Download navigating the next phase of health care reform

NAVIGATING THE
NEXT PHASE OF
HEALTH CARE
REFORM
PRESENTED
BY
SHIRAZI BENEFITS
LOOKING BACK
HEALTH CARE REFORM TIMELINE: A YEAR-BY-YEAR LOOK
2
Looking Back
2010
• Dependent coverage to age 26
• Changes to dollar limits
• Patient protections
• No pre-existing condition exclusions for children
• Emergency room services
• 100% coverage for in-network preventative services
o For non-Grandfathered plans
• Non discrimination in favor of highly compensated
employees (suspended until further guidance)
3
Looking Back
• Dependent coverage through age 26
o Allows for dependents to remain on their parent’s or guardian’s health
plan until age 26 (dependent age may be higher in some states) and
expands the definition of a dependent
o Also applies to specialty products such as vision, dental and pharmacy
o 100+ groups with a grandfathered plan can choose to include an
eligibility exclusion for dependents who are eligible for their own employer
sponsored plan
o 100+ groups can choose to customize their vision or dental dependent
age
4
Looking Back
• Changes to dollar limits
o Eliminates annual dollar limits on covered services that may be
considered “essential health benefits” by the Department of Health and
Human Services (HHS)
o Eliminates lifetime dollar limits on covered services that may be
considered “essential health benefits” by HHS
5
Looking Back
• Patient protections
o For plans that require a primary care provider (PCP), members must be
able to designate any in-network provider as their PCP (including an OBGYN for a woman or a pediatrician for a child)
o Eliminates referral and preauthorization requirements for in-network OBGYNs and pediatrician
o Only required for non-grandfathered plans; custom groups with a
grandfathered plan may exclude some of the patient protections
6
Looking Back
• No pre-existing condition limitations for children
o Prohibits pre-existing condition exclusions (including coverage denials and
waiting periods) for children younger than 19
7
Looking Back
• No member cost share for preventive care
o Requires health plans to provide coverage without cost-sharing for
preventive services
o Expands preventive services list
8
Looking Back
• Emergency room services
o Requires plans to cover in-network and out-of-network emergency room
services
o Forbids preauthorization requirements for emergency room services,
including out-of-network (post treatment notification requirements are
permitted)
o Out-of-network copayments and coinsurance cannot exceed in-network
copayments and coinsurance
o Only required for non-grandfathered plans.
9
Looking Back
• Non discrimination in favor of highly compensated
employees (suspended until further guidance)
o Prohibits employers from having different health benefits tied to employee
salary levels
o Disallows eligibility rules (that is, total hourly or annual salary rules) that
have the effect of discriminating in favor of highly compensated
employees
o Self-funded plans are not subject to this requirement, but are subject to a
separate similar law. IRS Section 105(h)
10
Looking Back
2011
• Changes to Tax-Free Savings Accounts
• Medical loss ratio standards go into effect
11
Looking Back
• Changes to Tax-Free Savings Accounts
•
•
•
Excludes the costs for over-the-counter drugs not prescribed by a doctor
from being reimbursed through a Health Reimbursement Account or
health Flexible Spending Account and from being reimbursed on a taxfree basis through a Health Savings Account or Archer Medical Savings
Account.
Increases the tax on distributions from a health savings account or an
Archer MSA that are not used for qualified medical expenses to 20% of
the amount used.
Implementation update: On September 3, 2010, the IRS issued guidance
regarding changes on health flexible spending accounts including Health
Reimbursement Accounts and health Flexible Spending Accounts noting
that over-the-counter medicines prescribed by a doctor could be
reimbursed by these tax-savings accounts.
