Transcript Document

Affordable Care Act :
Are you prepared?
Jim Hill and Ken McGee
The Affordable Care Act is back on a fast track.
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Will I have to buy it
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Can I still get it though my
Employer
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I own a small business. Will I
have to buy health
insurance for my workers?
DOL Starts Auditing ACA Compliance
•The DOL has begun using its investigative authority to enforce compliance
with the health care reform law. DOL audit letters have been requesting that
health plan sponsors provide documents demonstrating compliance with
ACA’s mandates.
•The DOL’s audit requests related to ACA compliance have been divided into
three categories:
(1) requests for grandfathered plans
(2) requests for non-grandfathered plans
(3) requests for all health plans
Inadequate responses to the DOL could trigger additional document requests,
interviews, on-site visits and even DOL enforcement actions.
DOL Starts Auditing ACA Compliance
COMPLIANCE STEPS
In light of these risks, employers should be prepared to demonstrate their
compliance with ACA by producing documents.
Employers should maintain and be able to produce:
•Records of the steps they have taken to comply with ACA’s requirements,
including plan participation information and communications with participants
•Plan amendments or procedures that were adopted to comply with ACA, as
well as contracts or agreements with service providers, such as IROs and TPAs
•Notices that were provided under ACA, such as the notice of grandfathered
status and notice of enrollment for children up to age 26.
What is the ACA:
Promoting Health Coverage
Universal Coverage
Medicaid
Coverage
(up to 133% FPL)
Individual
Mandate
Health
Insurance
Market Reforms
Exchanges
(subsidies 133-400%
FPL)
Employer-Sponsored
Coverage
Reforms Currently in Place
Summary of Benefits and Coverage
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Simple and concise explanation of benefits
− Applies to GF and non-GF plans
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Model template and guidance available
− Instructions
− Sample language
− Uniform glossary of terms
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Final guidance specifies compliance deadlines
− Original deadline was March 23, 2012
SBC Compliance Deadlines
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Issuers to health plans: Sept. 23, 2012
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Health plans:
− Open enrollment: 1st day of the 1st open enrollment period
that begins on or after Sept. 23, 2012 or
− Other enrollment: 1st day of the 1st plan year that begins on
or after Sept. 23, 2012
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Special rules specify when SBC must be provided
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No duplication required: if issuer provides to
enrollees, plan doesn’t have to
Providing the SBC to Health Plans
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Issuers must provide SBC to health plans:
− Upon application
− Before the first day of coverage (if there have been changes
to the SBC)
− When a policy is renewed or reissued
− Upon request
Providing the SBC to Enrollees
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Plans must provide SBC to enrollees:
− For each benefit package offered or which they are eligible
− Annually at renewal (or 30 days before new plan year if
automatic renewal)
− With enrollment application materials (if no written enrollment
materials, when the participant is first eligible to enroll)
− Before the first day of coverage (if there have been changes
to the SBC)
− To special enrollees within SPD timeframe
− Upon request
60-Day Notice Rule
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Material modifications not in connection with
renewal must be described in a summary of material
modifications (SMM) or an updated SBC
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Material modification:
− Enhancement of covered benefits or services
− Material reduction in covered benefits or services
− More stringent requirements for receipt of benefits
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Must be provided at least 60 days BEFORE
modification becomes effective
Health FSA Limits
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Current limits
− No limit on salary reductions
− Many employers impose limit
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Beginning in 2013, limit is
$2500/year
− Limit is indexed for CPI for later years
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Applies to plan years beginning on or after 1/1/13
− This is a change from initial effective date
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Does not apply to dependent care FSAs
New Notice Requirement
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Employers must notify new employees regarding
health care coverage
− At time of hiring
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Notice must include information about 2014
changes:
− Existence of health benefit exchange
− Potential eligibility for subsidy under exchange if employer’s
share of benefit cost is less than 60 percent
− Risk of losing employer contribution if employee buys
coverage through an exchange
2014 Compliance Deadlines
Individual Mandate
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Effective Jan. 1, 2014: Individuals must enroll in health
coverage or pay a penalty
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Penalty amount: Greater of a flat dollar amount or a
percent of income
− 2014 = $95 or 1%
− 2015 = $325 or 2%
− 2016 = $695 or 2.5%
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Family penalty capped at 300% of the adult flat
dollar penalty or “bronze” level Exchange premium
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Some exceptions apply
Penalties for individuals
Outside exchange
– Fully insured
Small Group and
Individual
Outside
exchange –
Fully insured
Large Group
and self-insured
2017 and beyond:
Annual
adjustments
2016:
Greater of $695 or 2.5% of taxable
2015:
income
Greater of $325 or 2% of taxable income
2014:
Greater of $95 or 1% of taxable income
The big picture for individuals
Americans not covered under
a government plan will have three
options for health insurance in 2014:
1.
Get coverage through their
employer if available
2.
Buy an individual market
plan through either:
• The individual market exchange –
Purchaser may be eligible for subsidy
• The off-exchange market
3.
Go uninsured (will pay penalty
unless they qualify for an
individual exemption)
Health Insurance Exchanges
Health Insurance Exchanges
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What do they look like
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How many options will we have
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Actual Value out of Pocket levels
− Platinum
− Gold
− Silver
− Bronze
Health Insurance Exchanges
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Health insurance Exchanges will be established in
each state (by the state or the federal government)
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State action:
− 17 (and D.C.) declared state-based Exchange
− 7 planning Partnership Exchange
− 26 default to federal Exchange
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Deadlines
− Fully operational: 1/1/14
NH Exchange
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New Hampshire: 16,863 Granite Staters had selected
an Exchange plan as of 2/1/14.
