1. ACA: Compliant or Complacent?

2. Keynote Presenter Dr. Kristin L. Kahle CEO and Founder of NavigateHCR Nationally recognized leader in Health Care Reform Certified Health Care Reform Specialist (CHRS) Dissertation on Health Care Reform National speaker and educator Benefits strategist and broker with 20+ years of experience Awarded: 2014 and 2015 Most Influential Women in Benefit Advising Dr. Kristin Kahle Navigatehcr.com @EasyHCR

3. Ball of Confusion

4. Common Misnomers We’re OK… our carrier handles everything for us Our carrier provides us with our SPD We’re not concerned… What are the chances of an audit? I’m a small employer, I don’t have to worry about fines or penalties

5. Common Concerns It’s information overload… I can’t get my arms around all of this regulation stuff… I have a business to run; I can’t make this a priority! You send us great information, but who has time to read it? What worries me is, we don’t know what we don’t know…

6. Compliance Consequences DOL Audits are happening at a record pace and will continue Wide range of potential penalties for various notices and various timeframes Impacts groups of all sizes Acronym Alert DOL – Department of Labor “How am I supposed to think about consequences before they happen?”

7. Compliance Penalty Categories Healthcare reform COBRA ERISA FMLA Taxation Medicare/TRICARE HIPAA Privacy HIPAA Portability Cafeteria Plans Nondiscrimination Other Federal Mandates Many employers are under the misconception that the “pay or play” penalties for large employers are the only penalties to fear Types of Penalties Company Fines Personal Fines Legal Action Even Prison Types of Penalties Company Fines Personal Fines Legal Action Even Prison

8. Compliance

9. ACA Compliance Solutions NavigateHCR Compliance Communication – Employer Express – Push notices to employer – Employee Express – Push notices direct to employees – SPD/Wrap Exposure Analysis- Several Tests (including but not limited to) – Look Back Analysis – Full-Time Equivalents Calculations Measurement Analysis and Reporting – Tracker – Monthly variable hour tracking – Tracker- IRS Reporting (6055 and 6056) ACA Consulting Services ACA Hotline- 1095 Questions

10. Today’s Challenge Mind numbing complexity of the ACA Potentially harsh tax penalties Financial consequences for noncompliance Continual avalanche of new regulations All of these have created unprecedented new challenges for businesses and brokers! IRS Inspector General calls the ACA “the largest set of tax law changes the IRS has had to implement in more than 20 years.

11. Topics to be covered Individual Mandate Exchange- Premium Subsidy Employer Shared Responsibility Compliance Considerations/Notices DOL Audits Compliance Notices Reporting- NEW

12. Individual Mandate 2014 All US Citizens age 18 or older must maintain minimum essential coverage or pay a TAX Minimum Essential Coverage – All “group health plans” – Policies issued in the individual market (inside or outside the exchange) – Penalty ranges $95- $12,000 IRS determination

13. Exchange Metallic level of coverage Rating Requirements Special/annual enrollment Individuals may qualify for premium subsidy – Household income between 100% and 400% FPL – Not “eligible” for MEC with employer that is both affordable and provides minimum value OR – Not enrolled in employer sponsored MEC

14. 4980H- Pay or Play Applicable Large Employers (ALE) 2015 50-99 (Mid) Employers 2016 (AME) Reporting needs to occur for both groups 2 methods for identifying employees for full time – Look Back (12 or 6 consecutive months) – Monthly Measurement

15. 4980H “Offer” of coverage – Opportunity to enroll or decline each year Affordability – W2 (Annual determination) – Rate of Pay – Federal Poverty Level Limits – Exchange is based on household income Reporting- 6056/6055

16. Hammer Penalties Sledgehammer Penalty – Offering of coverage – 70% of full time employees and dependent children – ONE employee receives subsidy – $2,000 penalty or ($167) per month reduced by 80 employees – The reason that employees receives subsidy is not relevant

17. Hammer Penalties Tackhammer Penalty – Offering of coverage – Does not offer affordable, minimum value coverage – 70% of full time employees and dependent children – Employee receives subsidy – $3,000 penalty or ($250)X the number of full time employees receiving a subsidy in the exchange that month

18. Other considerations If you want your ALE’s to AVOID 4980H – (A): then must also include coverage for dependent children – (B): Affordable and provide minimum value For all employers, if it doesn’t provide minimum value OR is not affordable then, YOU MUST OFER THEM THE OPPORTUNITY TO DECLINE COVERAGE.

