Transcript LOCEY & CAHILL, LLC

Affordable Care Act (ACA)
An Overview of Key Provisions
Locey & Cahill, LLC Presentation to the:
New York State Association of Management
Advocates for School Labor Affairs, Inc.
37th Annual Summer Conference
Date: July 22, 2014
Location: High Peaks Resort, Lake Placid, NY
1
Affordable Care Act (ACA)
Overview of Key Provisions
and the
Impact of the ACA on
School Districts and BOCES
2
ACA Key Mandated Benefits

Dependent Coverage to Age 26





Natural Born Child / Adopted Child
Regardless of Marital Status
Regardless of Financial Dependency
Regardless of Residency
Can be Employed with Health Insurance



If Grandfathered, Provision Effective 2014
Covered Lives Increased by 4% to 5%
Overall Paid Claims Increased by 1% to 2%
3
Cooperative Health Insurance Fund of CNY
Monthly Census Count - Dependents
January 2008 to June 2013
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Dependents <19
Dependents 19 and Over
4
Cooperative Health Insurance Fund of CNY
Monthly Paid Claims - Dependents
January 2008 to June 2013
$2,000,000
$1,800,000
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
2010/2011 Avg. Monthly Paid Claims = $367,712
2011/2012 Avg. Monthly Paid Claims = $487,041
2012/2013 Avg. Monthly Paid Claims = $757,140
$200,000
$0
Dependents <19
Dependents 19 and Over
5
ACA Key Mandated Benefits
2010 Changes (09-23-2010)



No Pre-Existing Conditions
Plan Appeal Processes
No Lifetime Limits on EHB



No Annual Limits on EHB (2014)
Preventive Care – No Cost Sharing
Women’s Preventive Health Services

Including Birth Control/Contraceptives (08/01/2012)

EHB = Essential Health Benefits
6
ACA Key Mandated Benefits
2011 Changes

Minimum Medical Loss Ratios


Clinical Services/Quality Costs = > 85% of Premium
OTC Meds No Longer Eligible for FSA/HSA




2012 Changes
Summary of Benefits and Coverage
Annual Fees on Pharmaceutical Industry
Patient-Centered Outcomes Research Trust Fund

$1.00/Life (2012/2013) $2.00/Life (2013/2014)
7
ACA Key Mandated Benefits
2013 Changes



Medical Expense Deduction 7.5% to 10.0%
FSA Limits = $2,500 per year
Medicare Part A Tax Increase 1.45% to 2.35%



Individuals > $200,000 and Families >$250,000
Medical Device Tax = 2.3% Excise Tax
W-2 Reporting of Aggregate Cost of Coverage

Small Employers are Exempt (<250 W-2’s)
8
2014 ACA Major Changes
On January 1, 2014, several other key components of the Affordable Care Act were
scheduled to be implemented, including the following:

The Individual Mandate to Purchase Health Insurance

The Implementation of State and Federal Health Insurance Exchanges

Premium and Cost Sharing Subsidies and Tax Credits

The Employer Requirement to Offer Health Insurance Coverage

Delayed Until January 1, 2015 for Employers of >100 Employees

Delayed Until January 1, 2016 for Employers of >50 Employees

The Allowing of Health Insurance Premium Rewards or Credits for Wellness Programs

The Imposition of Fees on the Health Insurance Sector

Patient Centered Outcomes Research Institute Fees

Transitional Reinsurance Program Fees

Health Insurance Sector Fees
9
ACA Individual Mandate
Deadline to Sign-Up March 31, 2014
Deadline extended for those who “started the process, but failed to complete it.”
Penalties
 2014



2015



$95 Per Adult / $47.50 Per Child
Not to Exceed $285 Per Family or 1.0% of Family Income
$325 Per Adult / $162.50 Per Child
Not to Exceed $975 Per Family or 2.0% of Family Income
2016


$695 Per Adult / $347.50 Per Child
Not to Exceed $2,085 Per Family or 2.5% of Family Income
10
ACA Individual Mandate
Does Not Apply If:
 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
 You family income is below threshold for filing a tax return


