AFI Webinar Presentation PPT 4 13

							           Implementing
        Health Care Reform
         in the Workplace


          Nancy E. Taylor, Esquire
       Shareholder, Greenberg Traurig
       Co-chair, Health and FDA Group

                             April 13, 2010




GREENBERG TRAURIG, LLP | ATTORNEYS AT LAW | WWW.GTLAW.COM
What Health Reform Means For You


                             Speaker:
          Nancy E. Taylor, Co-Chair
    Health & FDA Business Practice Group
              Greenberg Traurig
Greenberg Traurig, LLP is an international, full-service law firm with
approximately 1775 attorneys serving clients from more than 30 offices
in the U.S., Europe and Asia.

Greenberg Traurig’s multi-disciplinary Health Care & FDA Business
Group provides strategic legal counsel to a diverse group of companies
and organizations, helping them to respond proactively to the rapidly
changing marketplace.
* DISCLAIMER: The information provided in this document is intended as a
summary only and is not intended to impart legal advice.
Health Care Reform


● Discussion about employer obligations:

     What is required and when?

● What are the most common questions?




 GREENBERG TRAURIG, LLP | ATTORNEYS AT LAW | WWW.GTLAW.COM
    Employer Obligation
    Effective 2014

    Starting in 2014, employers may either offer
    coverage or potentially pay a penalty.

   Only large employers must offer coverage for full-time
    employees (work 30-hours or more per week over a
    month).

   No requirement to offer coverage for part-time
    employees.

   Coverage must be a plan that pays out 60% of the
    benefits (including copays).

   Coverage must be “affordable” for full-time employees, or
    full-time employees may get coverage in the exchange
    and may qualify for a tax credit.

      GREENBERG TRAURIG, LLP | ATTORNEYS AT LAW | WWW.GTLAW.COM
How do you define “large employer”?
   For the employer obligation requirement, an
    applicable large employer is one with 50 full-time
    equivalent employees.

   Law stipulates how employer size and full time
    equivalencies are calculated.

   Under current rules, generally employees who are
    “similarly situated” are covered under the same
    “plan.” Many times, employers will have more than
    one “plan”, like a plan for salaried workers and a
    plan for hourly workers. We do not know whether
    that will change.

   HOWEVER, there are rules prohibiting discrimination
    in favor of highly compensated individuals.

    GREENBERG TRAURIG, LLP | ATTORNEYS AT LAW | WWW.GTLAW.COM
Calculating Employer Size

              # of Full-Time Employees
    (working 30 or more hours/week over a month)

                                       +

 # of Hours Worked by PT Employees in a Month

                                      120

                                         =

         Total Full-Time Equivalent Employees*



   *If 50 or more, employer is a large employer.

 GREENBERG TRAURIG, LLP | ATTORNEYS AT LAW | WWW.GTLAW.COM
But Employer Does Not Have to Offer
Coverage:


     For part-time workers.

     For seasonal/temporary workers.

     For full time workers during a 90 day
      waiting period.




 GREENBERG TRAURIG, LLP | ATTORNEYS AT LAW | WWW.GTLAW.COM
 Aggregating employees among 2
 or more employers
 Employer obligation to provide insurance only applies to
  the “applicable large employer,” with 50 full-time
  equivalent employees.


 Law incorporates IRC provisions on “common control”
  to determine when 2 or more employers treated as a
  single employer for purposes of determining whether 50
  employee threshold met.


 In cases where 2 or more employers treated as a single
  employer, the 30 employee reduction for the purpose
  of calculating any penalty applies only once, and is
  allocated among employers based on their contribution
  of employees.
    If Employer Offers Affordable Coverage…


   Then employees who opt out may not get a tax credit
    and employer does not have to pay a penalty.


   If the employee must pay more than 9.5% of income
    for premium costs, coverage may be deemed
    “unaffordable” and employee may opt out and seek
    subsidized coverage in the exchange. If they do,
    employer will pay $3,000 penalty.




     GREENBERG TRAURIG, LLP | ATTORNEYS AT LAW | WWW.GTLAW.COM
 Employers who offer coverage that
 may be “unaffordable”
 Employers offering coverage to all full time employees (and
 dependents):
 If one full time employee gets a tax credit to buy insurance
  in exchange, because unaffordable:
    Employer must pay a fee the lesser of:
      $3,000 x # of full time employees* receiving such tax credits; or
      $2,000 x # of all full time employees*.
     * With no penalty for the first 30 full time employees

 EXAMPLE:
        Employer offers coverage to all 230 full time employees.
        Coverage is unaffordable for 40 full time employees.
        These 40 full time employees get tax credit to buy coverage in the
         exchange (no payment for first 30 full time employees).
        Employer must pay $30,000, because:
                  $3,000 x (40-30) 10 FT employees receiving tax credits = $30,000,
                   which is less than
                  $2,000 x (230-30) 200 FT employees = $400,000.


    GREENBERG TRAURIG, LLP | ATTORNEYS AT LAW | WWW.GTLAW.COM
If Employers Do Not Offer Coverage
For employers not offering coverage to full time
 employees (30 hours/week) (and dependents):

 If one full time employee gets a tax credit to buy
  insurance in exchange:
   Employer must pay a fee -
      $2,000 x # of all full time employees ( - 30 full time
       employees).

 EXAMPLE:
     Employer with 240 full time employees doesn’t offer
      coverage.
     40 full time employees get government tax credits to
      buy coverage in the exchange.
     Employer must pay $2,000 x 210 (240-30) = $420,000.


   GREENBERG TRAURIG, LLP | ATTORNEYS AT LAW | WWW.GTLAW.COM
    Always some exceptions:

   Small employer exception:
    ▪ 50 full-time equivalencies;
    ▪ First 30 full-time workers exempted from any
      penalty.