19. Variable Hour Flowchart

20. Measurement Period To give employers flexible and workable options and greater predictability for determining full time employee status, the IRS developed an optional look-back measurement method as an alternative to the monthly measurement method. The details of this method vary based on whether the employees are ongoing or new, and whether new employees are expected to work full- time or are variable, seasonal or part- time employees. An employer has discretion in deciding how long these periods will last, subject to specified IRS parameters. Employers can use the look-back measurement method for new variable hour employees, seasonal employees and ongoing employees. However, if an employee is expected to work full-time, the employer must offer coverage to that employee by the end of the first three calendar months of employment.

21. 2015 ACA Compliance Checklist: Affordability As part of ACA, Employer Groups must offer “affordable” benefits to all eligible employees. Eligible employees are those that are FTEs (30 hours of service per week: 130 hours in calendar month). Which way are you defining full time employees? Look-back measurement method? Monthly measurement method? Measurement period: counting hours of service Administrative period: allowing time to enrollment and disenrollment $tability period: coverage needs to be provided

22. Example of Measurement Periods

23. Preparing for 2015 Employers Need a Compliance Strategy Arduous task which is difficult to implement without the help of outside resources Risk of being audited for non-compliance is increasing as regulations regarding healthcare become more stringent Partnering with the right compliance provider is necessary so that you can provide appropriate solutions

24. Compliance Considerations Key health insurance reforms Provider non discrimination Annual/lifetime dollar limits Out of pocket maximums Federal compliance considerations COBRA ERISA reporting, disclosure and reporting rules

25. Employer Notices By Size 1-49 SPD SMM and Summary Material Reduction in Covered Services Plan Documents Health Insurance Exchange Notice SBC Notice of Modification Disclosure of Grandfather Status Notice of Patient Protections Patient-Centered Outcomes Research (PCORI) Notice of Special Enrollment Rights Wellness Program Disclosure Notice of Privacy Practices WHCRA Mental Health CHIP Michelle’s Law Newborns and Mothers Protections Medicare Part D 20-49 General Notice of COBRA Notice of COBRA QE COBRA election notice Notice of Unavailability of COBRA Notice of Underpayment of COBRA Notice of Early Termination of COBRA Coverage 20-49 General Notice of COBRA Notice of COBRA QE COBRA election notice Notice of Unavailability of COBRA Notice of Underpayment of COBRA Notice of Early Termination of COBRA Coverage

26. Employer Notices By Size 50+ SPD SMM and Summary Material Reduction in Covered Services Plan Documents Health Insurance Exchange Notice SBC Notice of Modification Disclosure of Grandfather Status Notice of Patient Protections Patient-Centered Outcomes Research (PCORI) Notice of Special Enrollment Rights Wellness Program Disclosure Notice of Privacy Practices WHCRA Mental Health CHIP Michelle’s Law Newborns and Mothers Protections Medicare Part D 50+ General Notice of COBRA Notice of COBRA QE COBRA Election notice Notice of Unavailability of COBRA Notice of Underpayment of COBRA Notice of Early Termination of COBRA Coverage 50+ FMLA Notice Notice of FMLA Eligibility Rights FMLA Designation Notice 100+ Form 5500 SAR 50+ General Notice of COBRA Notice of COBRA QE COBRA Election notice Notice of Unavailability of COBRA Notice of Underpayment of COBRA Notice of Early Termination of COBRA Coverage 50+ FMLA Notice Notice of FMLA Eligibility Rights FMLA Designation Notice 100+ Form 5500 SAR

27. Example: Notices New Hire/Upon Eligibility Notices NoticePotential Penalties Employer Chip NoticeUp to $100 per day per failure HIPAA Notice of Special Enrollment Rights$100 per failure up to $25,000 FMLA General NoticeEmployers may be liable for compensation or benefits lost, actual monetary losses, or other equitable relief Medicare Part D Creditable/Non-creditable Disclosure Notice No monetary penalties as of yet, but employer may lose eligibility in Retiree Drug Subsidy program Exchange NoticeNo specific penalty, but possibility of civil action Summary of Benefits and Coverage (SBC)Penalty of up to $1,000 per failure; may also target excise tax of $100 per day under the IRC

