Patient Protection and Affordable Care Act

1. 2013 Garden State Council SHRM Conference – October 27-29 – Atlantic City, NJ
Patient Protection and Affordable Care Act
What Employers Need To Know Now
2014 and beyond
John J. Sarno, Esq. Employers Association of NJ
October 28, 2013 4:00 – 5:30 PM

2. 44% of Americans think that the Affordable Care
Act has been repealed.
Star Ledger, Sept. 13, 2013

3. • About 500,000 New Jerseyans are eligible to
purchase a healthcare plan on the Health
Insurance Marketplace
• Most work full-or part-time for a small employer
• About 80% will be eligible for a subsidy
• 525,300 undocumented workers in N.J. not
eligible

4. Personal responsibility mandate – January 1,
2014
Open enrollment on Health Insurance
Marketplace
October 1 – March 31, 2014

5. Eligibility for Premium Subsidy
Individuals with incomes up to 400 FPL.
$46,000 / year (2013)
$94,200 / year (family of 4)
Expected amount of subsidize for N.J. - $700
million

6. Notice to Employees – October 1, 2013
(thereafter at the time of hire)
Part A: General information about Health
Insurance Marketplace, coverage standards and
help paying premiums
Part B: General information about coverage
offered by employer (if any)
Detailed information about plan is optional

7. COBRA Notices
HHS Technical Advice requires COBRA Notice
contain general reference to Insurance
Healthcare Marketplace

8. Employer Healthcare Plans
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Essential Benefits
Consumer Protections
Minimum Value
Affordable
Employee will not get subsidy if employer offers
coverage that meets standards.

9. Health Insurance Marketplace
A one-stop web portal where individuals and small
businesses can shop for plans, compare
prices, and receive other information.
Plans must 1) offer essential benefits, 2) have
consumer protection standards, 3) have a minimum
value, and 4) be affordable.
States define “small business.” Cannot exceed 50
employees.

10. Carriers
• Horizon Blue Cross Blue Shield
• AmeriHealth
• Health Republic Insurance of NJ (non-profit
cooperative)

11. “Average” Employer Plan
“Essential Health Benefits” requires minimum set of
benefits, with no lifetime of annual coverage limits
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Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health and substance abuse coverage
Prescription drugs
Rehab services and medical devices
Preventative and wellness/chronic disease management

12. Consumer Protections
All Plans
• No lifetime maximums of essential benefits
• No annual maximums on essential benefits, except as
allowed by the secretary of HHS
• Provide coverage for children up to age 26
• No pre-existing condition exclusion on children under
age 19
• No rescissions of coverage

13. Consumer Protections
(continued)
• Cover preventive services at 100%
• Includes immunizations, child preventive care and women’s health
screenings
• Insured health plans must comply with
nondiscrimination requirements
• Generally prohibits discrimination in favor of highly compensated
individuals as to eligibility and benefits under the plan
• New Appeals process for insurers
• Waiting periods cannot exceed 90-days for
employee or dependent otherwise eligible to
enroll

14. In-Network, Out-of-Network
Plans will typically provide essential benefits and
preventive services in-network.
Out-of-network – no co-pays, deductibles or
limitations.

15. Minimum Value
Platinum (pays 90% of the value of benefits)
Gold (80%)
Silver (70%)
Bronze (60%)

16. Calculating Value of Benefits
IRS will provide an Actuarial Value Calculator.
Employer enters information about plan’s
coverage and cost-sharing and calculates value.
Must be at least 60% or penalty may apply.

17. N.J. Benchmark – Small Employer
Horizon’s HMO Access HSA Compatible does
not include pediatric dental and vision.

18. N.J. Small Group Health Plan
(50 or fewer employees)
N.J. Regulations still apply
• 75% coverage of “eligible” employees (25 or
more hours).
• Coverage on spouse’s plan, Medicare, Medicaid
or FamilyCare count.
• Coverage on Marketplace does not count.

19. Affordability
Full-time employee cannot pay more than 9.5% of
household income for his/her share of premium for
single coverage. Lowest cost plan.
Safeharbor: Employer may use W-2 income for
employee. (Box 1)
Rate of Pay Safeharbor – Hourly rate multiplied by 130
hrs/month. Determine affordability using monthly
premium based on monthly wage. For salaried
employee, monthly wage can be used. Does not apply
where wages were reduced during the year.

