Defining Affordable . . .

The employer would not have to pay more premium cost towards a higher paid employee. The 9.5% calculation sets the maximum. Therefore, a higher paid employee could actually afford to contribute more towards the cost.

There has been some talk of new contribution rules. Some are saying that the employer can simply set the ER contribution to be 9.4% of the employee's W2 wage as shown on Box 1 of the W2, and that amount would vary according to the incomes of employees. This may turn out to be the standard... I'm sure the carriers' lawyers will see if it's legal and will let us know.
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Also, I do interpret to be on the employee only portion. However, I do not think this would stop a spouse or child from going to the exchange if the employer family premium is too high. Think the government was just trying to get 2 parent working families to take advantage of their own employer sponsored ins plans.

You are correct about the 2 parent family issue. As YAgents mentioned in a post yesterday, new rules from the IRS says that the employer can not make dependents INELIGIBLE for group plans in order to circumvent the problem. However, the IRS said that the dependents that had to be eligible would be children, not spouses. That is because many businesses encourage the spouse to take their own employer's group plan. This language from the IRS strengthens rather than weakens the claim that it considers the statutory language in PPACA to be that "affordable" is based on 9.5% of the self-only premium for the employee, in spite of the group plan's cost for a family.
 
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A couple of clarifying points.

The play or pay requirements apply to "large employers" (defined below) for plan years beginning in 2014, meaning January 1, 2014 for calendar-year plans. Beginning in 2014, Section 4980H of the Internal Revenue Code (Code) requires each large employer to either offer at least 95% of its "full-time" employees. Beginning in 2015, this requirement extends to the "dependents" of full-time employees.

Monthly penalty for not offering coverage that month is 1/12 x $2,000 x each FTE employed, not just those who are not offered or receive the fed subsidy.

Monthly penalty for employers who offer, but the coverage is either not affordable or fails the minimum value test is 1/12 x $3,000 x number of FTE who receive the subsidy. This is capped at the penalty amount of (FTE's – 30) X (1/12 x $2,000)

Hope this helps.
 
A couple of clarifying points.

The play or pay requirements apply to "large employers" (defined below) for plan years beginning in 2014, meaning January 1, 2014 for calendar-year plans. Beginning in 2014, Section 4980H of the Internal Revenue Code (Code) requires each large employer to either offer at least 95% of its "full-time" employees. Beginning in 2015, this requirement extends to the "dependents" of full-time employees.

Monthly penalty for not offering coverage that month is 1/12 x $2,000 x each FTE employed, not just those who are not offered or receive the fed subsidy.

Monthly penalty for employers who offer, but the coverage is either not affordable or fails the minimum value test is 1/12 x $3,000 x number of FTE who receive the subsidy. This is capped at the penalty amount of (FTE's – 30) X (1/12 x $2,000)

Hope this helps.

YES! Thank-you for that clarification, Leevena. One more important point, is that the employer must count FTE's (full-time equivalents) to reach that magic number of 50 which makes them subject to the penalties. Two part-time employees can constitute one full-time employee. However, the method of counting changes when it comes to eligibility for the group plan. The law allows the employer to set eligibility rules so that only full-time employees working 30 or more hours per week are eligible for the group plan. That's a reason that employers of lower-paid employees (like restaurants and hotels) are planning to move many lower-wage employees to part-time, so they are not eligible for the group plan, and so that the employer is then not subject to a $3,000 penalty if they go to the exchange and get a subsidy.
 
YES! Thank-you for that clarification, Leevena. One more important point, is that the employer must count FTE's (full-time equivalents) to reach that magic number of 50 which makes them subject to the penalties. Two part-time employees can constitute one full-time employee. However, the method of counting changes when it comes to eligibility for the group plan. The law allows the employer to set eligibility rules so that only full-time employees working 30 or more hours per week are eligible for the group plan. That's a reason that employers of lower-paid employees (like restaurants and hotels) are planning to move many lower-wage employees to part-time, so they are not eligible for the group plan, and so that the employer is then not subject to a $3,000 penalty if they go to the exchange and get a subsidy.

Yes, I agree. I should have written it out. When I discuss employees I use ee and when I discuss full time equivalents, I use FTE.
 
There has been some talk of new contribution rules. Some are saying that the employer can simply set the ER contribution to be 9.4% of the employee's W2 wage as shown on Box 1 of the W2, and that amount would vary according to the incomes of employees. This may turn out to be the standard... I'm sure the carriers' lawyers will see if it's legal and will let us know.
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Since most employers contribute the same amount to all employees, I do not see why employers would decide to have a moving contribution rate scale.

