1. Healthcare Reform Compliance Strategy
A Proactive Approach to Protecting Company Profitability
Russell J. Carpentieri, Partner
Executive Tax Forum - November 7, 2013

2. One Year Delay on Penalties
• The Obama Administration delayed enforcing certain
employer requirements.
• Opus will provide practical, accurate and time-sensitive
solutions aimed at exploiting the opportunities that exist for
employers/employees under the ACA, to prepare for the
enforcement stage.
• As new information becomes available, alternate strategies
may be suggested.
This presentation has been provided for informational purposes only and is not intended and should not be construed
to constitute legal advice. Please consult your attorneys in connection with any fact-specific situation under federal,
state, and/or local laws that may impose additional obligations on you and your company.
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3. Terminology
State/Federal Exchanges
Individuals can access coverage from various carriers (varies by state) and choose from
set plan designs. Individuals may be eligible for a subsidy dependent upon income.
SHOP Exchanges (Small Business Health Options)
Exchanges will be available to Small Group employers with 50 or fewer full-time
equivalent (FTE) employees.
Private Exchanges
Technology based platforms that aggregate carrier plans options (including multiple
plan designs options). Rates are underwritten and are the same as in the open
market.
Open Market
Current small and large group marketplace
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4. SHOP Exchange
• Effective January 1, 2014, SHOP (Small Business Health Options Program)
Exchanges will be available to Small Group employers with 50 or fewer fulltime equivalent (FTE) employees.
• If you plan to use SHOP, you must offer coverage to all of your full-time
employees –generally those working 30 or more hours per week on
average.
• If employer is currently receiving a tax credit, they must secure coverage
through the SHOP exchange in order to preserve the tax credit.
• There is a participation requirement, but no requirement for employers to
pay for coverage.
• New York City Area (Region 4 - Bronx, Kings, New York, Queens, Richmond,
Rockland, Westchester)
– Health Republic Insurance
– MVP Health Care
– Oxford Health Insurance
Executive Tax Forum - November 7, 2013
Metro Plus
North Shore – LIJ
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5. Sample SHOP Exchanges
Plan Highlights
Classification
Network
HealthCare Platform
UCR Percentile
PCP Copay
Specialist Copay
In-Patient Hospital Copay
Out-Patient Hospital Copay
Radiology Copay
ER Copay
Deductible
Coinsurance
Out of Pocket (w/ded)
Lifetime Maximum
RX Drug-Retail
Referral Needed
Mail Order Prescriptions
Deductible Accumulator
Platinum Standard
All active full-time employees
Liberty
PPO
In- Network
Out-of-Network
Negotiated Fee
140% of Medicare
$15
Ded & Coins.
$35
Ded & Coins.
$500
Ded & Coins.
$100
Ded & Coins.
$35
Ded & Coins.
$100
None
$2,000/$4,000
100%
70%
$2,000/$4,000
$5,000/$10,000
Unlimited
Unlimited
$10/$30/$60
Yes
N/A
N/A
2.5x Retail
Calendar Year
Plan Cost
Monthly Rates
Employee
Employee + Child(ren)
Employee + Spouse
Family
Executive Tax Forum - November 7, 2013
$836.98
$1,422.87
$1,673.96
$2,385.39
Bronze Standard
All active full-time employees
Liberty
EPO
In- Network
Out-of-Network
Negotiated Fee
N/A
50% After Ded
N/A
50% After Ded
N/A
50% After Ded
N/A
50% After Ded
N/A
50% After Ded
N/A
50% After Ded
$3,000/$6,000
N/A
50%
N/A
$6,350/$12,700
N/A
Unlimited
N/A
$10/$35/$70 After
Medical Ded
Yes
N/A
2.5x Retail
Calendar Year
Deductible must be met prior to
any (non-preventive) services being
covered
$473.25
$804.53
$946.50
$1,348.76
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6. Step 1:
Are You a Large Employer Under the ACA?
