Pocket Guide TO THE Affordable Care Act

THE NATIONAL CLUB ASSOCIATION’S

Pocket Guide to the ACA

The private club industry must prepare for the full implementation of the Affordable Care Act (ACA). As an advocate for private clubs and a source of trusted answers for club leaders, NCA seeks to empower its members with the information they need to ensure their club complies with the new health care law. The ACA has been a moving target, with changing deadlines and delays, making it difficult for busy club leaders to stay informed and adapt to the latest changes. NCA’s Pocket Guide to the ACA is an exclusive resource for NCA members, which provides critical compliance information by date.

OCTOBER 1, 2013 AND BEYOND

• Every current and new employee must receive notice regarding the Health Care Exchanges.

JANUARY 1, 2014 - DECEMBER 31, 2014

Determine whether the law applies to your club (Did you have 50 or more full-time and full-time equivalent employees in the previous year?) Step 1: Calculate the Total Number of Full-Time Employees during 2014 Full-Time Employees: • Full-time employees are those who work 30 hours/week or 130 hours/month.

Step 2: Calculate the Total Number of Full-Time Equivalent Employees during 2014 Full-Time Equivalent Employees: • Full-time equivalent employees are part-time employees whose hours per month equate to partial full-time employee status: Ø Ø Each part-time employee’s hours must be added together and the sum must be divided by 120 to determine the number of full-time equivalents a club has each month. Step 3: Calculate the Total Number of Seasonal Workers during 2014 Seasonal Workers: • Seasonal workers will likely work more than 30 hours/week, so they will count as full-time employees, but if some seasonal workers are employed part-time, then the club must determine the number of full-time equivalent seasonal workers it has. Step 4: Calculate the Total Number of Full-Time and Full-Time Equivalents Per Month • Add the number of full-time employees, full-time equivalents, and seasonal full-time and full-time equivalent workers for each month of the year. Step 5: Does the Seasonal Worker Exemption Apply? • The Seasonal Worker Exemption states that if a club has more than 50 full-time and full-time equivalents in a given month, and it is pushed over the 50 threshold by its full-time or full-time equivalent seasonal workers, then it may remove those seasonal workers from the count if they push a club over 50 in no more than 4 months. • If a club has more than 50 full-time and full-time equivalents in a given month and it is pushed over the 50 threshold by its full-time or full-time equivalent seasonal workers for more than 4 months, then the Seasonal Worker Exemption does not apply. Step 6: Calculate the Average Number of Full-Time and Full-Time Equivalents Per Month for the Year • Add full-time, full-time equivalent and full-time and full-time equivalent seasonal workers (depending on the Seasonal Worker Exemption) for each month and then divide by 12. • Clubs that average 50 or more employees for the year fall under the law and must comply. Clubs with less than 50 are exempt.

JANUARY 1, 2014-DECEMBER 31, 2014

Determine whether your club’s waiting periods and policy offerings must be altered to comply with the law

• Clubs with waiting periods of more than 90 days must make changes: Ø Ø Clubs with 200 or less full-time employees may wait 90 days from the date of hire before offering health insurance. If the employee is not full-time, then the club may have longer if it places that employee in the look-back period. Ø Ø Clubs

with more than 200 full-time employees will soon have to enroll any new full-time employee immediately unless the employee ops out – the final regulations on this requirement are to be issued soon.

• Clubs that offer different insurance plans to high wage earners must comply with the law’s new nondiscriminatory policy: Ø Ø Policies must have the same benefits, employer contribution, waiting periods and types of coverage for ALL fulltime employees. Ø Ø Failure

to offer the same policy to all employees will result in a $100/day/employee fine for discrimination with a cap of the lesser of $500,000 or 10% of the previous year’s premium.

JANUARY 1, 2014-DECEMBER 31, 2014

Determine if your club is entitled to the additional delay in the Employer Mandate offered by the government for 2015

• Clubs with 50-99 full-time employees will not have to offer insurance to their full-time employees in 2015. If they meet the following requirements, such clubs may wait until 2016 to comply with the ACA. To receive this delay, clubs must show: Ø Ø The club employed less than 100 full-timers in 2014; Ø Ø From

2/9/14 on, the club did not reduce the size of its workforce or cut hours of its employees to meet the 50-99 full-time threshold (bona fide business reasons for changes are okay);

Ø Ø From

2/9/14 on, the club did not eliminate or materially reduce the insurance it offered; and

Ø Ø From

2/9/14 on, the club did not change its health plan’s start date.

◦◦

When determining whether your club had 50-99 full-time employees in 2014, club leaders are to use the same process they use when determining whether the club had 50 FT/FTEs in the previous year and falls under the law.

• Clubs with 100 or more full-time employees will only have to offer insurance to 70% of those employees beginning in 2015. Ø Ø To receive this relief, a club cannot change its plan’s start date after 2/9/14. ◦◦

The club’s leaders may determine which full-time employees receive the offer of insurance.