12
Looking Back
• Medical loss ratio (MLR)
o MLR is the percentage of premiums spent on medical care relative to the
amount spent on administrative costs
o Requires issuers to spend a minimum of 85% for large group and 80% for
small group and individuals (generally) on medical care
o If the MLR minimum is not met a rebate check is issued to enrollees in the
individual market and employers in the group market
o MLR applies to large group, small group and fully insured plans, regardless
of grandfathered status. It is also being implemented for individual plans,
but not self-funded groups
13
WHERE WE ARE TODAY
MAKING SHIFTS FROM 2012 TO 2013
14
WHERE WE ARE TODAY
2012-2013
• Uniform Summary of Benefits and Coverage
• W-2 tax reporting
• Notice for Material Modification
• Flexible Spending Account Limits ($2,500 per year)
• Comparative effectiveness research (CER) fee
• Women’s Preventive Services
• Medicare Tax Increase
• Health insurance exchanges: Employee notification
deadline extended
• Reinsurance Assessment
15
WHERE WE ARE TODAY
• Summary of benefits and coverage (SBC)
o Requires plans and issuers to provide an easy-to-understand
document that includes a summary of coverage, common
glossary of terms and coverage fact labels
o This provision is being implemented for all group sizes and
individual plans. It also applies to both fully insured and selffunded plans
16
WHERE WE ARE TODAY
• W-2 tax reporting
o Requires employers to report the cost of employer-sponsored health
benefits on a separate entry of the W-2 form
o Various types of coverage may be included such as medical plans,
dental and vision coverage, prescription drug plans and employee
physicals
o This provision applies to fully insured and self-funded plans. However,
employers that file less than 250 W-2s are not required to report the value
of benefits
17
WHERE WE ARE TODAY
• Notice of Material Modification
o Requires plan sponsors or issuers to provide 60 days advance
notice to enrollees when making material modifications to
the plan
o Modifications include any change to the coverage such as
enhanced or reduced benefits, increased premiums or cost
sharing, and new referral requirements
o Can be satisfied by sending an updated summary of benefits
and coverage or separate written notice
18
WHERE WE ARE TODAY
• Comparative effectiveness research (CER)
fee
o Revenues will fund research to determine the effectiveness of
various forms of medical treatment. The initial annual fee of
$1 per covered life is for plan years that began on or after
Oct. 2, 2011. The fee increases to $2 in 2012, then increases to
an amount indexed annually to national health expenditures
until 2019, when it no longer applies. Reporting and payment
using IRS Form 720 is required by July 31of the calendar year
immediately following the last day of the policy or plan year
(e.g., liability for a plan year ending Jan. 31, 2013 must be
filed by July 31, 2014).
19
WHERE WE ARE TODAY
• Women’s Preventive Services
o Requires health plans to cover evidence-informed preventive
care and screenings without cost sharing
o Some services include:
• – Well-woman visits
• – Testing for human papillomavirus (HPV)
• – Breastfeeding support, supplies and counseling
• – FDA-approved contraception methods and
contraceptive counseling
o This provision applies to all non-grandfathered health plans
(whether insured or ASO) starting with the first plan year on or
after August 1, 2012. It also applies to grandfathered health
plans that have chosen to implement the ACA’s preventive
care coverage
20
WHERE WE ARE TODAY
• Medicare Tax Increase
o Increases the Medicare Part A (hospital insurance) tax rate
on wages by 0.9% (from 1.45% to 2.35%) on earnings over
$200,000 for individual taxpayers and $250,000 for married
couples filing jointly and imposes a 3.8% assessment on
unearned income for higher-income taxpayers.
21
WHERE WE ARE TODAY
•
Health insurance exchanges: Employee notification deadline
extended
o
o
The Affordable Care Act (ACA or health care reform law) added a section to the
Fair Labor Standards Act (FLSA),that says an applicable employer must provide
each employee at the time of hiring (or with respect to current employees, no
later than March 1, 2013), a written notice:
Informing the employee of the existence of exchanges including a description of
the services provided by the Exchanges, and the manner in which the employee
may contact exchanges to request assistance;
o
If the employer plan’s share of the total allowed costs of benefits provided under
the plan is less than 60 percent of such costs, that the employee may be eligible
for a premium tax credit under section 36B of the Internal Revenue Code (the
Code) if the employee purchases a qualified health plan through an exchange;
and
o
If the employee purchases a qualified health plan through an exchange, the
employee may lose the employer contribution (if any) to any health benefits plan
offered by the employer and that all or a portion of such contribution may be
excludable from income for Federal income tax purposes.
o
The FAQ issued by the Department of Labor (DOL) on January 24, 2013 recognized
that the initial March 1, 2013 notification deadline is unrealistic and will not take
effect on March 1, 2013. The new FAQ indicates that the agency will issue
additional guidance in the future, moving the implementation date to late
summer or fall of 2013.
22
WHERE WE ARE TODAY
•
Reinsurance Assessment
o
o
o
Collected over the three-year period from 2014 through 2016, this assessment will
fund a reinsurance program to help lessen the impact of high-risk individuals
entering the Individual market.
Fully insured plans: The Carrier is required to pay this assessment. The carrier will
build additional loads into our premium rates to offset the cost of these fees for
any applicable insurance plan effective 2/1/2013 and later.
Self-funded plans: Third party administrators may make the payment on behalf of
self-insured plans.
