1. Ten Steps for ACA Compliance Presented: Tiffany Downs, Partner FordHarrison LLP (404) 888-3961 |tdowns@fordharrison.com|tdowns@fordharrison.com NECA Labor Relations Conference New Orleans, LA March 19, 2015

2. Agenda Steps for compliance – single employer plans and – employers contributing to multiemployer plans Determining size of Employer Determining right type of Plan Employer tracking of information Cadillac Plan Tax Employer reporting Options and sample documents

3. 1: Determine Employer Size Large Employer = Employers with 50 or more full-time employees (including full-time equivalents) Have to provide coverage to all full-time employees (both bargained and non- bargained employees) or face a penalty Can satisfy obligation by contributing to a multiemployer plan for bargained employees

4. Large Employer Mandate Large Employer (100 or more full-time employees and full-time equivalents) had to offer coverage to all full-time employees in 2015 Mid-size Employer (50-99 full-time employees or equivalents) could be eligible for the transitional relief (delay) until 2016 if certain requirements are met

5. 5 If Large Employer Mandate Applies If reach 100 threshold for 2015, coverage only required to be offered for full-time employees (average 30 hours a week or 130 hours a month) Offer minimum value coverage to at least 70% in 2015 (95% in 2016) of full-time employees and their dependents (children up to age 26) Do not have to offer or provide coverage to spouses Do not have to offer or provide coverage for part-time

6. 2: Is the Plan ACA Compliant? Make sure the Plan or Fund: – Provides Minimum Essential Coverage any major medical coverage – Provides Minimum Value Plan pays 60% of the cost of benefits – Affordable Not more than 9.5% of household income for employee-only coverage

7. 3: Was an Offer of Coverage Made? Contributing employer to a multiemployer plan can be considered to have made “offer of coverage” to shield the Large Employer from any penalty even during the period before participate in eligible to participate – But all the requirements of the multiemployer rules has to be satisfied – Recommended to conduct due diligence to confirm that all of the requirement have been met

8. Multiemployer Plan rule The employer is required to contribute to a multiemployer plan on behalf of that employee pursuant to a CBA or participation agreement. Coverage is offered under the multiemployer plan to employees (and the employee’s dependent children under 26) who meet the plan’s eligibility rules. The coverage offered by the plan is affordable and provides minimum value.

9. Affordability Based on the employee’s contribution for self-only coverage. If a participant does not pay anything for self-only coverage, the plan would always be affordable. If there is an employee contribution toward self-only coverage, make sure it is affordable or that one of affordability safe harbors apply: – Federal Poverty Level (FPL) safe harbor For 2015, coverage will be deemed affordable if the participant’s cost for self- only coverage does not exceed $92.39 per month. – Coverage under a multiemployer plan will be considered affordable if an employee’s required contribution toward self-only coverage under the plan does not exceed 9.5 percent of the wages reported to the multiemployer plan. Wages may be determined based on actual wages, or on an hourly wage rate under the applicable CBA.

10. Minimum Value A plan provides minimum value if the plan’s share of the total allowed costs of benefits provided under the plan is 60 percent of those costs. Most multiemployer plan coverage meets or exceeds the 60 percent test. Summary of Benefits and Coverage (SBC) for the 2014 plan year includes information on minimum value

11. 4: Proof of Offer of Coverage Make sure offers are being made Proof of the offer exists Acceptance or declination of the offer exists Inquire as to the multiemployer plan’s process for offering coverage

12. 5: Classification of Employees Full-time – works 30 or more hours Part-time – works 29 or less hours Variable Hour Seasonal – works 6 months or less

13. 6: Gathering and Tracking Information Determining Hours of Service Tracking Hours for Variable Hour and Part-time employees through use of Measurement Period Determine how to gather hours ACA hours is not always consistent with CBA language Information will be needed for IRS reporting

14. 7: IRS Reporting Section 6055 and 6056 reporting Employer is responsible for reporting to IRS, which of its employees were full-time employees, based on their hours of service for the employer. Reporting is based on employer’s total workforce (bargained and non-bargained) Penalties for non-compliance would be paid by contributing employer (not multiemployer plan) Reporting is made using Forms 1094 and 1095 – Forms due in early 2016 for 2015 plan year for both Large and mid-size employers – Final forms and instructions for reporting were released on February 9, 2015 (similar to drafts) – Reporting will be done on a calendar year basis—regardless of plan year – IRS will use data from employer reporting, exchanges and individuals to determine discrepancies and possible audits

15. Section 6055 and 6056 Reporting Prepare for Required Reporting – Forms must be provided to employees by January 31, 2016 – Forms must be sent to the IRS by February 29, 2016 or March 31 (if electronic) – A Form 1095-C must be provided for each full- time employee (even if they did not take coverage or were not offered coverage) AND, if self-funded, any other plan participants (even if not full-time)

16. Information Needed for Reporting Prepare for Required Reporting – Allow time for gathering information from multiple sources and completing forms will be time consuming Review required data to be sure all appropriate data is being collected – Month-by-month information for each enrollee, including SSN – 9 codes to identify the coverage offered – 9 additional codes identifying Whether coverage was taken If a safe harbor is being applied for affordability Were any transition rules used

17. Information Needed from Multiemployer Plans Contributing employers should request from multiemployer plans – Plan provides minimum value – Plan coverage is affordable – Plan offers coverage to participants’ children under age 26 through the end of the month in which they turn 26 To complete the reporting forms reflecting offers of coverage in 2015 for bargained employees.

