The Affordable Care Act: summary of employer requirements

The Affordable Care Act: summary of employer requirements
Washington Council Ernst & Young Ernst & Young LLP
May 2014

Disclaimer
► Any US tax advice contained herein was not intended or written to be used, and cannot be used, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.
► These slides are for educational purposes only and are not intended, and should not be relied upon, as tax or legal advice. Recipients of this document should seek advice based on their particular circumstances from an independent tax advisor or legal counsel.

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Table of contents
I. Where we are now
► Overview of coverage requirements……………………………....…...…………………..................6 ► Exchange enrollment…………………………………………………………………………………….8 ► Sources of health coverage……………………………………………………………………………12
II. Employer mandate under IRC §4980H
► Transition relief for employers…………………………………………………………………………20 ► Large employer…………………………………………………………………………......................22 ► Full-time employee……………………………………………………………………………………..26 ► Tax penalties and other fees ► Employer penalties under IRC §4980H………………………………………………………………32 ► No offer of coverage……………………………………………………………………………………33
► Minimum essential coverage………………………………………………………………………………………35 ► Unaffordable coverage…………………………………………………………………………………38
► Affordability test…………………………………………………………………………………………………….40 ► Minimum value test…………………………………………………………………………………………………42 ► Treatment of employer contributions to HSAs, HRAs for minimum value, affordability…..………………...43

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Table of contents
III. Employer information reporting requirements under IRC §§ 6055 and 6056………….50
► IRC §6056 general reporting method…………………………………………………………………53 ► IRC §6056 alternative reporting methods……………………………………………………………55 ► IRC §6055 reporting……………………………………………………………………………………59 ► Information return penalties……………………………………………………………………………61
IV. Communication with employees and Exchanges
► Process and timing for communications and reporting…………………………………………….63 ► Fair Labor Standards Act notice to employees…...………………………….................................64 ► Individual eligibility for premium tax credits in 2014………………………………………………..67

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WHERE WE ARE NOW
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Major coverage requirements and expansion provisions
The ACA is expected to expand health coverage to an estimated 25 million previously uninsured Americans.
► Individual mandate: Mandates that all Americans, with some exceptions, maintain a minimum level of health coverage or face a tax.
► Insurance Exchanges: Creates Exchanges (“Marketplaces”) in which individuals and small businesses can shop for health insurance. Tax credits are available to eligible individuals and small employers to offset the cost of coverage.
► Medicaid expansion: Allows states the option to newly expand Medicaid to most adults up to 138% of federal poverty level.
► Employer mandate: Mandates employers with 50 or more full-time equivalents to offer coverage to full-time employees and their dependents or pay taxes if an employee obtains Exchange coverage and receives a premium tax credit.

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Projected sources of health coverage under the ACA in 2014 (millions of nonelderly people)

Nongroup and other (includes
Medicare for people under age 65 with disabilities),
23

Exchanges, 6

Uninsured, 42

Medicaid and CHIP, 42

Employment-based coverage, 156

Source: Congressional Budget Office, Updated Estimates of the Effect of the Insurance Coverage Provisions of the Affordable Care Act, April 2014.

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2014 open enrollment
► More than 8 million people selected private health plans during the inaugural open enrollment period in the ACA’s health insurance Exchanges (October 1, 2013- March 31, 2014) and a subsequent special enrollment period that ended on April 15.
► Open enrollment for individuals for 2015 is November 15, 2014 through February 15, 2015.
► Small employers can enroll year-round (with some limits).

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State-by-state breakdown of individuals who selected a plan in 2014 open enrollment

WA 163,207 OR 68,308
NV 45,390 CA 1,405,102
AK 12,890

ID 76,061
UT 84,601
AZ 120,071

Enrollment numbers for the period: October 1, 2013 – April 15, 2014

MT 36,584
WY 11,970
CO 125,402
NM 32,062

ND 10,597

MN 48,495

VT: 38,048

ME 44,258

SD 13,104
NE 42,975
KS 57,013
OK 69,221
TX 733,757

WI
139,815 MI

NY 370,451

272,539

IA 29,163

PA

OH

318,077

IL

IN 154,668

217,492132,423

WV

MO 152,335

KY 82,747

19,856 VA 216,356

AR 43,446

TN 151,352

NC 357,584
SC 118,324

MS AL

GA

61,494 97,870 316,543

NH: 40,262 MA: 31,695
RI: 28,485 CT: 79,192
NJ: 161,775 DE: 14,087 DC: 10,714 MD: 67,757

LA 101,778

FL 983,775

HI 8,592
Source: Department of Health and Human Services; May 1, 2014 Office of the Assistant Secretary for Planning and Evaluation Issue Brief

State-run exchanges; 15 exchanges; 2,573,585 individuals Federally run/supported exchanges; 36 exchanges; 5,446,178 individuals

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Medicaid expansion in 2014

WA
OR ID

MT WY

NV
UT CO
CA

AZ NM

AK

HI Source: Centers for Medicare and Medicaid Services

ND SD NE
KS

MN WI
IA IL
MO

OK TX

AR MS
LA

ME

MI
IN OH WV
KY

VT NH
NY MA

CT RI PA

NJ

DE

VA

DC

MD

NC TN

SC

AL

GA

FL

State will expand Medicaid in 2014 State will not expand Medicaid in 2014

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