23
WHERE WE ARE GOING
SUMMARY OF NEW HEALTH REFORM LAW EFFECTIVE 2014
24
WHERE WE ARE GOING
2014
• Health Insurance Industry Fee
• Employer requirements to provide coverage
• Health Insurance Exchanges
o Health insurance premium and cost sharing subsidies
•
•
•
•
Guaranteed availability of insurance
Essential health benefits
Wellness programs in insurance
Individual requirement to have insurance
25
EMPLOYER RESPONSIBILITY
TO PROVIDE COVERAGE
•
•
•
•
•
Health Insurance Industry Fee
The Health Insurance Industry Fee affects health insurers (including
HMOs) and is estimated to start at $8 billion in 2014. It increases year
over year before reaching an estimated $14.3 billion in 2018. After
2018, it will continue to increase with premium growth.
The fee applies only to insured business, and will be based on each
insurer’s share of the taxable health insurance premium base
(among all health insurers of U.S. health risks). Plans include all insured
individual and group medical plans (HMO, Network, PPO and OAP)
regardless of funding type (i.e., Guaranteed Cost or Shared Returns
including Minimum Premium), behavioral health, pharmacy, vision
and dental benefit plans (including stand-alone), among others.
Impacted plans will be assessed 2-2.5% of premium in 2014. This will
increase to 3-4% of premium in future years.
The Carrier is required to pay this assessment. The Carrier will build
additional loads into our premium rates to offset the cost of these
fees for any applicable insurance plan..
26
EMPLOYER
RESPONSIBILITY
TO PROVIDE
COVERAGE
Penalties for Employers Not Offering Affordable Coverage
Under the Affordable Care Act Beginning in 2014
Does the employer
have at least 50
full-time
equivalent
employees?
Start here.
No
Penalties do
not apply to small
employers.
If the employer has 25 or
fewer employees and
average wage up to
$50,000, it may be
eligible for a health
insurance tax credit.
Yes
Larger employers face
penalties starting in
2014 if they don't make
affordable coverage
available.
Does the employer
offer coverage to
its workers?
No
Did at least one
employee receive
a premium tax
credit or cost
sharing subsidy in
an Exchange?
No
Employees can
choose to buy
coverage in an
Exchange and
receive a premium
tax credit.
responsibilities work.
The penalty is $2,000
annually times the
number of full-time
employees minus 30.
The penalty is increased
each year by the growth
in insurance premiums.
Yes
Does the
insurance pay for
at least 60% of
covered health
care expenses for
a typical
population?
The employer
must pay a penalty
for not offering
affordable coverage.
Yes
This simple flowchart
illustrates how those
employer
Yes
The employer must pay a
penalty for not offering
coverage.
Do any employees
have to pay more
than 9.5% of
family income for
the employer
coverage?
Yes
Those employees
can choose to buy
coverage in an
Exchange and
receive a premium
tax credit.
The penalty is $3,000
annually for each fulltime employee receiving
a tax credit, up to a
maximum of $2,000
times the number of fulltime employees minus
30. The penalty is
increased each year by
the growth in insurance
premiums.
No
There is no penalty
payment required of the
employer since it
offers affordable
coverage.
healthreform.kff.org
27
EMPLOYER RESPONSIBILITY
TO PROVIDE COVERAGE
•
Prepare for 2014, when the employer mandate kicks in.
Employers with 50+ full-time employees (or full-time
equivalents) must offer medical coverage that is “affordable”
and provides “minimum value” to their full-time employees
(and their dependent children to age 26) or be subject to
penalties. This mandate is effective January 1, 2014,
regardless of grandfathered status. There is transitional relief
for employer-sponsored plans that begin on a date other
than January 1, if they comply upon the first day of their 2014
plan year.
o
o
o
o
o
– Employees who work 30 hours per week are deemed full-time.
– Coverage is affordable if employee contributions are less than 9.5% of:
• - an employee’s W-2 wages,
• - an employee’s monthly wages (hourly rate x 130 hours per month), OR
• - the Federal Poverty Level for a single individual.
– A plan must pay 60% of the costs of covered health services to be considered as providing
“minimum value.”
– Employers cannot have more than a 90-day waiting period after an employee becomes
eligible for coverage.
– Dependents are considered children up to age 26. Spouses are not included in the
definition.
28
EMPLOYER RESPONSIBILITY
TO PROVIDE COVERAGE
• Determining your full-time employees – Safe
harbor methods may be used to determine the
full-time status of current and new employees
who work variable hours. These methods are
complex and differ for ongoing and new
employees. Employers should consider the
methods carefully with their own legal counsel.
