Regulatory Compliance Workshop ADP Health Compliance is a

Regulatory Compliance Workshop

ADP Health. Compliance is a Comprehensive Solution Our Comprehensive Solution Leverages Two Areas of Expertise Market Leading User Interface § § Multi-Platform Data Aggregator § Dedicated Account Manager § Secure Cloud Based Platform INTEGRAED CLOUD BASED SOFTWARE § Regulatory Compliance Specialist § ADPs Industry Leading Compliance Expertise REGULATORY MANAGEMENT EXPERTISE 2 © Copyright 2014 ADP, LLC. Proprietary and Confidential Information. Updated July, 2014. § § § Notices of Coverage Exchange Notices Penalty Management Annual Health Care Reports Annual and Monthly Penalty Reconciliation

Regulatory Management Services 3 © Copyright 2014 ADP, LLC. Proprietary and Confidential Information. Updated July, 2014.

Regulatory Management Service Process Overview ADP Health Compliance Client ADP Health Compliance Regulatory Management Services Team Notice of Coverage Exchange Notices Research Penalty Management Process Annual Health Coverage Reports Reconcile Mitigate ADP Regulatory Management Services 16 State & 1 Federal Exchanges IRS -B 1094 -C Exch 1094 T P COM LIAN COMP 4 © Copyright 2014 ADP, LLC. Proprietary and Confidential Information. Updated July, 2014. Health and Human Services Monthly Reconciliation of Exchange Notices

Notice of Coverage 5 © Copyright 2014 ADP, LLC. Proprietary and Confidential Information. Updated July, 2014.

With ADP Notice of Coverage Service. . . • 7 required steps would be reduced to 2 steps • Standardized Process • Secure Tracking System • Document Storage and Retrieval • Expert Managed Service Potential Notice of Coverage Letters for a variable workforce of 3000 Employees 1, 650 6 © Copyright 2014 ADP, LLC. Proprietary and Confidential

Notice of Coverage When Not Using ADP 7 © Copyright 2014 ADP, LLC. Proprietary and Confidential Information. Updated July, 2014.

Notice of Coverage Process Flow Scenario 2 When Using ADP When using ADP’s Regulatory Management Services, we will help simplify the process of providing Notice of Coverage to your employees. Boxes highlighted below represent what you are responsible for in this process: 8 © Copyright 2014 ADP, LLC. Proprietary and Confidential Information. Updated July, 2014.

Notice of Coverage - Productivity Metrics (Static Mode) Productivity assumptions have not been scaled based on ramp up 9 © 2014, ADP, Inc. Proprietary and Confidential Information.

Notice of Coverage - Productivity Metrics (Growth Mode) Productivity assumptions have not been scaled based on ramp up 10 © 2014, ADP, Inc. Proprietary and Confidential Information.

Exchange Notice and Penalty Management 11 © Copyright 2014 ADP, LLC. Proprietary and Confidential Information. Updated July, 2014.

Exchange Notice The process and documentation is not standardized Exchange Notice process and documentation will vary by state or federal exchange 12 © 2014, ADP, Inc. Proprietary and Confidential Information.

With ADPs Exchange Notice and Penalty Management…. • 21 required steps would be reduced to 3 • Security • Cloud Based System To Track Status, Potential Penalty Calculations and Accruals • Regulatory Management Tracking Process and System • Accurate Document Storage and Retrieval • Agency Relations and Appeal Expertise Potential Exchange Notices for a Variable Workforce of 3000 Employees 1, 800 13 © Copyright 2014 ADP, LLC. Proprietary and Confidential

Exchange Notice and Penalty Management Process Penalty Remittance Process Flow Scenario 1 When Not Using ADP 14 © Copyright 2014 ADP, LLC. Proprietary and Confidential Information. Updated July, 2014.

Exchange Notice and Penalty Management Process Penalty Remittance Process Flow Scenario 2 When Using ADP When using ADP’s Regulatory Management Services, we will help simplify the process of remittance for any penalties assessed by the IRS. Boxes highlighted below represent what you are responsible for in this process: 15 © Copyright 2014 ADP, LLC. Proprietary and Confidential Information. Updated July, 2014.

Exchange Notice and Penalty Management Process Penalty Appeals Process Flow Scenario 1 When Not Using ADP 16 © Copyright 2014 ADP, LLC. Proprietary and Confidential Information. Updated July, 2014.

