1. Tom Bernard October 2015

2.  This presentation is provided solely for the purpose of enhancing knowledge on tax matters. It does not provide tax advice to any taxpayer because it does not take into account any specific taxpayer’s facts and circumstances.  These slides are for educational purposes only and are not intended, and should not be relied upon, as accounting advice.  The views expressed by the presenters are not necessarily those of Ernst & Young LLP.  This presentation is © 2015 Ernst & Young LLP. All Rights Reserved. EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms, of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. Ernst & Young LLP is a client-serving member firm of Ernst & Young Global Limited operating in the US.

3. Agenda  ACA overview  Implementation risks  Wrap-up

4. The ACA is not only a benefits issue — it is a business issue  Shareholders, boards and audit committees need to understand the costs and tax liabilities and plan for minimizing their exposure.  The ACA impacts HR, timekeeping/payroll, IT, accounting, tax, legal and internal audit functions.  Company systems and processes must be capable of complying with significant reporting requirements.  The ACA is expected to expand health coverage to an estimated 25 million previously uninsured Americans by 2024. Depending upon your workforce, cost savings opportunities may exist for your business and employees.

5. Penalty for no coverage IRC §4980H(a) ► If a large employer does not offer coverage to all of its full-time employees and their dependents, employers face a tax of: ► $2,000x the total number of full-time employees (FTE) if at least one FTE is receiving a premium assistance tax credit ► Minimum of 95% (70% in 2015) of FTE employees offered coverage constitutes all full-time employees Penalty for unaffordable coverage IRC §4980H(b) ► If a large employer offers coverage to its FTEs and their dependents but the coverage is unaffordable to certain employees or does not provide minimum value, employers face a penalty of: ► The lesser of $3,000x the number of FTEs receiving a premium assistance tax credit or $2,000x the total number of FTEs Risk areas Independent contractors, variable hour employees, unions, interns, rehires, leaves of absence, cross-border employees

18. Anatomy of IRS information returns

19. The following information will be captured on a monthly basis:  For each full-time employee (and part-time employee that was offered coverage) ◦ Whether minimum essential coverage providing minimum value was offered:  To the employee only  To the employee’s spouse  To the employee’s dependents  Employee’s share of lowest-cost monthly premium for self-only coverage providing minimum value  Whether an employee’s effective date of coverage was affected by a waiting period  Which employer met one of the affordability safe harbors  The name, address and tax identification number for the primary insured and each individual enrolled in minimum essential coverage  Months during which the individual is treated as having minimum essential coverage (in place of coverage dates)

27.  Who are your employees? ◦ Common law employee standard  Do you have a self-insured or fully-insured plan? Or both?  How many EINs are in your control group?  How are you defining full-time and are you applying the ACA definition for purposes of the IRS forms? ◦ May be different from benefits eligibility definition  Do you have data for union employees?  Do you have data for COBRA enrollees?  Do you have retirees enrolled in a self-insured plan?  Have there been or will there be any acquisitions during the calendar year?

28. Thank you and please remember to complete your evaluation for this session.