HR Wellness
King F. Tower, Spilman Thomas & Battle
West Virginia
North Carolina
Pennsylvania
www.spilmanlaw.com
Virginia
Employer Mandate
Large Employers are only required to provide health
insurance to full-time employees if they have 50 fulltime employee equivalents.
But...
ACA changes the definition of full-time employees:
30 hours per week, not 40.
Employer Mandate
What is a Full-time Equivalent?
1) Calculate total hours of service for all non-full-time
employees (but not more than 120 hours of service for
any one employee).
2) Divide total by 120.
3) Add this number to the number of full-time employees.
4) If this is 50 or more, the ACA pay or play mandate
applies to you.
Employer Mandate
“I run a holding company that owns more
than one company. I get to count each
company separately, right?”
No. You have to consider whether there is a
control group, which will be a single entity
for ACA purposes.
Employer Mandate
Control Groups
Companies that are part of the same control group
generally must be combined for the purpose of determining
whether they collectively employ 50 or more full-time or fulltime equivalent employees under the ACA. Where the
combined total of full-time or full-time equivalent employees
in a controlled group is at least 50, each individual employer
is subject to the employer mandate, even if each individual
employer itself does not employ enough employees to meet
the threshold.
Control Groups
There generally are three types of controlled groups:
Parent/subsidiary
Where one or more businesses are connected through stock ownership
with a common parent.
• 80% of the stock of each corporation (except the parent) is
owned by one or more corporations in the group;
• Parent owns at least 80% of at least one other corporation
Control Groups
Brother/sister
Where two or more corporations with five or fewer common owners own
a controlling interest of each group and have “effective control.”
• A common owner must be an individual, trust or estate.
• Controlling interest means 80% or more of the stock of each
business.
• Effective control means more than 50% of the stock of each
business, but only to the extent that the stock ownership is
identical with each corporation.
Control Groups
Combined
Three or more organizations that:
• Each organization is member of one of the two prior types
• At least corporation is the common parent and is also a
member of the brother/sister group.
Employer Mandate
Control Groups
Penalties will apply separately to each member organization of a control
group.
• For example, if one member organization fails to provide minimum
coverage to all its full-time employees, the penalty would be based on
the number of full-time employees in that particular organization, not
the total number of employees in the entire control group.
The “not counting the first 30 rule” that applies where the employer
offers no coverage would apply proportionality to each member entity.
So, a member entity that accounts for 50% of the total full-time
employees in the control group would pay a penalty of $2000 per year
times the number of full-time employees in that specific entity not
counting the first 15 (50% of 30).
Employer Mandate
Ongoing Employees
Look back at standard measurement period and calculate
average hours worked.
If 30 or more, employee is full-time for the next stability
period. (If employee works 1560 hours, he/she is full-time.)
If under 30, employee is not full-time for the next stability
period.
Employer Mandate
New Employees
If expected to work full-time, must offer coverage in
90 days.
If expected to work variable hours (reasonably
expected to average fewer than 30 hours), may use
initial measurement period and administrative period
to determine status.
No obligation to provide coverage in this period.
But, entire time cannot extend beyond the last day of
the first calendar month beginning after employee’s
one-year anniversary.
Employer Mandate
Variable-Hour Employees
If 30 hours or more, must treat as full-time for the next stability
period.
If under 30, may treat as not full-time for the next stability period.
EXCEPT
If the employee transitions to on-going and is full-time in the next
standard measurement period, employee must be treated as fulltime for the next standard stability period.
Employer Mandate
Determining Full-Time Status
Measurement period – 3 to 12 consecutive month period set by
employer.
Can be any period the employer chooses, as long as it is uniform.
Stability period – Period during which determination of full-time status
remains stable.
Must be at least six months, but cannot be shorter than
measurement period.
Administrative period – Period of up to 90 days used to notify and enroll
employees.
Cannot shorten the measurement or the stability period.
Employer Mandate
Employer Shared Responsibility (Pay or Play)
For any penalty to apply, the employer must have an
employee who:
a) Enrolls in an exchange plan; and
b) Receives the premium tax credit (i.e. has a family income
less than 400% of the FPL or approximately $95,000 in 2014).