JANUARY 1, 2014-DECEMBER 31, 2014

Determine the financial impact the law will have on your club’s bottom line and how your budget for 2015 should reflect the law’s new realities • Clubs can expect significant increases in premiums due to new policy requirements under the law and various new taxes levied against health care providers that will be passed on to customers.

• Clubs can expect a $350-500 per policy premium increase due to the new Health Insurance Tax charged to insurance companies for every policy they sell. • Clubs can expect that the new Medicare investment income tax and new Medicare payroll tax will reduce the disposable income available to their members. • Clubs will also need to determine the impact the American Taxpayer Relief Act will have on their members’ disposable income. Ø Ø Members making $400,000 per year (or $450,000 per year as a family) will see their marginal tax rate increase by nearly five percent and their capital gains tax rate increase by five percent. Ø Ø Members

making $250,000 per year (or $300,000 per year as a family) will not be able to claim as many.

JANUARY 1, 2014-DECEMBER 31, 2014

Determine to whom you must offer health insurance

• Full-time exempt employees and those expected to work more than 30 hours per week must be offered health insurance on 1/1/15 or at the start of the club’s 2015 plan year, whichever is later (subject to additional rules). • Hourly employees whose hours fluctuate may be placed in an IRS “safe harbor” look-back period to determine if they qualify as full-time employees. Ø Ø A club may select a period of time from 3-12 months, called the Standard Measurement Period, and track the hours of its employees – clubs will likely select a 12 month period. Ø Ø At

the end of the look-back period, if the employee has worked 30 or more hours per week throughout the period, then he must be offered insurance during a subsequent Stability Period, which is to be the same amount of time as the Standard Measurement Period.

Ø Ø Clubs

must determine in 2014 whether their employees are fulltime and must then offer such employees insurance in 2015.

• New hourly employees whose hours fluctuate may be placed in another IRS “safe harbor” look-back period to determine if they qualify as full-time employees Ø Ø A club may select a period of time from 3-12 months, called the Initial Measurement Period, and track the new employee’s hours – clubs will likely select a 12 month period. Ø Ø At

the end of the look-back period, if the employee has worked 30 or more hours per week throughout the period, then he must be offered insurance during the subsequent Stability Period, which is to be the same amount of time as the lookback period.

Ø Ø If

the employee has not worked 30 or more hours per week, then the club must immediately place him into the Standard Measurement Period to determine if, as he continues to work at the club, he reaches 30 or more hours per week through that look-back period.

• Employees who were not deemed full-time after the look-back period will need to be re-examined each year to determine if they do become full-time. • Clubs that offer insurance to their full-time employees must ensure the policy they offer meets government-approved requirements, and they must ensure the employee contribution for insurance is no more than 9.5% of each employee’s wages Ø Ø Those employees whose contribution is more than 9.5% of 1.) their annual W-2 wages, 2.) their lowest hourly wage per month or 3.) 1/12 of the Federal Poverty Limit for an individual living in his respective state may cause the club to be fined $3,000 if they leave the club’s plan and receive a subsidy from the Exchange to buy insurance. • Clubs that choose not to offer insurance to their full-time employees will be fined $2,000 per employee, minus the first 30 employees. • Most seasonal employees will fall under the definition of full-time employees working more than 30 hours per week, but they may not have to be offered insurance. Ø Ø The IRS has established a safe harbor for seasonal employees. Ø Ø To

qualify for the safe harbor, a club must have a seasonal period that customarily last no more than six months.

Ø Ø Insurance

does not need to be offered to employees who are hired to work during that seasonal period, regardless of the number of hours those employees work per week.

• Clubs that meet the threshold for the one-year delay have until 1/1/16 or the start of the club’s 2016 plan year, whichever is later (subject to additional rules), before being required to comply with the law. • Clubs must determine whether their new hires are truly “new.” Ø Ø “New” employees are those who have been away from the club for at least 13 consecutive weeks or away from the club longer than they were most recently employed at the club. Ø Ø If

a seasonal employee is not “new,” the club may be required to offer insurance.

ON JANUARY 1, 2015

Clubs must begin collecting information to report annually to the IRS and to club employees • The first report to the IRS is due on 2/28/16 or 3/31/16 if filed electronically. Ø Ø This “Section 6056 Return” must include information that includes, but is not limited to, whether the club offers insurance, its waiting period time, the months the plan was offered, premium costs, club’s contribution to insurance premium, number of FT employees/month, the months each employee was on insurance, and other information. Ø Ø The

first report to employees is due by 1/31/16.

More information about the ACA is available online through the NCA Health Care Resource Center, a real-time, comprehensive microsite with compliance information, news, FAQs, history of the health care law and more. The resource center is a NCA membership benefit and can only be accessed after logging in as a member.

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