1. P ATIENT P ROTECTION & A FFORDABLE C ARE A CT (PPACA) Angela Moore Indiana State Library Intern June 26, 2013

2. Presenter Introduction  Rising 2 nd year law student  Not a lawyer  Summer legal intern at ISL  Former librarian at Berne Public Library 2

3. Disclaimer  This is legal information, not legal advice  I cannot apply the law to your specific situation 3

4. PPACA: An Overview  900+ pages of legislation  Focus today on employer requirements  Shared Responsibility for Employers  Automatic Enrollment Requirement  SHOP Exchange  Reporting Requirements  Notice Requirement  Some issues are still awaiting regulation 4

5. Shared Responsibility for Employers  PPACA § 1513; effective after Dec. 31, 2013  You’ve heard about employer penalties, right?  Technically, there is no “penalty” for not providing insurance  PPACA falls under Congress’s taxing power  But you may have to make a “shared responsibility payment”  No employer is “required” to provide insurance  You can still choose to not provide insurance, PPACA just shifts the cost-benefit analysis 5

6. Shared Responsibility for Employers  An Employer’s Choice 1. Provide adequate, affordable insurance, or 2. Risk being liable for making payments  It’s not a penalty, but it’s still taking your money  You are not breaking the law if you choose to not provide insurance 6

7. Shared Responsibility for Employers  Not all employers have to make payments  There are three questions to ask  If your library can answer any of them with “no,” then you do not need to make a payment.  Are you a large employer?  50+ full-time equivalent employees, system-wide  Did a full-time employee receive a premium tax credit or cost-sharing reduction?  Do you have more than 30 full-time employees?  There is a difference between “full-time” and “full-time equivalent” 7

8. Shared Responsibility for Employers  Large Employer: 50 Full-Time Equivalents  FTE = # FT employees + # pro-rated PT employees  Full-time = average of 30 hours per week or more  In general, to pro-rate PT: add all part-time workers’ hours for the month together and divide by 120  43 IRC §4980H(c)(2)(C) (as modified by PPACA §1513(a))  e.g. 4 FT + 2 PT employees (who together worked 150 hours for the month)  150/120 = 1.25  4 + 1.25 = 5.25 FTE  IRS regulations may change this to 130 (Notice 2011-36) 8

9. Shared Responsibility for Employers  Large Employer: 50 Full-Time Equivalents  The calculations can become more complex and very specific. If you’re on the bubble, you may want to consult a lawyer. 9

10. Shared Responsibility for Employers  Two things before we move on: 1. Remember, if you are under 50 full-time equivalent employees, you will not be liable for any payments. 2. From this point on, forget about full-time equivalents. We are only looking at full-time employees now. 10

11. Shared Responsibility for Employers  Our three questions:  Are you a large employer?  Did a full-time employee receive a premium tax credit or cost-sharing reduction?  Do you have more than 30 full-time employees? 11

12. Shared Responsibility for Employers  Premium Tax Credit/Cost-sharing Reduction  FT employee has to apply for and receive a PTC or CSR for employer payments to be triggered  It is ok to just offer insurance to full-time employees  If the employer does not offer insurance  Generally eligible if household income is between 100% and 400% of the federal poverty level  Dept. of Health and Human Services releases annually  Federal poverty level = poverty guidelines  Dependent on household size  2013 levels: http://aspe.hhs.gov/poverty/13poverty.cfmhttp://aspe.hhs.gov/poverty/13poverty.cfm 12

13. Shared Responsibility for Employers  Premium Tax Credit/Cost-sharing Reduction  FT employee has to apply for and receive a PTC or CSR for employer payments to be triggered  If the employer does offer insurance  Unaffordable: the plan premium is more than 9.5% of household income, or  Inadequate: policy does not cover an average of 60% of healthcare costs  Minimum value calculator: http://www.cms.gov/cciio/resources/regulations-and- guidance/index.html http://www.cms.gov/cciio/resources/regulations-and- guidance/index.html  IRS Safe Harbor: look at employee’s wages listed on W-2 (IRS Notice 2011-73) 13

14. Shared Responsibility for Employers  Our three questions:  Are you a large employer?  Did a full-time employee receive a premium tax credit or cost-sharing reduction?  Do you have more than 30 full-time employees? 14

15. Shared Responsibility for Employers  Calculating the Payment (for 2014)  Once a large employer’s full-time employee has received a credit/reduction  If you do not offer insurance, the monthly payment is  If you do offer insurance, the monthly payment is OR whichever is smaller  Note: for FT employees ≤ 30, the payment is $0 15

16. Shared Responsibility for Employers  Recap:  Payments do not apply to small employers  Large, but with 30 or fewer FT employees: payment = $0  A full-time employee needs to actually receive a credit or reduction to trigger a payment 16

17. Shared Responsibility for Employers  Determining Full-Time with IRS Safe Harbors  On-going employees:  Measurement period: 3-12 months  Administrative period: up to 90 days  Stability period: 6-12 months (no shorter than measurement period)  You can rely on this method, at least through cycles beginning before the end of 2014 17 IRS Notice 2012-58: http://www.irs.gov/irb/2012-41_IRB/ar07.html http://www.irs.gov/irb/2012-41_IRB/ar07.html

18. Shared Responsibility for Employers  Determining Full-Time with IRS Safe Harbors  On-going employees:  Example of one complete cycle:  Measurement Period: May 1-October 31 (6 months)  Administrative Period: November 1-December 31 (2 months)  Stability Period: January 1-December 31 (12 months) Cycle 1 Cycle 2 Cycle 3 18 IRS Notice 2012-58: http://www.irs.gov/irb/2012-41_IRB/ar07.html http://www.irs.gov/irb/2012-41_IRB/ar07.html MeasurementAdminStabilityMeasurementAdminStabilityMeasurementAdminStability

