1. www.laborlawyers.com Healthcare Reform What Employers Need to Know Presented By Sheldon J. Blumling Fisher & Phillips LLP (949) 798-2127 sblumling@laborlawyers.com Atlanta Boston Charlotte Chicago Cleveland Columbia Dallas Denver Fort Lauderdale Houston Irvine Kansas City Las Vegas Los Angeles Louisville Memphis New England New Jersey New Orleans Orlando Philadelphia Portland San DiegoSan FranciscoTampa Washington D.C. www.laborlawyers.com Fisher & Phillips LLP ATTORNEYS AT LAW Solutions at Work ®

2. Healthcare Reform Today’s Agenda: 1. Delay of Enforcement of Employer “Play or Pay” Mandate to 2015 2. Provisions and Obligations that Remain 3. Recent Exchange Notice 4. Employer “Play or Pay” Mandate Overview 5. What Employers Should be Doing Now

3. Healthcare Reform Delay of Enforcement of Employer “Play or Pay” Mandate to 2015: July 2nd Treasury Blog Post July 2nd Treasury Blog Post July 5th HHS Guidance re Exchange Verification Requirements July 5th HHS Guidance re Exchange Verification Requirements July 9th IRS Notice 2013-45 July 9th IRS Notice 2013-45 Bottom Line Bottom Line

4. Healthcare Reform Delay of Enforcement of Employer “Play or Pay” Mandate to 2015: What Now? What Now? Initial IRC 6055/6056 Reporting Guidance Issued Initial IRC 6055/6056 Reporting Guidance Issued Future Guidance on Employer “Play or Pay” Mandate Future Guidance on Employer “Play or Pay” Mandate What Happens to Transition Rules? What Happens to Transition Rules? How Much Room to Simplify? How Much Room to Simplify? Possible Legislative Changes? Possible Legislative Changes? Effect on Employees… Effect on Employees…

5. Healthcare Reform Provisions and Obligations that Remain: Individual Mandate Individual Mandate Exchange (“Marketplace”) Coverage Exchange (“Marketplace”) Coverage 90-Day Waiting Periods 90-Day Waiting Periods Elimination of Pre-Existing Condition Limitations Elimination of Pre-Existing Condition Limitations Essential Health Benefits Essential Health Benefits Prohibition on Annual Limits Prohibition on Annual Limits Cost-Sharing and Deductible Limits Cost-Sharing and Deductible Limits New Fees New Fees New Wellness Program Rules New Wellness Program Rules

6. Healthcare Reform Provisions and Obligations that Remain: Providing SBCs Providing SBCs MLR Rebates MLR Rebates W-2 Reporting of Cost of Coverage W-2 Reporting of Cost of Coverage Coverage Mandates Coverage Mandates Employer Exchange Notice Employer Exchange Notice

7. Healthcare Reform Exchange Notice— Basic concept of notice Basic concept of notice Back and forth on effective dates Back and forth on effective dates “Temporary” guidance: “Temporary” guidance: New notice req. applies to employers “subject to FLSA” (see www.dol.gov/elaws/esa/flsa/scope/screen24.asp) New notice req. applies to employers “subject to FLSA” (see www.dol.gov/elaws/esa/flsa/scope/screen24.asp) www.dol.gov/elaws/esa/flsa/scope/screen24.asp Must provide notice to all employees Must provide notice to all employees Existing employees—by October 1, 2013 Existing employees—by October 1, 2013 Within 14 days of start date for employees hired on or after October 1, 2013 Within 14 days of start date for employees hired on or after October 1, 2013 No specific penalties, but… No specific penalties, but…

8. Healthcare Reform Exchange Notice— Model Notices: Model Notices: http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf (for use if a plan is offered) http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf (for use if a plan is offered) http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf (for use if a plan is not offered) http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf (for use if a plan is not offered) http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf Revisions to DOL Model COBRA Notices: Revisions to DOL Model COBRA Notices: http://www.dol.gov/ebsa/modelelectionnotice.doc (model notice) http://www.dol.gov/ebsa/modelelectionnotice.doc (model notice) http://www.dol.gov/ebsa/modelelectionnotice.doc http://www.dol.gov/ebsa/modelelectionnoticeredline.doc (redline of prior model notice) http://www.dol.gov/ebsa/modelelectionnoticeredline.doc (redline of prior model notice) http://www.dol.gov/ebsa/modelelectionnoticeredline.doc More to come… More to come…

