WHAT THE AFFORDABLE CARE ACT MEANS TO YOUR ASSOCIATION

AND YOUR MEMBERS

Dan Bond, Principal

Handouts

capstonebenefits.com/cfoforum

Roles Under ERISA / ACA• ERISA Fiduciary

o Act solely in participant’s best interesto Act in accordance with plan docs and ERISA

• ERISA Plan Administratoro Directly responsible for compliance with

administrative functionso Liable for non-compliance

Plan Sponsor Arrangements

• Single Employer

• Controlled Group

• Multiple Employer Welfare Arrangemento Health Plan (Association Level)o Multiple Employer Trust (single plans)o PEO

Insurance Arrangements

• Fully Insured

• Self-Insured (stop loss)

• Partial Self-Funding

• Minimum Premium

• Participating Contracts

Plan at MEWA or Employer Level?

•Commonality of Interest Testo Same Line of Business

o Same Geographical Area

o Not Just Arrangement to Provide Insurance

•Control Testo Do Employers Control the Plan?

Fiduciary Concerns

ERISA 519• Shall Not Knowingly Make False Statement

Regarding Marketing or Sale of MEWAo Financial Condition

o Benefits Provided

o Regulatory Status

• $250,000 Fine and 10 Years in Prison

Fiduciary Concerns

ERISA 510Unlawful to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right or interfering with the attainment of any right to which such participant may become entitled under the plan.

• Employer should have legitimate business reason in reclassifying employees causing loss of benefits

• Did employees previously have benefits?

• Does it disproportionately impact a protected class?

Fiduciary Concerns

Whistleblower Act• Employer may not in any manner retaliate against an

employee because he or she received a premium credit under the ACA.

• Unclear whether possibility of receiving premium credit applies

• Requires only preponderance of evidence (51%)• Remedies include “Special Damages”• Administrative process first before federal court• Employer must provide clear and convincing

evidence it would have taken the same action

Will Employers Keep Plans?• Many Surveys Say “Yes” For Large Employers

• Declines For Small Employers with Low Wage Workers

• Small Firms Moving to Self-Insurance• Greater Cost Sharing and HDHP• Many Dropping Spousal Coverage

National Institute for Health Care Managements (October 2013). Employer Sponsored Health Insurance: Recent Trends and Future Directions. Retrieved from: www.nihcm.org/images/pdf/Employer-Sponsored-Health-Insurance-v2-data-brief.pdf

Adjusted Community Rating

• Effective January 1, 2014

• Groups Up To 50 Eligible Lives

• Fully Insured

• Non-Grandfathered

• Non-Grandmothered

Adjusted Community Rating

•Premiums Based On:• Individual vs Family Coverage• Geographic Area• Age (limited to a 3-to-1 factor)• Tobacco Use (limited to a 1.5 to 1 factor)

•Premiums Cannot Account For:• Actual or Expected Health Status• Claims Experience

Alternatives to Community Rating

Group Insurance Trust or MEWA• Proso Increased Buying Powero Lower Fixed Costso Participating Financial Arrangementso Legal Compliance at Trust Level

• Conso Legalo Administration

Alternatives to Community Rating

Self-Funding• Proso Total Plan Controlo Benefit From Good Claims Years

• Cons• Risk Tolerance• Administration / HIPAA Privacy and Security• Understand Stop Loss Contract

PCORI Fees

• Increase to $2.08o Plan Years After 10/1/14 and Before 10/1/15o Responsibility of Plan Sponsor

•MEWAso Responsibility of Committee that Sponsors Plano Determine Insured Status

Fully-Insured: Verify Insurer Is Paying Self-Insured: Cannot Pay from Plan Assets

Reinsurance Fees

Self-Insured Group Health Plans• Who Will Report/Pay?

• Which Plans Are Subject?

• Which Individuals Must Be Counted?

• Which Counting Method?