Exchange Notice and Penalty Management Process Penalty Appeals Process Flow Scenario 2 When Using ADP When using ADP’s Regulatory Management Services, we will help simplify the process of appeals for any penalties identified by the IRS. Boxes highlighted below represent what you are responsible for in this process: 17 © Copyright 2014 ADP, LLC. Proprietary and Confidential Information. Updated July, 2014.

Exchange Notice - Productivity Metrics Productivity assumptions have not been scaled based on ramp up 18 © 2014, ADP, Inc. Proprietary and Confidential Information.

Penalty Notices - Productivity Metrics Productivity assumptions have not been scaled based on ramp up 19 © 2014, ADP, Inc. Proprietary and Confidential Information.

Annual Health Care Reporting 20 © Copyright 2014 ADP, LLC. Proprietary and Confidential Information. Updated July, 2014.

Annual Health Care Reporting ADP Expertise In 2012 We Produced 52 Million W-2 s. ADP will prepare and submit your required employer reporting requirements of the ACA to the IRS on your behalf. These required annual reports document your compliance with the Affordable Care Act and will report required employee information for income tax returns. Annual Plan Required Reports: Annual Health Care Reporting 21 Name Form Type 1094 -B Employer Transmittal 1095 -B Employee Statement 1094 -C Employer Transmittal 1095 -C Employee Statement Description Not an applicable large employer, but self-funded Applicable large employer fully insured + applicable large employer self-funded © Copyright 2014 ADP, LLC. Proprietary and Confidential Information. Updated July, 2014.

Exchange Notice and Penalty Management - Shared Responsibility Penalty Process Flow 1 st Check: Employer has, on average, 100 in 2015 (50 in 2016) ACA full-time employees plus full-time equivalent employees in the prior year? No Penalties do not apply to small employers Did at least one employee receive a premium tax credit or cost-sharing subsidy in a Marketplace/Exchange? The penalty (assessed monthly) for not offering coverage is the number of full-time employees (minus 80 in 2015; 30 in 2016) times $2, 000 annually Yes 2 nd Check: Does the employer offer minimum essential coverage (MEC) to at least 70% in 2015 (95% in 2016) of its ACA full-time employees? No Yes 3 rd Check: Does the plan provide coverage of at least 60% minimum value? " No Yes 4 th Check: Those employees can choose to buy coverage in a Marketplace/Exchange and may receive a premium tax credit Would any full-time employees pay more than 9. 5% of current year for lowest cost self only coverage § Box 1 W-2 Wages, § Rate of pay, or § Federal Poverty Level Yes No 22 There is no penalty payment required of the employer since it offers affordable coverage © 2014, ADP, Inc. Proprietary and Confidential Information. The penalty (assessed monthly) for failure to offer minimum value and/or affordable coverage is a $3, 000 annual penalty that will be due for each full-time employee receiving a subsidy, up to a maximum of the total number of full-time employees (minus 80 in 2015; 30 in 2016) times $2, 000

Regulatory Compliance Tasks – In-House New Hire Penalty Remittance Hires new associate Access payroll system for regulatory testing Inputs associate info into payroll, time & benefits systems Employer Determine if associate is insurance eligible and full -time Prepares Notice of Coverage to be sent via email and first class mail Validate that the Notice of Coverage meets DOL Send Notice of Coverage via email and first class mail Access benefits system for regulatory testing Conduct regulatory testing on MEC for all Exchange notices received Conduct regulatory testing on minimum value for all Exchange notices received Conduct regulatory testing on affordability for all Exchange notices received IRS Exchange Employe e Certify that Notice of Coverage was mailed Receives Notice of Coverage via email and first class mail within 14 days of hire date Response Annual Filings Review Response Request Respond to any of the 18 Exchanges Prepare annual filings 1094/1095 c Receives penalty appeal resolution Send employees and IRS copies of 1094/1095 c Employee goes to 1 of 18 State or Federal Exchanges for coverage and are granted a premium tax credit Respond to any of the 18 Exchanges Ensure you are within the specific Exchanges guidelines Research validity of penalty by reviewing preliminary Exchange notices (payroll, benefits, time) Ensure you are within the specific Exchanges guidelines Determine which Exchange notices are subject to penalty Reconcile all employee W 2 s, Exchange notices and 1094 c Access payroll system for regulatory testing Store all resolutions in document tracking system for future reference Documents resolution for every employee in document tracking system Determine if there is a need to take action to mitigate risk of monthly accrual of penalty Document all penalties to be paid for each employee Determine that Exchange notices are NOT subject to penalty based on previous regulatory testing Research and access all Exchange notices, payroll system, benefit system and 1095 cs to determine if penalty is valid Remit payment on behalf of each employee to the IRS Request an appeal from the appropriate 1 of 128 Exchanges Receives penalty resolution Tracks and monitors penalty payment receipts in tracking system Store all resolutions in a document tracking system for future reference Updates status in tracking system Access benefits system for regulatory testing Conduct regulatory testing on MEC for all Exchange notices received Conduct regulatory testing on minimum value for all Exchange notices received Conduct regulatory testing on affordability for all Exchange notices received Determine if there is a need to take action to mitigate risk of monthly accrual of penalty Request an appeal from the appropriate one of 18 Exchanges within the 90 day timeline Communication Prepare for appeal by collecting all data from payroll system, benefit system, Exchange notices and 1094 cs to support the penalty appeal Sends appeal of new penalty notice to IRS Employee goes to 1 of 18 State or Federal Exchanges Exchange sends preliminary notice to employer Sends notice to employer and employee within 90 days of appeal being accepted or dismissed Sends timely receipt of appeal request Sends notification to employer and employee of appeal being accepted or dismissed within 90 days Reconciles annual Exchange reports (1094/1095 c), health insurer reports (1094/1095 c) and taxpayer tax returns IRS sends final amount of penalty to employer after IRS penalty reconciliation deadline Sends communication on penalty resolution remittance Sends timely acknowledgement of appeal receipt Sends notification to employer of penalty being valid or sends notice of dismissal if penalty is invalid/dismissed within 90 days of appeal