19. Shared Responsibility for Employers  Determining Full-Time with IRS Safe Harbors  New Employees: reasonably expected to work full- time  Offer at, or before, conclusion of initial 3 calendar months 19 IRS Notice 2012-58: http://www.irs.gov/irb/2012-41_IRB/ar07.html http://www.irs.gov/irb/2012-41_IRB/ar07.html

20. Shared Responsibility for Employers  Determining Full-Time with IRS Safe Harbors  New Variable Hour and Seasonal Employees  A little more complicated  Initial measurement period: 3-12 months, no shorter than one month less than initial stability period  Initial administrative period: up to 90 days  Initial stability period: same length as for ongoing employees, no more than 1 month longer than IMP  IMP + IAP cannot extend beyond end of calendar month beginning on or after employee’s one-year work anniversary  Once they have worked an entire standard MP, determine full-time status along with other on-going employees 20 IRS Notice 2012-58: http://www.irs.gov/irb/2012-41_IRB/ar07.html http://www.irs.gov/irb/2012-41_IRB/ar07.html

21. Shared Responsibility for Employers  Determining Full-Time with IRS Safe Harbors  New Variable Hour and Seasonal Employees  Example:  Initial Stability Per. must be as long as Standard Stability Per.  12 months  Initial Measurement Per. cannot be more than 1 month shorter than Stability Per.  11-12 months, for our example, we’ll choose 11 months  Initial Admin. Per. can be up to 90 days, but IMP + IAP cannot extend past the end of the calendar month beginning on or after the employee’s one year work anniversary  0- 2 months (plus fraction of month, depending on start date) 21 IRS Notice 2012-58: http://www.irs.gov/irb/2012-41_IRB/ar07.html http://www.irs.gov/irb/2012-41_IRB/ar07.html MeasurementAdminStabilityInitial MeasurementI. AdmInitial StabilityMeasurementAdminStability

22. Shared Responsibility for Employers  Being Assessed, Making a Payment  The IRS will contact you if you are potentially liable  Will not happen until after employees’ tax returns are due  You will have opportunity to respond  If you are found liable for payment, IRS will send a notice and demand for payment  Notice will include instructions 22

23. Shared Responsibility for Employers  You have a choice (are not breaking the law)  You may be exempt from payments  Only full-time (30 or more hours/week) employees trigger payments  Full-time can be calculated with cycles  The IRS will contact you about payments if you need to make them 23

24. Automatic Enrollment Requirement  PPACA § 1511  For employers with 200 or more full-time employees  If employer offers insurance coverage, new full- time employees must automatically be enrolled in the coverage  Employees may opt out of coverage  Still awaiting regulations from Dept. of Labor, intended completion before 2014 24

25. SHOP Exchange  Small business Health Options Program  Beginning in 2014, eligible small businesses will be able to purchase insurance through the SHOP  No obligation to purchase through exchange  Side-by-side policy comparisons  Premiums cannot be set by employees’ health or medical history  Businesses with up to 100 employees are eligible, although until 2016 states may further limit eligibility to only businesses with up to 50 employees.  Look for more information in October 2013  Coverage begins January 2014 http://www.healthcare.gov/news/factsheets/2011/07/exchanges07112011g.html 25

26. Reporting Requirements  PPACA § 9002: W-2s  Cost of employer-sponsored insurance  Still awaiting IRS guidance, meanwhile, see http://www.irs.gov/uac/Form-W-2-Reporting-of- Employer-Sponsored-Health-Coverage http://www.irs.gov/uac/Form-W-2-Reporting-of- Employer-Sponsored-Health-Coverage  PPACA § 1514: large or insuring employers  First reports will be due in 2015 (for 2014 info)  To IRS  Basic information regarding whether insurance was provided.  To Employees  Full-time employees whose info was reported to the gov’t  Still waiting for IRS regulations, reporting might be coordinated with other required reports 26

27. Notice Requirement: PPACA § 1512  Applies to all employers (regardless of size)  To be given at time of hiring (plus initial distribution to current employees)  Model language if you offer insurance:  http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf  Model language if you do not offer insurance:  http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf  Originally effective March 31, 2013, delayed until October 1, 2013 27DOL Technical Release No. 2013-02: http://www.dol.gov/ebsa/newsroom/tr13-02.htmlhttp://www.dol.gov/ebsa/newsroom/tr13-02.html

28. PPACA In Review  Shared Responsibility for Employers  Large Employers  Automatic Enrollment  Very Large Employers  SHOP Exchange  Small Employers  Reporting Requirements  Large or Insuring Employers  Notice Requirement  All Employers 28

29. Resources  Dept. of Labor – Employee Benefits Security Administration  www.dol.gov/ebsa/healthreform www.dol.gov/ebsa/healthreform  Dept. of Health and Human Services  www.healthcare.gov www.healthcare.gov  Includes full text of the PPACA  IRS  www.irs.gov/aca www.irs.gov/aca  UCLA Law School Library  libguides.law.ucla.edu/ppaca libguides.law.ucla.edu/ppaca 29

30. Questions For questions about this presentation, contact:  Angela Moore: mangela@library.in.govmangela@library.in.gov  At ISL until July 31 st, 2013 For questions about how PPACA specifically affects your library, contact your library’s attorney. 30