29
EMPLOYER RESPONSIBILITY
TO PROVIDE COVERAGE
• Who is a Full-Time Employee?
o Hours of service include paid leave.
o Employers must count all of the hours of service for which an employee is
paid or is entitled to payment, including paid leaves of absence such as:
• Vacations
• Holidays
• Leave for illness, disability or other incapacity
• Layoffs
• Jury or military duty leave
30
EMPLOYER RESPONSIBILITY
TO PROVIDE COVERAGE
• Safe Harbors
o Defined time periods. The safe harbors allow employers to use these time
periods to predict whether an employee will qualify as full-time for shared
responsibility purposes:
o Measurement period. Employers select a fixed three- to 12-month
measurement period for determining whether an employee has
averaged at least 30 hours of service per week.
o Stability period. After meeting the minimum-hours threshold during the
measurement , employees must be treated as full-time – regardless of
actual hours worked during a subsequent “stability period,” provided they
remain employed.
• Employees who fail to meet the minimum-hours threshold during the
measurement period do not have full-time status during the stability
period and will not trigger shared-responsibility penalties.
31
EMPLOYER RESPONSIBILITY
TO PROVIDE COVERAGE
• Safe Harbors
o Stability period.
• The stability period can’t be shorter in duration (number of months)
than its associated prior measurement period.
• If an employee meets the minimum-hours threshold during the
measurement period, then the ensuing stability period for coverage
availability must last at least six full, consecutive calendar months.
• If the employee did not meet the minimum-hours threshold, the
stability period cannot be longer than the measurement period.
32
EMPLOYER RESPONSIBILITY
TO PROVIDE COVERAGE
• Safe Harbors
o Optional administrative period. Employers may need time after the
measurement period ends to decide which employees must be offered
coverage during the ensuing stability period.
o The safe harbor allows an optional “administrative period” between the
measurement and stability periods so employers can notify employees
qualifying for coverage and handle enrollment tasks.
o The administrative period can’t exceed 90 days or be applied in a way
that imposes a gap in employees’ coverage.
33
EMPLOYER RESPONSIBILITY
TO PROVIDE COVERAGE
• Safe Harbors
o Uniform periods, except between certain employee groups. An employer
generally must apply its selected measurement and stability periods on a
consistent basis to employees.
o But an employer’s measurement and stability periods can vary in length
and/or in starting and ending dates for different specified categories of
employees:
• Collectively bargained versus non-collectively bargained employees,
• Salaried versus hourly employees, and
• Employees located in different US states.
34
EMPLOYER RESPONSIBILITY
TO PROVIDE COVERAGE
• Employer mandate penalties – The penalty for
employers not offering any coverage to at least 95%
of their employees is $2,000 per FTE (minus the first 30).
• The penalty for employers offering a plan that is not
“affordable” or does not provide “minimum value” is
the lesser of:
o (a) $3,000 per FTE receiving the tax credit for exchange coverage, or
o (b) $2,000 per FTE (minus the first 30).
• There are no tax penalties for employers with fewer
than 50 full-time employees, or full-time equivalents.
• Employers with non-1/1 plan effective dates will not
incur any penalties if they comply upon the first day
of their 2014 plan year. Employers cannot change
their effective date now to take advantage of this
relief.
35
REQUIREMENTS FOR
MINIMUM COVERAGE
To be considered minimum coverage, a plan must:
• Provide 60% actuarial value minimum (covers at
least 60% of covered health care costs)
• Be “affordable” based on regulations – Employee
share of the premium must be less than 9.5% of
household income
36
Essential Health Benefits
1.
2.
3.
4.
5.
Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health and substance use disorder
services, including behavioral health treatment
6. Prescription drugs
7. Rehabilitative and habilitative services and devices
8. Laboratory services
9. Preventive and wellness services and chronic
disease management
10.Pediatric services, including oral and vision care
37
Determination of employer penalty
for categories of employees
Employee Category
How is this category of employee
used to determine “large employer?”
Once an employer is determined to
be a “large employer,” could the
employer be subject to a penalty if
this type of employee received a
premium credit?
Full-time
Counted as one employee, based on a
30-hour or more work week
Yes
Part-time
Prorated (calculated by taking the
hours worked by part-time employees
in a month / by 120)
No
Seasonal
Not counted, for those working less
than 120 days in a year
Yes, for the month in which a seasonal
worker is full-time
Temporary Agency
Generally, counted as working for the
temporary agency (except for those
workers who are independent
contractors)
Yes, for those counted as working for
the temporary agency
38
POTENTIAL ANNUAL PENALTIES IN 2014 FOR LARGE
EMPLOYERS
Large employer: 50 or more full-time equivalent employees
Does not offer coverage
Not a large employer:
Less than 50 full-time
equivalent employees
No penalty
Offers coverage
A
No full-time
employees receive
credits for exchange
coverage
B
1 or more full-time
employees receive
credits for exchange
coverage
C
No full-time
employees receive
credits for exchange
coverage
D
1 or more full-time
employees receive
credits for exchange
coverage
No penalty
Number of full-time
employees minus 30
multiplied by $2,000
No penalty
Lesser of:
• Number of full-time
employees minus 30,
multiplied by $2,000
• Number of full-time
employees who
receive credits for
exchange coverage,
multiplied by $3,000.
