The ACA’s Impact on Nonprofits: Preparing Your Group Health Plan Thursday, November 13, 2014, 2:00 p.m. – 3:30 p.m. ET Venable LLP and Association TRENDS Speakers Thora A. Johnson, Esq., Venable LLP Christopher E. Condeluci, Esq., CC Law & Policy © 2014 Venable LLP Agenda “Play-or-Pay” Rules  Identifying Full-Time Employees  Affordability and Minimum Value Standards  Interacting with the Exchanges  (the “Health Insurance Marketplace”) Next Steps  2 © 2014 Venable LLP 2 Introduction to the Play-or-Pay Rules © 2014 Venable LLP 3 Introduction to the Play-or-Pay Rules Individual Mandate (effective January 1, 2014)  – The Patient Protection and Affordable Care Act (ACA) requires individuals to maintain minimum essential coverage or pay a penalty tax. – Some individuals qualify for a premium subsidy from the government to purchase such coverage on the Exchanges. 4 © 2014 Venable LLP 4 Introduction to the Play-or-Pay Rules Employer Mandate (generally effective January 1,  2015) – A one-year delay; originally effective January 1, 2014 – Special rules for fiscal year plans – The ACA imposes a mandate on large employers to offer minimum essential coverage to their full-time employees and their dependent children (up to age 26) or pay a penalty tax – In addition, if that minimum essential coverage is not affordable or does not provide minimum value, the employer is subject to a penalty tax 5 © 2014 Venable LLP 5 Introduction to the Play-or-Pay Rules The Employer Mandate applies to “applicable large  employers,” defined as “an employer that employed an average of at least 50 full-time employees [including full-time equivalent employees (FTEs)] on business days during the preceding calendar year.” – Determined on a controlled group basis – Full-time means an average of 30 hours/week or 130 hours/month – Common law test used for identifying employees Note – Special Transition Rule for 2015 – At least 100 full-time employees (including FTEs) 6 © 2014 Venable LLP 6 Play-or-Pay – Penalty Tax Trigger A penalty tax is due for any month in which at least  one full-time employee is certified to the employer as having purchased health insurance through an Exchange with a premium subsidy from the government for that coverage. An individual is NOT eligible for a premium subsidy  offered through the Exchange if he or she is eligible for employer-sponsored coverage that is affordable and provides minimum value. 7 © 2014 Venable LLP 7 The Mechanics of the Play-or-Pay Penalties © 2014 Venable LLP 8 The “No Coverage” Penalty Penalty for failure to provide coverage  – If more than 5% of full-time employees are not offered coverage and even ONE full-time employee obtains a subsidy through an Exchange  the no coverage penalty is triggered Note – Special Transitional Rule for 2015 – if more than 30% (not 5%) 9 © 2014 Venable LLP 9 The “No Coverage” Penalty Penalty for failure to provide coverage  – Penalty = $2,000/year * TOTAL number of full-time employees • Assessed on a monthly basis ($166.67/employee/month) • First 30 (80 for 2015) full-time employees are disregarded Penalty applies on an employer-by-employer  basis and not on a controlled group basis Be careful not to play AND pay  10 © 2014 Venable LLP 10