1. ACA Affordability & Reporting
Affordable Care Act How It Affects Your Day-To-Day Admin & Year-End Reporting Processes
ACA Tracking
ACA Penalties
ACA Affordability & Reporting
Budgeting for the ACA

2. Please Note…
The purpose of this presentation is to bring to your attention elements of the ACA that could impact your company (or may have already). Please keep in mind that this is a general description of major provisions that affect companies, not a specific list of how health care reform will affect your company. Some of the provisions of the ACA have already been implemented, while there are still many regulations to be written that will impact and change this summary. According to our understanding & interpretation of the ACA, we believe the information contained in this presentation to be accurate. We are not attorneys and we do not intend to give legal advice and do recommend that you consult your attorney or tax advisor for advice on specific issues.

3. ACA Tracking Measurement Period Terms
Initial Period – New Hires
Can begin upon date-of-hire or any subsequent day in the calendar month
Standard Period – Existing Employees
Set measurement dates for every year
Admin Period – Open Enrollment
Must be completed within 90 days
Stability Period – Length of Coverage
Mirrors the length of the measurement periods
Minimum Stability Period is 6 months
The Initial period is the period in which eligibility for new hire’s is measured – for ease of tracking it usually begins on date of hire or first payroll date - whereas the Standard period is measurement period to determine eligibility for your existing (or non-new hire) employees. Both periods must be the same length, and the length of these periods can be anywhere from 3 to 12 months (we’ll review common measurement lengths shortly.). The Admin period is simply the open enrollment period, and it must be completed within 90 days of an employee becoming eligible for benefits. The Stability period is the length of coverage for the employee when they will receive their benefits, and that period is required to mirror the length of your measurement periods.

4. I Qualify As An ALE, How Do I Determine Who Is Eligible?
Employees who are hired as designated “full time” employees must be offered coverage within 90 days of hiring.
The ACA allows employers to use a “look back” measurement period of 3-12 months or live monthly measurement. A “look back” period is either an Initial or Standard measurement period.
Most Common: 12 months - Turnover
Variable-hour or part-time employees who average at or over 30 hours per week during their measurement period are eligible for coverage.
Addressing designation of “full time” employees; some organizations have adjusted handbooks to change definition of full time status

5. Common Standard Period Tracking for a 1/1 Benefits Plan Start Date
If using a 12 month “look back”, the standard period would begin & end early or mid-October
Allows for an Admin period of less than 90 days

6. Common Issues with ACA Tracking
Re-Hire Rules
Overlapping Measurement Periods
Re-Hire Rules
13 Week Rule
If break in service > 13 weeks, employee is treated as New Hire
If break in service < 13 weeks, mark zeros for pay periods missed
Parity Rule (Sub-Rule of 13 Week Rule)
Only applicable if break in service < 13 weeks
If employee works longer than break in service, mark zeros for pay periods missed. Vice Versa, treat as New Hire
I.E. John works for 8 weeks & gone for 6 weeks: mark zero
John works for 6 weeks & gone for 8 weeks: treated as New Hire
Important to have system or software in place to accurately & diligently track all hire and term dates

7. Overlapping Measurement Periods
Overlapping measurement periods occur for almost every new hire – each employee must be measured in their Initial (new hire) Measurement Period, and then also in their Standard (existing employee) Measurement Period once the Standard Measurement Period restarts for all current employees. 

8. 2014 Average Weekly Hours Report with ACA Modifications
Notice how this report captures and accurately applies re-hire dates and tracks enrollment & declination dates as well. This report has been autogenerated from our software but can be created in a variety of different ways & formats.

9. 3 Types of ACA Penalties – not mutually exclusive & not tax deductible
After Accurately Determining Eligible Employees, What Comes Next And Why Is It Important?
The Affordable Care Act states that not only do employers need to offer coverage to eligible employees, but also, that coverage extended must be “affordable” for each employee.
Each eligible employee’s “affordable” amounts must be reported to the IRS in the form of the 1095-c Report (details will be reviewed later)
3 Types of ACA Penalties – not mutually exclusive & not tax deductible

10. ACA Penalties
Penalty A – If employer does not offer insurance, and if at least one FT receives federal insurance subsidies in the exchange.
$2,000 x (FT – 80)
$2,000 x (FT – 30)
2017… - $2,000 x FT
Penalty B - If employer offers insurance that is “unaffordable” or “inadequate” and at least one FT receives insurance subsidies.
“Unaffordable” is determined by payroll deductions
“Inadequate” is determined by benefits plan structure
Lesser Amount of $3,000 x Subsidized FT OR Penalty A
Penalty C - If employer does not submit an annual IRS return or provide individual statements to all full-time employees.
$100 per return + 2 returns (1094/1095) per employee = $200 per employee
Penalty B is typically lower than Penalty A.
Penalty C – also penalty for filing incorrect information, however there is relief for this first year’s filing if “good faith” effort was made. There are also higher penalties for failures due to intentional disregard.

