Welcome to the Cigna Health Care Reform Web Meeting ... · clients navigate the evolving landscape...

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Welcome to the Cigna Health Care Reform Web Meeting Employer Mandate: Full-Time Employee Status Part 2 of a 3-Part Series on Employer Mandate-Related Topics March 27, 2014

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Part 2 of a 3-Part Series on the Employer Mandate

2 © 2014 Cigna

Last Week 3/19: Employer Mandate: Final Regulations and Clarification Replay on www.InformedOnReform.com Under Web Meetings

Today 3/27: Full-time Employee Status, Measurement and Stability Periods and Unique Rules for Various Types of Workers 4/2: Final Rules for Reporting Health Insurance Coverage by Large Employers and Reporting Minimum Essential Coverage by Insurers and Self-Funded Employers

Kathy Vaccaro VP Health Care Reform, Cigna Crowell & Moring Seth Perretta Malcolm Slee Via Boppana Crowell & Moring, LLC, a Washington D.C.-based law firm, is nationally-renowned for its practice in health care and employee benefits. Cigna has established an arrangement with Crowell & Moring to help clients navigate the evolving landscape created by the PPACA.

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Employer Mandate: Full-Time Status, Measurement and Stability Periods and Unique Rules for Various Types of Workers

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• Employer mandate basics • Full-time vs. variable hour employees • Measurement methods • Examples • Employer checklist • Preview part 3 of the series • Resources • Questions

Today’s Agenda


What is a Common law Employee? Facts and circumstances, including: • Right to control and direct • Right to control means of work • Right to hire and fire • Right to set hours and place of work

Employer Mandate Basics

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Employer - Common law employer

Employee - Common law employee

• Temporary employee? • Statutory employee? • Seasonal employee? • Employee in the PEO context? • Volunteer? • Leased employee?


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Employer Mandate Basics


Hour of Service Hours worked + Paid time off

Three methods to calculate hours of service

1 Actual Hours Actual hours of service worked

“from records” + Certain non-worked

hours

2 Days-Worked Equivalency

8 hours of service per day

3 Weeks-Worked

Equivalency 40 hours of service

per week

Variable Hour Employee • True variable hour • Fixed hour < 30 hours/week • Qualifying seasonal

Full-Time Employee

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Employer Mandate Basics Limited Choice: “Full-Time” or Variable Hour

OR


Full-Time Employee

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Full-time schedule 30 hours of service per week or 130 hours of service per month

Full-Time Employee An employee reasonably expected to work a full-time schedule

General Rule: Must offer full-time coverage by the first day of the fourth full month following hire

Variable Hour Employee

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Variable hour employee An employee not reasonably expected to work a full-time schedule based on facts and circumstances

Two methods to determine full-time status: Remember: Different rule if expectations change to reasonably expect full-time work

1 Look-back

measurement method

2 Monthly measurement

method

Look-Back Measurement Method Method to determine whether a variable hour employee works a full-time schedule

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12 mos 9 mos 6 mos 90 days 12 mos 9 mos 6 mos 3 mos

Measurement period 3 to 12 months

Stability period 6-12 months

Administrative period Up to 90 days to allow

for open enrollment

New Monthly Measurement Method

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Proposed Rule Safe harbor method for measuring employees’ hours of service for determining “full-time” status

Commenters’ Request Alternative regime for measuring employer mandate compliance

New Final Rule Monthly Measurement Method

Monthly Measurement Method • Allows employers to avoid use of measurement and stability period machinery • Likely of most use for employers who:

1) offer compliant coverage broadly to both “full-time” and “non-full-time” employees; and/or 2) have workers with consistent and expected monthly hours of service

Note: Final regulations provide for a one-time (per employment term) non-assessment period of up to 3 months during which the employer is not subject to employer mandate penalties

Seasonal Employee

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Seasonal employee Employee in a position that is performed at a recurring time each year and customarily lasts no longer than six months

How the employer mandate applies to seasonal employees varies based on method

1 Look-back measurement method

2 Monthly measurement method

May apply measurement period of up to 12 months even where employee is expected to work a full-time schedule

during seasonal employment

If expected to work a full-time schedule, then must be offered qualifying coverage by the first day of the

fourth month following hire

Short-term Employee

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General Rule: Proposed and Final Applicable large employer must offer coverage to full-time employees and full-time equivalents

Compliance Issue Unclear whether an exception applied for short-term hires

New Final Rule Short-term and high-turnover employees are not generally treated differently from other employees under these rules. If they are expected to work a full-time schedule, must be treated as full-time employees.

Break-in-Service Rules

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Final Rule: An employee who resumes service after a break in service may not be considered a new employee unless he or she has a break of at least 13 consecutive weeks without an hour of service.