($10,000 for an individual / $20,000 for a family in 2013)
You have to pay more than 8% of your income for health
insurance, after taking into account any employer contributions or
tax credits
11
ACA Individual Mandate
Does Not Apply If You are Covered by the Following:
 Medicare
 Medicaid or CHIP (Children’s Health Insurance Program)
 Tricare (for service member, retirees, and their families)
 The Veteran’s health program
 An employer offered plan
 Insurance you purchase on your own that > or = to a Bronze Plan
 A grandfathered health plan in existence prior to ACA enactment
12
ACA Insurance Marketplace
Health Insurance Exchanges in New York State
www.HealthBenefitExchange.ny.gov
What is an Exchange?
“An Exchange is an organized marketplace designed to help people shop for
and enroll in health insurance coverage. Individuals, families and small
businesses will be able to use the Exchange to help them compare commercial
insurance options, calculate costs and select coverage online, in person, over
the phone or by mail. The Exchange will also help people to check their
eligibility for health care programs like Medicaid and sign up for these
programs if they are eligible. The Exchange will also be able to tell what type
of financial assistance is available to applicants to help them afford health
insurance purchased through the Exchange. Insurance coverage can be
purchased through the Health Benefit Exchange beginning in October 2013
and will be effective January 1, 2014.”
Source: New York Health Benefit Exchange web-site (www.HealthBenefitExchange.ny.gov)
13
ACA Insurance Marketplace
Metal Levels of Coverage:
The Affordable Care Act contains language which defines the Actuarial Value
(AV) of a health insurance plan’s coverage based on the percent of health care
expenses covered by the plan for a typical population. Health insurance plans
will be placed into four categories based on their Actuarial Value (AV):

Platinum Plan Models
Actuarial Value (AV) = to 90%

Gold Plan Models
Actuarial Value (AV) = to 80%

Silver Plan Models
Actuarial Value (AV) = to 70%

Bronze Plan Models
Actuarial Value (AV) = to 60%
14
ACA Insurance Marketplace

What Would a Bronze Plan Look Like?

Deductible = $3,000 per individual / $6,000 per family

Coinsurance Amount = 50% of allowed or approved amount

Rx Plan = 3-Tier Rx Formulary Plan ($10/$35/$70)

Out-of-Pocket Maximum = $6,350 per individual / $12,700 per family

Preventive Care = No Member Cost


Adult Routine Exams/Physicals (including immunizations)

Well Child Care (including immunizations)

Women’s Preventive Health (including birth control)
Essential Health Benefits = Deductible and Co-Insurance or Co-Payment
15
ACA Insurance Subsidies
Kaiser Family Foundation Subsidy Calculator
www.Kff.org/interactive/subsidy-calculator/









Family Income = $50,000 (2014 dollars)
No Employer Coverage
Two Adults (ages 39 and 40) / Two Children
All Members are Non-Smokers
Household Income = 318% Poverty Level in 2013
2013 Unsubsidized Premium = $11,499 (Silver Plan Level)
Maximum % of Income for Premium = 9.5%
Premium Member Pays = $7,125
Federal Tax Credit Subsidy = $4,374
* This is for illustrative purposes only based on a number of assumptions.
16
ACA Insurance Subsidies
United States Department of Health & Human Services
2013 Poverty Guidelines for the
48 Contiguous States and the District of Columbia
Persons in
Family/Household
Poverty Guideline
1
$11,490
2
15,510
3
19,530
4
23,550
5
27,570
6
31,590
7
35,610
8
39,630
For families/households with more than 8 persons,
add $4,020 for each additional person.
17
ACA Employer Mandate

Step 1: What Employers are Affected:


All Employers who have at least 50 full-time equivalent employees are
subject to this mandate. This includes employers with a combination of
full-time and part-time employees who equal 50 full-time employee
equivalents.

Full-Time Employees are defined as working 30 hours per week for 120 days on
average during a year. There is a “look back” period allowed of not less than 3 months
and not more than 12 months as a “measurement period.”

If you have part-time employees, you have to divide your total monthly part-time
hours by 120 to determine the full-time employee equivalent of this segment of your
population.
If you have less than 50 full-time equivalent employees you are exempt
18
from this mandate.
ACA Employer Mandate
Step 1 (continued) – Sample Calculation:
Full-Time Employees:
+
Full-Time Equivalent Employees:
40
16
((20 Part-Time Employees x 96 (24 x 4) Hours) ÷ 120) = 16
=
Total Full-Time Equivalent Employees
56
Assumptions:
Employer has 40 Full-Time Employees
Employer has 20 Part-Time Employees who average 24 hours per week
19
ACA Employer Mandate

Step 2: Do You Offer Coverage to 95% of Your Full-Time
Employees (avg. 30 hours of service per week) which
is considered affordable and which is considered to
provide a minimum level of coverage?