39
IMPACT ON SMALL
BUSINESS
• Individual and small group plans must provide
Essential Health Benefits Package
o Four components of package:
• Essential Health Benefits
o 10 required coverage categories
• Out-of-Pocket Maximum
o New accumulation rules and ceiling
• Small group deductible ceiling
o 2,000 single/$4,000 family
• Limited to "Metallic" coverage levels
o Bronze, Silver, Gold, Platinum
40
IMPACT ON SMALL
BUSINESS
Essential Health Benefits
1.
2.
3.
4.
5.
Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health and substance use disorder
services, including behavioral health treatment
6. Prescription drugs
7. Rehabilitative and habilitative services and devices
8. Laboratory services
9. Preventive and wellness services and chronic
disease management
10.Pediatric services, including oral and vision care
41
IMPACT ON SMALL
BUSINESS
Out-of-Pocket Maximum – New accumulation rules and ceiling
• OOPM ceiling at HSA level: likely $6,400/$12,800
in 2014 (indexed to inflation)
• All cost-sharing (for essential health benefits)
must accumulate to OOPM
• Applies to small and large fully insured plans
and self-funded plans
• Transition rules give flexibility for "separate
service providers" for one year
• Does not apply to out-of-network benefits
42
IMPACT ON SMALL
BUSINESS
Small group deductible ceiling - $2,000 single/$4,000 family
• Indexed to inflation
• Exception for Bronze plans if you cannot
"reasonably" design one with a $2,000
deductible
• Applies to small group fully insured only; NOT to
individual, large group, or self-funded
• Does not apply to out-of-network benefits
43
IMPACT ON SMALL
BUSINESS
Limited to "Metallic" coverage levels (Bronze, Silver, Gold, Platinum)
• Apply on and off Exchange
• Defined by actuarial value (plus/minus 2%):
Bronze/60%, Silver/70%, Gold/80%, Platinum/90%
• Federal requirement to offer one Silver, one
Gold plan on Exchanges
• All as calculated by the new "actuarial value
calculator" (released on 2/20)
44
INDIVIDUAL
MANDATE
The Requirement to Buy Coverage Under the Affordable Care Act
Beginning in 2014
Do any of the following apply?
You are part of a religion opposed to
acceptance of benefits from a health
insurance policy.
You are an undocumented immigrant.
You are incarcerated.
You are a member of an Indian tribe.
Your family income is below the threshold
requiring you to file a tax return ($9,350 for
an individual, $18,700 for a family in 2010).
You have to pay more than 8% of your
income for health insurance, after taking into
account any employer contributions or tax
credits.
Start here.
All U.S. citizens and legal
residents will be required to
have qualifying health
coverage in 2014 or pay a
penalty.
Yes
There is no
penalty for being
without health
insurance.
Yes
The requirement
to have health
insurance is satisfied
and no penalty is
assessed.
No
Were you insured for the whole year
through a combination of any of the
following sources?
Medicare.
Medicaid or the Children’s Health Insurance
Program (CHIP).
TRICARE (for service members, retirees, and
their families).
The veteran’s health program.
A plan offered by an employer.
Insurance bought on your own that is at
least at the Bronze level.
A grandfathered health plan in existence
before the health reform law was enacted.
This simple flowchart
illustrates how that
requirement works.
No
There is a
penalty for being
without health
insurance.
2014
2015
2016 and Beyond
Penalty is $95 per adult
and $47.50 per child (up
to $285 for a family) or
1.0% of family income,
whichever is greater.
Penalty is $325 per adult
and $162.50 per child (up
to $975 for a family) or
2.0% of family income,
whichever is greater.
Penalty is $695 per adult
and $347.50 per child (up
to $2,085 for a family) or
2.5% of family income,
whichever is greater.
The penalty is pro-rated by the number of months without coverage, though there is no penalty
for a single gap in coverage of less than 3 months in a year. The penalty cannot be greater
than the national average premium for Bronze level coverage in an Exchange. After 2016,
healthreform.kff.org
penalty amounts are increased annually by the cost of living.