28. Example: Notices Notices Upon Enrollment NoticePotential Penalties Summary of Benefits and Coverage (SBC)Up to $110 per day; up to 10 years in prison and a $100,000 fine for individuals or a $500,000 fine for companies Summary of Material Modification (SMM)Up to $110 per day; up to 10 years in prison and a $100,000 fine for individuals or a $500,000 fine for companies Initial COBRA Notice$110 per day under ERISA; must self report with IRS using Form 8928 and civil penalty of $100 per day would be assessed

29. Example: Notices Ongoing/Annual Notices NoticePotential Penalties Medicare Part D Creditable/Non-creditable Disclosure Notice No monetary penalties as of yet Summary Annual Report (5500)No specific civil penalties but possible criminal penalties up to 10 years in prison and $100,000 fine Employer Chip NoticeUp to $100 per day per failure Notice of Availability of Reasonable Alternative Standard for Wellness Program Violation of HIPAA discrimination rules could lead to employer having to repay surcharge amounts Summary of Benefits and Coverage (SBC)Penalty of up to $1,000 per failure Women’s Health and Cancer Rights Act Annual Notice Legal action may be brought by the participant; $110 per day penalty under ERISA FMLA Eligibility Notice, FMLA Rights and Responsibility Notice, FMLA Designation Notice Employers may be liable for compensation or benefits lost, actual monetary losses, or other equitable relief

30. Coverage Termination Notices NoticePotential Penalties COBRA Election NoticeLegal action by the participant (may be liable for medical costs incurred); ERISA $110 per day penalty; must self-report on Form 8928 and pay $100 per day civil penalty FMLA Notice of Nonpayment of PremiumEmployers may be liable for compensation or benefits lost, actual monetary losses, or other equitable relief Notice of Rescission of CoverageMust self-report violation on Form 8928 and $100 per day penalty

31. DOL Audit Triggers A DOL audit can be triggered for a variety of reasons. In most cases, the DOL investigator will not disclose to an employer why its health plan was selected for audit. Common triggers for a DOL audit include: Participant complaints to the DOL about potential ERISA violations  In 2013, according to a DOL audit summary, 775 new investigations were opened as a result of participant complaints Answers on the plan’s Form 5500 The DOL’s national enforcement priorities or projects, which target the DOL’s resources on certain issues  For example, the DOL’s Health Benefits Security Project focuses on making sure health plans and health insurance issuers comply with the ACA’s mandates

32. DOL Audit Triggers A DOL audit can be triggered for a variety of reasons. In most cases, the DOL investigator will not disclose to an employer why its health plan was selected for audit. However, there are some common audit triggers that an employer should keep in mind. Common triggers for a DOL audit include: Participant complaints to the DOL about potential ERISA violations. In 2013, according to a DOL audit summary, 775 new investigations were opened as a result of participant complaints. Answers on the plan’s Form 5500. For example, if a plan’s Form 5500 is incomplete, or if inconsistent information is reported from year to year, the DOL may investigate the issue further. The DOL’s national enforcement priorities or projects, which target the DOL’s resources on certain issues. For example, the DOL’s Health Benefits Security Project focuses on making sure health plans and health insurance issuers comply with the ACA’s mandates.

33. 15 Items: DOL Letter: 2014. NavigateHCREmployerOther Vendor/NHCR Genetic Information Nondiscrimination Act (GINA) Contracts for claims and administration services Plan Document Certificate of Creditable coverageContracts with Insurance CompaniesSPD (Summary Plan Description) HIPAA COBRA ERISA Preexisting Conditions Newborns’ Act Notice FMLA QMSCO Mental Health Parity and Addiction Equity Act COBRA WHCRA Grandfathered status Healthcare and Education Reconciliation Act

34. Reporting Finally Approved Section 6055 –1094-B –1095-B Section 6056 –1094-C –1095-C Extensions and Waivers –30 day extension- 8809 –Waiver electronically-8508 1094-B 1095-B 1094- C 1095-C

