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Focus on ACA Requirements2015 ADP Pro User Conference

Agenda Effects of ACA Employer Mandate (Shared Responsibility) ACA Benefit Status – What is this? Employer Mandate Reporting and WorkforceNow

Disclaimer*This presentation is not: Legal or tax advice A political opinion The final word on the Affordable Care Act (ACA)* Before taking any actions on the information contained in this presentation, employers andplan sponsors should review this material with internal and/or external counsel.3 Copyright 2015 ADP, LLC. Proprietary and Confidential Information.

Data Elements Needed Data will come from these major sources:– HR– Payroll– Time and Absence Management (Including Leaves)– Benefits A wide range of data elements will be required in order to document,comply, and complete required reportingHRTime andAbsenceManagement Indicative dataDate of hireDate of most recent terminationMost recent date of hireDate of BirthACA FT Status effective dateUnion statusState of residenceJury DutyFMLAUSERRAOther state mandated leavesStart / End dates of leavesIntermittent FMLA time / dates6 Copyright 2015 ADP, LLC. Proprietary and Confidential Information.PayrollBenefits Hours worked and paidHours not worked but paidPayroll period begin / end dateHourly rate of payRate of pay effective dateBox-1 Form W-2 ValueSSNMEC documentation60% Minimum Value DocumentationProof of offeringEE cost by plan and tierStatus indicator (i.e., enrolled /waived) Plan funding (i.e., insured / selfinsured

Shared Responsibility (Employer Mandate):Decision Flow To Avoid Penaltiesst1CHECKEmployer has, on average, 100 in2015 (50 in 2016) ACA full-timeemployees plus full-time equivalentemployees in the prior year?YESnd2CHECKDoes the employer offer minimumessential coverage (MEC) to at least70% in 2015 (95% in 2016) of itsACA full-time employees?YESrd3CHECKDoes the plan provide coverage of atleast 60% minimum value?IRC §4980H(a) – “The Big Penalty”NO4CHECKNONo Penalty Payment Required7 Copyright 2015 ADP, LLC. Proprietary and Confidential Information.YESThe penalty (assessedmonthly) for not offeringcoverage is the number offull-time employees (minus80 in 2015; 30 in 2016)times 2,000 annually.NOThose employees canchoose to buy coverage ina Marketplace/Exchangeand may receive a premiumtax credit.Would any full-time employees paymore than 9.5% of current year forlowest cost self-only coverage? Box 1 W-2 Wages, Rate of pay, or Federal Poverty LevelDid at least one employeereceive a premium tax creditor cost-sharing subsidy in aMarketplace/Exchange?IRC §4980H(b) – “The Lesser Penalty”YESthPenalties do not apply tosmall employers.NOYESThe penalty (assessedmonthly) for failure to offerminimum value and/oraffordable coverage is a 3,000 annual penalty thatwill be due for each full-timeemployee receiving asubsidy, up to a maximumof the total number of fulltime employees (minus 80in 2015; 30 in 2016) times 2,000.

Let’s look at the annualreport requirements8 2015, ADP LLC. Proprietary and Confidential Information.

New IRS FormsEmployer Mandate ReportingForm 1094-C to the IRS Filing electronically ( 250 Forms 1095-C)by March 31 of the next year Filing paper ( 250 Forms 1095-C)by February 28 of the next yearForm 1095-C to IRS, Full-Time Employeesand COBRA Participants and Retirees– Mail paper forms to last known addressor electronic delivery (with consent)– By January 31 of the next year– First filing in 2016 for 2015 information9 Copyright 2015 ADP, LLC. Proprietary and Confidential Information.

New IRS Forms 1094-C Employer & 1095-C EmployeeEmployer Mandate ReportingFully Insured PlansSelf-Insured Plans

Annual Reporting Who is responsible for reporting?- Applicable Large Employers (ALEs) This includes employers during 2015, with 50 to 99 employees, who did not have to fullycomply with the shared responsibility requirements due to transition relief- For fully insured plans, the insurance provider is responsible for Part III of theForm1095-C (provided as a 1095-B) Who needs to receive a 1095-C?- Any employees that were full-time for one ormore months- For self-insured ALEs, all persons who werecovered during the year which may include: Retirees COBRA beneficiaries, and Any other covered non-employee11 Copyright 2015 ADP, LLC. Proprietary and Confidential Information.