Regulatory Compliance Tasks – With ADP New Hire Penalty Remittance Hires new associate Access payroll system for regulatory testing Inputs associate info into payroll, time & benefits systems Employer Determine if associate is insurance eligible and full -time Prepares Notice of Coverage to be sent via email and first class mail Validate that the Notice of Coverage meets DOL Send Notice of Coverage via email and first class mail Access benefits system for regulatory testing Conduct regulatory testing on MEC for all Exchange notices received Conduct regulatory testing on minimum value for all Exchange notices received Conduct regulatory testing on affordability for all Exchange notices received IRS Exchange Employe e Certify that Notice of Coverage was mailed Receives Notice of Coverage via email and first class mail within 14 days of hire date Response Annual Filings Review Response Request Respond to any of the 18 Exchanges Prepare annual filings 1094/1095 c Receives penalty appeal resolution Send employees and IRS copies of 1094/1095 c Employee goes to 1 of 18 State or Federal Exchanges for coverage and are granted a premium tax credit Respond to any of the 18 Exchanges Ensure you are within the specific Exchanges guidelines Research validity of penalty by reviewing preliminary Exchange notices (payroll, benefits, time) Ensure you are within the specific Exchanges guidelines Determine which Exchange notices are subject to penalty Reconcile all employee W 2 s, Exchange notices and 1094 c Access payroll system for regulatory testing Store all resolutions in document tracking system for future reference Documents resolution for every employee in document tracking system Determine if there is a need to take action to mitigate risk of monthly accrual of penalty Document all penalties to be paid for each employee Determine that Exchange notices are NOT subject to penalty based on previous regulatory testing Research and access all Exchange notices, payroll system, benefit system and 1095 cs to determine if penalty is valid Remit payment on behalf of each employee to the IRS Request an appeal from the appropriate 1 of 128 Exchanges Receives penalty resolution Tracks and monitors penalty payment receipts in tracking system Store all resolutions in a document tracking system for future reference Updates status in tracking system Access benefits system for regulatory testing Conduct regulatory testing on MEC for all Exchange notices received Conduct regulatory testing on minimum value for all Exchange notices received Conduct regulatory testing on affordability for all Exchange notices received Determine if there is a need to take action to mitigate risk of monthly accrual of penalty Request an appeal from the appropriate one of 18 Exchanges within the 90 day timeline Communication Prepare for appeal by collecting all data from payroll system, benefit system, Exchange notices and 1094 cs to support the penalty appeal Sends appeal of new penalty notice to IRS Employee goes to 1 of 18 State or Federal Exchanges Exchange sends preliminary notice to employer Sends notice to employer and employee within 90 days of appeal being accepted or dismissed Sends timely receipt of appeal request Sends notification to employer and employee of appeal being accepted or dismissed within 90 days Reconciles annual Exchange reports (1094/1095 c), health insurer reports (1094/1095 c) and taxpayer tax returns IRS sends final amount of penalty to employer after IRS penalty reconciliation deadline Sends communication on penalty resolution remittance Sends timely acknowledgement of appeal receipt Sends notification to employer of penalty being valid or sends notice of dismissal if penalty is invalid/dismissed within 90 days of appeal