Plan Value Requirements
Minimum Essential Coverage (MEC) vs. Minimum Value (MV)
Minimum Essential Coverage (MEC)
“Any” employer sponsored health plan
No IRS Guidance yet
Minimum Value (MV)
Employer plan must have an actuarial value of at least 60%
Based on population based actuarial assumptions, not
plan design or covered benefits under a particular plan
IRS/HHS minimum value Calculator
http://cciio.cms.gov/resources/regulations
Employer determination of plan’s Minimum Value
Use MV calculator
Hire an actuary for plans that do not “fit”
Use MV benchmark plans as a guide
Employer Mandate
Employer Shared Responsibility
Penalty Scenario #1: Large employers who do not offer
coverage to all* full-time employees:
Monthly penalties for every full-time employee beyond
the first 30 employees. The penalty is assessed per month, at
one-twelfth of $2000. The penalty amount will be adjusted
annually to reflect growth in premium costs.
*95% = all.
Employer Mandate
Employer Shared Responsibility
Penalty Scenario #2: Large employers who offer coverage
If a large employer offers coverage, but it is
“unaffordable” (employee cost exceeds 9.5% of household
income or it doesn’t provide actuarial value of at least 60%)
and at least 1 employee receives a subsidy on the Exchange,
employer will pay a monthly assessment.
Employer Mandate
Employer Shared Responsibility
Penalty amount in Scenario #2 is the lesser of
a) The penalty for being uninsured (Scenario #1), or
b) A monthly assessment based on a yearly fee of $3000 for
each employee who declines the employer’s coverage and
buys through the exchange.
What is affordable?
Rule = Employee premium is 9.5% of household
income.
Safe Harbor #1 = Employee premium is 9.5% of
W-2 income.
Safe Harbor #2 = Employee premium is 9.5% of
hourly wage for 130 hours.
Safe Harbor #3 = Employee premium is 9.5% of
Federal Poverty Limit.
What is required of employers?
Summary of Benefits and Coverage
Employers must give these to employees on
first day of first open enrollment that begins on
or after September 23, 2012. It must describe
the benefits and coverage rules for each
benefit that is offered.
What (else) is required of
employers?
Summary of Benefits and Coverage
Cannot exceed four double-sided pages
At least 12-point font
Culturally and linguistically appropriate
Employer must make best effort to describe
plan terms
Template available at
www.dol.gov/ebsa/pdf/SBCtemplate.pdf
What (else) is required of
employers?
Notice to Employees
Employers must give written notice to employees describing the
Exchange, including a description of the services, and the manner in
which the employee may contact the Exchange to request assistance.
Applies to all employers covered by the FLSA.
Employers must provide notice to each current employee by October
1, 2013 and for each new employee at the time of hiring beginning
October 1, 2013.
What (else) is required of
employers?
Notice to Employees (During employment)
Notice must be written so that it will be understood by the average employee and
must cover:
The existence of the new Marketplace;
The contact information and description of services provided by a Marketplace;
That the employee may be eligible for premium tax credit if the employee
purchases a qualified health plan through the Marketplace; and
That the employee may lose the employer contribution, if any, to any health plans
offered by the employer.
Model Notice is available at: http://www.dol.gov/ebsa/healthreform/.
What (else) is required of
employers?
Reporting Requirements
W-2 reporting of total value of employer-sponsored
health coverage (health, dental, eye).
Self-Insured: COBRA premium
Fully insured: Actual premium paid
Employers that file fewer than 250 W-2s for 2011 are not
subject to the 2012 reporting requirements.
Exemptions from W-2 reporting – Multiemployer plans,
salary reduction contributions under Health Flexible
Spending Accounts, and stand-alone dental and vision
benefits.
What (else) is required of
employers?
Other employer reporting – in 2014, large
employers will file a tax return providing the
following information as to coverage offered:
The length of any waiting period;
Months coverage was available;
Premiums for the lowest-cost option;
The employer’s share of covered expenses; and
The number and identifying information of full-time
employees
What (else) is required of
employers?
Health Flexible Spending Accounts – Employee
contributions limited to $2500 for plan years
beginning on 1/1/13
Medicare Hospitalization Insurance Tax – the
employee’s portion of this tax will be increased
on wages in excess of $200,000 for plan years
beginning on 1/1/2013 (no change to employer’s
portion of tax).