If Yes, Mandate Applies and the Process Continues.

If No, Employer may be Subject to Penalties as Follows:


If you have at least one employee receive a premium tax credit or cost sharing subsidy
in an Exchange you must pay the penalty.

Penalty = $2,000 per year times the number of full-time employees minus 30 and this
penalty increases each year after 2014 by the growth in health insurance premiums.
For 2015, Threshold Reduced to 70% of Full-Time Employees as a
result of IRS Final Regulations Issued on February 10, 2014.
20
ACA Employer Mandate

Step 3: Do You Offer Coverage = or > the Minimum Value?

Minimum Value of Coverage = Bronze Plan or Better

A Bronze Plan has an Actuarial Value of 60% as Defined by the ACA

If Yes, Mandate Applies and the Process Continues.

If No, Employer may be Subject to Penalties as Follows:

Employees may purchase coverage in a Health Insurance Exchange and receive a
premium tax credit. To receive a premium tax credit family income must be less than
400% of the Federal Poverty Level.

Penalty = $3,000 annually for each full-time employee receiving a premium tax credit
up to $2,000 per year times the number of full-time employees minus 30 and this
penalty increases each year after 2014 by the growth in health insurance premiums.
21
ACA Employer Mandate

Step 4: Do you Offer Employees Affordable Coverage?
(Do any Employees Pay >9.5% of their W-2 Wages for Your Coverage?:

If No, Employer Meets Standard = No Penalties.

If Yes, Employer may be Subject to Penalties as Follows:

Employees may purchase coverage in a Health Insurance Exchange and receive a
premium tax credit. To receive a premium tax credit family income must be less than
400% of the Federal Poverty Level.

Penalty = $3,000 annually for each full-time employee receiving a premium tax credit
up to $2,000 per year times the number of full-time employees minus 30 and this
penalty increases each year after 2014 by the growth in health insurance premiums.
22
ACA Employer Mandate

Preparation Steps:

Determine the Actuarial Value of the Health Insurance Plan(s)

Identify any full-time employees whose premium contribution
for an individual plan is >9.5% of their Salary.

Sample Calculation:





Premium Contribution ÷ 0.095 = Salary Threshold
Individual Plan Monthly Premium = $600
Employee Contribution = 20%
Employee Annual Contribution = $1,440
$1,440 ÷ 0.095 = $15,157.89 (Salary Threshold)
23
ACA Employer Mandate

Identify Part-Time Variable Hour Employees Who May
Work More Than 30 Hours on Average

Reduce or Eliminate Variable Hour Positions Where Possible

Eliminate Dual Part-Time Positions

Establish a Time Tracking System for Variable Hour
Employees and Positions

Define Hours for Stipend Positions

Cap the Number of Days a Substitute Teacher Works
24
ACA Employer Mandate

Identify any full-time employees who are not offered health
insurance coverage, such as:

Adjunct Professors/Teachers

Athletic Team Coaches

Band Instructors

Bus Drivers for Extra Curricular Activities

Club Advisors/Teachers

Drama Teachers/Instructors

Substitute Employees/Teachers
25
ACA Employer Mandate

Establish a District/BOCES policy limiting the number of
days a substitute employee/teacher may work each year.


Recommendation = No More Than 100 Days.
Establish a District/BOCES policy for each extra curricular
activity paid position which specifically lists the number of
hours for each position. This policy should also note that any
hours worked above the stipulated number of hours will be
considered volunteer hours.

Example – High School Football Coach works 14 weeks which
includes 2 hours of practice per day 5 days per week, plus 5 hours per
game, and pre-season camp of 6 hours per day for 10 days. Total
hours worked will equal 240 hours for the 14 week season.
26
ACA Employer Mandate
Measurement Options :

Monthly Measurement Method:
With the Monthly Measurement Method, an employer would have to
determine each employee’s hours of service each month.