Codes: Part II Line 14 – Offer Of Coverage 1A. Qualified Offer: Minimum Essential Coverage providing Minimum Value offered to full-timeemployee with employee contribution for self-only coverage equal to or less than 9.5% mainlandsingle Federal Poverty Line and Minimum Essential Coverage offered to spouse and dependent(s). 1B. Minimum Essential Coverage providing Minimum Value offered to employee only. 1C. Minimum Essential Coverage providing Minimum Value offered to employee and at leastMinimum Essential Coverage offered to dependent(s) (not spouse). 1D. Minimum Essential Coverage providing Minimum Value offered to employee and at leastMinimum Essential Coverage offered to spouse (not dependent(s)). 1E. Minimum Essential Coverage providing Minimum Value offered to employee and at leastMinimum Essential Coverage offered to dependent(s) and spouse. 1F. Minimum Essential Coverage not providing Minimum Value offered to employee, or employeeand spouse or dependent(s), or employee, spouse and dependents. 1G. Offer of coverage to employee who was not a full-time employee for any month of the calendaryear and who enrolled in self-insured coverage for one or more months of the calendar year. 1H. No offer of coverage (employee not offered any health coverage or employee offered coveragenot providing Minimum Essential Coverage). 1I. Qualified Offer Transition Relief 2015: Employee (and spouse or dependents) received no offerof coverage, or received an offer of coverage that is not a Qualified Offer, or received a QualifiedOffer for less than all 12 months.13 Copyright 2015 ADP, LLC. Proprietary and Confidential Information.

Codes: Part II Line 16 – Safe Harbor 2A. Employee not employed during the month. 2B. Employee not a full-time employee. 2C. Employee enrolled in coverage offered. 2D. Employee in a Section 4980H(b) limited non-assessment period. 2E. Multi-employer interim rule relief. 2F. Section 4980H affordability Form W-2 safe harbor.Note: Certain codes on lines 14 and 16 may apply simultaneously, and certain codes on these linescan be inconsistent with other codes. The IRS instructions identify which codes to use when more thanone can apply, and which may not be used along with certain other codes.14 Copyright 2015 ADP, LLC. Proprietary and Confidential Information.

Draft Form 1094-C: Employer Transmittal (continued)17 2015, ADP LLC. Proprietary and Confidential Information.

Best Practices: Report Timing AndPotential Penalties First reports will be filed in 2016 for the 2015 calendar year Form 1095-C must be distributed to all covered participants and any employeethat was full-time for any month of the calendar year Form 1094-C must be filed with the IRS- February of each year for employers who filed fewer than 250 Forms 1095-C- March of each year (electronically) for all other employers Penalties and Transition Relief- Penalties for failure to file on time will be 100 per form –not to exceed 1.5 million per year- Transition Relief No relief for late filingNo penalties if employer has inadvertenterrors or incomplete data but candemonstrate a good faith effort to comply18 Copyright 2015 ADP, LLC. Proprietary and Confidential Information.

How can ADP help?19 2015, ADP LLC. Proprietary and Confidential Information.

Where does an Employer start collecting data forthe 1094-C/1095-C forms? The full-time and part-time status under ACA rules must be determined andcounted toward Full-Time Equivalency Workforce Now refers to this full-time or part-time status as ACA Benefit Status- Derived from the Measurement Period evaluations OR- Established by the employer at new hire Any employee with an ACA Benefit Status of Full-time for at least one month inthe calendar year must be reported on the 1095-C- For self-insured employers, employees with an ACA Benefit Status of part-timeenrolled in a medical plan must also be reported Measurement Periods in Workforce Now can assist with compliance to show thatemployers have evaluated the ACA Benefit Status- Gives employers confidence that they have met the requirements- Provides an automated way to allow changes in eligibility for ACA Benefit Status andwork events for enrollments in a timely manner- ACA Dashboard provides real-time visibility into required administrative actions andhistorical data20 2015, ADP LLC. Proprietary and Confidential Information.

Employer Input Screens 1094-C - Draft27 2015, ADP LLC. Proprietary and Confidential Information.