• Employers who employed at least 50 full-time employees, including fulltime equivalent employees (FTEs), on business days during the preceding
calendar year.
– Full-Time Employees
Employees who are employed on average at least 30 hours of service per week,
measured over one month (130+ hours/month)
– Full-Time Equivalent Employees (FTEs)
Based on hours of ALL employees (including seasonal employees) who are NOT
full-time.
• Example: In a calendar month, employees who are not full-time employees work
1,260 hours. Therefore, there would be 10.5 FTEs for that month (1,260 hours /
120)
Note: ACA created IRC Section 4980H: Employer Shared Responsibility Assessment (penalty)
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7. What Companies Have
to be Included?
• Commonly-controlled and commonly-owned organizations are
considered a “single” employer for regulatory purposes
– “Parent-Subsidiary” controlled group exists when one company
owns 80% or more of another.
– “Brother-Sister” controlled group occurs when five or fewer
individuals (i) own 80%+ of the businesses; AND (ii) the same
five or fewer people own over 50% of the businesses counting
only identical ownership.
– “Affiliated Service Group” exists when several organizations
regularly collaborate on the services they provide to the public
and are linked by a material level of cross-ownership.
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8. Step 2:
Who Must be Covered?
• Must offer coverage to:
– Full-Time Employees
– Full-Time Employees’ Dependents (at employees’ cost)
• Not Required to offer coverage to:
– Part-Time (working less than 1,560 hours per year)
– Seasonal (apply a reasonable, good faith interpretation of
the term “seasonal worker” until further guidance is
issued)
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9. Step 2:
Who Must be Covered?
• May have to offer coverage to:
– Variable Hour Employees
• Measured over a “look-back/stability” period between
3-12 months
• Employer could determine eligibility for a period of
time and subsequently cover the employee for a period
of time
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10. Look-Back/Stability Period
• For 2014 plans only, employer establishes look-back period of
6-to-12- months (“standard measurement period”).
• At the expiration of the standard measurement period, employer
looks-back at hours worked by variable hour employees during
standard measurement period to determine which worked more
than 130 hours per month on average.
– 2014 can be the year systems are used to track hours.
• Employees who worked more than 130 hours per month on
average over the standard measurement period are considered
ELIGIBLE full- time employees and must be covered during a
6-to-12-month stability period.
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11. Step 3:
What are the Employer Requirements?
• Minimum Value – defined by proposed regulations released in December
2012
– Plan meets “minimum value” requirement if it pays out at least 60% of the costs of
the plan as determined by three methods
•
Affordability
– Annual premium charged to employee cannot exceed 9.5% of the employee’s
income derived from employer (W-2 income)
– Premium contribution applies to “employee-only” coverage, not to dependent
coverage
New Trend: New plans are being released in the market that provide Minimum
Essential Coverage (MEC). These plans are projected to be less expensive than
Minimum Value Plans.
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12. Possible Strategy
A. Offer plan A or plan B that meets “Minimum Value” and
“Affordability”
B. Offer another plan that meets Minimum Essential
Coverage (MEC)
–
Provides very basic coverage as per the ACA
–
If an employee signs up, they avoid the individual mandate
penalty and no penalty for the employer.
C. Secure a waiver from employee (advised, but not
necessary)
–
Employer will have to provide documentation to the Gov’t
in 2015
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13. What Triggers a Penalty ?
