2015 BAW Conference SHP Eligibility and ACA Reporting for 2015 LaShanti Geathers Denise Hunter

Today’s topics Part I. Expanded Eligibility Types of employees and Terms to Know October Eligibility Reminders What to Expect in 2016 Frequently Asked Questions Part II. ACA Reporting Requirements Form Details to Consider Helpful Information How PEBA Will Assist Employers Checklist for ACA Reporting 2

Expanded eligibility and the ACA 3

All employers participating in PEBA insurance benefits must offer coverage to all employees eligible to participate in the insurance benefits. The Plan of Benefits (POB) document has been amended to allow coverage for permanent full-time employees, as well as non-permanent full-time employees and variable-hour, part-time and seasonal employees. 4

Types of employees All employees fall into one of three categories: New full-time employee New variable-hour, part-time or seasonal employee Ongoing employee As an employer, it is your responsibility (not PEBA’s) to determine how to classify your employees 5

How to define an employee New full-time employee as defined by the POB: Employer reasonably determines based on facts and circumstances at the date of hire, the employee will average 30 hours per week. New part-time employee as defined by the POB: Has not completed a full standard measurement period as of date of hire Not expected to average 30 hours or more per week during an initial measurement period 6

How to define an employee New seasonal employee as defined by the POB: Has not completed a full standard measurement period Hired into a position for which the customary annual employment is six months or less. Customary means by nature of the position, the employee works six months or less, and that period begins each calendar year in approximately the same part of the year, such as summer or winter. 7

How to define an employee New variable-hour employee as defined by the POB: Has not completed a full standard measurement period. As of date of hire, employer cannot determine whether the employee is reasonably expected to be employed an average of at least 30 hours per week. Ongoing Employee as defined by POB: Has been employed by an employer for an entire standard measurement period October 4 – October 3 of next plan year. 8

Summary of types of employees Full-time employee (permanent and non-permanent) Employee expected to average 30 hours per week Variable hour, part-time, seasonal employee Variable-hour: employer does not know Part-time: employer does not expect Seasonal: position is customarily less than six months that begins around the same time each year 9

Initial stability period Variable-hour, part-time and seasonal employees that have been deemed eligible for benefits are eligible for the entire initial stability period, even if their hours are later reduced. 10

Terms to Know (Refer to Affordable Care Act Glossary) New variable-hour, part- time, and seasonal Initial Measurement Period Initial Administrative Period Initial Stability PeriodOngoing employeesStandard Measurement Standard Administrative Standard Stability Period 11

Quick review New variable-hour, part-time or seasonal employee 12

Example: Bruno Bruno was hired part-time on June 6, 2015, by the Department of Public Safety. Bruno’s benefits administrator (BA) does not know or expect him to average 30 or more hours per week. Initial measurement period July 1, 2015 – June 30, 2016 Initial administrative period July 1, 2016 – July 31, 2016 Initial stability period August 1, 2016 – July 31,

Sample timeline for Bruno 2015 Hire date is June 6 Initial measurement begins July 1 Standard measurement begins October Initial measurement ends June 30 Initial administrative period July 1-31 Initial stability begins August 1 Standard measurement ends October 3 (ongoing employee) 2017 Initial stability ends July 31. (Look back at October 2016 to see if coverage continues the remainder of the Plan Year.) 14

Plan YRJanFebMarAprMayJunJulAugSeptOctNovDec 2015 Date of Hire June 6 October Enrollment Period Sample timeline for Bruno new part-time employee Initial measurement period begins Jul 1 Initial measurement period ends Jun 30 Initial stability period begins Aug 1 When does Bruno become and an ongoing employee? Standard measurement period October 4 - October 3 Continue to measure Bruno becomes ongoing October 3, 2016

October eligibility reminders 16

October eligibility reminders 2015 October enrollment period Offers coverage to newly eligible ongoing employees for 2016 plan year Ongoing employees have been employed October 4, 2014, through October 3, 2015 Any employees whose stability period, Standard or Initial began on January 1 will not lose eligibility for insurance until December 31,

October eligibility reminders 2015 open enrollment Nonpermanent full-time, variable-hour, part-time, and seasonal employees are eligible to participate with all insurance programs offered. Be sure to provide the most recent Notice of Election form. Part-time teachers are not eligible for life insurance and long term disability. Be sure to provide the Marketplace Exchange Notice to newly eligible employees, and the initial COBRA notice to newly enrolled employees and/or their newly enrolled dependents. 18