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According to reports, more than 22,000 residents
received insurance cancellation letters.
Health Insurance Exchanges
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States will receive funding to establish health
insurance exchanges
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Individuals and small employers can purchase
coverage through an exchange (Qualified Health
Plans)
− In 2017, states can allow employers of any size to purchase
coverage through exchange
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Individuals can be eligible for tax credits
− Limits on income and government program eligibility
− Employer plan is unaffordable or not of minimum value
Health plan requirements: Product tiers
Platinum 90%
Gold
80%
actuarial value
actuarial value
All will include
Essential Health
Benefits
Silver
70%
actuarial value
Actuarial Value**
=
•Plus catastrophic plan
offering for individuals
younger than 30/
financial hardship
Bronze
60%
actuarial value
Total Expected Payments by Health Plans for
EHBs
Health Insurance Exchanges
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Individuals and small employers can purchase
coverage through an Exchange
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Small Business Health Option Program (SHOP)
− Small employers = up to 100 employees
− Before 2016, states can define small employers as having up
to 50 employees
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In 2017, states can allow employers of any size to
purchase coverage through Exchange
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Individuals can be eligible for tax credits
− Limits on income and government program eligibility
− Employer plan is unaffordable or not of minimum value
Employer Responsibility
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Large employers subject to “Pay or Play” rules
− Delayed for one year, until 2015 – these payments will not apply in 2014
− Delayed for an additional year, until 2016, for applicable large employers
with 50-99 full-time employees (including full-time equivalents)
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Applies to employers with 50 or more full-time equivalent
employees in prior calendar year
− FT employee: employed for an average of at least 30 hours of service per
week
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Penalties may apply if the employer:
− Fails to offer minimum essential coverage to all FT employees (and
dependents) OR
− Offers coverage that is not affordable or does not provide minimum value
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Penalties triggered if any FT employee gets subsidized coverage
through Exchange
Exchange Premium Assistance
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Employee eligibility will trigger employer penalties
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Employees who are not offered employer coverage
− Not eligible for government programs (like Medicaid)
− Meet income requirements (less than 400% of FPL)
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Employees who are offered employer coverage
− Not enrolled in employer’s plan
− Not eligible for government programs (like Medicaid)
− Meet income requirements (less than 400% of FPL)
− Employer’s coverage is unaffordable (greater than 9.5% of
income for single coverage) or not of minimum value (covers
less than 60% of cost of benefits)
Employer Penalty Amounts
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Employers that fail to offer coverage to all FT employees:
− $2,000 per full-time employee (excludes first 30 employees)
− Transition relief for 2015: employers with 100 or more FT
employees can reduce their FT employee count by 80 when
calculating the penalty
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Employers that offer coverage to substantially all FT
employees (and dependents) but not all FT employees
OR coverage is unaffordable or not minimum value:
− $3,000 for each employee who receives subsidized coverage
through an Exchange
− Capped at $2,000 per FT employee (excluding first 30
employees, or 80 for 2015)
Employer Reporting
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Employers will have to report certain information
about health coverage to the government and
individuals
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Applies to:
− “Applicable large employers” – generally, employers with at
least 50 full-time equivalent employees
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Delayed for one year, until 2015
− Treasury issued proposed regulations on Sept. 5, 2013
− No additional delay for applicable large employers with
fewer than 100 FT employees
Waiting Period Limitations
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Waiting periods limited to 90 days beginning with 2014
plan year
− Proposed rule issued on March 18, 2013 (may rely on proposed
rule through 2014)
− First of the month following 90 days not permissible
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Other eligibility conditions are permissible (unless
designed to avoid compliance with 90-day limit)
− Cumulative hours of service requirement cannot exceed 1200
hours and must be one-time only (not each year)
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Employers can use up to a 12-month measurement
period to determine FT status for variable hour employees
− Coverage must be effective by 13 months from start date (plus
remaining days in the month)
Plan Changes
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Annual limits eliminated
− Prohibited on essential health benefits with 2014 plan year
− Essential health benefits to be determined according to state
benchmark plan
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Preexisting condition exclusions prohibited
− Currently prohibited for children under age 19
− Prohibited for everyone beginning with 2014 plan year
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Small group and individual policies (non-GF plans)
− Must provide essential health benefits package
− Premium rating restrictions apply
Future Compliance
Deadlines
2018 – Cadillac Plan Tax
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40 percent excise tax on high-cost health plans
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Based on value of employer-provided health
coverage over certain limits
− $10,200 for single coverage
− $27,500 for family coverage
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To be paid by coverage providers
− Fully insured plans = health insurer
− HSA/Archer MSA = employer
− Self-insured plans/FSAs = plan administrator
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More guidance expected
Automatic Enrollment Rules
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Will apply to large employers that offer health
benefits
− Applies to GF and non-GF plans
− Large employer = more than 200 employees
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Must automatically enroll new employees and reenroll current participants
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Adequate notice and opt-out option required
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DOL:
− Regulations will not be ready to take effect by 2014
− Employers not required to comply until regulations issued and
applicable
Contact information
Linkedin-www.linkedin.com/in/thejimhill/
Facebook- http://www.facebook.com/jimhillcma
Thank you!