• Employers will only be subject to a penalty if they
either:
– Do not offer any coverage to full-time employees
– Offer coverage, but do not offer minimum value coverage
that is affordable for the lowest paid eligible employee
• AND employee(s) found eligible for a tax credit(1) or
cost-sharing reduction in the Exchange
(1)Eligible
for a tax credit is household income between 100% to 400% of the Federal Poverty Level
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14. What are the Employer Penalties
Starting in 2015
If You Offer Coverage
– Employers with over 50 full-time (FT) and full-time equivalent (FTE) employees in
the prior calendar year must offer coverage to all but 5% or, if greater than 5, FTs
(and their dependents) that is affordable and meets “minimum value”
requirements
• No penalty if employer is compliant
If You Do Not Offer or Provide Adequate Coverage
– Employer does NOT provide coverage to all but 5% or, if greater than 5, FTs (and
their dependents) and one of the FT’s receives subsidized coverage through
exchange
• Penalty is $2,000 per FT (minus 30 employees)
– Employer provides coverage that is unaffordable or does not meet “minimum value”
requirements and one of the FTs receives subsidized coverage through exchange
• Penalty is lesser of $3,000 per FT receiving tax credit or $2,000 per FT (minus 30
employees)
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15. Trends/Best Practices
• Boards and Sr. Management are taking actives roles in the
renewal process
• Companies are now gravitating to alternate methods
–
–
–
–
–
–
–
employing mathematics and algorithms to measure risk
analyzing probability of claims vs. premiums
dismissing and/or challenging broker/carrier recommendations
providing HR with the resources to executive
state of the art technology for reimbursement methods
communication initiatives
removing the internal “excuses” as to why the company should pass
on the savings
• Aligning with fee (non broker)solutions and third party
oversight with performance guarantees
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16. Best Practices
Companies are providing third party oversight with the
following objectives:
• Work with existing brokers on the renewal and
design process
– Bring new ways of thinking and capabilities
– Cross check recommendations
– Challenge conventional approaches
– Make sure brokers are aligned with clients interest
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17. Our Role for ACA
Compliance/Strategies
• Step 1: Gather historical census and plan information
• Step 2: Develop a series of strategies or recommendations
that will:
– Guarantee full ACA compliance with verification to protect against audit
– Properly categorize workforce to maximize opportunity under the ACA
and avoid or mitigate employer 2K/3K penalty
– Maintain high quality coverage and multiple plan offerings while
complying with ACA
– Exploit the opportunity for employees to receive government subsidized
healthcare thus reducing employers’ cost
– Create a long term solution to manage costs/penalties
Note: Services provided on a fee basis or as Broker of Record
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18. ACA Compliance Team
• Russell J. Carpentieri
– Partner, Opus Advisory Group, LLC
• Nancy E. Taylor, Esq.
– Co-Chair-Health & FDA Business Practice, Greenberg Traurig, LLP
• Howard Rosenfeld, MAAA, MSPA, EA
– President & Chief Actuary, Rosenfeld / Tortu Retirement Planning Co.,
Inc.
• Adam Rolewicz
– Director, Opus Advisory Group, LLC
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19. Addendum A:
Employee Categories Defined
•
Full-Time Employees. With respect to a calendar month, an employee who is employed an average of at least 30 hours of
service per week with an employer, or 130 hours of service in a calendar month, is full-time. Determine through look-back
measurement method, followed by a stability period in which coverage must be offered to full-time employees.
•
Full-Time Employees’ Dependents. Employers must offer coverage (not necessarily affordable) to full-time employees’
dependents, defined as the children of an employee who have not attained age 26. Dependent does not include a spouse.
•
Full-Time Equivalent (FTE) Employees. FTE means a combination of all employees not otherwise treated as a full-time,
based on their average hours of service per week. The hours of service of all FTEs are combined, allocated, and counted as
the equivalent of a full-time employee solely for purposes of determining whether the employer is an applicable large
employer.
•
Ongoing Employees. Those who have been employed for at least 1 complete standard measurement period.
•
New, Full-Time Employees. New employees reasonably expected to work full-time as of their start date.
•
New, Variable Hour Employees. Based on the facts and circumstances at their start date, it cannot be determined whether
they are reasonably expected to provide, on average, at least 30 hours of service per week during the initial measurement
period.
•
Seasonal Workers. Those employees who perform labor or services on a seasonal basis as defined by the Secretary of Labor,
including (but not limited to) agricultural workers and retail workers employed exclusively during holiday seasons. Employers
may apply a reasonable, good faith interpretation of the term “seasonal worker” until further guidance is issued.
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20. Questions?
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