Key Facts:
Premiums for health insurance bought through Exchanges would vary by age. The Congressional Budget
Office estimates that the national average annual premium in an Exchange in 2016 would be $4,500-5,000
for an individual and $12,000-12,500 for a family for Bronze coverage (the lowest of the four tiers of
coverage that will be available).
In 2010 employees paid $899 on average towards the cost of individual coverage in an employer plan and
$3,997 for a family of four.
A Kaiser Family Foundation subsidy calculator illustrating premiums and tax credits for people in different
circumstances is available at http://healthreform.kff.org/subsidycalculator.aspx.
45
Health Insurance
Exchanges
• Exchanges, administered by a governmental
agency or non-profit organization, are where
individuals and small businesses with up to 50
employees can purchase qualified coverage.
• Exchanges are effective January 1, 2014.
• Businesses with more than 100 employees will be
able to purchase coverage in the SHOP Exchange
beginning in 2017.
46
Plans within the Exchange
% of coverage
of benefit
costs of the
plan
Out-of-pocket
Limit
Bronze
Plan
Silver
Plan
Gold
Plan
Platinum
Plan
60%
70%
80%
90%
Catastrophic
Plan
(only available in the
individual market, for
those up to age 30 or
exempt from the
mandate)
Equal to the Health Savings Account (HSA) current law limit
($6,250 for individuals and $12,500 for families in 2013)
*Catastrophic plan prevention benefits and coverage for three
primary care visits are exempt from the out-of-pocket limit.
47
Federal Subsidy through
the Exchange
• The federal subsidy (or tax credit) is not available to
an employee if the following conditions are met:
o An employer offers employees the opportunity to enroll in a group health
plan providing minimum actuarial coverage, and
o Health plan premium costs for single coverage are less than 9.5% of an
employee’s household income
48
Federal Subsidy through
the Exchange
• 2013 Poverty Guidelines for the 48 Contiguous States and the
District of Columbia Persons in family/household Poverty
guideline
Persons in
Poverty
family/hou
guideline
sehold
1
2
3
4
5
6
7
8
$11,490
15,510
19,530
23,550
27,570
31,590
35,610
39,630
400%
$45,960
$62,040
$78,120
$94,200
$110,280
$126,360
$142,440
$158,520
• Persons in Family / Household Poverty Guideline For
families/households with more than 8 persons, add $4,020 or
each additional person.
49
Federal Subsidy through
the Exchange
•
Provide refundable and advanceable premium credits to eligible
individuals and families with incomes between 100-400% FPL to
purchase insurance through the Exchanges. The premium credits will
be tied to the second lowest cost silver plan in the area and will be
set on a sliding scale such that the premium contributions are limited
to the following percentages of income for specified income levels:
o
o
o
o
o
o
•
•
100-133% FPL: 2% of income
133-150% FPL: 3 – 4% of income
150-200% FPL: 4 – 6.3% of income
200-250% FPL: 6.3 – 8.05% of income
250-300% FPL: 8.05 – 9.5% of income
300-400% FPL: 9.5% of income
Increase the premium contributions for those receiving subsidies
annually to reflect the excess of the premium growth over the rate of
income growth for 2014-2018. Beginning in 2019, further adjust the
premium contributions to reflect the excess of premium growth over
CPI if aggregate premiums and cost sharing subsidies exceed .54% of
GDP.
Provisions related to the premium and cost-sharing subsidies are
effective January 1, 2014.
50
Wellness programs in
insurance
• Permits employers to offer employees rewards of
up to 30%, potentially increasing to 50%, of the
cost of coverage for participating in a wellness
program and meeting certain health-related
standards.
o Effective January 1, 2014
51
“Pay or Play?”
CHOICES EMPLOYERS FACE
52
6 Reasons why ‘Pay’ is not
an easy answer
1.
2.
3.
4.
5.
6.
There are lost tax advantages
Reporting burdens remain
Employee recruitment and retention challenges
Counting employees can be complex
The cost of coverage can be adjusted
Other financial implications
53
6 Reasons why ‘Pay’ is not
an easy answer
There are lost tax advantages
Currently, employee benefits are tax deductible to the employer and a tax
free benefit to the employee. The employee’s portion of the premium can
be paid via a Section 125 plan, which reduces both the employer’s and
employee’s FICA tax.
54
6 Reasons why ‘Pay’ is not
an easy answer
Reporting burden remains
Employers will still face federal reporting requirements to help determine the
penalty amount. The individual exchanges will require employee reporting
to determine if the employee is eligible for a premium tax credit.