Look-Back Measurement Method:
The Look-Back Measurement Method requires an employer to determine
the employee’s status as a “full-time” employee by calculating service
hours in a prior period (measurement period). Said coverage would be
effective during a future period (stability period).
27
ACA Employer Mandate
Identifying Full-Time Employees:
On-Going Employees:

Did the employee work on average 30 hours per week during the
“Standard” Measurement or Look-Back Period? If yes, coverage has to be
provided during the Stability Period.

“Standard” Measurement or Look-Back Period – a 3 to 12-month period
of time where an employer determines who is a “full-time” employee.

Do I have to pass a Board Resolution Defining my Measurement Period?
No, we have seen several legal opinions that state that you do not need your Board of
Education to pass a resolution defining your Measurement Period. That being said, we
recommend setting a consistent Measurement Period for all employees.
28
ACA Employer Mandate
Identifying Full-Time Employees:
New Employees:

Is the new employee reasonably expected to work an average of 30 or
more hours per week during their first 12-months of employment?

If yes, they must be treated as a “full-time” employee.

If no, the employer may not have to offer the new employee coverage.
However, if it is determined during the “Standard” or “Look-Back”
Measurement Period they must be offered coverage during the Stability
Period.
29
ACA Employer Mandate
Identifying Full-Time Employees:
Seasonal or Variable Hour Employees:

Did the employee work on average 30 hours per week during the
“Standard” Measurement or Look-Back Period?

If yes, coverage has to be provided during the Stability Period.

If no, the employer is not obligated to offer the employee health insurance
coverage.
30
ACA Employer Mandate
Sample School District/BOCES Model:
Measurement Period:
07/01/2013 to 06/30/2014
Administrative Period:
07/01/2014 to 08/31/2014
Stability Period:
09/01/2014 to 08/31/2015
31
ACA Employer Mandate
IRS Q&A – May 13, 2014
Q1. What are the consequences to the employer if the
employer does not establish a health insurance plan for
its own employees, but reimburses those employees for
premiums they pay for health insurance (either through
a qualified health plan in the Marketplace or outside the
Marketplace)?
32
ACA Employer Mandate
Under IRS Notice 2013-54, such arrangements are described as employer
payment plans. An employer payment plan, as the term is used in this
notice, generally does not include an arrangement under which an
employee may have an after-tax amount applied toward health coverage or
take that amount in cash compensation. As explained in Notice 2013-54,
these employer payment plans are considered to be group health plans
subject to the market reforms, including the prohibition on annual limits
for essential health benefits and the requirement to provide certain
preventive care without cost sharing. Notice 2013-54 clarifies that such
arrangements cannot be integrated with individual policies to satisfy the
market reforms. Consequently, such an arrangement fails to satisfy the
market reforms and may be subject to a $100/day excise tax per applicable
employee (which is $36,500 per year, per employee) under section 4980D
33
of the Internal Revenue Code.
ACA Employer Mandate
IRS Reporting Requirements:
IRS recently issued final regulations regarding the reporting
requirements associated with the Affordable Care Act. Compliance
with the reporting requirements of Sections 6055 and 6056 of the
Internal Revenue Service (IRS) Code.
Reporting will be provided on a combined form 1094-C and 1095-C
Reporting for the 2015 Calendar Year by January 31, 2016
34
ACA Employer Mandate
IRS Combined Form 1094-C and 1095-C:

Top Part of Form – 1094-C


This part of the form deals with information related to IRS Code Section
6056. This provision requires all employers to furnish the IRS with
information pertaining to the coverage offered to their employees.
Bottom Part of Form – 1095-C

This part of the form deals with information related to IRS Code Section
6055. This provision requires self-insured applicable large employers to
provide information regarding the coverage offered to their employees.
35
ACA Employer Mandate
Who Needs to Report:

Fully-Insured Plans Complete Top Part of Form – 1094-C

This would include those employers contracting with an insurance
company via a minimum premium contract, experience-rated contract, or
a community-rated contract.

