-insured plans (like the State Health Plan) this responsibility falls on the employer Must report on all full-time, part-time, temporary or other non-full-time employees and other enrolled individuals whether or not an employee or retiree; COBRA beneficiaries, and dependents of all of these as well as dependents of Medicare individuals Coverage subject to reporting includes employer-sponsored active and retiree health coverage, whether insured or self-insured, including COBRA and Retiree coverage 8

6056 Reporting The purpose of this reporting requirement is to administer the employer shared responsibility provisions of 4980h (pay or play) and the premium tax credit First returns are due in 2016 for coverage provided in 2015 Individual statement to the full-time employee must be delivered by January 31, 2016 For self-insured plans (like the State Health Plan) this responsibility falls on the employer Must report on full-time employees regardless of whether or not they were offered coverage. If an employee was full-time for one or more months of the year the employee must be reported for the full year, including pre- and post-employment. Coverage subject to reporting includes employer-sponsored active and retiree health coverage, whether insured or self-insured 9

Information Required Name, address and EIN of plan sponsor Name, address and TIN of primary insured and covered family members Months covered during the year Must identify if the coverage is a qualified health plan offered through a qualified exchange and whether any premium subsidy or cost-sharing assistance is applicable to the member Any other information the IRS requires 10

Information Required Name, address and EIN of applicable large employer (ALE) and telephone number of contact person Calendar year for which the information is being reported The number of full-time employees for each month during the calendar year A certification as to whether the ALE offered its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible sponsored plan, by calendar month The months during the calendar year that coverage was available Each full-time employee’s share of the lowest cost monthly premium (employee only) for coverage providing minimum value under an eligible employer sponsored plan, by calendar month The name, address, TIN of each full-time employee during the calendar year and the number of months which the employee was covered under the plan Any other information the IRS requires 11

Additional Information The penalties for failure to file the return and individual statements are up to $100 for each failure Due to transition from BenefitFocus to Aon Hewitt, employers must capture/save the enrollment data for January – May, 2015, needed to meet the reporting requirements before the transition takes place on June 1, 2015 The Plan continues to look at these reporting requirements in consultation with legal counsel and recognizes that assistance and coordination may be needed as it relates to reporting on COBRA participants and retirees 12