55
6 Reasons why ‘Pay’ is not
an easy answer
Employee recruitment and retention challenges
The primary reason for offering employee benefits is to attract and retain
employees. PPACA does not change this. Employers that offer a good
comprehensive employee benefit package will still be looked up on more
favorably than those employers that decide not to offer employee benefits.
56
6 Reasons why ‘Pay’ is not
an easy answer
Counting employees can be complex
Counting employees is a complex calculation! How many full time? How
many part time? How do I count seasonal? How do I count temporary?
57
6 Reasons why ‘Pay’ is not
an easy answer
The cost of coverage can be adjusted
Current plans may be too expensive for the employer or the employee.
Employers can begin offering the 60% minimum value plan or reduce
employees hours to part time to mitigate the overall cost effect of PPACA.
58
6 Reasons why ‘Pay’ is not
an easy answer
• Other financial implications
o Employers may have to increase employee compensation to off set the
loss of employer provided coverage. An employer paying $500 per
month for medical insurance would have to give their employee a raise
between $633 and $926 per month to give the employee the same after
tax money, so the employee can purchase medical insurance through
the exchange.
59
Impact of
Affordable Care Act (ACA)
2010 Provisions
Unless otherwise noted, the provisions went into effect for plan years on or after 9/23/2010
Individual
Small Group
Large Group
Self-funded (ASO
Dependent coverage for adult children to age 26
Y
Y
Y
Y
No lifetime or annual dollar limits on essential health
benefits
Y
Y
Y
Y
No lifetime dollar limits on coverage
Y
Y
Y
Y
100% coverage for in-network preventive care1
Y
Y
Y
Y
No annual dollar limits on certain types of benefits
(restricted annual limits allowed until 2014)
Y1
Y
Y
Y
No pre-authorization for emergency services1 (patient
protection)
Y
Y
Y
Y
No higher cost share for out-of-network emergency
services1 (patient protection)
Y
Y
Y
Y
No pre-existing condition exclusions for children
Y
Y
Y
Y
1
Y
Y
Y
Y
Early retiree reinsurance program (fund exhausted
2011)
NA
Y
Y
Y
Y (80%)
Y (80%)
Y (85%)
NA
NA
Y
Y
Y
Revised appeals process
MLR requirements
No pre-tax reimbursements from health spending or
flexible spending accounts (HSA/FSA) for nonprescribed over-the-counter medications
The law does not require grandfathered plans to comply with this provision. However, in some cases we have decided to extend these provisions regardless of
1
grandfathered status.
60
Impact of
Affordable Care Act (ACA)
20% tax for nonqualified HSA withdrawals
Reporting value of employer- sponsored coverage on W-2
2011 Provisions
Unless otherwise noted, the provisions went into effect on 1/1/2011
Individual
Small Group
Large Group
Y
Y
Y
2012 Provisions
Unless otherwise noted, the provisions went into effect for plan years on or after 9/23/2012
Individual
Small Group
Large Group
NA
Optional
Optional
Summary of Benefits & Coverage (SBC)
Y
Y
Y
60-day notice of material modification
Y
Y
Y
Women’s Preventive Care
Self-funded (ASO
Y
Self-funded (ASO
Optional
Y
(provided for benefits we administer)
Y
Y
Y*
Y*
Y*
(effective for new or renewing plans on (effective for new or renewing plans on (effective for new or renewing plans on (effective for new or renewing plans on
or after 8/1/2012)
or after 8/1/2012)
or after 8/1/2012)
or after 8/1/2012)
Religious exemption or one year enforcement safe harbor available for groups that meet certain, specific criteria outlined in the regulation.
*
Payable beginning Federal fiscal year 2013 which began October 1, 2012. Applies to plan years ending 10/1/2012 and later.
2
2013 Provisions
Unless otherwise noted, exact dates of implementation are to be determined
Individual
Small Group
Large Group
Self-funded (ASO
Reporting value of employer- sponsored coverage on W-2
NA
Transitional relief until 2014
Y
(employer responsibility)
Y
(employer responsibility)
Employee notification of exchanges, including subsidies and
tax credits
NA
Y
(employer responsibility)
Y
(employer responsibility)
Y
(employer responsibility)
Flexible spending account contributions limited to $2,500/year
Effective 1/1/2013
NA
Y
Y
Y
Patient-Centered Outcomes Research Institute (PCORI)sponsored comparative effectiveness research fee (CER)2
Y
(health plan pays)
Free choice voucher required to be provided to qualifying
employees
NA
Y
Y
Y
(employer responsible for calculating
(health plan pays on employers’ behalf) (health plan pays on employers’ behalf)
amount and paying fee)
Repealed
Repealed
Repealed
Religious exemption or one year enforcement safe harbor available for groups that meet certain, specific criteria outlined in the regulation.
