PPACA: New Measurement Periods

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1 Safe Harbor/Lookback periods (choices) Designed to to help help Employers Employers plan plan for the for year the year Great option for for ERs ERs with with fluctuating EE hours EE hours Initial Measurement Period Standard Measurement Period Administrative Period (helpful for BIG plans) Stability Period Purpose: PPACA: New Measurement Periods Determine WHO is offered health insurance during next stability period Option: each month the employer can offer health insurance to all full-time Benefits Compliance Link

2 PPACA: Measurement Periods How Long? Initial Measurement Period 3-12 months New Variable Standard Measurement Period 3-12 months Ongoing Full-time New Full-time Administrative Measurement Period up to 90 days Short period between the Initial/Standard Measurement period, but not to shorten Stability period Stability Period 6-12 months no shorter than initial/standard measurement period Benefits Compliance Link

3 Benefits Compliance Link Ongoing Employees

4 Teach everything they need to know about Health Reform and other compliance topics. Benefits Compliance Link How Benecomplink Can Help Plan Sponsors Overview PPACA requirements/impact: Notice of Exchange requirements, W-2 reporting, Employer Mandate ("Pay vs. Play"), individual mandate, small business health care tax credit and nondiscrimination testing Road Map of the Look-Back Measurement Method: Ongoing Employee, New, Full-Time Employee, New, Variable Hour and Seasonal Employees, Change in Employment Status Impact Analysis of the Employer Mandate: You share your data with Benecomplink and we will do a comprehensive analysis with recommendations/options.

5 Benefits Compliance Link can analyze employee data and offer recommendations on how to comply with the Employer Mandate. Benefits Compliance Link Will: Conduct a pre-analysis conference call. Analyze the your workforce using two different look-back periods. Offer recommendations on: The look-back measurement period The administrative period The stability period Analyze the 9.5% affordability requirements. Analyze the penalties they may incur. Prepare a detailed report outlining all pertinent findings from the Impact Analysis. Be available for a post-analysis conference call to discuss follow-up questions. Benefits Compliance Link Impact Analysis of PPACA Employer Mandate

6 PPACA: Timely Action Steps 1) Employer consider why they offer benefits now and why they would continue to offer benefits over the years or why offer new Health Ins. 2) Large Employers should do the math on their Full-Time Equivalent* status now 3) Small Employers should do the math on their potential to get a small business tax credit & talk to CPA 4) Large Employers should make decisions on measurement & stability periods soon 5) Large Employers should do financial analysis on benefit to their business of offering health insurance, or modifying staffing --- compared to NO health insurance (now) 6) Employer should take the time to find/create an education tool to communicate the VALUE of their health insurance (take the worry away re: Ind Mandate Tax) 7) BTW if an employer decides to DROP Health Insurance and increase wages, what is the impact if this changes the employee s tax bracket? *Full-time equivalent for purposes of the Large Employer definition in PPACA is 30+ hours/week or a safe harbor of 130+ hours/month Benefits Compliance Link 2013

7 PPACA: Penalty v. Premium Comparing Penalty v. Premium? Should Employer Offer Health Insurance or Not? Will the total real cost of the Penalty truly be less than premium, saving employer dollars? What is total financial picture when considering loss of tax deductible health insurance expense? Penalty is not tax-deductible, so potential impact of increased claims to Worker s Comp, and increased FICA, FUTA, etc. to increased wages? What if increased compensation to offset loss of Group Health Insurance pushes employee into higher tax bracket? What is impact of no health insurance to employees? Impact on morale and competitive advantage when retaining and recruiting good employees Benefits Compliance Link 2013

8 Offering Health Insurance $360,000 Competitive edge Attract, retain employees No Health Insurance $378,000 What if loss of deduction pushes employer into higher tax bracket? What if increased comp pushes employees into higher tax bracket? DISCLAIMER: Today s discussion & this illustration do not represent legal or tax advice. Benefits Compliance Link True Cost of Offering Health Insurance or Not (SAMPLE)

9 Employer Offers Benefits 100 employees $1 million profit Health Insurance Premiums $400/month Employer pays 75% $30,000/mo $360,000/year for premiums Health Insurance Expense Tax Deductible Employer Stops Offering Benefits $360,000 tax deduction for health insurance GONE Pay $140,000 Health Reform Penalty Expense NOT Tax Deductible No health insurance Cost of impact on employee morale, retention, recruiting? Does employer increase compensation to offset loss of health insurance? Increased Workers Compensation costs Increased FICA, FUTA, etc. True Cost of Offering Health Insurance or NOT (Sample) DISCLAIMER: Today s discussion and this illustration do not represent legal or tax advice. Benefits Compliance Link 2013

10 True Cost of Offering Health Insurance or NOT (Sample) Employer stops offering Benefits $360,000/year for premiums Health Insurance Expense Tax Deductible Assume 34% Tax Bracket 1/3 of the cost of Health Insurance paid with tax deduction Employer real cost with health insurance $360,000 included in net profit 1/3 getting spent in taxes Pay $120,000 Pay $140,000 Health Reform Penalty Expense NOT Tax Deductible Pay $70,000 in taxes, to get to the net $140,000 to pay the premium $330,000 so far.. No health insurance Cost of impact on employee morale, retention, recruiting? Employees -- increased wages to offset loss of health insurance $400/month = $4,800/year Assume 10 Key Employees = $48,000 $378,000 so far What if loss of Health Insurance deduction pushes employer to higher TAX BRACKET Increased Workers Compensation costs, increased FICA, FUTA, etc. DISCLAIMER: Today s discussion and this illustration do not represent legal or tax advice. Benefits Compliance Link 2013

11 Compliance Partnership Compliance Partner -- As Needed Benecomplink Consultants can help answer individual questions on: The Employer mandate (pay vs. play) The Individual Mandate Small business health care tax credit Premium Tax Credit Health Care Exchanges The Summary of Benefits and Coverage Nondiscrimination Testing Plan Documentation ERISA COBRA FMLA Broad Health & Welfare Expertise Benefits Compliance Link

12 It Would Be a Privilege to Expand Our Relationship and Be Your Benefits Compliance Resource Benefits Compliance Link 2013 Questions? Next Steps? 42