October eligibility reminders New variable-hour, part-time, and seasonal employees hired in September 2014 Initial measurement period October 1, 2014-September 30, 2015 Don’t let these employees fall through the cracks Initial administrative period October 1-31, 2015 Initial stability period November 1, 2015-October 31, When to begin tracking as an ongoing employee Standard measurement period October 4, 2014-October 3, 2015 Standard administrative period October 4- Dec 31, 2015 Standard stability period January 1, 2016-December 31, 2016

Plan YRJanFebMarAprMayJunJulAugSeptOctNovDec 2014DOH: 6 th October Enrollment Period October eligibility reminders: Part- time employee hired in Sept. 6, 2014 Initial measurement Initial measurement period Oct 1, 2014–Sept 30, 2015 Standard measurement period Oct 4- Oct 3 Continue to measure with ongoing employee Benefits

What to expect in

What to expect in Standard Stability Period January 1 – December 31 for ongoing employees Employees who average 30 hours or more per week during the standard measurement period are eligible for insurance the entire plan year if they remain employed with the same employer without a 13 week break in employment (26 weeks for academic employers) 22

2016 plan year Throughout the year “new” variable-hour, part-time and seasonal employees will reach the end of their initial stability period. BA should look back to October 2015 Employee should have been employed a full standard measurement period October 4, 2014 – October 3, 2015 If the employee averaged 30 hours, his benefits continue. If the employee did not average 30 hours, terminate his benefits at the end of the initial stability period, and offer COBRA continuation and conversion information if applicable. 23

Arnold was hired May 7, 2014, as a variable-hour employee October 4, 2015 Did not average 30 hours over the standard measurement period January 1, 2016 Benefits continue; still in initial stability period June 30, 2016 Benefits end; offer COBRA continuation and conversion if applicable October 4, 2016 Review hours again to determine eligibility for 2017 plan year 24 Example: Employee not eligible at the end of initial stability period Initial measurement period June 1, 2014-May 31, 2015 Initial administrative period June 1-30, 2015 Deemed eligible for insurance Initial stability period July 1, 2015–June 30, 2016

25 Example Arnold is not eligible at the end of stability period: Oct review hours Less than 30 hours June 30, Initial stability period ends. Coverage ends Oct review again for 2017 Plan year

Bobby was hired May 7, 2014 as a variable-hour employee October 4, 2015 Averaged 30 over the standard measurement period June 30, 2016 Benefits will continue through December 31, 2016 October 4, 2016 Review again to determine eligibility for the 2017 plan year 26 Example: Employee eligible at the end of initial stability period Initial measurement period June 1, 2014–May 31, 2015 Initial administrative period June 1-30, 2015 Deemed eligible for insurance Initial stability period July 1, 2015 – June 30, 2016

27 Example Bobby is eligible at the end of stability period: October 2015 Enrollment review hours Averages 30 hours June 30, Initial stability period ends. Coverage continues to Dec 31, 2016 October 2016 Enrollment review again for 2017 Plan year

Christina was hired as a full-time employee on August 3, 2015 September 1, 2015, benefits became effective November 1, 2015, unpaid leave begins. Insurance coverage terminated due to reduction of hours and COBRA continuation coverage was offered March 8, 2016, Christina returns to a full-time position Offer benefits the first of the month after she returns to work 28 Example: New full-time employee returns from unpaid leave

Frequently asked question An ongoing full-time employee is actively at work. The employee did not average 30 hours during the standard measurement period due to unpaid leave. Can I terminate his benefits? No. An employee who is actively at work in full-time position is eligible for coverage. However, if the employee experiences another reduction of hours or goes on unpaid leave during the plan year, coverage should terminate the first of the month following the reduction of hours and COBRA coverage should be offered (because the employee did not average 30 hours during the standard measurement period). Note: this is why we measure full-time employees. 29

Frequently asked question An employee averaged 30 hours and is in a stability period. The employee had a reduction of hours and is going on unpaid leave. Can I charge the employer share of premiums? No. After reviewing the Affordable Care Act employer mandates, PEBA amended the rules regarding unpaid leave. 30

