“We have to send out the ‘Notice to Employees of Coverage Options’ form when???!!!!” By October 1, 2013 – less than 1 month away! But don’t worry, Keenan is here to help you meet this deadline and comply with this requirement of the Affordable Care Act. This complimentary, one hour webinar will give you a crash course regarding the following: - What is the ‘Notice to Employees of Coverage Options’? - How do we remain compliant with this ACA requirement? - What does this notice need to contain? - Is it better to use the Model Notice provided by the Department of Labor? - How do you fill in the Model Notice? - What are the methods to determine Minimum Value and Affordability? - What resources are available for further information?
License No. 045127 Thank you for joining us. We have a great many participants in today’s call. Your phone is currently muted so that the noise level can be kept to a minimum. If you have not yet joined the audio portion of this webinar, please click on Communicate at the top of your screen, and then Join Teleconference. The dial-in information will appear. You can print this presentation: 1. On the File menu at the top of your screen, choose Print > Document. 2. Select the printing options that you want to use (print pages x-xx), and then print the document. If you have any questions, you can send them to the host using the Chat feature in the bottom right corner during the webinar. The webinar will start at 10 am. Affordable Care Act: Essential Points You Need to Know about the “Notice to Employees of Coverage Options” due October 1, 2013
Transcript
License No. 045127
Thank you for joining us. We have a great many participants in today’s call. Your phone is currently muted so that the noise level can be kept to a minimum. If you have not yet joined the audio portion of this webinar, please click on Communicate at the top of your screen, and then Join Teleconference. The dial-in information will appear.
You can print this presentation:1. On the File menu at the top of your screen, choose Print > Document.2. Select the printing options that you want to use (print pages x-xx), and then print the document.
If you have any questions, you can send them to the host using the Chat feature in the bottom right corner during the webinar.
•Automatic•Free of Charge•Understandable by average employee•First-class mail•Electronic delivery with special requirements
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DOL Electronic Delivery Safe HarborThe Plan Administrator should:1.Take appropriate and necessary measures reasonably calculated to ensure that the system for furnishing
documents:(a) Results in actual receipt of the document (e.g. using return receipt, etc.); and
(b )Protects the confidentiality of personal information relating to the individual’s accounts and benefits. 2. The document is prepared and furnished in a manner that is consistent with the style, format and content
requirements of the Notice. 3. The employee is informed at the time the Notice is sent of the significance of the document and the right to
receive a paper copy; and 4. Upon request, the individual is provided a paper version of the Notice. 5. Recipients must be either be (a) individuals who have the ability to access electronic documents from any location where the participant
performs duties as an employee; and has access to the employer’s information system; or (b) individuals who have affirmatively consented to receiving documents electronically and have been
provided a clear and conspicuous statement indicating: (i) The types of documents to which the consent would apply;
(ii) That consent can be withdrawn at any time without charge;(iii) The procedures for withdrawing consent;(iv) The right to obtain a paper copy without charge; and(v) Any hardware or software requirements for obtaining and retaining documents or changes to such requirements
1. Inform the employee of the existence of the Marketplace (Exchange) including a description of the services provided by the Marketplace, and the manner in which the employee may contact the Marketplace to request assistance;
2. Inform the employee that if the employer plan’s share of the total allowed
costs of benefits provided under the plan is less than 60% of such costs, that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code (the “Code”) if the employee purchases a qualified health plan through the Marketplace; and
3. If the employee purchases a qualified health plan through the Marketplace,
the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.
If checked, this coverage meets the minimum value standard, and the cost of this coverage to you is intended to be affordable, based on employee wages.
• What if my plan doesn’t fit into any of those Minimum Value “Safe Harbor” tools? – Actuarial Certification is required– Contact your Keenan representative for assistance in
determining Minimum Value
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How will I know that my health plan is “Affordable”?