Self-Insured Plans Complete Both Part of Form – 1095-B and C

Insurers and Other Providers, such as Self-Insured MultipleEmployer Plans and Providers of Government Sponsored
Coverage will Report Only Under IRC Section 6055 Using a
Separate Form.
36
ACA Wellness Programs

Participatory Wellness Programs


A Wellness Program that either does not require an individual to meet a
standard related to a health factor in order to obtain a reward or that
does not offer a reward at all.
Health-Contingent Wellness Programs

These types of Wellness Programs require an individual to attain or
maintain a certain health outcome in order to obtain a reward (such as
not smoking, attaining certain results on biometric screenings, or
meeting targets for exercise).
37
ACA Wellness Programs

Health-Contingent Wellness Program Requirements:

The total reward for such wellness programs offered by a plan sponsor does not exceed 30%* of
the total cost of coverage under the plan.

The program is reasonably designed to promote health or prevent disease. For this purpose, it must
have a reasonable chance of improving health or preventing disease, not be overly burdensome, not
be a subterfuge for discriminating based on a health factor, and not be highly suspect in method.

The program gives eligible individuals an opportunity to qualify for the reward at least once per
year.

The reward is available to all similarly situated individuals. For this purpose, a reasonable
alternative standard (or waiver of the otherwise applicable standard) must be made available to any
individual for whom it is unreasonably difficult due to a medical condition to satisfy the otherwise
applicable standard during that period (or for whom it is medically inadvisable to attempt to satisfy
the otherwise applicable standard).

In all plan materials describing the terms of the program, the availability of a reasonable alternative
standard (or the possibility of waiver of the otherwise applicable standard) is disclosed.
*Reward could be as much as 50% if determined to be appropriate to reduce tobacco use.
38
ACA Taxes and Fees
Patient Centered Outcomes Research Trust Fund Fees:
This provision of the Affordable Care Act requires all health insurance plans, including
self-insured plans, to pay a fee to the Federal Government to fund the development of a
not-for-profit organization which will do research to evaluate and compare the health
outcomes and the clinical effectiveness, risks and benefits of certain medical treatments,
services, procedures, drugs and other techniques that will help treat, manage, diagnose, or
prevent illness or injury. These research fees start with the plan or policy years ending on
or after September 30, 2012, and ends with plan years or policy years ending before
October 1, 2019.
The fee for the 2012/2013 Fiscal Year of our School Consortium, School District, and/or
BOCES Clients is $1.00 per covered life for the year. Said fee must be paid by July 31,
2014 as a one time payment utilizing the IRS Form 720. This fee increases to $2.00 per
covered life for the 2013/2014 Fiscal Year and then will increase by an inflationary factor
yet to be determined for future years.
39
ACA Taxes and Fees
Transitional Reinsurance Program Fees:
The Affordable Care Act creates a temporary (2014 to 2016) reinsurance program which
will require the Federal Government to collect payments from health insurers to provide
payments to plans, both inside and outside the Health Insurance Exchanges that incur high
claim costs from enrollees. This program was established by the Affordable Care Act to
help the Health Insurance Exchanges and insurance carriers keep premiums
affordable. The assumption is that covered members of these plans will present a greater
risk of claims cost as it is believed that many have not been receiving regular medical care.
The result is a patient pool with a greater likelihood to have chronic and catastrophic
medical conditions. Based on current estimates, these fees will equal approximately $5.25
per covered life per month ($63.00 per year).
40
ACA Taxes and Fees
Health Insurance Sector Fees (Premium Taxes)
Beginning in 2014, the Affordable Care Act imposes annual fees on the health insurance
sector which will be based on each health insurance company’s share of the total market,
adjusted for size and corporate structure. This fee which applies to all insured health
insurance plans will be one of the major funding sources for the Affordable Care Act. The
current estimate on the effect of these fees on Excellus BCBS insured plans, according to
Excellus’ Finance Department, is approximately 2.50% of paid claims beginning in 2014.
Estimated Total Impact of ACA Taxes and Fees:
3.0% to 4.0% Increase in Premiums
41
Future Planning and Strategies
Stagnate Plan Designs
Escalating Costs
Diminishing Cost Sharing
One Possible Solution
ACA Cadillac Tax
42
Biggest Misconception
My Health Insurance hasn’t changed in twenty years.
 For Most School Districts and BOCES, other than Rx
Co-Pays, this statement is false as Health Insurance is
ever-evolving and improving in favor of the member:





New Medical Procedures
New Pharmaceuticals
Mandated Benefits (Federal and State)
Affordable Care Act
The fact is Health Insurance has changed dramatically
in the past twenty years. Even if a Member’s deductible,
co-payment, or out-of-pocket maximum has not.
43
Historical Negotiating Issues