   “VOUCHER”
    ▪ If an employee’s premium contribution is
      between 8-9.5% of income, then employee may
      take the employer’s contribution to purchase
      coverage in the exchange.


      GREENBERG TRAURIG, LLP | ATTORNEYS AT LAW | WWW.GTLAW.COM
Timeline

   Most changes occur in 2014 to expand
    coverage:
       Reform insurance marketplace;
       Create tax credits; or
       Medicaid eligibility for low-income who
        do not have access to employer-
        sponsored coverage.

   Some interim changes in 2011.

   Gives employers time to make changes.

    GREENBERG TRAURIG, LLP | ATTORNEYS AT LAW | WWW.GTLAW.COM
Changes in 2011 (calendar year plans)
Insurance & Employer-Sponsored Plans Must:
 Cover dependents up to age 26 (if plan offers dependent
  coverage);
 No lifetime limits;
 No restrictive annual limits on essential benefits;
 No rescissions (unless there is fraud);
 No cost sharing on certain prevention and wellness
  services (unless plan is a grandfathered plan);
 No pre-existing condition limitations on children 19 and
  younger.

Additional Changes:
 W-2 reporting; HSA penalty; Changes to FSAs; CLASS
  Act enrollment begins
 Changes in 2013

 Notices to employees about benefits and
  eligibility for exchange (March 1, 2013).


 Medicare payroll and unearned tax increased
  for certain individuals (no change to employer
  contribution).


 Limit on FSAs ($2,500).
 Changes in 2014

 Employer obligations go into effect – auto-enrollment (over
  200 employees), offer affordable plan or may pay a penalty.

 Individual obligation to have coverage or pay a penalty.

 Health Exchanges available to groups under 100 and to
  individuals.

 Exchange plans will meet the “essential benefit package”,
  guarantee issue, no pre-ex, rating limits, no more than 90-
  day waiting period, no annual limits, appeals and
  grievances, and other requirements.

 All other plans must meet 60% value test, guaranteed issue,
  no pre-ex, no more than 90-day waiting period, no annual
  limits, appeals and grievances, dependent coverage up to
  age 26, and other requirements.
    What are your options under the law?


   Continue to offer coverage directly or give
    employees a plan to buy through the
    exchange (groups under 100 in 2014;
    potentially groups over 100 in 2017).

   Watch for updates on changes to the rules.

   Prepare during the three year transition to
    comply with obligation requirements.




     GREENBERG TRAURIG, LLP | ATTORNEYS AT LAW | WWW.GTLAW.COM
 Individual Obligation - 2014

Individual must obtain coverage through:
   Medicare;
   Medicaid;
      Eligibility expanded to individuals with
       incomes up to 133% FPL (under age 65)
   Exchanges;
      Individual
      Small Group (up to 100)
   Employer-Sponsored Coverage;
OR Pay a Penalty

   GREENBERG TRAURIG, LLP | ATTORNEYS AT LAW | WWW.GTLAW.COM
Questions and Specifics
Do I have to offer coverage to part-time
workers?



 No.

 In 2014, employers have an obligation
 to offer coverage to their full-time
 workers (30 or more hours per week
 measured over one month) or pay a
 penalty if any of the full-time workers
 qualify for a tax credit through the
 Exchange.
Will employers drop coverage and just
pay the penalty?



There may be some employers who
do that, however, many will continue
to offer benefits as a way to attract
and retain employees. Also,
employer-sponsored coverage is the
only way to get “tax preferred”
premiums for employees. Penalties
are generally not tax preferred.
When will more rules come out for
requirements?

Since there are some requirements for 2011, we
believe they will require “good faith compliance”
until they can get all the regulations and guidance
completed. This means “compliance with a good
faith, reasonable interpretation of the statute.”



However, there are a lot of terms not yet defined.
Employers will have choices on how they can
manage these benefits. Offer directly, offer
through an exchange (may be permissible later
for larger groups), or not offer and potentially pay
a penalty.
Doesn’t this bill mean more costs for
employers?

Many employers offer health insurance coverage
today – however, many smaller companies can’t
find affordable coverage.

For some employers, there are likely to be
additional costs and requirements over the short
term and maybe even long term.

To make this new law work, the implementation
of expanding the coverage and bringing down
some of the costs of the services will have to be
aligned.
 Follow Up Slides

No penalty for first 30 full-time workers

If offer coverage and it is unaffordable or

If do not offer coverage…

Employer only pays penalty for those full time workers
(over the first 30) who receive tax credits to purchase
coverage in the exchange.
 Follow Up Slides

No penalty for Medicaid eligible workers

If offer coverage and it is unaffordable or

If do not offer coverage…

Employer is not subject to penalty for those full time
workers that are Medicaid eligible.

Penalty would ONLY be for those full time employees who
are eligible for a tax credit. (Those between 133-400% of
federal poverty limits.)
  Follow Up Slides
Calculating employer size for small business exception

 To qualify for exception, employer must have 50 or fewer
  full-time equivalent (FTE) employees. This is calculated by
  adding hours worked by all employees during the taxable
  year and dividing this number by 2,080.

 Total # of hours of service for which wages were paid = ?*
                         2,080

*The resulting number is rounded to the next lowest whole
 number.

 Special aggregation rules apply for calculating employees
  when 2 or more businesses treated as 1 business under
  IRC “common control” provisions.
 Follow Up Slides

Affordability

If the cost of the plan to the employee exceeds 9.5% of
that employee’s income

The plan may be deemed “unaffordable” and

The employee may opt out and receive a tax credit for
coverage in the exchange and

An employer will have to pay a penalty.