March 27, Download This Presentation on InformedOnReform.com Under Reform News See the Featured Flag

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1 Download This Presentation on InformedOnReform.com Under Reform News See the Featured Flag Web Meeting Call-in Number: Passcode: Welcome to the Cigna Health Care Reform Web Meeting Employer Mandate: Full-Time Employee Status Part 2 of a 3-Part Series on Employer Mandate-Related Topics March 27, 2014

2 Web Meeting Overview Part 2 of a 3-Part Series on the Employer Mandate Last Week 3/19: Employer Mandate: Final Regulations and Clarification Replay on Under Web Meetings Today 3/27: Full-time Employee Status, Measurement and Stability Periods and Unique Rules for Various Types of Workers 4/2: Final Rules for Reporting Health Insurance Coverage by Large Employers and Reporting Minimum Essential Coverage by Insurers and Self-Funded Employers FEATURED SPEAKERS Kathy Vaccaro VP Health Care Reform, Cigna Crowell & Moring Seth Perretta Malcolm Slee Via Boppana Crowell & Moring, LLC, a Washington D.C.- based law firm, is nationally-renowned for its practice in health care and employee benefits. Cigna has established an arrangement with Crowell & Moring to help clients navigate the evolving landscape created by the PPACA. 2

3 Today s Agenda Employer Mandate: Full-Time Status, Measurement and Stability Periods and Unique Rules for Various Types of Workers Employer mandate basics Full-time vs. variable hour employees Measurement methods Examples Employer checklist Preview part 3 of the series Resources Questions 3

4 Employer Mandate Basics Employer - Common law employer Employee - Common law employee What is a Common law Employee? Facts and circumstances, including: Right to control and direct Right to control means of work Right to hire and fire Right to set hours and place of work Temporary employee? Statutory employee? Seasonal employee? Employee in the PEO context? Volunteer? Leased employee? 4

5 Employer Mandate Basics Hour of Service Hours worked + Paid time off Three methods to calculate hours of service 1 Actual Hours Actual hours of service worked from records + Certain non-worked hours 2 Days-Worked Equivalency 8 hours of service per day 3 Weeks-Worked Equivalency 40 hours of service per week 5

6 Employer Mandate Basics Limited Choice: Full-Time or Variable Hour Full-Time Employee OR Variable Hour Employee True variable hour Fixed hour < 30 hours/week Qualifying seasonal 6

7 Full-Time Employee Full-Time Employee An employee reasonably expected to work a full-time schedule Full-time schedule 30 hours of service per week or 130 hours of service per month General Rule: Must offer full-time coverage by the first day of the fourth full month following hire 7

8 Variable Hour Employee Variable hour employee An employee not reasonably expected to work a full-time schedule based on facts and circumstances Two methods to determine full-time status: 1 Look-back measurement method Remember: Different rule if expectations change to reasonably expect full-time work 2 Monthly measurement method 8

9 Look-Back Measurement Method Method to determine whether a variable hour employee works a full-time schedule 3 mos 6 mos 9 mos 12 mos 90 days 6 mos 9 mos 12 mos Measurement period 3 to 12 months Administrative period Up to 90 days to allow for open enrollment Stability period 6-12 months 9

10 New Monthly Measurement Method Proposed Rule Safe harbor method for measuring employees hours of service for determining full-time status Commenters Request Alternative regime for measuring employer mandate compliance New Final Rule Monthly Measurement Method Monthly Measurement Method Allows employers to avoid use of measurement and stability period machinery Likely of most use for employers who: 1) offer compliant coverage broadly to both full-time and non-full-time employees; and/or 2) have workers with consistent and expected monthly hours of service Note: Final regulations provide for a one-time (per employment term) non-assessment period of up to 3 months during which the employer is not subject to employer mandate penalties 10

11 Seasonal Employee Seasonal employee Employee in a position that is performed at a recurring time each year and customarily lasts no longer than six months How the employer mandate applies to seasonal employees varies based on method 1 Look-back measurement method May apply measurement period of up to 12 months even where employee is expected to work a full-time schedule during seasonal employment 2 Monthly measurement method If expected to work a full-time schedule, then must be offered qualifying coverage by the first day of the fourth month following hire 11

12 Short-term Employee General Rule: Proposed and Final Applicable large employer must offer coverage to full-time employees and fulltime equivalents Compliance Issue Unclear whether an exception applied for short-term hires New Final Rule Short-term and highturnover employees are not generally treated differently from other employees under these rules. If they are expected to work a fulltime schedule, must be treated as full-time employees. 12