Wellness Programs
In 2014, employers may increase the reward or
penalty on employees related to health-related
standards (tobacco use, weight loss, etc.) under
wellness programs.
Wellness Programs
Two Types:
1. Participatory programs: Programs that provide
the same benefit as long as you participate.
Reimbursing for costs of membership in a fitness
center
Rewarding employees for attending health
seminars
2. Health-contingent programs: Programs that
require an individual to meet a certain health
standard to qualify.
Altering premiums based on tobacco use
Rewarding employees for meeting certain
biometric standards
Wellness Programs
Health-Contingent Programs
Must meet five conditions:
1. Must be eligible to qualify at least yearly.
2. Cannot be too large.
3. Must have uniform availability and reasonable alternative
standards.
4. Must be reasonably designed to promote health.
5. Must provide notice of alternative methods of qualifying.
How do wellness programs impact
affordability?
In 2014, affordability determined by assuming
each employee satisfies wellness program
requirements
Starting in 2015, affordability determined by
assuming that each employee fails wellness
program requirements except that employers
may look at premiums for non-tobacco users.
Federal Law Side-Effects
King F. Tower, Spilman Thomas & Battle
West Virginia
North Carolina
Pennsylvania
www.spilmanlaw.com
Virginia
Employers and the ACA
Break Time for Nursing Mothers
FLSA now requires employers to provide
a “reasonable break time” for an
employee to express breast milk
Up to 1 year after birth
Employer must offer a private place,
other than bathroom
Do not have to compensate for time
Employers with 50+ employees – smaller
employers not required if can establish
undue hardship
What (else) is required of
employers?
Notice to Employees (COBRA)
Employers must provide notify employees who are eligible for
COBRA coverage that they may want to consider and compare
health coverage alternatives to COBRA continuation coverage
that are available in the Marketplace
Model Election Notice is available at:
http://www.dol.gov/ebsa/cobra/.
Employers and the ACA
Automatic Enrollment
Employers with more than 200 full-time employees that offer employees
enrollment in one or more health benefit plans are going to be required
to automatically enroll new full-time employees in one of the offered
plans and must continue enrollment of current employees in a health
benefits plan.
But in a set of frequently asked questions issued December 22, 2010, the
DOL deferred enforcement until the issuance of regulations.
According to the FAQs, “the Department of Labor has concluded that its
automatic enrollment guidance will not be ready to take effect by 2014.”
Therefore, employers are not required to comply with FLSA section 18A
until after 2014.
Employers and the ACA
Retaliation
An employer may not discriminate against any employee because the employee
has:
received a premium tax credit or health care subsidy,
provided information about a violation of this new law,
testifies, participates or assists in a proceeding about such violation or
objected to, or refused to participate in, any activity, policy, practice, or
assigned task that the employee reasonably believed to be in violation of the
ACA.
Enforced by a complaint brought under 15 U.S.C. § 2087(b) (Whistleblower
Provisions of the Consumer Product Safety Act).
Employee must file complaint within 180 days after violation with Secretary of
Labor. Available relief is order for employer to take affirmative action to abate the
violation, reinstatement with back pay and benefits, and compensatory damages,
costs and expenses.
Employers and the ACA
Discrimination
Plans cannot discriminate in favor of highly compensated individuals
Enforcement delayed
Requirement will be similar to current Section 105(h)
Benefits need not be identical between categories but must meet
certain tests
Highly compensated employees are top 25%
Excludes some employees (part-time, union).
Penalties
Self-funded = excess benefits provided to highly compensated
individuals is treated as taxable income.
Fully-insured = $100 per day per individuals discriminated against.
Employers and the ACA
Mini-Health plans
What about preventative only, or mini-health plans
They don’t meet minimum value standards
Recipients could still qualify for subsidized coverage in the
exchange
IRS has not yet said if they would meet minimum essential
coverage.
May protect employers from penalty for not offering any
insurance (or may not depending on what the IRS says).
West Virginia
North Carolina
Pennsylvania
www.spilmanlaw.com
Virginia