11. Potential ACA Penalties for 350 employee company with 160 full-time (benefits eligible) employees

12. Affordable Care Act – “Affordability”/ Reporting
You’ve concluded that you are an ALE, you have accurately measured your employees and determined your benefits-eligible employees, now you have to determine what “affordable” coverage is for each of your employees.
How do you determine what that “affordable” amount is?

13. ACA “Affordability” Safe Harbors
A safe harbor is an approved method of calculation to determine each employee’s “affordable” deduction amount.
Safe harbors may not be changed once selected and are used to measure “affordability” for all employees
3 Safe Harbors
Federal Poverty Level
Rate Of Pay
W2 Safe Harbor

14. Safe Harbors Federal Poverty Line: Rate of Pay: W2 Safe Harbor
2014 FPL = $11,670
(FPL x .095) / 12 = $92.39 per month
Biweekly payroll = $42.64 per payroll
Rate of Pay:
(RoP x 130) x .095
Example: $10/hr - (10 x 130) x .095 = $ per month
Biweekly payroll = $57 per payroll
W2 Safe Harbor
9.5% of Box 1 W2 Wages (Net Wages)

15. W2 Safe Harbor 9.5% of Box 1 W2 Wages (Net wages)
Example: Employee earns $1,000 in gross wages
$1,000 x 9.5% (Pre-Tax Health Ins. Deduction) = $95
$1,000 - $95 = $905  Box 1 W2 Wages
$905 x 9.5% = $85.98
$85.98 is the “affordable” amount for this employee

16. Thoughts When Choosing Safe Harbor
Federal Poverty Level is easiest to calculate, because it is the same for all employees. However, FPL will constitute the employees paying their minimum contribution amount.
Rate of Pay is calculated as if the employee works 130 hours each and every month. Using RoP, if an employee works more than 130 hrs/mth, the employee will not contribute their maximum possible amount.
W2 Safe Harbor is the most difficult to calculate, but in most cases it will result in employees paying their maximum possible contribution amount.
Talk about modified RoP – RoP of lowest paid employee, used across the board
Due to the ACA, most employers tend to schedule their benefits-eligible employees to work as much as possible. As a result, most of the employees receiving coverage work more than 130 hours per month – e.g. an EE working just 35 hrs/week totals 140 per month, at 40 hrs/week the EE totals 160 per month.
Real Question: Do you want a number easy to calculate or do you want employees to contribute their maximum possible amount?
There are systems available that can automate W2 calculations & administer to payroll

17. I’ve picked my Safe Harbor, but how do I calculate and report on “Affordability”?
You need to determine & track what the lowest cost plan is available to each class of employees
You need to know what the employee’s monthly premium per month
You use your Safe Harbor to calculate or test the “employee only” portion of the monthly premium (excludes spouses or dependents)

18. Example Corporation’s Bronze Plan
Bronze plan is the lowest cost plan available to the employee, John Doe
Employer chooses W2 Safe Harbor
Bronze Plan Premium = $300 per month
“Premium Cap”
How premiums used to be deducted in payroll
Employer contributes a flat $100 per month
Employee contributes a flat $200 per month
How premiums are now deducted in payroll
Employer contributes at least $100 per month
Employee contributes up to $200 per month (premium cap)

19. When “Affordable” Amounts Are Lower Than The “Premium Cap”
In this scenario, John Doe has earned $1,800 in gross wages
$1,800 x 9.5% = $171
$1,800- $171= $1,629
$1,629 x 9.5% = $154.76
John Doe’s “affordable” amount is $154.76, leaving an additional $45.24 that the employer must pay to cover the $300 premium

20. What About Buy-Ups?
Under the ACA, employees are 100% responsible for the cost of plan buy-ups which can be spouses, dependents, or higher levels of coverage
Even though employers are required to offer plans that cover dependents up to 26 years of age, the employer is not required to pay for the buy-up of adding the dependent.

21. Example Corporation’s Silver Plan
John Doe chooses to buy up to the Silver plan instead of choosing the Bronze plan
Employer has chosen the W2 Safe Harbor
Silver plan premium = $400 (Bronze was $300)
Employer contribution = at least $100
Employee deduction = “Affordability” amount plus Buy-Up amount ($100)

22. Silver Plan Buy-Up John Doe earns $1,800 in gross wages
$1,800 x 9.5% = $171
$1,800- $171= $1,629
$1,629 x 9.5% = $154.76
John Doe’s “affordable” amount is $154.76, leaving an additional $45.24 that the employer must pay to cover the $300 premium
Employee is responsible for additional $100 for Silver Plan Buy-Up

23. ACA Reporting Two sets of reports, 1094 & 1095
1094 = Transmittal statement to IRS (Company or Insurer)
1095 = Individual return
Two types of reports for businesses, B & C
B reports  Insurers & Non-ALE with self-insured health plans
C reports  All ALE

24. ACA Reporting First filings required in early 2016 for 2015 coverage
For returns, deadline is Feb. 28 of following year (March 31 if filed electronically)
For statements, deadline is Jan. 31 of following year
Smaller ALEs (50-99 FT + FTE), qualifying for transition relief must still file ALE reports in 2016