9. Healthcare Reform Employer “Play or Pay” Mandate— Now effective January 1, 2015 Now effective January 1, 2015 Applies to “large employers” Applies to “large employers” 50 or more “full-time” employees (including full-time equivalents) 50 or more “full-time” employees (including full-time equivalents) “Full-time” means 30 or more hours per week “Full-time” means 30 or more hours per week In order to “play” and avoid the possibility of “paying,” an employer must offer adequate and “affordable” group health plan coverage to substantially all full-time employees and their dependents In order to “play” and avoid the possibility of “paying,” an employer must offer adequate and “affordable” group health plan coverage to substantially all full-time employees and their dependents Plan covers at least 60% of the cost of benefits (minimum value) Plan covers at least 60% of the cost of benefits (minimum value) Employee premium cost must not exceed 9.5% of “household income” Employee premium cost must not exceed 9.5% of “household income”

10. Healthcare Reform Employer “Play or Pay” Mandate— If an employer fails to “play” by not offering coverage to substantially all full-time employees and their dependents AND at least one full-time employee receives Federal premium assistance for purchasing coverage through an insurance exchange, then the employer will “pay” an annual penalty tax of $2,000 per full-time employee, excluding the first 30 full-time employees. If an employer fails to “play” by not offering coverage to substantially all full-time employees and their dependents AND at least one full-time employee receives Federal premium assistance for purchasing coverage through an insurance exchange, then the employer will “pay” an annual penalty tax of $2,000 per full-time employee, excluding the first 30 full-time employees. An employee may qualify for Federal premium assistance if his or her income is less than 400% of the Federal poverty level (approximately $94,000 for a family of four) An employee may qualify for Federal premium assistance if his or her income is less than 400% of the Federal poverty level (approximately $94,000 for a family of four)

11. Healthcare Reform Employer “Play or Pay” Mandate— If an employer fails to fully “play” by offering inadequate and/or unaffordable coverage AND at least one full-time employee receives Federal premium assistance for purchasing coverage through an insurance exchange, then the employer will “pay” an annual penalty tax equal to the lesser of (i) $3,000 per full-time employee receiving assistance OR (ii) $2,000 per full-time employee, excluding the first 30 full-time employees. If an employer fails to fully “play” by offering inadequate and/or unaffordable coverage AND at least one full-time employee receives Federal premium assistance for purchasing coverage through an insurance exchange, then the employer will “pay” an annual penalty tax equal to the lesser of (i) $3,000 per full-time employee receiving assistance OR (ii) $2,000 per full-time employee, excluding the first 30 full-time employees. An employee may qualify for Federal premium assistance if his or her income is less than 400% of the Federal poverty level (approximately $94,000 for a family of four) An employee may qualify for Federal premium assistance if his or her income is less than 400% of the Federal poverty level (approximately $94,000 for a family of four)

12. Healthcare Reform Proposed Employer “Play or Pay” Mandate Guidance— “Substantially all” = 95% “Substantially all” = 95% “Dependents” do not include spouses “Dependents” do not include spouses 9.5% affordability “safe harbors” 9.5% affordability “safe harbors” Application of controlled group rules Application of controlled group rules Measurement and stability periods for determination of full-time status Measurement and stability periods for determination of full-time status Transition Rules Transition Rules

13. Healthcare Reform Employer “Play or Pay” Mandate— Common Questions and Considerations: Common Questions and Considerations: What about small employers? What about small employers? Impact of related employers Impact of related employers What about seasonal employees? What about seasonal employees? Any special rules for temps? Any special rules for temps? Any obligations for part-time employees? Any obligations for part-time employees? Effect of waiting periods Effect of waiting periods Considerations for a “play or pay” comparison Considerations for a “play or pay” comparison

