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PREPARING FOR SHARED RESPONSIBILITY Rise to the Challenge and Act Now
Agenda – Three Things & A Story 2 © Copyright 2013 ADP, Inc. Proprietary and Confidential Information. What is the ACAHow it will affect you What you can do about itBut…. first a story!
Who Moved My Cheese 3 © Copyright 2013 ADP, Inc. Proprietary and Confidential Information. Two little People Hem & Haw Two little mice: Sniff & Scurry
Who Moved My Cheese Hem & Haw We know the story….. Didn’t know or didn’t care that the cheese was going to run out Not aware that things might change 4 © Copyright 2013 ADP, Inc. Proprietary and Confidential Information.
Who Moved My Cheese Sniff & Scurry They were aware changes were happening Didn’t expect things to stay the same Didn’t get wrapped up on why the change Proactive to find new cheese 5 © Copyright 2013 ADP, Inc. Proprietary and Confidential Information.
Who Moved My Cheese 6 © Copyright 2013 ADP, Inc. Proprietary and Confidential Information. The Moral of the story Sooner or later we will experience change When you can read the writing on the wall you can do well in changing times!
Disclaimer This presentation is not: Legal advice Tax advice The final word on Health Care Reform A political opinion 7 © Copyright 2013 ADP, Inc. Proprietary and Confidential Information.
Why the ACA – Why it came to be? What: The Patient Protection and Affordable Care Act will ensure that all Americans have access to quality, affordable health care and will create the transformation within the health care system necessary to contain costs. Why: Healthcare crisis: Over 30 to 60 Million American’s don’t have access to Healthcare. Cost: Healthcare costs are skyrocketing, rising 2 -3 x of inflation. Coverage denial: Too many Americans were being denied coverage (pre-existing conditions, etc). Lack of scale: Our current healthcare system is not efficient. How: Business: Any large employer (50+ employees) must offer health insurance or pay a penalty. State Government: State Government is required to set up healthcare exchanges to more efficiently distribute healthcare to it’s constituents. 8 © Copyright 2013 ADP, Inc. Proprietary and Confidential Information.
Act Now – Employer Shared Responsibility
What Do Employers Need to Consider Now? Workforce Planning 10 © Copyright 2013 ADP, Inc. Proprietary and Confidential Information. Employer 50 or more full- time equivalents (FTEs) Employer offers coverage Tax credit obtained by at least one full-timer because coverage is “unaffordable” or does not meet “minimum value Annual penalty of $3,000 per full- timer who receives the credit Tax credit not obtained by any full-timer Employee Elects Plan No employer penalty Employee rejects Plan Employee buys own plan No employer penalty Employee opts to forgo insurance and pay individual assessment No employer penalty Employer does not offer coverage Tax credit obtained by at least one full-timer Annual penalty of $2,000 X full-timers (after the first 30*) Tax credit not obtained by any full-timer No employer penalty Less than 50 full-time equivalents (FTEs) No employer penalty
Darden Restaurants Experimented with more part time employees last fall Sales dropped: Lack of consistent workforce Difference in talent (part time vs. full) Did this effect their service profit chain? 11 © Copyright 2013 ADP, Inc. Proprietary and Confidential Information.
After Pay or Play – What else? Notice of Exchange Minimum Value Requirements (60%) Automatic Enrollment Benefit Costs included on your W-2 Medical Loss Ratios Dependent coverage to 26 year olds Expansion of Wellness incentives Cadillac Plan - Penalty 12 © Copyright 2013 ADP, Inc. Proprietary and Confidential Information.
What Do Employers Need to Consider Now? Workforce Planning 13 © Copyright 2013 ADP, Inc. Proprietary and Confidential Information. Is the company a “large” employer? How many full-time (30 or more hours of service per week) employees do you have? Do you have any seasonal employees? With the new definition of full-time, who will be newly eligible for healthcare coverage? Will there be an increased cost, based on the newly eligible employees? Will the company continue to offer healthcare coverage, based on those increased costs? What other considerations are there when determining whether to continue offering healthcare coverage? How will employee morale/satisfaction be affected by changes in hours or a decision to not offer healthcare coverage?
What Do Employers Need to Consider Now? Workforce Planning 14 © Copyright 2013 ADP, Inc. Proprietary and Confidential Information. Determine number of definite full-time and part-time employees. Determine number of variable hour employees (those on the bubble around 30 hours per week). Determine number of seasonal employees and for how many months they are employed each year (using a “good-faith” determination of “seasonal” based on existing DOL guidance). Run calculations to determine if the coverage is “affordable” - determine whether the cost of self-only coverage is greater than 9.5% of any full-time employee's W-2, box 1 wages.
ADP Offers an Integrated Approach to Manage Workforce Planning and Administration 15 © 2013, ADP, Inc. Proprietary and Confidential Information. ADP Time and Labor Management ADP Reporting and Reconciliation ADP Payroll ADP Benefits Full-Time Status Warnings Full-Time Threshold Indicator Based on ACA Definitions Work Schedule Dashboard Full-Time Status Reporting Auto-enrollment Required in 2015 Enrollment of Eligible Employees Coverage Termination W-2 Affordability Calculation Data to/from Exchanges Reporting to Federal Government Reconcile Penalties Levied for Exchange Participation Deductions and Other Earnings W-2 Earnings System of Record for Hours of Service Look-Back Approach EligibilityEnrollment Reporting/ Penalties Affordability
Closing Remarks To visit some of the most Frequently Asked Questions and Answers ADP has received on the topic of the ACA, please visit and bookmark: © Copyright 2011 ADP, Inc. Proprietary and Confidential Information. Subscribe now: Stay up-to-date with ADP’s Eye on Washington regulatory alerts. 16
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