*
Payable beginning Federal fiscal year 2013 which began October 1, 2012. Applies to plan years ending 10/1/2012 and later.
2
61
Impact of
Affordable Care Act (ACA)
2014 Provisions
Unless otherwise noted, exact dates of implementation are to be determined
Please see chart “2014 Impacts” for specific on / off exchange plan impacts
Individual
Small Group
Large Group
Self-funded (ASO
Y
(health plan pays on employers’ behalf)
Y
(health plan pays on employers’ behalf)
Y
(health plan pays on employers’ behalf)
NA
Transitional Reinsurance Fee
NA
Y
(health plan pays on employers’ behalf)
Y
(health plan pays on employers’ behalf)
Y
(employer encouraged to calculate
amount and pay fee directly3)
Essential health benefits (EHB) package required
Y
Y
NA
NA
Out-of-pocket maximum limits applied (cumulative for all coverage)
Y
Y
Y
(transitional relief until 2015)
Y
(transitional relief until 2015)
No pre-existing condition exclusions regardless of age
Coverage waiting period not to exceed 90 days
Y
Y
Y
Y
Y
Y
Y
Y
Employers with 50+ required to offer coverage with minimum value
(MV)
NA
Y
(dependent on number of employees)
Y
Y
(dependent on number of employees)
Auto-enrollment required by employers with 200+ employees
NA
NA
Y
(dependent on number of employees)
Y
(dependent on number of employees)
Coverage of routine care costs for patients* participating in clinical
trials
Y
Y
Y
Y
“Small group” redefined as 1-100 (states may defer until 2016)
NA
Y
Y
Y
(dependent on number of employees)
Deductible limits $2,000 individual /
$4,000 family4
NA
Y
NA
NA
HIPAA nondiscrimination rules on wellness programs
Wellness program maximum incentive increase to 30% 5
Individual mandate
Guaranteed issue
Rating limitations
NA
NA
Y
Y
NA
Y
Y
NA
Y
Y
Y
Y
NA
Y
NA
Y
Y
NA
Y
NA
Insurer Fee (or Health Insurance Tax)
* Patients with life-threatening illnesses
3 Final
business decision pending based on interpretation of regulations.
4 Health
5 Up to
insurance coverage may exceed the annual deductible limit if it cannot reasonably reach a given level of coverage (metal tier) without exceeding the deductible limit
50 percent for programs designed to prevent or reduce tobacco use
62
Impact of
Affordable Care Act (ACA)
2014 Impacts
Individual Market
Small Group Fully-Insured Market
Large Group Fully Insured Market
(until 2017)
Self-Insured
Market
On Exchange
Off Exchange
On Exchange
Off Exchange
Off Exchange
Off Exchange
Must cover
Must cover
Must cover
Must cover
Coverage not required
Coverage not
required
No $$ limits on EHBs
Other limits ok
No $$ limits on EHBs
Other limits ok
NA
NA
Applies
Applies
NA
NA
Out-of-Pocket maximum limitations
Applies
Applies
Applies
Applies for NGF
Applies for NGF
Applies for NGF
Metal levels (actuarial value or AV)
Must meet 1 of 4 AV
levels
Must meet 1 of 4 AV levels for NGF
Must meet 1 of 4 AV levels
Must meet 1 of 4 AV levels for NGF
N/A (risk penalty if plan is not 60%
MV)
N/A (risk penalty if
plan is not 60%
MV)
Rating rules
Standardized rating
Standardized rating for NGF
Standardized rating
Standardized rating for NGF
N/A
N/A
Applies
Applies to NGF
Applies
Applies
Applies
Applies
N/A
N/A
Applies
Applies
Applies
Applies
Applies
Applies to NGF
Applies
Applies (NGF)
Applies (NGF)
Applies (NG*)
N/A
N/A
Applies
Applies
Applies to NGF
Applies to NGF
Coverage for essential health benefits (EHBs)
Lifetime / Annual limits
Deductible limits
No pre-existing condition exclusions
90-day waiting period limitation
Coverage for patients in clinical trials
HIPAA
nondiscrimination on wellness programs
No $$ limits on
No $$ limits on EHBs Other limits ok No $$ limits on EHBs Other limits ok No $$ limits on EHBs Other limits ok EHBs Other limits
ok
This content is provided solely for informational purposes. It is not intended as and does not constitute legal advice. The information contained herein should not be relied upon or used as a substitute for consultation with legal,
accounting, tax and/or other professional advisers.
63
QUESTIONS?
64