New IRS Forms 1094-C Employer & 1095-C EmployeeEmployer Mandate ReportingWhat the IRS says about the r01.htmlIf a client has 150 employees who need a 1095-C form, then it will take 30 hrs(150 X 12 min 1,800/60 min 30 hrs 4 hrs34 hours for 1 Fed ID number with 150 1095-C forms28 2015, ADP LLC. Proprietary and Confidential Information.

Introducing EssentialACA29 2015, ADP LLC. Proprietary and Confidential Information.

Your ADP Health Compliance SolutionExchangesEligibilityAffordabilityReporting andAnalyticsBenefitsRegulatoryManagement Notice ofCoverage ExchangeManagement AnnualReportingHRPayrollTime & LeavesHuman Capital Management Platforms30 Copyright 2015 ADP, LLC. Proprietary and Confidential Information. PenaltyManagementIRS

Essential ACA - IncludesScreens &Dashboards Premium BenefitsScreens- BenefitOffering Trending DashboardMatrix (v9)Reporting ACA Benefit OfferingAudit ReportRecurring Fee: 1.50 PEPM plus a one time Implementation fee.31 2015, ADP LLC. Proprietary and Confidential Information.Annual Filings 1094-C Employerforms 1095-C Employeeforms

ACA Concierge Service Employers are feeling very unsure about the multitude ofrequirements around ACA. ACA Full Time Status Measurement Periods Rules, etc. Concierge helps promote a long-term partnership with ADPby demonstrating how to leverage ADP’s expertise &technology to support and guide them in navigating throughthis complex law.32

ACA Concierge Service – Service Bundle1. Initial meeting to review ACA Questionnaire & ACA Strategy Baseline Assessment of readiness for compliance with the Employer Mandate.2. Webinar/Live Meeting session – up to 2 hours session ACA Timeline & Provision Review Review of Employer Shared Responsibility Mandate; 6055/6056 overview ACA Tracking within ADP Platform Reporting Analysis Review & Demo of ACA Technology within the ADP Platform Customized Recommendations for client’s specific setup and long term ACA Strategy3. Wrap-up call to review remaining questions/take a deeper dive as needed33

What Our Clients Are Saying! We feel better prepared and equipped for compliance.We are much more clear on what to do to be in compliance.We have less anxiety based on this enhanced knowledge.We have a much higher degree of confidence on how to use the systemWe know what questions to ask our Broker34

Thank You Please submit all questions now through your chat/question form This session has been certified for 1 HRCI creditFor additional ACA insights and tosubscribe to ADP’s Eye on Washingtonregulatory alerts visit:www.adp.com/eyeonwashingtonPlease visit www.adp.com/acafaqs fora current list of ACA Frequently Asked Questions.The use of the HRCI seal is not an endorsement by the HR Certification Institute of the quality of the program. It means that this program has met the HRCertification Institute's criteria to be pre-approved for recertification credit.This material is subject to change and is provided for informational purposes only and nothing contained herein should be taken as legal opinion, legal advice, or acomprehensive compliance review.The ADP Logo, ADP, ADP Research Institute, and In the Business of Your Success are registered trademarks of ADP, LLC. All other trademarks and servicemarks are the property of their respective owners. Copyright 2015 ADP, LLC. ALL RIGHTS RESERVED.Copyright 2015 ADP, LLC. Proprietary and Confidential Information.35

New Hire And Ongoing Measurement PeriodsWith Administrative PeriodsFull-Time Employees20132014OctNovDecJanDOH90 Day ecCoverage in ForceOE AdminPeriodCoverage in Force12-Month Look-Back Standard Period: Ongoing Hourly Look-BackOctNovDecJan90 Day AdminFebMarAprStability Coverage PeriodLook-Back90 Day Admin11-Month Look-Back Initial Measurement Period to Determine Eligibility: New HireVariable Hour New ugSepOctNovDec2345678910Look-Back37 Copyright 2015 ADP, LLC. Proprietary and Confidential Information.Feb60 Day AdPd11-Month New Hire / Initial Measurement th Stability Coverage Period1390 Day Admin

Proof Of “Offering” Coverage Roll-over existing elections– Does not address Current waivers Newly eligible Bar-coded First-Class Mail Electronic distribution– Must comply with DOL requirements Drop shipments– Must obtain employee signature Actual affirmative elections made by employee38 Copyright 2015 ADP, LLC. Proprietary and Confidential Information.