18. Data Collection Strategies Large amount of information to capture and track Examine internal resources, software, budget Prepare data collection checklist Prepare a “spreadsheet” of all information to be captured and tracked – Verify who has it – you? Broker? TPA? Payroll? – Verify the “flow” of information and who will coordinate – Verify if collect SSNs Consider adding requests to capture information to enrollment materials and new hire packets?

19. Reporting Strategies Start planning - time is of the essence Verify communication issues – Who will coordinate the information? – Who will prepare the forms? – Who will take phone calls? Verify “controlled group” status – Will one member assist others?

20. Risks Mitigation Strategies Software or hire vendor to assist with collecting information throughout the year and assisting with reporting Test ability to capture information Fiduciary liability insurance ACA management liability products

21. 8: Disclosures Disclosures required: – Notice of Marketplace – Summary of Benefits Coverage (revised for 2015) – Summary Plan Descriptions Who has to disclose? – Single employer plan – employer – Multiemployer plan - Fund

22. 9: Cadillac Plan Tax 40% excise tax on amounts over thresholds effective 2018 Thresholds (will be adjusted annually): – Based on employer and employee premium contributions for applicable coverage (COBRA rate) Individual coverage—$10,200 Family Coverage—$27,500 – Retirees over 55, high risk professions and workers employed to repair or install electrical or telecommunication lines have higher threshold $11,850 for individual coverage $30,950 for family coverage

23. Cadillac Tax Calculation Entire amount over threshold (called excess benefit) taxed at 40% rate – Example: Individual coverage costing $12,000/year 13,200-$10,200 = $2,000 x 40% = $800 per year Excess Benefits is calculated monthly and on each individual

24. What is Included in Threshold Coverage (active and all retirees) includes: – Major medical – Pharmacy – Account based plans (both if employer contributes and if employee contributions are pre-tax) – Health FSA, HSA, and HRA – Gap coverage (if paid with pre-tax dollars and/or employer contributes) – Fixed indemnity, specific disease and hospital indemnity plans if contributions are pre-tax (if paid with pre-tax dollars and/or employer contributes) – Certain wellness benefits may also be included

25. Multiemployer Plan Calculation Coverage under a multiemployer plan will be treated as family coverage regardless of the type of coverage provided to the employee. Multiemployer plan sponsors can use the family dollar amount ($27,500 or $30,950 for high risk) to calculate whether any excise tax is due. Multiemployer plans will determine whether the Plan is a Cadillac plan and any tax owed and report to IRS Appears that multiemployer plans will pay the tax – But recommended to obtain indemnification language in CBA if employer has to pay the tax 25

26. 10: Remedies and Options Request information about the Plan or Fund Inquire as to eligibility requirements Do your own investigation and review Request certification that Fund is ACA compliant Inquire as to whether Cadillac Tax will be triggered Request language in CBA and/or Participation Agreement

27. Multiemployer Plan Considerations Obtain assurances that the Plan is ACA compliant Obtain assurances plan is offered to those who are eligible and proof of offers of coverage Cadillac tax – Discuss if it will be triggered, when, and who is responsible for paying Anticipate possible changes in the law and how to address those changes Options for non-compliance – reopener of CBA, indemnification or termination of participation

28. Due Diligence and Inquiry To be able to be informed for bargaining and to bargain in good faith, evaluate status of Plan and potential problems or penalties – Submit written questions to union and plan – Submit written document requests – Sample questions and document requests attached

29. Sample Questions Is the Plan expected to trigger the Cadillac tax? If so, when? How does the Plan define “full-time employee” (i.e., what is the Plan’s eligibility requirement for full-time employees)? Is eligibility based on hours of service (i.e., both hours worked and hours paid for time off must be counted)? Will coverage under the Plan be offered to all union members working at least thirty hours a week at locations owned or operated by the Company? Are there any part-time employees or variable hour employees in the bargaining unit? If so, are they offered coverage immediately upon hire or are they subject to a measurement period? If they are subject to a measurement period, what is the measurement period, administrative period, and stability period that will apply to those individuals? Will coverage under the Plan be offered to all eligible employees’ dependent children up to age 26?

30. Sample Questions Does the Plan impose a waiting period for coverage? If so, how long is the waiting period? Does the Plan impose a probationary period as part of its eligibility requirements? If so, how long is the probationary period (i.e., what is the cumulative hour requirement)? Will the Plan provide minimum essential coverage under the ACA requirements and regulations beginning in 2015 and after? Will coverage under the Plan satisfy the ACA’s and affordability requirement (i.e., what is the employee's share of the health care premium for the lowest-cost self-only minimum essential coverage affordable)? How does the Plan determine that coverage is affordable? Will coverage under Plan satisfy the ACA’s minimum value requirement (i.e. the Plan's share of the total allowed costs of benefits provided must be 60% or more of the total benefit costs)? How does the Plan determine that coverage provides minimum value? Does the Plan intend to obtain an actuarial certification that the Plan satisfies the ACA’s minimum value requirement? If not, how does the Plan determine that it provides minimum value?