25. 1094-C 1094-C will report the following information
Employer information (name, address, etc.)
Total number of 1095-C forms filed
Monthly certification that employer offered FT (& dependents) minimum essential health coverage
Number of FT employees for each calendar month
Total number of employees for each month
Whether special rules or transition relief applies to the employer
Names & FEIN’s of other affiliated companies

26. 1094-C – pg. 1

27. 1094-C – pg. 2

28. 1094-C – pg. 3

29. 1095-C 1095-C will report the following information
Employee’s name, address & SSN
Employer’s name, address & FEIN
Whether employee & family members were offered health coverage each month that met the minimum value standard
Employee’s monthly “affordable” amounts
Whether employee was FT each month
Whether employee was enrolled in health plan
SELF INSURED ONLY: Name & SSN of each employee and family member covered each month

30. 1095-C: Month by Month “Affordability”
Lines 14, 15 & 16 are the only lines that are not inherently easy to complete.

31. 1o95-c Terms MV – coverage that meets “minimum value” standard
MEC – coverage that meets “minimum essential coverage” standard
FPL – federal poverty level
SIHP – self insured health plan
CY – calendar year
E – employee
FT – full-time
S – spouse
D – dependent

32. Line 14 Codes Line 14 “Offer of Coverage (enter required code)”
1A – MV MEC to FT employees, affordability based on 9.5% of FPL plus MEC to S and Ds
1B – MV MEC to E only
1C – MV MEC to E plus MEC to D children
1D – MV MEC to E plus MEC to S but not Ds
1E – MV MEC to E plus MEC to S and Ds
1F – Non-MV MEC offered to E; or E plus; or E, S, and Ds
1G – Offer to E not FT for any month who enrolled in SIHP for
any month (enter in “all 12 months” box only”)
1H – No offer of coverage or no offer of MEC

33. Line 16 Codes Line 16 “Applicable Section 4980H Safe Harbor”
2A – E not employed during month
2B – E not FT employee
2C – E enrolled in coverage offered
2D – E in limited non-assessment period (LNP) Next Slide
2E – Multiemployer interim rule relief
2F – Form W2 affordability safe harbor
2G – FPL affordability safe harbor
2H – Rate of pay affordability safe harbor
2I – Non-CY transition relief applies to E

34. LNPs – Limited Non-Assessment Periods
Specific periods of time when employers will not be subject to fines for failure to offer MEC coverage to a full-time employee.
First three calendar months of employment for FT
First three calendar months for first time ALEs
First three months after an employee’s status changes to FT during the initial measurement period.

35. How Can I Control These New Costs Moving Forward?
Like other costs associated with your business, proper planning and a well crafted strategy are important in controlling your ACA-related costs. A scheduling/cost projection method or system can help you plan for the future. A projection method or system can provide you with information resulting from projecting multiple scenarios and helps you craft & implement your strategies moving forward. ACA compliance involves looking backwards, but ACA planning & budgeting involves looking forward.
I’m going to show you a brief look at Proliant’s scheduling & cost projection tools, but first I’d like to briefly review some very important disclaimers.

36. Important Disclaimer
The purpose of a scheduling/cost projection system is to help businesses with financial planning and enable employers to project multiple scenarios to better plan for & anticipate their future expenses.
Scheduling/cost projection systems should not be used discriminately to “cap” employees’ average weekly hours to under 30 for the distinct purpose of not offering coverage and saving money on their employee benefits. Strictly following this practice could be in violation of various labor & employee benefits laws.
Definitive, nondiscriminatory & legally viable scheduling strategies should always to be in place and well documented to ensure compliance with labor & employee benefits laws.
Mention how NAME will be covering this part of the presentation shortly.

37. The system is showing the current average weekly hours for the employees listed below and costs associated with current eligibility numbers. The hours are broken down into each pay period.

38. If Julio & Scott worked an unusually high number of hours during their first few months, you can see what their remaining schedules would look like if they were to average 29 hours per week by the end of the year. Conversely, if you had an employee who you anticipate working a higher weekly average rate, you can see what their pay period hours would look like accordingly. The Cost Summary part of the scheduling projection tool updates to show the revised premium & contribution costs if Julio & Scott both average 29 hrs/wk by the end of the year. Using this scheduling projection tool can you help you adjust your scheduling strategies to ensure that you’re controlling your benefits premium costs while staying fully staffed at all times.

39. This cost projection tool shows your anticipated premium & contribution amounts based upon your current or projected avg weekly hours and using your assigned safe harbor. As you can see here, I’ve estimated that exactly 1/3 of my existing employees (standard period employees) will accept offered coverage, while only 20% of my eligible new hires will accept coverage. The process of accurately estimating your benefits costs, in conjunction with a scheduling projection tool, can help you budget for future benefits costs down to the penny using a variety of potential scenarios.

40. In Summation: Necessary Steps
Determine if you are an ALE
Accurately track employees
Offer MEC plans to benefits-eligible employees
Calculate & report “affordability”
Payroll deductions
1095-c report
The absolute necessities that you should take away from today.

41. Thank You!
Patrick Clayton