WHAT THE AFFORDABLE CARE ACT MEANS TO YOUR ASSOCIATION AND YOUR MEMBERS Dan Bond, Principal

Handouts capstonebenefits.com/cfoforum

Roles Under ERISA / ACA ERISA Fiduciary o Act solely in participant’s best interest o Act in accordance with plan docs and ERISA ERISA Plan Administrator o Directly responsible for compliance with administrative functions o Liable for non-compliance

Plan Sponsor Arrangements Single Employer Controlled Group Multiple Employer Welfare Arrangement o Health Plan (Association Level) o Multiple Employer Trust (single plans) o PEO

Insurance Arrangements Fully Insured Self-Insured (stop loss) Partial Self-Funding Minimum Premium Participating Contracts

Plan at MEWA or Employer Level? Commonality of Interest Test o Same Line of Business o Same Geographical Area o Not Just Arrangement to Provide Insurance Control Test o Do Employers Control the Plan?

Fiduciary Concerns ERISA 519 Shall Not Knowingly Make False Statement Regarding Marketing or Sale of MEWA o Financial Condition o Benefits Provided o Regulatory Status $250,000 Fine and 10 Years in Prison

Fiduciary Concerns ERISA 510 Unlawful to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right or interfering with the attainment of any right to which such participant may become entitled under the plan. Employer should have legitimate business reason in reclassifying employees causing loss of benefits Did employees previously have benefits? Does it disproportionately impact a protected class?

Fiduciary Concerns Whistleblower Act Employer may not in any manner retaliate against an employee because he or she received a premium credit under the ACA. Unclear whether possibility of receiving premium credit applies Requires only preponderance of evidence (51%) Remedies include “Special Damages” Administrative process first before federal court Employer must provide clear and convincing evidence it would have taken the same action

Will Employers Keep Plans? Many Surveys Say “Yes” For Large Employers Declines For Small Employers with Low Wage Workers Small Firms Moving to Self-Insurance Greater Cost Sharing and HDHP Many Dropping Spousal Coverage National Institute for Health Care Managements (October 2013). Employer Sponsored Health Insurance: Recent Trends and Future Directions. Retrieved from: Insurance-v2-data-brief.pdf

Adjusted Community Rating Effective January 1, 2014 Groups Up To 50 Eligible Lives Fully Insured Non-Grandfathered Non-Grandmothered

Adjusted Community Rating Premiums Based On: Individual vs Family Coverage Geographic Area Age (limited to a 3-to-1 factor) Tobacco Use (limited to a 1.5 to 1 factor) Premiums Cannot Account For: Actual or Expected Health Status Claims Experience

Alternatives to Community Rating Group Insurance Trust or MEWA Pros o Increased Buying Power o Lower Fixed Costs o Participating Financial Arrangements o Legal Compliance at Trust Level Cons o Legal o Administration

Alternatives to Community Rating Self-Funding Pros o Total Plan Control o Benefit From Good Claims Years Cons Risk Tolerance Administration / HIPAA Privacy and Security Understand Stop Loss Contract

PCORI Fees Increase to $2.08 o Plan Years After 10/1/14 and Before 10/1/15 o Responsibility of Plan Sponsor MEWAs o Responsibility of Committee that Sponsors Plan o Determine Insured Status  Fully-Insured: Verify Insurer Is Paying  Self-Insured: Cannot Pay from Plan Assets

Reinsurance Fees Self-Insured Group Health Plans Who Will Report/Pay? Which Plans Are Subject? Which Individuals Must Be Counted? Which Counting Method? MEWAs o Determine Insured Status

Who? o Entities Providing “Minimum Essential Coverage” What? o Each Individual Receiving Coverage (employees, spouses and dependents) When? o Report in Early 2016 for 2015 Plan Year Where? o Transmittal/Report to IRS o Statements to Individuals Why? o Enforcement of the Individual Mandate Section 6055 Reporting

Reporting Responsibility o Fully-Insured: Insurer o Self-Insured: Employer o Same Responsibility Under MEWA Timing for Report o Statement to Individuals: January 31, 2016 o Return (1095) and Transmittal File (1094): February 28, 2016  March 31 if Filed Electronically

Individual TIN Include TIN For Covered Individuals o Reasonable Efforts to Obtain TIN o DOB if TIN Not Available Example: Initial Request: June st Annual Solicitation: December nd Annual Solicitation: December 2017 Section 6055 Reporting

Who? o Applicable Large Employers (ALEs) What? o Full-Time (30 hrs.) Employees and Dependents When? o Report in Early 2016 for 2015 Plan Year Where? o Transmittal/Report to IRS o Statements to Individuals Why? o Enforcement of Play or Pay and Premium Tax Credits Section 6056 Reporting

Reporting Responsibility o Fully-Insured & Self-Insured: Employer  Same Responsibility Under MEWA o May Use 3 rd Party, But Remain Liable Coordination with 6055 Reporting Timing for Report (same as 6055) o Statement to Individuals: January 31, 2016 o Return (1095) and Transmittal File (1094): February 28, 2016  March 31 if Filed Electronically Section 6056 Reporting

Reporting: 6055 and 6056 * 6055 and 6056 reporting can be combined into a single return

Providing Statements to Individuals “Responsible Individual (Generally, the Employee) May Combine 6055 and 6056 (1095-C) May Be In Same Mailing as W-2 First Class Mail to Last known Address Electronically with Consent Post on Web Site with Consent o Consent May be Combined for Other Materials Reporting: 6055 and 6056

Penalties Failure to File Informational Return Failure to Furnish Employee Statements Relief for 2015 If Good Faith Effort Incorrect Incomplete Relief Under Standards for Reasonable Cause Timely Correction Reporting: 6055 and 6056

Cadillac Tax 40% Nondeductible Excise Tax Begins in 2018 Calculated on Value Above Threshold o $10,200 (single) and $27,500 (family) o Employer and Employee Premiums Included Employer-Sponsored Group Health Plans Employer/Employee Contributions to FSAs and HRAs Employer/Employee Pretax Contributions to HSAs EAPs with counseling benefits, onsite medical clinics and wellness programs Retirees Not Entitled to Medicare Higher Thresholds

Cadillac Tax – Action Plans Retiree Health Benefits o Project the Cost of the Benefit to Determine Tax o Recognize Tax in Retiree Health Valuations (if significant) Evaluate Plan Design and Cost Sharing Move Away From Fee for Service Make Dental/Vision Excepted Benefits Evaluate Account Based Plans Consider Self-Insuring Review Eligibility Rules

Section 4980D Penalties ACA Market Reforms IRS Excise Tax $100 per Day per Individual Violation $2,500 per Individual if Not Corrected Prior to Notice Relief o Employer didn’t know or would not have known o Failure due to reasonable cause and corrected within 30 days

DOL Audit Review the Summary Plan Description (SPD) Health Certificate is NOT and SPD Distribution Method Should Ensure Actual Delivery Pre-Audit if Possible Organize Material Prior to Audit Bring Exceptions to Auditor’s Attention All Actions in Best Interest of Participants Notices Document Process and Timing – Maintain Copies

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