Frequently asked question A full-time teacher is a Medicare-eligible working retiree, who is also eligible for benefits during a stability period. The teacher is transitioning to a part-time position in the fall. Can she elect retiree health coverage over the summer? No. Because the teacher is eligible for Medicare and employer sponsored health coverage, she may not elect health coverage as a retiree. Federal law requires Medicare-eligible employees to elect active employer sponsored insurance whenever its available. Medicare eligible employees may: Enroll or remain enrolled in active coverage as an employee or Cancel the health insurance offered through PEBA and continue dental and vision as a retiree. 31

ACA reporting How PEBA will assist employers 32

ACA reporting One of the biggest challenges for employers has been combining benefits information with payroll information for the purpose of creating the required forms 33

ACA reporting for active employees After reviewing the final regulations released by the IRS in February for the 1094 and 1095 forms, PEBA has determined: Each employer will be responsible for filing forms for any individual deemed eligible for benefits anytime during the preceding calendar year. Members of the State ALE (state agencies, boards and departments that use the CG payroll) will be considered a single employer. Only one return for active employees will be submitted to the IRS. The entity to issue statements to the active employees has not been identified. 34

ACA reporting for non-employees State Applicable Large Employer (ALE) consist of state agencies/boards/departments that use the CG payroll PEBA will handle the return and statements required for former non-Medicare eligible employees, retirees, survivors, COBRA subscribers and their dependents who have not been employed any part of the reporting year 35

ACA reporting for non-employees Technical colleges, public universities, public school districts and certain public corporations May designate PEBA as its Designated Governmental Entity (DGE) to make the return and statements required for former non-Medicare eligible employees, retirees, survivors, COBRA subscribers and their dependents who have not been employed any part of the reporting year 36

Designated governmental entity Only employers that participate in the State Health Plan pursuant to S.C. Code of Law Ann § can designate PEBA as their DGE for reporting non- Medicare eligible retirees, COBRA and survivor subscribers. Employers who can designate PEBA as their DGE Employers Technical colleges Public universities Public school districts Certain public corporations 37

Designated governmental entity Local subdivisions as defined by S.C. Code of Law Ann § cannot designate PEBA as its DGE List of employers who cannot designate PEBA as it DGEemployers PEBA will not report coverage for former employees who were active one day or more during the reporting period No employer may elect PEBA as its DGE for active employees 38

How to designate PEBA as the DGE Complete the Designated Governmental Entity formDesignated Governmental Entity Form may be completed and signed by agency head and sent to PEBA for consideration PEBA will verify if employer is eligible to designate PEBA as its DGE If PEBA accepts the designation, PEBA will return a signed copy of the form to the employer. If employer does not receive a signed copy of the form, PEBA is not the DGE, and the employer will be responsible for reporting all active and former employees. PEBA will only accept designation as an employer’s DGE for the purpose of reporting non-Medicare eligible retirees, survivors and COBRA subscribers. PEBA will not report active employees or former employees active even for one day during the reporting period. form to by October 31,

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PEBA as the DGE PEBA will complete and provide the 1095-B form to the employer’s former non-Medicare eligible employees and transmit it with the 1094-B. PEBA will only report former employees who were not active employees for any portion of the reporting period. If an employee’s status changes from active to retiree or COBRA subscriber in the same reporting year, the employer must report the former employee on the C form (1095-B for small employers), along with all other active employees. PEBA will send the employer coverage information for the employee. 41

ACA reporting for non-employees Local subdivisions Employers are responsible for handling the return and statements required for their former non-Medicare eligible former employees, retirees, survivors, COBRA subscriber and their dependents. PEBA will provide employers with coverage information for these individuals. 42

Two types of ACA reporting Section 6056 Reporting (1095-C and 1094-C) Applies to Applicable Large Employers (ALE) with 50 or more full- time equivalent employees Report includes the employer’s offers of coverage to employees and the coverage for which the employee and his dependents were enrolled Section 6055 Reporting (1095-B and 1094-B) Applies to all employers and includes the coverage for which former employees and their dependents were enrolled Employers with fewer than 50 full-time equivalent employees will also use these forms to report coverage for their active employees 43