14. Healthcare Reform Employer “Play or Pay” Mandate Guidance— Lookback and Stability Period Concepts-Ongoing EEs Lookback period of 3 to 12 months Lookback period of 3 to 12 months Stability period of at least 6 months, but no shorter than lookback period Stability period of at least 6 months, but no shorter than lookback period Use of an “administrative” period for enrollment process must overlap the stability period in order to prevent potential gaps in coverage Use of an “administrative” period for enrollment process must overlap the stability period in order to prevent potential gaps in coverage Different periods for different groups permitted in some circumstances Different periods for different groups permitted in some circumstances

15. Healthcare Reform Employer “Play or Pay” Mandate Guidance— Lookback and Stability Period Concepts-New Employees Apply to new (i) “seasonal employees” and (ii) “variable hour employees” for whom it cannot be determined that the employee is reasonably expected to work on average at least 30 hours per week. Apply to new (i) “seasonal employees” and (ii) “variable hour employees” for whom it cannot be determined that the employee is reasonably expected to work on average at least 30 hours per week. Maximum 90-day waiting period for otherwise eligible new full-time employees Maximum 90-day waiting period for otherwise eligible new full-time employees

16. Healthcare Reform Employer “Play or Pay” Mandate Guidance— Lookback and Stability Period Concepts-New Employees Lookback period of 3 to 12 months Lookback period of 3 to 12 months Stability period of at least 6 months, but no shorter than lookback period (and stability period for ongoing employees) Stability period of at least 6 months, but no shorter than lookback period (and stability period for ongoing employees) May apply an additional “administrative” period for enrollment process, as long as coverage begins no later than the end of the first calendar month beginning on or after an employee’s first anniversary May apply an additional “administrative” period for enrollment process, as long as coverage begins no later than the end of the first calendar month beginning on or after an employee’s first anniversary

17. Healthcare Reform Beyond the Employer “Play or Pay” Mandate— Automatic Enrollment Implementation Applies to “large employers” of more than 200 full-time employees Applies to “large employers” of more than 200 full-time employees Informal guidance indicates that requirement will not be implemented until sometime after 2014 Informal guidance indicates that requirement will not be implemented until sometime after 2014 Delayed Implementation of Nondiscrimination Requirements for Insured Plans

18. Healthcare Reform What Employers Should be Doing Now: 1. Modeling the impact of the Employer “Play or Pay” Mandate Does it Apply? Does it Apply? How Much Will it Cost? How Much Will it Cost? Impact on Employees Impact on Employees 2. Addressing ongoing compliance obligations 3. Watching for new near-term guidance: Revised/Final Employer Mandate Guidance Revised/Final Employer Mandate Guidance Revised/Final IRC 6055/6056 Reporting Guidance Revised/Final IRC 6055/6056 Reporting Guidance

19. Healthcare Reform What Employers Should be Doing Now: 4. Following developments in the law as other new guidance is issued:  Exchange Notices  Nondiscrimination Requirements  Automatic Enrollment  Plenty more to come…

20. www.laborlawyers.com Questions ? Atlanta Boston Charlotte Chicago Cleveland Columbia Dallas Denver Fort Lauderdale Houston Irvine Kansas City Las Vegas Los Angeles Louisville Memphis New England New Jersey New Orleans Orlando Philadelphia Portland San Diego San FranciscoTampa Washington D.C. www.laborlawyers.com Fisher & Phillips LLP ATTORNEYS AT LAW Solutions at Work ®

21. www.laborlawyers.com Healthcare Reform What Employers Need to Know Presented By Sheldon J. Blumling Fisher & Phillips LLP (949) 798-2127 sblumling@laborlawyers.com Atlanta Boston Charlotte Chicago Cleveland Columbia Dallas Denver Fort Lauderdale Houston Irvine Kansas City Las Vegas Los Angeles Louisville Memphis New England New Jersey New Orleans Orlando Philadelphia Portland San DiegoSan FranciscoTampa Washington D.C. www.laborlawyers.com Fisher & Phillips LLP ATTORNEYS AT LAW Solutions at Work ®