Health Insurance Evolves Over Time
3 to 5 Years Between Contracts
Health Insurance Trends Outpace Cost-Sharing Changes
Lack of Focus on True Cost Distribution
Plans are Negotiated Line Item by Line Item
Proposed Changes Become Personal and Emotional
Modest Premium Changes = “Major” Benefit Changes



$50 Deductible to $100 Deductible = 0.5% of Premium Rate
$10 Co-Pay to $20 Co-Pay = 2% of Premium Rate
$5 Rx Brand Co-Pay Change = 3% of Premium Rate
44
Cooperative Health Insurance Fund of CNY
BOCES Benefits vs. Medicare Benefits
1990/1991 to 2013/2014
$1,200
$1,100
$1,000
$900
$800
$700
$600
$500
$400
$300
$200
$100
$0
1990/1991
1992/1993
1994/1995
OCM BOCES Ded
1996/1997
1998/1999
2000/2001
OCM BOCES OOP Max
2002/2003
2004/2005
Mx Part B Premium
2006/2007
2008/2009
Mx Part B Ded
2010/2011
2012/2013
Mx Part A Ded
45
Cooperative Health Insurance Fund of CNY
Average Monthly Paid Claims Per Covered Life by Arena and by Age Band
January 2010 to August 2013
Coop. Total
$266.38
65+
$206.34
60 - 64
$512.00
55 - 59
$393.68
50 - 54
$348.61
45 - 49
$282.74
40 - 44
$250.46
35 - 39
$234.62
30 - 34
$292.51
25 - 29
$234.39
23 - 24
$144.68
$61.50
19 - 22
$151.93
$58.53
07 - 18
$132.39
02 - 06
$103.89$19.21
00 - 01
$484.61
$0
$126.43
$331.76
$204.07
$161.82
$126.40
$97.47
$94.39
$89.51
$74.17
$57.61
$44.85
$18.80
$100
$200
$300
$400
Medical Claims
$500
$600
$700
$800
$900
$1,000
Rx Claims
46
Cooperative Health Insurance Fund of CNY
Avg. Monthly Member Cost Per Covered Life by Arena and by Age Band
January 2010 to August 2013
Coop.… $12.43
$10.14
65+
$15.79
60 - 64
$17.55
55 - 59
$15.67
50 - 54
$13.87
45 - 49
$12.28
40 - 44
$11.75
35 - 39
$11.28
30 - 34
$11.02
25 - 29
$9.37
23 - 24
$6.85
19 - 22
$7.48
$5.12
07 - 18
$8.67
$3.83
02 - 06
$9.67
00 - 01
$16.75
$0
$22.11
$15.58
$14.06
$12.07
$9.34
$8.09
$7.59
$6.71
$5.79
$4.93
$2.33
$2.50
$10
$20
Medical Claims
$30
$40
$50
Rx Claims
47
Cooperative Health Insurance Fund of CNY
Average Monthly Cost Per Covered Life by Arena and by Age Band
January 2010 to August 2013
Coop. Total
$392.81
$22.57
65+
$538.10
$37.90
60 - 64
$716.07
55 - 59
$555.50
50 - 54
$475.01
45 - 49
$380.21
40 - 44
$344.85
35 - 39
$324.14
30 - 34
$291.99
23 - 24
$206.18
$11.78
19 - 22
$210.46
$12.60
07 - 18
$177.24
02 - 06
$123.10
$25.94
$21.61
$18.87
$17.73
$15.16
$12.50
$11.99
00 - 01
$503.41
$0
$100
$29.73
$19.84
$366.68
25 - 29
$33.13
$200
$300
$400
Plan Paid
$19.24
$500
$600
$700
$800
$900
$1,000
Member Paid
48
Possible Future Solution
The Affordable Care Act may Provide a Solution

Guarantee a Level of Coverage (e.g. Platinum Plan):
The Affordable Care Act contains language which defines the Actuarial Value
(AV) of a health insurance plan’s coverage based on the percent of health care
expenses covered by the plan for a typical population. Health insurance plans
are placed into four categories based on their Actuarial Value (AV):