Section 6056 IRS reporting requirements for large employers 44

Section §6056 reporting requirements Applies to employers with 50 or more full-time equivalent employees (ALE groups) Forms 1095-C Employer-Provided Health Insurance Offer and Coverage Individuals employed in a full-time position at any time during the preceding calendar year Employers must use the 1095-C form to report former employees who have retired, left employment and/or elected COBRA if the employee was enrolled in active coverage any part of the year/reporting period 1094-C Transmittal of Employer (attached to the 1095-C and provided to IRS) 45

IRS form 1095-C Part I Requests information about the employee and employer Part II Requests information about whether the employee was offered coverage Part III Requests information about when an employee and his dependents were enrolled in coverage PEBA will provide employers with an electronic file containing information about which employees and dependents were covered 46

47 If you need assistance completing this form, consult with your legal counsel, a tax professional or the IRS. PEBA cannot provide guidance for completing IRS forms. PEBA will provide the information needed to complete Part III.

Form details to consider Name, address and EIN of the employer Name and phone number of employer’s contact person Calendar year for which the information is reported Certification that the employer offered its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage (by calendar month) 48

Form details to consider Employee’s name, address and Social Security number Months during the plan year coverage was available (offered) to the employee Months during the plan year the employee and his dependents enrolled in coverage Employee’s share of the lowest cost monthly premium (self-only) for coverage providing minimum value 49

Form details to consider Applicable safe harbor codes (depends on reporting method) Whether the employee’s effective date of coverage was affected by a permissible waiting period (limited non-assessment period) 50

Helpful information The State Health Plan is a self-funded plan Coverage offered by PEBA is minimum essential coverage providing minimum value and is affordable Based on SHP Savings Plan – Subscriber only coverage is $9.70 per month $9.70 per month x 12 months = $ per year $ /.095 = $1, per year Coverage is not affordable if employee’s share of premium exceeds 9.5 percent of employee’s household income Employee share of lowest cost monthly premium for self-only minimum value coverage is $9.70 (part-time teachers who do not average 30 hours pay higher premiums) 51

Helpful information Limited non-assessment period is a period where the employer is not subject to a penalty under Code Section 4980H regardless of whether the employer offered coverage to a full-time employee 52

Scott is a variable-hour employee hired May 16, 2014: Scott’s PEBA insurance file Initial measurement period June 1, 2014 – May 31, 2015 Initial administrative period June 1-30, 2015 Averaged 30 hours and is eligible for benefits Scott is offered benefits effective July 1, 2015, and enrolls Limited non-assessment period January-June 2015 No qualifying offer of coverage was made to Scott July-December 2015 Employer made a qualifying offer of coverage to Scott and he enrolled 53 Limited non-assessment period example

Tina is a variable-hour employee hired July 17, 2014: Tina’s PEBA insurance file Initial measurement period August 1, 2014 – July 31, 2015 Initial administrative period August 1-31, 2015 March 15, 2015, Tina is offered a full-time position and accepts Tina is offered benefits effective April 1, 2015, and enrolls Limited non-assessment period January– March 2015 No qualifying offer of coverage was made to Tina April-December 2015 Employer made a qualifying offer of coverage to Tina and she enrolled 54 Limited non-assessment period example

Joan was hired by Company ABC July 16, 2015, as a full-time employee: Joan is offered benefits effective August 1, 2015, and enrolls January-June 2015 Joan is not employed by Company ABC Limited non-assessment period July 2015 No qualifying offer of coverage was made to Joan August-December 2015 Employer made a qualifying offer of coverage to Joan and she enrolled 55 Limited non-assessment period example

Sample coverage file for 1095-C 56

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PEBA coverage information example Sharon was hired as a full-time employee at Midlands Technical College on January 15, Sharon was offered health coverage and enrolled effective February 1, 2014, and has had continuous health coverage. Around the last week of December, PEBA will send Midlands Tech information indicating that Sharon was enrolled in health coverage January through December In other words, an “X” will be indicated for each month, January through December 2015, (or one “X” indicating coverage for the entire year) for Sharon. 58

PEBA coverage information example Jason was hired as a full-time employee at Charleston County School on July 15, Jason was offered health coverage, and enrolled himself and his family effective August 1, Around the last week of December, PEBA will send Charleston County School information indicating that Jason and each of his dependents were enrolled in health coverage August through December In other words, an “X” will be indicated for each month, August through December, for Jason and each of his covered dependents. 59

