Surviving ACA Compliance 2016 Compliance Checklist for reporting 2015 activity October 22, 2015

Goal Today Prepare you with a checklist to help guide you in complying with ACA in 2016 Our hope is you will comply without penalties You have 2 ½ months left to be ready No promise that it will not be painful You will survive though

Recent News The Protecting Affordable Coverage for Employees (PACE) Act is now law Amends PPACA that employers with 50 – 100 employees will be considered large group as of Jan. 1, 2016 unless the State expands their definition of small group from 2- 50 to 2-100 (Eight (8) states have changed) Carriers are holding any quoting request for medical groups 51-100 employees and the 101+ payroll count with 100 or less eligible employees Big question is what to do for employers that took advantage of a transition rule and renewed as of Oct 1, 2015 October 15th deadlines 5500 filings were due if you filed for an extension Medicare Part D Notices were to be distributed to employees participating on the medical plan with prescription drug coverage to whether or not their plan’s prescription drug coverage is credible Coverage is creditable if the coverage is expected to pay an average as much as the standard Medicare prescription drug coverage

Recent News Texas - Equal Employment Opportunity The number of people enrolled in plans through PPACA’s exchange decreased from 11.7 million at the end of Feb. to 9.9 million at the beginning of June – 15% drop Some dropped after a drop in income Others dropped because income could not be verified and lost their subsidies Some because they think the subsidies receiving were not enough Experts are criticizing the process as too confusing and poor communications making it difficult for people to understand Texas - Equal Employment Opportunity On June 26, 2015, the U.S. Supreme Court ruled that Texas and other states with same-sex marriage bans must issue marriage licenses to same-sex couples and recognize same-sex marriages lawfully performed out-of-state (Obergefell v. Hodges, U.S., No. 14-556, 6/26/15). We survived implementation of this law as it pertains to health care coverage

2016 Compliance Checklist Plan Design Changes Review your plan’s grandfather status Check your plan’s cost–sharing limits (2016 out-of-pocket max $6,850 for Employee only coverage and $13,700 for family coverage) HDHP with a ‘HSA is different (2016 out-of-pocket max $6,550 for Employee only coverage and $13,100 for family coverage) Update your Health FSA’s contribution limit 2016 limit expected to stay at $2,550 Determine whether or not your health plan is subject to reinsurance fees Analyze your obligations for the HIPAA certification Determine your ALE status for 2016 Determine whether you qualify for the one-year delay for medium-sized ALEs

Who must report? Section 6056 – Employer Plan & Eligibility Information Requires all “applicable large employers” (50 or more FTEs) to report plan and eligibility information Employers with 50-99 FTEs satisfying the transition relief criteria to delay compliance until 2016 must still report for 2015 Purpose – IRS enforcement of employer shared responsibility rule and individual eligibility for subsidies when purchasing individual health insurance

Who must report? Section 6055 – Coverage Data Requires all employers offering self-funded plans (large and small) to report participant coverage information Insurance companies will report this information to the IRS for fully-insured plans Purpose – Tracking coverage for IRS enforcement of the individual mandate

ALE – Applicable Large Employers If average for year is 50 or more FTEs – Full Time Equivalents Remember - Full Time and Part Time employees The equation is Total No. of EEs with 120 or more hours of service + Total hours of service all other employees 120 Equals Number of FTEs per month Groups under common control or part of an affiliated service group must be treated as a single employer Employer may choose any period of six consecutive months in 2014 to determine ALE status for 2015

When must Employer Report? ER may voluntarily report in 2015 for 2014 calendar year. Required to report in 2016 for 2015 calendar year Based on previous calendar year regardless of the group’s plan year When – required time frame – same as W-2s Must be filed with IRS by Feb 28 ( March 31st if filed electronically) If filing 250 or more returns must file electronically Corresponding employee statements must be provided annually to employees by Jan 31st Since Jan 31, 2016 is a Sunday – statements must be provided by Feb. 1, 2016

Reporting Made Easy

FORMS Form 1094-B or 1094-C Employer Summary and Transmittal Form Purpose – report employer summary info to IRS Consider it a summary sheet for all the individual employee statements Form 1095-B or 1095-C Employee Statement Purpose – report employee specific info to IRS Remember – one is required for Each full-time employee Each covered individual ( including dependents) under a self-funded plan

Which Forms?

1094-C Form Part II – Designate at least one form 1094-C as the authoritative transmittal and tally total 1095-Cs being submitted

1094-C Page 2 Part III : Column (a) – did employer offer coverage to 95% of full time? EEs in limited non-assessment period not counted ERs qualifying for transitional relief may mark “yes” Column (b) – No. of full-time EEs Must use 4980H definition of full time using either the monthly or look-back measurement period Column (c) – Total No. of EEs Column (d) – Is ER part of a controlled group or affiliated service group? Column (e) – Transitional relief code Code A for 50-99 FTE relief Code B for all other 100+ transitional relief

1095-C Form Part I : Name, SSN and address for each employee who was full-time for at least one month ER info Part II - for each calendar month Offer of coverage code ( 1A – 1I) required for each month Offer of coverage must be available for the whole month to be considered a valid offer EE cost for lowest cost plan; complete only if codes 1B-1E used for offer of coverage Remember – 9.5% of 12015 FPL is $93.18 Safe harbor codes (2A-2I); optional …use if applicable