Platinum Plan Models
Actuarial Value (AV) = to 90%

Gold Plan Models
Actuarial Value (AV) = to 80%

Silver Plan Models
Actuarial Value (AV) = to 70%

Bronze Plan Models
Actuarial Value (AV) = to 60%
49
Possible Negotiating Strategy
School District or BOCES Health Insurance:

Plan Must be Equal to or Better than Platinum Plan

Employers Can Make Modest Annual Changes to Plan

Changes Limited to Open Enrollment Period Each Year

Open Enrollment Period Consistent with FSA Elections

Mandatory 30 or 60 Day Notice to Employees
50
Possible Contract Language

The District will provide a health insurance plan which has an Actuarial Value
(AV) equal to or greater than 90% which is commonly referred to as a
“Platinum Plan.” Said AV will be calculated using the AV Calculator
developed by the Centers for Medicare & Medicaid Services (CMS) Center
for Consumer Information & Insurance Oversight (CCIIO) which was
implemented in accordance with the Patient Protection and Affordable Care
Act of 2010. If such calculator is no longer available or in use, the District
shall have an independent Actuary develop the AV of the health insurance
plan. In either case, it is the intent that the result will represent an empirical
estimate of the AV calculated in a manner that provides a close approximation
to the actual average spending by a wide range of consumers in a standard
population and that said AV will be equal to or greater than 90%.
51
ACA “Cadillac Tax”
Effective January 1, 2018

Tax on High-Cost Medical Insurance Plans

ACA 2018 Limits:




Individual Coverage = $10,200
Family Coverage = $27,500
Excise Tax = 40% of Each Dollar Over Limit
Applies to aggregate expenses of employer-sponsored health
insurance plans which based on our current understanding
will include the actuarial value of a Health Reimbursement
Arrangement (HRA), if offered by the employer.
52
CEWW Schools Health Insurance Consortium Plan – Platinum Plan 1
Monthly Premium
Annual Premium
"Cadillac Tax Threshold"
Excise Tax Per Contract Per Year
Fiscal Year
Individual
Family
Individual
Family
Individual
Family
Individual
Family
2012/2013
$633.54
$1,648.54
$7,602.48
$19,782.48
n/a
n/a
n/a
n/a
2013/2014
$658.88
$1,714.81
$7,906.56
$20,577.72
n/a
n/a
n/a
n/a
2014/2015
$718.18
$1,869.14
$8,618.15
$22,429.71
n/a
n/a
n/a
n/a
2015/2016
$782.82
$2,037.37
$9,393.78
$24,448.39
n/a
n/a
n/a
n/a
2016/2017
$853.27
$2,220.73
$10,239.22
$26,648.74
n/a
n/a
n/a
n/a
2017/2018
$930.06
$2,420.59
$11,160.75
$29,047.13
$10,200.00
$27,500.00
$384.30
$618.85
2018/2019
$1,013.77
$2,638.45
$12,165.22
$31,661.37
$10,200.00
$27,500.00
$786.09
$1,664.55
CEWW Schools Health Insurance Consortium Plan – Platinum Plan 2
Monthly Premium
Annual Premium
"Cadillac Tax Threshold"
Excise Tax Per Contract Per Year
Fiscal Year
Individual
Family
Individual
Family
Individual
Family
Individual
Family
2012/2013
$534.87
$1,392.03
$6,418.44
$16,704.36
n/a
n/a
n/a
n/a
2013/2014
$534.87
$1,392.03
$6,418.44
$16,704.36
n/a
n/a
n/a
n/a
2014/2015
$583.01
$1,517.31
$6,996.10
$18,207.75
n/a
n/a
n/a
n/a
2015/2016
$635.48
$1,653.87
$7,625.75
$19,846.45
n/a
n/a
n/a
n/a
2016/2017
$692.67
$1,802.72
$8,312.07
$21,632.63
n/a
n/a
n/a
n/a
2017/2018
$755.01
$1,964.96
$9,060.15
$23,579.57
$10,200.00
$27,500.00
$0.00
$0.00
2018/2019
$822.96
$2,141.81
$9,875.57
$25,701.73
$10,200.00
$27,500.00
$0.00
$0.00
Assumptions:
1. 2012/2013 and 2013/2014 Actual Rates
2. 9% Annual Premium Increase (2014/2015 to 2018/2019)
3. Threshold = $10,200 Individuals and $27,500 Families
53
Questions and Answers
54