35. Reporting

36. 2015 ACA Compliance Checklist: Reporting of Coverage ACA has provided guidelines on information that must be reported by employers for their Groups. Understanding the requirements and timing reduces audit risk and potential penalties for non-compliance. Do you understand the reporting requirements and which one needs to be filed and when? 1094-C 1095-C 1094-B 1095-B Section 6056 Section 6055

37. General Method The regulations provide that, as a general method, each ALE member may satisfy the requirement to file a section 6056 return by filing a Form 1094-C (transmittal) and, for each full-time employee, a Form 1095-C (employee statement), or other forms the IRS may designate. An ALE member that maintains a self-insured plan also uses a Form 1095-C to satisfy the reporting requirements under section 6055. The Form 1095-C will have separate sections to allow ALE members that sponsor self-insured group health plans to combine reporting to satisfy both the section 6055 reporting requirements and the section 6056 reporting requirements, as applicable, on a single return. Non-ALE members (meaning employers not subject to the employer shared responsibility provisions under section 4980H and therefore not subject to the information reporting requirements under section 6056- companies under 100 employees) that sponsor self-insured plans will file Forms 1094-B and 1095-B to satisfy the reporting requirements under section 6055.

38. Alternative Method The regulations contain two alternative methods of reporting under section 6056 that were developed to minimize the cost and administrative tasks for employers Consistent with the statutory requirements to file an information return with the IRS and furnish an employee statement to each full-time employee. The alternative reporting methods, in certain situations, may permit employers to provide less detailed information than under the general method for reporting. These simplified alternative reporting methods and the conditions for using them are described in detail in Subsections A through D of the preamble to the section 6056 regulations. The alternative reporting methods are:section 6056 regulations – Reporting Based on Certification of Qualifying Offers – Option to Report Without Separate Identification of Full-Time Employees if Certain Conditions Related to Offers of Coverage Are Satisfied (98 Percent Offers) The information provided to the IRS and the employee pursuant to section 6056 is important for administering section 4980H and the premium tax credit. However, in some circumstances, only some of the information required under the general method is necessary. Accordingly, the alternative reporting methods identify specific groups of employees for whom simplified alternative reporting would provide sufficient information.

39. SECTION 6055 AND 6056 As of March 2014, the IRS released final regulations on reporting requirements. In 2016, employers will be required to provide data they start collecting in 2015 to the IRS MEC Reporting: any entity that provides Minimum Essential Coverage, which includes health insurance issuers and sponsors of self-insured health plans is required to file an annual return with information about each individual for whom MEC’s provided. ALE reporting: Each ALE (50 plus)employees must file an annual return that reports terms and conditions of health care provided to its full time employees during the calendar year. Filing to the IRS no later than 2/28/16 or 3/31/16 electronically. Each reporting entity will also be required to furnish statements annually to individuals who are provided MEC on or before 1/31/16. For reporting it is 50 full time employees including full time equivalents (FTEs), those employees on average at least 30 hours of service per week. Employers that employed fewer than 50 full time employees that sponsors a self-insured health plan is required to report under Section 6055, even if the employer has fewer than 50 full time employees.

40. 1094-B

41. 1095-B

42. 1094-C

43. 1095-C

44. 8508

45. 8809

46. ACA Compliance Solutions NavigateHCR Summary EmployER Express – Pushes all notices to employer for distribution to employees EmployEE Express – Pushes all notices direct to employees and verifies receipt – Monthly reports sent to employer (notices sent/verification of notices) SPD/Wrap – Create and maintain proper SPDs (to accompany certificates of coverage) – Can send SPD to employees through Employee Express Tracker – Monthly variable hour tracking Tracker Reporting - 6055 and 6056 ACA Hotline ACA Consulting NavigateHCR will support its clients in the event of a DOL audit

47. Contact Us Our NavigateHCR team is ready to assist: Email: kristin@navigatehcr.com P: 855-742-7427 X201 Email: gracie@navigatehcr.com P: 855-742-7427 X200 Or visit us online at http://navigatehcr.com/products/http://navigatehcr.com/products/ @EasyHCRNavigatehcr.com