• An ACA FTE’s cost for the lowest cost self-only Minimum Essential Coverage that meets Minimum Value requirements offered by the employer is “affordable” if it does not exceed 9.5% of his/her Household Income– Challenge: Predicting ACA FTE Household Income– May ask employees for HI but they don’t have to provide
this information (employee relations loser)
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Affordability Safe Harbors
• Satisfying one of 3 Affordability Safe Harbors can exempt employer from tax penalties while allowing employee to receive Federal subsidies
• Conditions: – Self-only coverage under plan must be of Minimum Value– Must give FTEs an opportunity to enroll each year– Employer cannot reduce hourly/monthly wages during the
year• Safe Harbors may apply to any reasonable category of
employees, provided done so on a uniform and consistent basis for all in category
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Affordability Safe Harbors
• Federal Poverty Line Safe Harbor: Full-Time and Part-Time Employees– Employee’s contribution for lowest cost self-only coverage does
not exceed 9.5% of FPL for a single individual, divided by 12– 2013 FPL for an individual is $11,490– 9.5% x $11,490 ÷ 12 = $90.96 = maximum “affordable”
contribution per month
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Affordability Safe Harbors
• Form W-2 Safe Harbor for Full-Time Employees– Employee’s required contribution for the calendar year does not
exceed 9.5% of employee’s Form W-2 wages (box 1) from the employer– Application of safe harbor occurs after close of calendar year– Employee’s contribution must be a consistent amount or percentage
for the plan year(s) within the calendar year– Amounts are adjusted to reflect partial years of coverage
• Example– Lowest cost self-only coverage is $100/month– Box 1 Form W-2 should be no less than $12,631.56– $12,631.56 ÷ 12 = $1,052.63– 9.5% x $1052.63 = $100 = maximum “affordable” contribution per
month
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Affordability Safe Harbors
• Rate of Pay Safe Harbor for Full-time and Part-Time Employees– Employee’s contribution for a month for the lowest cost self-only coverage
doesn’t exceed 9.5% of an amount equal to 130 hours multiplied by the employee’s hourly rate of pay on the first day of coverage (the first day of the plan year)
– Use monthly salary for salaried employees– To use this Safe Harbor, employer may not reduce wages during the year
• Example– Lowest cost self-only coverage is $100/month– Employee’s rate of pay is $8.50/hour– $8.50 x 130 hours = $1,105 monthly rate of pay– $1,105 x 9.5% = $104.98 = maximum “affordable” contribution per month
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Rate of Pay Safe Harbor Example : Hourly Employee Full-Time
• Works 40 hours a week for $8.50/hr• Monthly cost of insurance: $100• 130 times $8.50 = $1,105 monthly rate of pay• 9.5% of $1,105 = $104.98
Affordable!
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Rate of Pay Safe Harbor Example: Salaried Employee Full-Time
• Monthly Salary: $1,360• Monthly cost of insurance: $130 • 9.5% of $1,360 = $129.20
Not Affordable!
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Rate of Pay Safe Harbor Example : Hourly Employee Part-Time
• Works 20 hours a week for $8.50/hr• Monthly cost of insurance: $100• 130 times $8.50 = $1,105 monthly rate of pay• 9.5% of $1,105 = $104.98
Affordable!
If checked, this coverage meets the minimum value standard, and the cost of this coverage to you is intended to be affordable, based on employee wages.
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“Bright Line” Determination of Affordability
Example:Monthly cost of lowest cost minimum value self-only coverage on January 1, 2014 is $102 $102/.095 = $1,073.68 (130 x hourly rate of pay or monthly salary).
Conclusion:
1. Hourly employees whose hourly wage is no less than $8.26/hour ($1,073.68/130) have “affordable” coverage.
2. Salaried employees whose monthly salary is no less than $1, 073.68 have “affordable” coverage.
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One More Thing …
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Going Forward …
• Choose one or all of the three Affordability Safe Harbors, depending on your categories of employees
• Complete your Workforce Analysis to see who must be tested
• Review the impact of your findings with your governing body/board by doing a Strategic Impact Study
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Keenan Resources: Employee Relations FAQ
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Employer Resources
• Are you subject to FLSA?:• http://www.dol.gov/elaws/esa/flsa/scope/screen24.asp• The Model Notice to Employees can be found at:
http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf• Federal Calculator to determine Minimum Value: • http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/
Downloads/mv-calculator-final-4-11-2013.xlsm• Guidance on Determining Affordability:• http://www.keenan.com/news/brief/2013/BRF_20130204_Assess
ablePartI_KA.pdf• Employee Relations FAQs and Other Resources:• http://www.keenan.com/hcr/
Questions?Disclaimer – Keenan & Associates is an insurance brokerage and consulting firm. It is not a law firm or an accounting firm. We do not give legal advice or tax advice and neither this presentation, the answers provided during the Question and Answer period, nor the documents accompanying this presentation constitutes or should be construed as legal or tax advice. You are advised to follow up with your own legal counsel and/or tax advisor to discuss how this information affects you.
