Effectively Manage PPACA Compliance ©PrimePay LLC. All Rights Reserved 1

What do the measure-determine- administer-and stability provisions of the Affordable Care Act mean to your Church or Nonprofit? ©PrimePay LLC. All Rights Reserved 2

Questions that must be answered! Are you considered a large employer? Do you know how many FT Employees and FT Equivalents your Church or Nonprofit has? How are you going to establish and track the various measurement periods? How are you going to calculate and track the 9.5% affordability regulation for the lowest cost single coverage Do you know how to calculate pay or play penalties if your Church or Nonprofit doesn’t offer group medical coverage OR you don’t provide affordable medical coverage? ©PrimePay LLC. All Rights Reserved 3

GENERAL ACA COMPLIANCE Often it is easy to make something difficult, but difficult to make something easy! ©PrimePay LLC. All Rights Reserved 4

Large Employer 5 ©PrimePay LLC. All Rights Reserved

Let Me Count the Hours… 6 Employers must determine whether they are considered an Applicable Large Employer (ALE) by tracking their FT employees and total hours worked by their Variable Hour Employees. This is a calendar year determination. In 2014, an ALE may use any 6 consecutive month period. Large Employer = in 2015, at least 100 FT and/or FTE Hours worked and intended to work FT = based on 30 hour work week FTE = FT + total PT hours worked per month / 120 Seasonal – not counted if working less than 120 days per year FTEs = FT employees + (total PT hours per month / 120) ©PrimePay LLC. All Rights Reserved

Employer Mandate – Measurement of VHEs 7

Tracking (Measure) the Employee Hours Large employers must track their employees 30 hours per week or At least 130 hours per month Include hours worked And hours paid but not worked (i.e. vacation, LOA, sick days, etc.) Exclude: Owners Family Members Seasonal ©PrimePay LLC. All Rights Reserved 8 Four recommended main phases for Employers for newly and ongoing hired employees: 1.Initial Measurement Period (IMP) 2.Standard Measurement Period (SMP) 3.Administrative Period 4.Stability Period

Measurement periods defined Initial Measurement Period-A designated period of time between 3-12 months where the employer determines whether the newly-hired variable hour employee is “full- time”. The employer must determine whether or not the employee worked an average of 30 hours a week during this period. Standard Measurement Period-A designated period of time between 3-12 months to measure hours for ongoing employees that have completed the Initial Measurement Period. Employer may choose the time period in which to start and end the SMP, but the time period must be uniform for all employees in the same category. Administrative Period-The period of time, not longer than 90 days, where employers have the option to delay the stability period to determine which employees are eligible for coverage and to notify and enroll employees. Stability Period-Must be at least 6 consecutive months in length and no shorter than the Standard Measurement Period. During the Stability Period the employer must offer affordable minimum essential value coverage to all full-time and full-time equivalent employees. If they employer fails to comply with these regulations they will be assessed a penalty. ©PrimePay LLC. All Rights Reserved 9

Measurement Periods - Defined 10 Standard Measurement Period At least 3 but no more than 12 months Categories accepted: Collectively & Non-Collectively Bargained Ees Salaried vs. Hourly Ees of different entities Ees located in different States Administrative Period Maximum is 90 days Period for Employers to evaluate the eligibility of Employees Must not prevent any gaps in coverage Stability Period At least 6 consecutive months; no shorter than Standard Measurement Period Period for ongoing Employees that have completed one Standard Measurement Period

March 2015 Renewal Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Standard Measurement Period: 3/1/2014 – 11/30/2014 Standard Measurement Period: 3/1/2014 – 11/30/ month Standard Measurement Period 3 month Administrative Period (AP) 9 month Stability Period (SP) 9 month Initial Measurement Period AP Stability Period: 3/1/2015 – 11/30/2015 Stability Period: 3/1/2015 – 11/30/2015 Initial Measurement Period 7/15/2014 – 4/14/2015 Initial Measurement Period 7/15/2014 – 4/14/2015 Standard Measurement Period: 3/1/2016 – 11/30/2016 Standard Measurement Period: 3/1/2016 – 11/30/2016 Stability Period: 7/15/2015 – 4/14/2016 Stability Period: 7/15/2015 – 4/14/2016 Standard Measurement Period: 3/1/2015 – 11/30/2015 Standard Measurement Period: 3/1/2015 – 11/30/2015 AP 11

Measurement Periods – Action Items Employer Mandate is delayed until 2015 Employers must begin measuring their employees in 2014 Determine Measurement Periods that are best for your business How will this get accomplished? Internalize process, outsource, integrate technology, etc. 12

Employer Mandate - Affordability 13

Coverage Affordability Key Requirements Offer Coverage Must offer to 70% in 2015 and 95% in 2016 of the FT Employees Coverage for employees and dependents Offer Affordable Coverage Include the MV requirements For the lowest cost coverage, employees pay no more than 9.5% of their W-2 income Key Decisions What does your maximum penalty look like? Will you cover spouses? What is the expectation that your FT employees will receive a subsidy? 14 w2 safe harbor provision for affordable coverage

AFFORDABILITY How is payroll used to determine the Employer Mandate requirement of “Affordability”? ©PrimePay LLC. All Rights Reserved 15

Affordable Coverage 16 Employer Decides Not to Offer Health Insurance = Pay 100+ FT employees or equivalents in 2015 Penalty imposed if subsidy is given to any one of its FT employees. # FT Employees – 30 x $2,000 = Annual Penalty Employer Decides to Offer Health Insurance = Play 100+ FT employees or equivalents in 2015 ER must: Must offer coverage to 70% (2015) & 95% (2016) of its FT employees & their dependents (does not include spouse) Employer’s plan pay for at least 60% of covered expenses Employee’s required contribution for self-only coverage must not exceed 9.5% of household income (W-2 Safe Harbor) – least expensive single rate If conditions aren’t met and if subsidy is given to any one of its FT employees, employer is penalized $3,000 / EE ©PrimePay LLC. All Rights Reserved

So, what is the missing puzzle piece for ACA compliance? ©PrimePay LLC. All Rights Reserved 17 FSA | PRA | HSA COBRA | Retirement Plans Bill Reconciliation Deduction & Limit Management Eligibility Counts New Hires & Terminations W-2 Reporting of Employer- Sponsored Coverage Reportable, Not Taxable Box 12 with Code DD to Identify the Amount Small Employer Health Care Tax Credit Determination of FTEs Calculation of Average Annual Taxable Wages Estimation of Tax Credit Employer Mandate Requirements Determination of Applicable Large Employer Status Measuring VHEs Calculation of Affordability Common Ownership? Metrics Utilize: o Status of EE (FT/VHE) o Exclusions (Owner, Seasonal, etc.) o Measurement Period Status o Average Hours Worked o Anticipated Annual Wages PAYROLL helps employers effectively manage ACA compliance The Data Found in Payroll

Now is the Time to Measure, Count, and Determine – Are you Prepared? 18 ©PrimePay LLC. All Rights Reserved

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