PEBA coverage information example Linda was hired as a full-time employee at the City of Sumter on March 17, Linda was offered health coverage and enrolled effective April 1, Effective July 1, 2015, Linda left employment. On October 15, Linda was rehired at the City of Sumter. Linda was offered health coverage and enrolled, effective November 1, Around the last week of December, PEBA will send the City of Sumter information indicating that Linda was enrolled in health coverage April through June and November through December. In other words, an “X” would be indicated for each month, April through June and November through December, for Linda. 60

PEBA coverage information example Jim retired from USC several years ago and enrolled in retiree coverage. Jim decides to return to work and is hired in a full-time position at USC effective August 17, Jim was offered health coverage and enrolled effective September 1, Around the last week of December, PEBA will send USC information indicating that Jim was enrolled in health coverage January through December. In other words, an “X” would be indicated for each month, January through December for Jim even though part of his coverage was retiree coverage and part was active coverage. 61

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Form details to consider Name, address and EIN of the employer Name and phone number of employer’s contact person Calendar year for which the information is reported Total number of forms (1095-C) submitted Months for which MEC is offered by employer 65

Form details to consider Number of full-time employees for each month of the calendar year (does not include those in limited non- assessment period) Total number of employees (head count) for each month of the calendar year If part of an Aggregated Group, other members Election of Section 4980H Transition Relief Indicator, if applicable 66

IRS form 1094-C The 1094-C should be attached to the 1095-C and submitted to the IRS. If you need assistance completing this form, consult your legal counsel, a tax professional or the IRS. PEBA cannot provide guidance for completing IRS forms. 67

Section 6055 IRS reporting requirements for both small and large employers 68

Section 6055 reporting requirements Applies to employers with fewer than 50 full-time equivalent employees (non-ALE groups) Applies to all employers who offer coverage to former non-Medicare eligible employees (retirees, COBRA and survivor subscribers) Forms 1095-B Health Coverage form Individuals employed in a full-time position (small employers) at any time during the preceding calendar year Retirees, COBRA and survivor subscribers 1094-B Transmittal of Employer (attached to the 1095-B and provided to IRS) 69

IRS form 1095-B Part I Contains information to identify the employee, retiree, survivor or COBRA participant Part II & Part III Contact legal counsel, tax professional or the IRS for assistance 70

IRS form 1095-B Part IV Lists when an employee and his dependents were enrolled in coverage Local Subdivision and Non-designated Governmental Entity (DGE) Groups PEBA will provide an electronic file with the information needed to complete Part IV of the form 71

72 If you need assistance completing this form, consult with your legal counsel, a tax professional or the IRS. PEBA cannot provide guidance for completing IRS forms. PEBA will provide the information (not guidance) needed to complete Part IV for active employees and former employees, survivors and COBRA participants for local subdivisions and employers that do not designate PEBA as their designated governmental entity.

Sample coverage file for 1095-B 73

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75 The 1094-B should be attached to the 1095-B and submitted to the IRS. Employers with fewer than 50 FTEs can only submit one transmittal for employees and former non-Medicare eligible employees. If you need help, consult your legal counsel, a tax professional or the IRS. PEBA cannot provide guidance for completing IRS forms.

Deadlines and penalties 76

IRS reporting requirements All statements (1095-C and 1095-B) should be provided to all covered subscribers by January 31, Forms should be submitted to the IRS by February 28, 2016, or March 31, 2016, if filing electronically. Penalties can be imposed for: (1) failing to provide statements or timely file a return; and/or (2) failing to provide a correct or complete statement. See IRS guidelines for penalty amounts. 77

Checklist for ACA reporting Review the IRS forms and instructions to become familiar with the reporting requirements Identify where the required data is collected and stored in your systems (in-house or external) Develop systems to collect any data that is not currently captured in existing systems and aggregate this data to prepare the required forms Verify employee addresses Verify information in MyBenefits (employees) Determine whether assistance is needed from an outside vendor Consult with legal counsel 78

Questions 79

Disclaimer This presentation does not constitute a comprehensive or binding representation regarding the employee benefits offered by the South Carolina Public Employee Benefit Authority (PEBA). The terms and conditions of the retirement and insurance benefit plans offered by PEBA are set out in the applicable statutes and plan documents and are subject to change. Please contact PEBA for the most current information. The language used in this presentation does not create any contractual rights or entitlements for any person. 80