Line 14 Code Series Common Rare Rare Rare Common Some Rare Common ???? 1A. Qualifying Offer: Minimum essential coverage providing minimum value offered to full-time employee with employee contribution for self-only coverage equal to or less than 9.5% mainland single federal poverty line and at least minimum essential coverage offered to spouse and dependent(s). This code may be used to report for specific months for which a Qualifying Offer was made, even if the employee did not receive a Qualifying Offer for all 12 months of the calendar year. However, an employer may not use the Alternative Furnishing Method for an employee who did not receive a Qualifying Offer for all 12 calendar months (except in cases in which the employer is eligible for and reports using the Alternative Furnishing Method for 2015 Qualifying Offer Method Transition Relief as described in these instructions). 1B. Minimum essential coverage providing minimum value offered to employee only. 1C. Minimum essential coverage providing minimum value offered to employee and at least minimum essential coverage offered to dependent(s) (not spouse). 1D. Minimum essential coverage providing minimum value offered to employee and at least minimum essential coverage offered to spouse (not dependent(s)). 1E. Minimum essential coverage providing minimum value offered to employee and at least minimum essential coverage offered to dependent(s) and spouse. 1F. Minimum essential coverage NOT providing minimum value offered to employee, or employee and spouse or dependent(s), or employee, spouse and dependents. 1G. Offer of coverage to employee who was not a full-time employee for any month of the calendar year and who enrolled in self-insured coverage for one or more months of the calendar year. 1H. No offer of coverage (employee not offered any health coverage or employee offered coverage that is not minimum essential coverage). 1I. Qualifying Offer Transition Relief 2015: Employee (and spouse or dependents) received no offer of coverage, received an offer that is not a qualifying offer, or received a qualifying offer for less than 12 months. Common Rare Rare Rare Common Some Rare Common ????

Line 16 Code Series 2 2A. Employee not employed during the month. Do not use code 2A for a month if the individual was an employee of the employer on any day of the calendar month. Do not use code 2A for the month during which an employee terminates employment with the employer. 2B. Employee not a full-time employee. Enter code 2B if the employee is not a full-time employee for the month and did not enroll in minimum essential coverage, if offered for the month. Enter code 2B also if the employee is a full-time employee for the month and whose offer of coverage (or coverage if the employee was enrolled) ended before the last day of the month solely because the employee terminated employment during the month (so that the offer of coverage or coverage would have continued if the employee had not terminated employment during the month). 2C. Employee enrolled in coverage offered. Enter code 2C for any month in which the employee enrolled in health coverage offered by the employer for each day of the month 2D. Employee in a section 4980H(b) Limited Non-Assessment Period. Enter code 2D for any month during which an employee is in a Limited Non-Assessment Period for section 4980H(b). (e.g. waiting period) 2E. Multiemployer interim rule relief. Enter code 2E for any month for which the multiemployer interim guidance applies for that employee. This relief is described under Offer of Health Coverage in the Definitions section of these instructions. 2F. Section 4980H affordability Form W-2 safe harbor. Enter code 2F if the employer used the section 4980H Form W-2 safe harbor to determine affordability for purposes of section 4980H(b) for this employee for the year. 2G. Section 4980H affordability federal poverty line safe harbor. Enter code 2G if the employer used the section 4980H federal poverty line safe harbor to determine affordability for purposes of section 4980H(b) for this employee for any month(s). 2H. Section 4980H affordability rate of pay safe harbor. Enter code 2H if the employer used the section 4980H rate of pay safe harbor to determine affordability for purposes of section 4980H(b) for this employee for any month(s). 2I. Non-calendar year transition relief applies to this employee. Enter code 2I if non-calendar year transition relief for section 4980H(b) applies to this employee for the month.

Full time employee hired Feb Full time employee hired Feb. 15, 2015 and employer makes a qualifying offer Apr – Dec 2015

Full time employee offered minimum value coverage Jan–Jul 2015 and employment is terminated Aug 15, 2015 (coverage terminated upon date of employment termination)

Full time employee offered minimum value coverage May–Dec 2015 but employer qualifies for non-calendar year transition relief (Jan-Apr 2015)

Creative Strategies and the IRS Group health plans excluding substantial coverage for inpatient hospitalization services or physician services (or both) will not satisfy MV standards Reimbursing individual premiums creates a group health plan subject to health care reform requirements (i.e. annual/lifetime limits, coverage for preventative services, etc.) and will not satisfy such requirements Providing cash incentives to high risk employees to encourage them to waive coverage on the employer’s plan, and instead purchase individual health insurance is a violation of the HIPAA rules that prohibit discrimination against individuals based on health status

Fully-Insured Nondiscrimination Rules IRS has delayed enforcement until plan years beginning sometime after guidance is issued Rules will be similar to current 105 (h) rules which already apply to self-funded plans Health Plans may not discriminate in favor of highly compensated individuals Under 105 (h) benefits don’t always have to be identical among sub-groups of employees – safe harbor tests allow for some discrimination

On the Horizon Cadillac Tax Beginning 2018 – 40% excise tax on health coverage cost that exceeds threshold amounts $10,200 / yr. for self-only coverage $27,500 / yr. for coverage other than self-only Tax applies on a per covered employee

It will be an interesting year for Group Health Plans in Texas 2016 It will be an interesting year for Group Health Plans in Texas