Patient Protection & Affordable Care Act (PPACA)

Patient Protection& Affordable Care Act (PPACA) Angela Moore Indiana State Library Intern June 26, 2013

Presenter Introduction • Rising 2nd year law student • Not a lawyer • Summer legal intern at ISL • Former librarian at Berne Public Library

Disclaimer • This is legal information, not legal advice • I cannot apply the law to your specific situation

PPACA: An Overview • 900+ pages of legislation • Focus today on employer requirements • Shared Responsibility for Employers • Automatic Enrollment Requirement • SHOP Exchange • Reporting Requirements • Notice Requirement • Some issues are still awaiting regulation

Shared Responsibility for Employers • PPACA § 1513; effective after Dec. 31, 2013 • You’ve heard about employer penalties, right? • Technically, there is no “penalty” for not providing insurance • PPACA falls under Congress’s taxing power • But you may have to make a “shared responsibility payment” • No employer is “required” to provide insurance • You can still choose to not provide insurance, PPACA just shifts the cost-benefit analysis

Shared Responsibility for Employers • An Employer’s Choice • Provide adequate, affordable insurance, or • Risk being liable for making payments • It’s not a penalty, but it’s still taking your money • You are not breaking the law if you choose to not provide insurance

Shared Responsibility for Employers • Not all employers have to make payments • There are three questions to ask • If your library can answer any of them with “no,” then you do not need to make a payment. • Are you a large employer? • 50+ full-time equivalent employees, system-wide • Did a full-time employee receive a premium tax credit or cost-sharing reduction? • Do you have more than 30 full-time employees? • There is a difference between “full-time” and “full-time equivalent”

Shared Responsibility for Employers • Large Employer: 50 Full-Time Equivalents • FTE = # FT employees + # pro-rated PT employees • Full-time = average of 30 hours per week or more • In general, to pro-rate PT: add all part-time workers’ hours for the month together and divide by 120 • 43 IRC §4980H(c)(2)(C) (as modified by PPACA §1513(a)) • e.g. 4 FT + 2 PT employees (who together worked 150 hours for the month) • 150/120 = 1.25 • 4 + 1.25 = 5.25 FTE • IRS regulations may change this to 130 (Notice 2011-36)

Shared Responsibility for Employers • Large Employer: 50 Full-Time Equivalents • The calculations can become more complex and very specific. If you’re on the bubble, you may want to consult a lawyer.

Shared Responsibility for Employers • Two things before we move on: • Remember, if you are under 50 full-time equivalent employees, you will not be liable for any payments. • From this point on, forget about full-time equivalents. We are only looking at full-time employees now.

Shared Responsibility for Employers • Our three questions: • Are you a large employer? • Did a full-time employee receive a premium tax credit or cost-sharing reduction? • Do you have more than 30 full-time employees?

Shared Responsibility for Employers • Premium Tax Credit/Cost-sharing Reduction • FT employee has to apply for and receive a PTC or CSR for employer payments to be triggered • It is ok to just offer insurance to full-time employees • If the employer does not offer insurance • Generally eligible if household income is between 100% and 400% of the federal poverty level • Dept. of Health and Human Services releases annually • Federal poverty level = poverty guidelines • Dependent on household size • 2013 levels: http://aspe.hhs.gov/poverty/13poverty.cfm

Shared Responsibility for Employers • Premium Tax Credit/Cost-sharing Reduction • FT employee has to apply for and receive a PTC or CSR for employer payments to be triggered • If the employer does offer insurance • Unaffordable: the plan premium is more than 9.5% of household income, or • Inadequate: policy does not cover an average of 60% of healthcare costs • Minimum value calculator: http://www.cms.gov/cciio/resources/regulations-and-guidance/index.html • IRS Safe Harbor: look at employee’s wages listed on W-2 (IRS Notice 2011-73)

Shared Responsibility for Employers • Our three questions: • Are you a large employer? • Did a full-time employee receive a premium tax credit or cost-sharing reduction? • Do you have more than 30 full-time employees?

Shared Responsibility for Employers • Calculating the Payment (for 2014) • Once a large employer’s full-time employee has received a credit/reduction • If you do not offer insurance, the monthly payment is • If you do offer insurance, the monthly payment is OR whichever is smaller • Note: for FT employees ≤ 30, the payment is $0

Shared Responsibility for Employers • Recap: • Payments do not apply to small employers • Large, but with 30 or fewer FT employees: payment = $0 • A full-time employee needs to actually receive a credit or reduction to trigger a payment

Shared Responsibility for Employers • Determining Full-Time with IRS Safe Harbors • On-going employees: • Measurement period: 3-12 months • Administrative period: up to 90 days • Stability period: 6-12 months (no shorter than measurement period) • You can rely on this method, at least through cycles beginning before the end of 2014 IRS Notice 2012-58: http://www.irs.gov/irb/2012-41_IRB/ar07.html