31. Sample Document Requests A copy of the Plan’s Trust Document, including any amendments A copy of Plan Documents, and any other documents on which the Plan is established, operated, and governed, including any amendments or updated procedures or policies A copy of the Plan’s most recent Summary Plan Description, including any eligibility requirements for union members and their dependents and loss of coverage provisions A copy of the Plan’s most recent Summary of Benefits and Coverage A copy of the Plan’s most recent Form 5500 Any actual calculation that the Plan provides minimum value and as to when the Cadillac Tax will be triggered

32. Sample Document Requests Copies of any Summaries of Material Modifications issued relating to compliance with any of the provisions of Health Care Reform, including the Affordable Care Act and any subsequently released regulations and guidance issued thereunder; A statement certifying the Plan’s full compliance with all the applicable requirements under the Affordable Care Act and representing that the Plan will continue to be in full compliance with the Affordable Care Act including any requirements and regulations that have been released but not yet in effect and any subsequently released regulations and guidance issued thereunder; A copy of any audit letter(s) or determination(s) made by the Department of Labor or other governmental agency regarding the Plan’s compliance with Health Care Reform, including the Affordable Care Act and any subsequently released regulations and guidance issued thereunder; A certification that, beginning in 2015 and after, the Plan is providing or will provide “minimum essential coverage” (including providing minimum value and satisfying the affordability requirements) under the Affordable Care Act requirements and regulations;

33. Proposed CBA Language The Union shall offer healthcare coverage in accordance with the Patient Protection and Affordable Care Act (“ACA”) to all eligible employees covered by this Agreement and all dependent children up to age 26 of such employees under the [NAME OF FUND]. The Union represents and warrants that said [NAME OF FUND] is in full compliance with all the applicable requirements of the ACA and the Fund will continue to be in full compliance with the ACA including any requirements, regulations, and guidance issued thereunder. The Union further agrees, upon request, to obtain from the Fund and provide to the Company certifications, representations, and documentation that the Fund is in compliance with the existing requirements under the ACA and its regulations, and that the coverage and benefits provided under the Fund satisfy the minimum essential coverage requirements, including affordability and minimum value, (or essential health benefits if the Fund is considered a “qualified health plan”) under ACA. Such information includes, but is not limited to, the plan documents, summary of benefits coverage, employee contributions toward the cost of coverage, records of offers for enrollment in plans, acceptances of coverage, declinations of plan coverage, and completed enrollment forms. The Union represents and warrants that said [NAME OF FUND] will not trigger the Code § 4980I excise tax beginning in 2018, and that any taxes assessed due to a Code § 4980I finding shall be calculated accurately and correctly and paid by the Union or the Fund.

34. Proposed CBA Language The Union represents and warrants that said [NAME OF FUND] shall provide every employee covered by this Agreement, regardless of whether enrolled and/or eligible for healthcare coverage under the [NAME OF FUND], all notices required under the ACA, including, but not limited to the Summary of Benefits coverage and the notice regarding the availability of healthcare coverage through Marketplace Exchanges. Such notices will be in compliance with the governing requirements for the notice and distribution requirements. The Union shall indemnify and hold the Employer harmless against any forms of liability or potential liability that arise by reason of the [NAME OF FUND]’s current or future noncompliance with the ACA, including, but not limited to, any claim, demand, charge, cause, suit, tax, liability, cost, fine, penalty, damage, loss or expense (including attorney’s fees and court costs) that is imposed against the Employer by any governmental agency or plan participant under the ACA and/or Code §§ 4980H and/or 4980I. The parties acknowledge that the full impact of, and the requirements under, the Patient Protection and Affordable Care Act (“ACA”) are unknown. The parties agree that the Company has the option to re-open negotiations when additional information is provided as to: (1) the impact on and/or treatment of a Taft Hartley Fund (“the Fund) under the ACA; (2) the Fund’s ability to participate in a Health Exchange; (3) the application of the Penalties under Internal Revenue Code §§ 4980H and 4980I to the Fund or coverage provided by the Fund; (4) calculation of minimum essential coverage and affordability; (5) the auto-enrollment requirements; and/or (5) any other issues the parties deem relevant to any requirements of the ACA that are not known or uncertain at the time of this Agreement, or ACA requirements that are new and/or changed after this Agreement’s effective date. The parties agree to bargain to address the following issues, including, but not limited to, whether the unionized workforce will continue to participate in the Fund; the contribution level required by the Company; the impact and application of the Code § 4980H penalties and the 4980I excise tax; whether the coverage is deemed “affordable;” and the application of the auto-enrollment requirements.

35. QUESTIONS 35