I think employers would just take their lowest paid employees salary, calculate the 9.5% and set this as the employee contribution. Most of our groups that I looked at were currently satisfying this minium.
 
Key here is who is "regulating" (poor word, but I am rushing through this) this. Section 105 never applied to fully-insured, only self-funded. What you are referring to is when a "carrier" regulates via their underwriting rules and regulations as to whether you can have a carve-out. The MERP is a great example, because this was one of the products that Smitty loved at MONY. Many of these MERPS were self-funded, thus falling into the Section 105 rules.

The treasury ruling you may be thinking about was about group life carve outs, sometime around 2000 or so.

I am sending you (your email) a document I received that outlines very nicely how PPACA threatens fully-insured carve outs. I will also send you Notice 2010-63 which discusses 105 in more detail.

Hope you had a great New Years and all is well with you and your family.

Bob, finally found the information I was looking for.

IRC Section 104 regulates management carve-outs. It allows an employer to design a benefit plan as a carve-out, but must comply with 104. After tax, self-funded plans under 104 are not subject to the 105 discrimination rules. After tax, self funded plans under 104 are not subject to 105 if the plan is maintained exclusively by ee contributions.
 
I think employers would just take their lowest paid employees salary, calculate the 9.5% and set this as the employee contribution. Most of our groups that I looked at were currently satisfying this minium.

The the ER would be paying a lot of fines b/c the plan may not be deemed 'affordable' for the older individuals. The affordability is not for one EE, but for ALL EE's... is my understanding. I suppose older EE's could make higher incomes, but their ins cost could be up to 3x greater than the lowest cost insured on the plan. What a cluster mess!!!
 
The the ER would be paying a lot of fines b/c the plan may not be deemed 'affordable' for the older individuals. The affordability is not for one EE, but for ALL EE's... is my understanding. I suppose older EE's could make higher incomes, but their ins cost could be up to 3x greater than the lowest cost insured on the plan. What a cluster mess!!!

If group plans go to age/gender rating rather than composite rating as Somarco has mentioned, then this would be an even bigger mess.
 
"affordable" is based on 9.5% of the self-only premium for the employee, in spite of the group plan's cost for a family.

Look for carriers to shift the EE/DEP ratio to something that generates a lower EE rate and shift the difference to the dependent side.

Monthly penalty for not offering coverage that month is 1/12 x $2,000 x each FTE employed, not just those who are not offered or receive the fed subsidy.

Monthly penalty for employers who offer, but the coverage is either not affordable or fails the minimum value test is 1/12 x $3,000 x number of FTE who receive the subsidy. This is capped at the penalty amount of (FTE's – 30) X (1/12 x $2,000)

And that penalty is non-deductible.

With all the squirrely new rules, employers have a solid reason to drop health insurance as a benefit.

I think employers would just take their lowest paid employees salary, calculate the 9.5% and set this as the employee contribution.

Depends on the size of the group and industry. Larger employers may well contribute a significant amount toward the cost of insurance but this is not universal.

You must also factor in higher rates in 2014 for the new plan designs (lower deductibles, copay's and OOP).

After tax, self funded plans under 104 are not subject to 105 if the plan is maintained exclusively by ee contributions.

Sounds like a 125 (or similar arrangement), salary reduction plan.

If group plans go to age/gender rating rather than composite rating as Somarco has mentioned, then this would be an even bigger mess.

Reflecting, I believe this will be required in states where the exchange will offer employer plans to groups of 50+. But who knows? I may just be making this up.
 
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Ok, so I emailed NAHU, and this came from them. My Q's are in black, their answers in red. This answers a lot of our speculation on a few items, but still TBD.
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[FONT=&quot]I can't answer some of your questions yet, we are waiting for more guidance. But, see below for what I can tell you.[/FONT]

Can an employee get on a group plan that's "affordable", and the rest of the family receive "subsidies" on the exchange based on their lower family income? No. There may be an opportunity for a spouse to do so but not the children. It is unclear at this point exactly how the calculation for the spouse's subsidy would be made.

Can a carrier offer major medical insurance with all EHB's/AV's outside the exchange, and NOT offer plans inside the exchange?
This is still being determined in some cases. But, there are a number of insurers who are quietly indicating that they will not participate in exchange plans.

Can a carrier offer major medical plans OFF the exchange, that are NOT compliant with PPACA?....... For example....one that excludes maternity.
No, it doesn't appear so.

If brokers are allowed to use their own websites, will HHS require approval of our websites before using them?
We have been trying to avoid this, instead pushing more for brokers to be able to link to the HHS site. It could be a nightmare having to have your site be required to meet HHS requirements and approval of same. But, we don't have definitive answer yet.
 
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