• MEWAso Determine Insured Status

• Who?o Entities Providing “Minimum Essential Coverage”

• What?o Each Individual Receiving Coverage

(employees, spouses and dependents)

• When?o Report in Early 2016 for 2015 Plan Year

• Where?o Transmittal/Report to IRSo Statements to Individuals

• Why?o Enforcement of the Individual Mandate

Section 6055 Reporting

Section 6055 Reporting

•Reporting Responsibilityo Fully-Insured: Insurero Self-Insured: Employero Same Responsibility Under MEWA

•Timing for Reporto Statement to Individuals: January 31, 2016o Return (1095) and Transmittal File (1094): February

28, 2016 March 31 if Filed Electronically

Individual TIN• Include TIN For Covered Individualso Reasonable Efforts to Obtain TIN

o DOB if TIN Not Available

• Example:

• Initial Request: June 2015

• 1st Annual Solicitation: December 2016

• 2nd Annual Solicitation: December 2017

Section 6055 Reporting

• Who?o Applicable Large Employers (ALEs)

• What?o Full-Time (30 hrs.) Employees and Dependents

• When?o Report in Early 2016 for 2015 Plan Year

• Where?o Transmittal/Report to IRSo Statements to Individuals

• Why?o Enforcement of Play or Pay and Premium Tax Credits

Section 6056 Reporting

• Reporting Responsibilityo Fully-Insured & Self-Insured: Employer

Same Responsibility Under MEWAo May Use 3rd Party, But Remain Liable

• Coordination with 6055 Reporting

• Timing for Report (same as 6055)o Statement to Individuals: January 31, 2016o Return (1095) and Transmittal File (1094): February

28, 2016 March 31 if Filed Electronically

Section 6056 Reporting

Non-ALE ALE

Fully Insured Self-Insured Fully Insured Self-Insured

Covered Ees(6055) Insurer 1095-B Insurer 1095-C*

Full-Time Ees(6056)

N/A N/A 1095-C* 1095-C*

IRS Insurer 1095-B 1095-C 1095-C

IRS Transmittal

Insurer 1094-B 1095-C 1095-C

Reporting: 6055 and 6056

* 6055 and 6056 reporting can be combined into a single return

Providing Statements to Individuals• “Responsible Individual (Generally, the Employee)

• May Combine 6055 and 6056 (1095-C)• May Be In Same Mailing as W-2• First Class Mail to Last known Address• Electronically with Consent• Post on Web Site with Consento Consent May be Combined for Other Materials

Reporting: 6055 and 6056

Penalties• Failure to File Informational Return

• Failure to Furnish Employee Statements

• Relief for 2015 If Good Faith Effort• Incorrect• Incomplete

• Relief Under Standards for Reasonable Cause• Timely Correction

Reporting: 6055 and 6056

Cadillac Tax• 40% Nondeductible Excise Tax• Begins in 2018• Calculated on Value Above Threshold

o $10,200 (single) and $27,500 (family)o Employer and Employee Premiums Included

• Employer-Sponsored Group Health Plans• Employer/Employee Contributions to FSAs and HRAs• Employer/Employee Pretax Contributions to HSAs• EAPs with counseling benefits, onsite medical clinics and

wellness programs

• Retirees Not Entitled to Medicare• Higher Thresholds

Cadillac Tax – Action Plans• Retiree Health Benefits

o Project the Cost of the Benefit to Determine Taxo Recognize Tax in Retiree Health Valuations (if significant)

• Evaluate Plan Design and Cost Sharing

• Move Away From Fee for Service

• Make Dental/Vision Excepted Benefits

• Evaluate Account Based Plans

• Consider Self-Insuring

• Review Eligibility Rules

Section 4980D Penalties

ACA Market Reforms• IRS Excise Tax• $100 per Day per Individual Violation• $2,500 per Individual if Not Corrected Prior to Notice

• Reliefo Employer didn’t know or would not have knowno Failure due to reasonable cause and corrected within

30 days

DOL Audit

• Review the Summary Plan Description (SPD)• Health Certificate is NOT and SPD• Distribution Method Should Ensure Actual Delivery

• Pre-Audit if Possible• Organize Material Prior to Audit• Bring Exceptions to Auditor’s Attention

• All Actions in Best Interest of Participants

• Notices• Document Process and Timing – Maintain Copies

THANK YOU !!