Shared Responsibility for Employers • Determining Full-Time with IRS Safe Harbors • On-going employees: • Example of one complete cycle: • Measurement Period: May 1-October 31 (6 months) • Administrative Period: November 1-December 31 (2 months) • Stability Period: January 1-December 31 (12 months) Cycle 1 Cycle 2 Cycle 3 Measurement Admin Stability Measurement Measurement Admin Admin Stability Stability IRS Notice 2012-58: http://www.irs.gov/irb/2012-41_IRB/ar07.html

Shared Responsibility for Employers • Determining Full-Time with IRS Safe Harbors • New Employees: reasonably expected to work full-time • Offer at, or before, conclusion of initial 3 calendar months IRS Notice 2012-58: http://www.irs.gov/irb/2012-41_IRB/ar07.html

Shared Responsibility for Employers • Determining Full-Time with IRS Safe Harbors • New Variable Hour and Seasonal Employees • A little more complicated • Initial measurement period: 3-12 months, no shorter than one month less than initial stability period • Initial administrative period: up to 90 days • Initial stability period: same length as for ongoing employees, no more than 1 month longer than IMP • IMP + IAP cannot extend beyond end of calendar month beginning on or after employee’s one-year work anniversary • Once they have worked an entire standard MP, determine full-time status along with other on-going employees IRS Notice 2012-58: http://www.irs.gov/irb/2012-41_IRB/ar07.html

Shared Responsibility for Employers • Determining Full-Time with IRS Safe Harbors • New Variable Hour and Seasonal Employees • Example: • Initial Stability Per. must be as long as Standard Stability Per. • 12 months • Initial Measurement Per. cannot be more than 1 month shorter than Stability Per. • 11-12 months, for our example, we’ll choose 11 months • Initial Admin. Per. can be up to 90 days, but IMP + IAP cannot extend past the end of the calendar month beginning on or after the employee’s one year work anniversary • 0- 2 months (plus fraction of month, depending on start date) Initial Measurement I. Adm Initial Stability Measurement Measurement Admin Admin Stability Stability IRS Notice 2012-58: http://www.irs.gov/irb/2012-41_IRB/ar07.html

Shared Responsibility for Employers • Being Assessed, Making a Payment • The IRS will contact you if you are potentially liable • Will not happen until after employees’ tax returns are due • You will have opportunity to respond • If you are found liable for payment, IRS will send a notice and demand for payment • Notice will include instructions

Shared Responsibility for Employers • You have a choice (are not breaking the law) • You may be exempt from payments • Only full-time (30 or more hours/week) employees trigger payments • Full-time can be calculated with cycles • The IRS will contact you about payments if you need to make them

Automatic Enrollment Requirement • PPACA § 1511 • For employers with 200 or more full-time employees • If employer offers insurance coverage, new full-time employees must automatically be enrolled in the coverage • Employees may opt out of coverage • Still awaiting regulations from Dept. of Labor, intended completion before 2014

SHOP Exchange • Small business Health Options Program • Beginning in 2014, eligible small businesses will be able to purchase insurance through the SHOP • No obligation to purchase through exchange • Side-by-side policy comparisons • Premiums cannot be set by employees’ health or medical history • Businesses with up to 100 employees are eligible, although until 2016 states may further limit eligibility to only businesses with up to 50 employees. • Look for more information in October 2013 • Coverage begins January 2014 http://www.healthcare.gov/news/factsheets/2011/07/exchanges07112011g.html

Reporting Requirements • PPACA § 9002: W-2s • Cost of employer-sponsored insurance • Still awaiting IRS guidance, meanwhile, see http://www.irs.gov/uac/Form-W-2-Reporting-of-Employer-Sponsored-Health-Coverage • PPACA § 1514: large or insuring employers • First reports will be due in 2015 (for 2014 info) • To IRS • Basic information regarding whether insurance was provided. • To Employees • Full-time employees whose info was reported to the gov’t • Still waiting for IRS regulations, reporting might be coordinated with other required reports

Notice Requirement: PPACA § 1512 • Applies to all employers (regardless of size) • To be given at time of hiring (plus initial distribution to current employees) • Model language if you offer insurance: • http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf • Model language if you do not offer insurance: • http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf • Originally effective March 31, 2013, delayed until October 1, 2013 DOL Technical Release No. 2013-02: http://www.dol.gov/ebsa/newsroom/tr13-02.html

PPACA In Review • Shared Responsibility for Employers • Large Employers • Automatic Enrollment • Very Large Employers • SHOP Exchange • Small Employers • Reporting Requirements • Large or Insuring Employers • Notice Requirement • All Employers

Resources • Dept. of Labor – Employee Benefits Security Administration • www.dol.gov/ebsa/healthreform • Dept. of Health and Human Services • www.healthcare.gov • Includes full text of the PPACA • IRS • www.irs.gov/aca • UCLA Law School Library • libguides.law.ucla.edu/ppaca

Questions For questions about this presentation, contact: • Angela Moore: mangela@library.in.gov • At ISL until July 31st, 2013 For questions about how PPACA specifically affects your library, contact your library’s attorney.

Patient Protection & Affordable Care Act (PPACA)