Updated from a break of 26 weeks in the proposed rule.

6 Month Ongoing Stability

Up to 90 day Admin

12 Month Ongoing Measurement

3 Month Ongoing Stability

Up to 90 day Admin


6 Month Ongoing Stability Up to 90 day Admin


6 Month Ongoing Stability Up to 90 day Admin 6 Month Ongoing Measurement

12 Month Ongoing Stability Up to 90 day Admin 12 Month Ongoing Measurement

Look-back Measurement Method: Ongoing Variable Hour Employees

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Examples that work


Ongoing measurement period 3 to 12 months

Ongoing stability period 6-12 months (at least as long as ongoing measurement period)

Administrative period (Admin) No more than 90 days (not

3 full calendar months)

Examples that DO NOT work

Look-back Measurement Method: Variable Hour Employee Example

10/15/14

12 Mo. Measurement

12 Mo. Measurement

12 Mo. Measurement

12 Mo. Measurement

12 Mo. Measurement

12 Mo. Stability

12 Mo. Stability

12 Mo. Stability

12 Mo. Stability

12 Mo. Stability


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10/15/14 10/15/15 10/15/15 10/15/16 10/15/16 10/15/17 10/15/17 10/15/18 10/15/18 10/15/19 10/15/19

12 Month Initial Stability

Up to 90 day Admin

12 Month Initial Measurement

11 Month Initial Stability Up to 60 day Admin 11 Month Initial Measurement

12 Month Initial Stability 12 Month Initial Measurement

Up to 30 day Admin

6 Month Initial Stability Up to 60 day Admin 6 Month Initial Measurement

Look-back Measurement Method: New Variable Hour Employees

Examples that work


Initial measurement period 3-12 months so long as individual may

enroll in coverage as of first day of 14th full calendar month after hire

Initial stability period 6-12 months

Administrative period (Admin) No more than 90 days (not

3 full calendar months)

Example that DOES NOT work

For all employees hired in the first quarter, will apply an x-month initial stability period beginning on the first day of the next quarter

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SO BE CAREFUL NOT TO…. Base the start of the initial measurement period on an event that might not meet these timing rules.

Look-back Measurement Method: Some Pitfalls to Keep in Mind


RULE 1…. Initial measurement period may begin: • Between employee’s start date and first day of the

following month • Or if later, first day of the first payroll period

following the start date

SO BE CAREFUL NOT TO…. Use a 12 month initial measurement period plus a 60 to 90 day administrative period – the employee won’t get timely coverage

RULE 2…. Initial measurement and administrative periods together cannot extend beyond the last day of the first calendar month beginning on or after the first anniversary of the employee’s start date

SO BE CAREFUL NOT TO…. Assume you can use a 90-day administrative period, unless you begin initial measurement period on start date

RULE 3…. Combined length of period before start of initial measurement period and administrative period is limited to 90 days

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Employer Checklist: Next Steps

Know your employee base: Full-time vs. variable-hour employees Determine the best method to calculate hours (actual, days worked or weeks) Understand the methods to determine full-time status and decide what’s best for your situation: Look-back or monthly measurement methods Ask your Cigna sales representative to set up a meeting with Crowell & Moring if you have questions that you’d like to discuss


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Understand common law employer and employee facts and circumstances


Preview of Part 3 of the Series

Wednesday, 4/2

• Final Rules for Reporting Health Insurance Coverage by Large Employers • Reporting Minimum Essential Coverage by Insurers and Self-Funded Employers

A reminder registration link will be included with the replay from today’s meeting. Replays of all three web meetings will be on InformedOnReform.com.

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To contact Crowell & Moring, ask your Cigna representative

Visit our website InformedOnReform.com

• Now optimized for desktop, tablet or mobile devices

• News alerts, fact sheets, timeline, FAQs

• A replay will be available within a few days under Web Meetings


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Resources

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Offered by: Connecticut General Life Insurance Company or Cigna Health and Life Insurance Company. “Cigna,” the “Tree of Life” logo and “GO YOU” are registered service marks of Cigna Intellectual Property, Inc., licensed for use by Cigna Corporation and its operating subsidiaries. All products and services are provided by or through such operating subsidiaries and not by Cigna Corporation. Such operating subsidiaries include Connecticut General Life Insurance Company, Cigna Health and Life Insurance Company, and HMO or service company subsidiaries of Cigna Health Corporation and Cigna Dental Health, Inc. All models are used for illustrative purposes only. 03/14 © 2014 Cigna. Some content provided under license.

Welcome to the Cigna Health Care Reform Web Meeting ... · clients navigate the evolving landscape...

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