Still To Come Nondiscrimination Rules for Health Plans- IRC Sec.105(h) applicable to self-insured plans to be enforced--All self-insured health care plans are required to pass two tests under IRC Sec.105(h): Eligibility Test: the plan does not discriminate in favor of highly compensated individuals as toeligibility to participate Benefits Test: the benefits provided under the plan do not discriminate in favor of participantswho are highly compensated individualsACA requires IRS to promulgate nondiscrimination rules for fully insured plans Auto-Enrollment- Required under the ACA- Effective date is not specifically stipulated in the legislation- Significant issues related to IRC Sec.125 are likely39 Copyright 2015 ADP, LLC. Proprietary and Confidential Information.

Insurance Marketplace / Exchange Notification Effective 2013:- DOL has provided model notices for employers who: Do offer health coverage Do NOT offer health coverage Employers must notify new employees of:- Their right to purchase health coverage through state/federal Marketplaces/Exchanges- Their potential eligibility for government subsidies- Their potential non-eligibility for government subsidies if the employer has offered affordable,ACA -compliant health plans- The possibility of losing any employer-sponsored coverage and tax-free contribution if insurance ispurchased through a Marketplace/Exchange On September 11, 2013, the DOL clarified that employers would not be penalized or fined for failing toprovide these notices.- Notices are still required under the health care law, however Notice must be provided to:- Newly hired employees within 14 days of start date- One-time event – not annual Notice must be provided free of charge via:- First-Class Mail - Electronically, if method is compliant with DOL Electronic Distribution safe harbor40 Copyright 2015 ADP, LLC. Proprietary and Confidential Information.

Marketplaces / Exchanges Must Verify Eligibility The Marketplace/Exchange must verify:- Whether an applicant is eligible for qualifying coverage in an employer-sponsored plan for the benefityear for which coverage is requested. The Marketplace/Exchange must obtain data about enrollment in and eligibility for an eligibleemployer-sponsored plan from any electronic data sources that are available to theMarketplace/Exchange and which have been approved by HHS. When the Marketplace/Exchange does not have information from data sources for the verificationsrelated to enrollment in an eligible employer-sponsored plan and eligibility for qualifying coverage in aneligible employer-sponsored plan, the Marketplace/Exchange will move forward with a samplingprocess, which involves sending inquiries to employers.- Effective electronic data sources generally do not exist yet.- Regulations clarify that the verification requirement will not apply for 2015. Employers may be called upon to substantiate:- The existence of qualified employer-provided coverage- Whether or not an employee is eligible for that coverage- Whether or not the employee was offered qualified coverageBEST PRACTICE: In order to support this effort, employers will need to have auditable records thatprovide the requisite substantiation. They will have 90 days to respond/appeal – timing could bereduced in the future.41 Copyright 2015 ADP, LLC. Proprietary and Confidential Information.

Qualifying Offer Methods Qualifying Offer Method- Employer certifies that it offered to at least 70% (95% in 2016 and thereafter) ofACA full-time employees MEC At least 60% actuarial value (including hospitalization) Affordable coverage under any one of the three safe harbors 2015 Qualifying Offer Method Transition Relief--An employer that has provided a “qualifying offer” to 95% of its full-time employeesand their spouses and dependents may provide each of its full-time employeeswith a statement informing the employee that they will not be eligible for premiumtax credits, if the “qualifying offer” was made to the full-time employees and theirspouses and dependents for each of the 12 months of the year, orThat they may be eligible for premium tax credits for any months in which aqualifying offer was not madeThe statement must also include contact information for the employer42 Copyright 2015 ADP, LLC. Proprietary and Confidential Information.

Qualifying Offer Methods (continued)

ACA Concierge Service Employers are feeling very unsure about the multitude of requirements around ACA. ACA Full Time Status Measurement Periods Rules, etc. Concierge helps promote a long-term partnership with ADP by demonstrating how to leverage ADP’s expertise & t