“Pay, Play, or Pray” Presented by: Rocco Lueck, MBA, GBDS Managing Director HR Benefit Advisors, Ltd. Buffalo, NY 14209

2 About HR Benefit Benefit Advisors, Ltd. Founded 18 years ago by Michael Colao and Gary Mink in Rochester, NY. Opened an office in Buffalo in Invited to join the United Benefit Advisors (UBA) in 2005 UBA is the 3 rd largest employee benefit organization in the United States w/$16B in revenue

3 Agenda  Understand the law  Review and Strategize  Develop your plan

4 Einstein Riddle A clerk at a butcher shop stands five feet ten inches tall and wears size 13 sneakers. What does he weigh?

5 Einstein Riddle Answer: Meat

6 Understand the Law

7 Employer Obligations What Should I Do Now? What Do I Need to Do in 2014? To 2014, and Beyond!!

8 Employer Obligations-Under 50 ee’s NOW:  Distribute medical loss ratio rebates  Begin issuing summary of benefits and coverage (SBC’s) starting with the first enrollment period beginning on or after 9/23/12  Reduce employee FSA contribution to $2,500  Withhold an extra.9 percent FICA on employees earning greater than $200,000 per year  Be prepared to file an application to participate in a SHOP exchange in summer or fall of 2013  Provide notice of upcoming exchanges in March 2013  Expand the definition of first dollar preventative care starting April 1 st 2014

9 Employer Obligations-Under 50ee’s What to do in 2014:Non-grandfathered plans  Work with exchanges to identify ee’s eligible for premium tax credits  Amend the plan to: – Remove all annual limits on essential health benefits – Provide coverage for those in clinical trials for services outside the trial – Limit cost sharing – Remove pre-existing condition limitations for adults  Limit eligibility waiting periods to 90 days  Begin reporting to IRS on coverage offered and available (first reports due actually in 2015)

10 Employer Obligations-Under 50ee’s 2014 for grandfathered plans:  Work with exchanges to identify employees eligible for premium tax credits  Amend the plans to: – Remove all annual limits on essential health benefits – Remove pre-existing conditions for adults – Cover dependent children to age 26 even if they are eligible for coverage through their own employers plan  Limit eligibility waiting period to 90 days  Begin reporting to IRS on coverage offered and available (first reports due actually in 2015)

11 Employer Obligations-Under 50ee’s 2014 and beyond!!  Nondiscrimination rules will apply, no date set yet  2018: 40% non-deductible excise tax will apply to high cost health coverage. – $10,200 for single coverage – $27,500 for family coverage  Employee and employer contributions will count towards threshold  Trigger amount will be increased annually

12 Einstein Riddle In British Columbia you cannot take a picture of a man with a wooden leg. Why not?

13 Einstein Riddle Answer: You can’t take a picture with a wooden leg. You need a camera (or iPad or cell phone) to take a picture.

14 Employer Obligations-Over 50 Employees Between NOW and 2014:  Expand definition of first-dollar preventative care to include a number of women’s services on or after 8/1/12 – Does not apply to grandfathered plans – Does not apply to religious employers – Not-for-profit’s who have excluded contraception for religious reasons have a one year delay to comply.  Distribute medical loss ratio rebates  Begin issuing summary of benefits and coverage (SBC’s) starting with the first enrollment period beginning on or after 9/23/12  Reduce employee FSA contribution to $2,500, on or after 1/1/2013  Withhold an extra.9 percent FICA on employees earning greater than $200,000 per year  Calculate and pay the Patient Centered Outcomes Fee in July 2013 if plan is self-funded and its plan year ends between 10/1/2012 and 12/31/2012.  Insurers are responsible for paying the fee for insured plans but will likely pass it on

15 Employer Obligations-Over 50 Employees What to do in 2014:Non-grandfathered plans  Provide affordable, min value to FT (30 hrs per week) or pay a penalty  Work with exchanges to identify those employees eligible for premium tax credits  Amend plan to: – Remove all annual limits on essential health benefits – Provide coverage for those in clinical trials for services outside the trial – Limit cost sharing – Remove pre-existing condition limitations for adults  Limit eligibility waiting periods to 90 days  Begin reporting to IRS on coverage offered and available(first reports are actually due in 2015)

16 Employer Obligations-Over 50 Employees What to do in 2014: Grandfathered plans  Provide affordable, min value to FT (30 hrs per week) or pay a penalty  Work with exchanges to identify those employees eligible for premium tax credits  Amend plan to: – Remove all annual limits on essential health benefits – Remove pre-existing condition limitations for adults – Cover dependent children to age 26 even if they are eligible for coverage through their own employer  Limit eligibility waiting periods to 90 days  Begin reporting to IRS on coverage offered and available(first reports are actually due in 2015)

17 Employer Obligations-Over 50 Employees 2014 and beyond!!  200 or more FT employees, must auto-enroll. Effective dat not set yet.  2018: 40% non-deductible excise tax will apply to high cost health coverage. – $10,200 for single coverage – $27,500 for family coverage  Employee and employer contributions will count towards threshold  Trigger amount will be increased annually

18 Pay For employers with 50 or more full time employees: You do not have to offer medical insurance, but, If you don’t……  Non-Tax deductible fine: $2,000 x number of full time employees, less the first 30. Example:  80 full time employees, no insurance offered.  80 – 30 = 50 x $2,000 = $100,000 fine (non tax deductible)

19 Pay For employers that offer medical insurance; the insurance must be:  “Qualified” – Expected to pay at least 60% of allowed charges and have minimum benefit standards AND  “Affordable” – Single coverage can cost the employee no more than 9.5% of W-2 wages

20 Pay If plans are not “BOTH” qualified and affordable AND employee(s) receives a subsidy via insurance purchase from “state exchange” Then Non-Tax Deductible Fine:  The lesser of $3,000 per such employee or $2,000 x number of full time employees, less the 1 st 30 employees.  Example: 80 full time employees, 25 purchase coverage through the exchange & receive the subsidy: Non-Tax Deductible Fine: A.25 x $3,000 = $75,000 (lesser of) B.80 – 30 = 50 x $2,000 = $100,000

21 Pray Why do it now, when I can wait? I'll get it done before it's late, I work much better under stress, (But that's not true, I must confess). Poem by David Ronald Bruce Pekrul “Procrastination”

22 Summary Thank you For Attending