20. Maximum Out -of-Pocket Premium
Payments
400% of poverty level
Single - $4,115
Single/Spouse - $5,537
Family 3 - $6,958
Family 4 - $8,379
Source HHS (2009)

21. The Marketplace, Prices and Subsidies – N.J.
29 plans within 4 categories
Platinum
Gold
Silver – benchmark plan (70% of healthcare costs)
Bronze

22. • 27-year old earning $25,000/year
Silver plan - $260/month
with subsidy - $145/month
• Family of 4 earning $50,000
Silver Plan - $943/month
with subsidy - $282
Bronze plan with subsidy -$131/month

23. Navigators
Center for Family Services – South Jersey
Food Bank of Monmouth and Ocean Counties
Urban League of Hudson County
Public Health Solutions – Essex County

24. Employee Protections
Employer can not interfere or discriminate
against an employee for seeking or receiving
subsidy.
Does failure to provide notice constitute
“interference?”

25. Delayed until January 1, 2015
Based on 2014 scenario

26. “Large” Employer Penalty
Employers with 50 or more “full-time” employees will be penalized for
not offering coverage or coverage that does not meet standards.
All employees counted in a calendar month (parttime, temporary, seasonal).
“Full-time” employee is someone who is employed to perform
services on average of 30-hrs per week or 120 hrs/month.
Part-time employees are grouped together to create “full-time”
equivalents.
Aggregate number of hours worked by part-time workers in any
month and divide by 120 to determine number of full-time
equivalents.

27. “Services” includes all hours an employee is paid or
entitled to be paid – vacation, sick, holiday, jury
Hourly Workers – Records of hours worked and
paid have time off
Salaried Workers – Records of equivalency

28. Add “full-time equivalent” number to total fulltime employees to determine whether employer
has 50 “full-time” employees.
Used only for the purpose of determining
whether employer has 50 or more employees.

29. Seasonal employees’ hours are included
when determining whether employer is
“large”
But
An employer will not be a “large” employer if
it employed 50 or more full-time employees
for no more than 120 days in the preceding
calendar year.

30. Firms with “common ownership” are combined

31. Penalty for not offering insurance or to less than 95% of full-time
employees and at least one FTE receives a subsidy to pay for
insurance on the Exchange
• $2,000 per full-time employee after first 30 employees
Penalty for offering unaffordable or less than minimum
value when employer offers to at least 95% of FTE and
at least one FTE receives subsidy
• $3,000 for each full-time employee receiving a subsidy or $2,000 per
full-time employee after first 30

32. Full-time employee means an employee who is
employed on average of 30 “hours or service”
per week or 130 hours/month
FTE are not counted

33. “Hours of service” means hour paid or paid time
off.
Employees paid a commission must have
reasonable method of crediting hours of service

34. Reduction of Hours
Employee Retirement Income Security Act
(ERISA)
Unlawful employment practice to intentionally
interfere with benefits, including healthcare
benefits

35. Crawford v. TRW Automotive
(6th Cir. 2009)
Employer closes plant and shifts work over to
another facility. Laid off workers are not recalled
and are not transferred to other facility. Many fall
short of the 30-year enhancement pension
benefit.

36. Employer’s decision is motivated by overcapacity at the plant, although pension-payment
savings was also considered.
Court finds that decision to close plant was
motivated primarily by over capacity.

37. Auditing and Enforcement
• U.S. Department of Treasury (IRS)
• U.S. Department of HHS
• U.S. Department of Labor
Combined databases – Form W-2, Form
5500, Social Security Administration database.

38. N.J. Conscientious Employee
Protection Act (CEPA)
“Objecting” to the reduction of hours

39. Wrongful Termination
Discharging employees to avoid penalty
Possible exception to employment at-will rule

40. W-2 Reporting
• Employers are required to disclose the value of
health coverage provided to an employee on a W-2
• This value includes medical coverage, HRA
contributions, and possibly EAPS and wellness
programs
– Contributions to HSAs, Archer MSAs, and health FSAs are not
included
– Need additional guidance
– Does not include Dental or Vision care
Effective for taxable years beginning January 1, 2011

41. Automatic Enrollment
All new “full-time” employees will be
automatically enrolled, subject to regulations.
Notice will include opportunity to opt out. Current
employees will be auto enrolled.
Applies to employers with 200 or more “full-time”
employees and who offer a health care plan.
Regulations have not been issued.

42. Workplace Wellness
• Clarifies HIPAA Privacy Rules
• Increases maximum reward under “healthcontingent” wellness program to 30 percent of
employee’s premium
• Premiums can increase based on tobacco use

43. Questions?
Thank You