13 Break-in-Service Rules Final Rule: An employee who resumes service after a break in service may not be considered a new employee unless he or she has a break of at least 13 consecutive weeks without an hour of service. Updated from a break of 26 weeks in the proposed rule. 13

14 Look-back Measurement Method: Ongoing Variable Hour Employees Download this presentation on InformedOnReform.com under Reform News Ongoing measurement period 3 to 12 months Administrative period (Admin) No more than 90 days (not 3 full calendar months) Ongoing stability period 6-12 months (at least as long as ongoing measurement period) Examples that work 3 Month Ongoing Measurement Up to 90 day Admin 6 Month Ongoing Stability 6 Month Ongoing Measurement Up to 90 day Admin 6 Month Ongoing Stability 12 Month Ongoing Measurement Up to 90 day Admin 12 Month Ongoing Stability Examples that DO NOT work 3 Month Ongoing Measurement Up to 90 day Admin 3 Month Ongoing Stability 12 Month Ongoing Measurement Up to 90 day Admin 6 Month Ongoing Stability 14

15 Look-back Measurement Method: Variable Hour Employee Example 10/15/14 10/15/15 10/15/16 10/15/17 10/15/18 10/15/19 12 Mo. Measurement 12 Mo. Measurement 12 Mo. Measurement 12 Mo. Measurement 12 Mo. Measurement 12 Mo. Stability 12 Mo. Stability 12 Mo. Stability 12 Mo. Stability 12 Mo. Stability 15

16 Look-back Measurement Method: New Variable Hour Employees Download this presentation on InformedOnReform.com under Reform News Initial measurement period 3-12 months so long as individual may enroll in coverage as of first day of 14th full calendar month after hire Administrative period (Admin) No more than 90 days (not 3 full calendar months) Initial stability period 6-12 months Examples that work 11 Month Initial Measurement Up to 60 day Admin 11 Month Initial Stability 12 Month Initial Measurement 12 Month Initial Stability 6 Month Initial Measurement Up to 60 day Admin 6 Month Initial Stability Up to 30 day Admin Example that DOES NOT work 12 Month Initial Measurement Up to 90 day Admin 12 Month Initial Stability For all employees hired in the first quarter, will apply an x-month initial stability period beginning on the first day of the next quarter 16

17 Look-back Measurement Method: Some Pitfalls to Keep in Mind Download this presentation on InformedOnReform.com under Reform News RULE 1. Initial measurement period may begin: Between employee s start date and first day of the following month Or if later, first day of the first payroll period following the start date RULE 2. Initial measurement and administrative periods together cannot extend beyond the last day of the first calendar month beginning on or after the first anniversary of the employee s start date SO BE CAREFUL NOT TO. Base the start of the initial measurement period on an event that might not meet these timing rules. SO BE CAREFUL NOT TO. Use a 12 month initial measurement period plus a 60 to 90 day administrative period the employee won t get timely coverage RULE 3. Combined length of period before start of initial measurement period and administrative period is limited to 90 days SO BE CAREFUL NOT TO. Assume you can use a 90-day administrative period, unless you begin initial measurement period on start date 17

18 Employer Checklist: Next Steps Understand common law employer and employee facts and circumstances Know your employee base: Full-time vs. variable-hour employees Determine the best method to calculate hours (actual, days worked or weeks) Understand the methods to determine full-time status and decide what s best for your situation: Look-back or monthly measurement methods Ask your Cigna sales representative to set up a meeting with Crowell & Moring if you have questions that you d like to discuss 18

19 Preview of Part 3 of the Series Wednesday, 4/2 Final Rules for Reporting Health Insurance Coverage by Large Employers Reporting Minimum Essential Coverage by Insurers and Self-Funded Employers A reminder registration link will be included with the replay from today s meeting. Replays of all three web meetings will be on InformedOnReform.com. 19

20 Resources To contact Crowell & Moring, ask your Cigna representative Visit our website InformedOnReform.com Now optimized for desktop, tablet or mobile devices News alerts, fact sheets, timeline, FAQs A replay will be available within a few days under Web Meetings 20

21 Questions? 21

22 Offered by: Connecticut General Life Insurance Company or Cigna Health and Life Insurance Company. Cigna, the Tree of Life logo and GO YOU are registered service marks of Cigna Intellectual Property, Inc., licensed for use by Cigna Corporation and its operating subsidiaries. All products and services are provided by or through such operating subsidiaries and not by Cigna Corporation. Such operating subsidiaries include Connecticut General Life Insurance Company, Cigna Health and Life Insurance Company, and HMO or service company subsidiaries of Cigna Health Corporation and Cigna Dental Health, Inc. All models are used for illustrative purposes only. 03/14. Some content provided under license.