Transcript Document

Health Care
Reform:
Top Employer
Questions
November 2013
Health Care Reform
Affordable Care Act
• Enacted in March 2010
• Makes significant changes to health care system
• Implementation continues through 2020
Provisions that impact:
• Health care providers
• Government programs
• Health insurance issuers
• Employers/plan sponsors
• Individuals
Most employers that offer
health plans will be
impacted in some way
2
Public Opinion of ACA
• 55% say they have enough info
to understand how it will impact
their own family (^8%)
• 64% say they have not been
personally impacted so far
• 23% say impacted negatively
(higher cost, impact on job,
changes to benefits)
• 14% say positively impacted
(dep age, lower costs, better
access)
www.kff.org October 2013
3
Delay, Amend, Rescind
At least 14 changes, some minor
•
Delay Auto Enroll
•
W-2 Informational Reporting (250 or more W-2’s)
•
Large Employer Mandate (Pay or Play) (50 employees)
•
Time to send Exchange Notices
•
Delay on Full Time Employee Hours
•
Delay on SHOP Exchange
4
Q: What is a grandfathered
plan (and do I have one)?
Grandfathered Plans
Definition
• Health plan or health insurance coverage
that covered individuals on March 23, 2010
• Determination made separately for each
benefit package
Requirements
• Do not significantly change costs or benefits
• Provide notice to participants and
beneficiaries in plan materials
• Keep records of plan terms
Status
• Depends on each plan
• New plans are not grandfathered
• Check with your broker or carrier
• Does not automatically expire
6
Changes to Grandfathered Plans
Permitted Changes
• Routine coverage
changes
• Premium changes*
• Adding new
employees or family
members
• Changing insurance
carriers
Prohibited Changes
• Significantly reducing
benefits
• Increasing
coinsurance
• Significantly
increasing copays or
deductibles
• Adding annual limit
• Significantly reducing
employer contribution
(by more than 5%)
7
My Plan is Grandfathered.
So What?
Grandfathered plans do have to comply
with many health care reform rules
• Cover Adult children up to • Provide SBC (Summary of
age 26
Benefits and Coverage)
• Cannot have Annual or
Lifetime Maximum on
Essential Health Benefits
• Health status
nondiscrimination
8
My Plan is Grandfathered.
So What?
Grandfathered plans are exempt from
some health care reform rules
• Cover preventive health care • Nondiscrimination rules for
services for free
fully-insured plans
• Guarantee your Right to
Appeal
• Quality of care reporting
• Essential Health Benefits
coverage
• Cost-sharing limitations (OOP
max and deductibles)
• Clinical trial coverage
requirements
• Protect your choice of
doctors and access to
Emergency Care
9
Q: What is an Exchange or
Marketplace?
Exchanges
Small Businesses
If up to 100 employees,
can buy thru Exchange
Under 50 employees
2014 & 2015
A web portal
“marketplace”
for health
insurance
Individuals
(no subsidies for ones offered
employer-based coverage, unless
that coverage is “unaffordable”)
Self-insured plans
not eligible to
Participate
Federal Government
• sets criteria for plan participation
and purchaser eligibility
• provides subsidies for small businesses
and individuals
• sets up Exchange if a state fails to
©2010 Steptoe &
States
• each sets up own Exchange
• will be involved in premium
reasonableness reviews; can
approve/reject as provided
under state law
Continuum of Exchange Options
State-based Exchange
State operates all exchange activities
16 states plus DC, approximately 34.9% of population
State-Federal Partnership Exchange
State operates plan management and/or consumer
assistance activities; may determine Medicaid/CHIP
eligibility
9 states, approximately 12.5% of population
Federally-Facilitated Exchange
HHS operates all exchange activities; state may
determine Medicaid/CHIP eligibility
25 states – approximately 52.6% of the population
Qualified Health Plans (QHP)
Offered
by an approved insurer
Certified
to meet Exchange
requirements
Offers
essential health benefits
Meets
cost-sharing limitations
Priced
like plans outside the
Exchange
Apples to apples...
Provides
bronze, silver, gold or platinum coverage
(or catastrophic plan for young individuals)
14
SHOP Exchange
•
Small Business Health Option Program (SHOP) – Exchange for
small employers
•
DELAYED at least 1 year on Federal Exchange
2014-15
• States can
limit size to
up to 50
employees
•
2016
2017
• States must
increase
size to up
to 100
employees
• States can
let any size
employer
participate
Small employers can offer employees enrollment in a Qualified
Health Plan through a SHOP
− Can offer benefits through a cafeteria (Section 125) plan
− Exchange sets contribution methods
15
Q: Who can shop for
coverage in an
Exchange/Marketplace?
Exchange Eligibility
Individuals
Small Employers
(SHOP Exchanges)
• Citizen or legal resident
• Not incarcerated
• Reside in state covered by
Exchange
• Separate from subsidy
eligibility rules
• Qualify as a small
employer based on size
• Offer QHP coverage to at
least all FT employees
• Use SHOP in primary office
location or employee’s
primary worksite location
Most individuals can shop for Exchange coverage
(even if eligible for employer coverage)
17
Exchange Subsidies
Provide assistance to low-income individuals:
• 100%-400% of federal poverty level (chart)
• Not eligible for government programs that provide
coverage
To help pay premiums or reduce cost-sharing
(deductibles, out of pocket costs)
Not available to individuals who are:
• Eligible for affordable, minimum-value employer
coverage or
• Enrolled in an employer plan
18
2013 Federal Poverty Level Chart
Household
Size
1
2
3
4
5
6
7
8
100%
$11,490
$15,510
$19,530
$23,550
$27,570
$31,590
$35,610
$39,630
133%
$15,282
$20,628
$25,975
$31,322
$36,668
$42,015
$47,361
$52,708
200%
300%
400%
$22,980 $34,470 $45,960
$31,020 $46,530 $62,040
$39,060 $58,590 $78,120
$47,100 $70,650 $94,200
$55,140 $82,710 $110,280
$63,180 $94,770 $126,360
$71,220 $106,830 $142,440
$79,260 $118,890 $158,520
In States that expanded the Medicaid to include those people making up to 138% of FPL, those
people will be covered by Medicaid. In states that opt out of expanding Medicaid, some people making
below this amount will still be eligible for Medicaid, some will be eligible for subsidized coverage
through Marketplaces, and others will not be eligible for subsidies.
Q: When is Exchange
enrollment?
Exchange Enrollment
Restrictions apply to timing of enrollment
to prevent adverse selection
Individuals
• Initial enrollment:
Oct. 1, 2013-March 31, 2014
• Selections must be made by
Dec. 15 for Jan. 1 coverage
• Annual open enrollment:
Oct. 15-Dec. 7
• Special enrollment for
qualifying events
• Update – No penalty for 2014
as long as you apply by
March 31, 2014
Small Employers
• Can buy coverage for
employees any time after
Oct. 1, 2013
• 12 month plan year
required
• Annual election periods
apply
• Special enrollment for
employees with qualifying
events
21
Q: What information do I have to
give my employees about the
Exchange?
Notice to Employees of Coverage
Options
Current employees:
by Oct. 1, 2013
•
New employees hired after Oct. 1:
within 2 weeks of hire
•
Employers subject to
FLSA must inform all
employees of Exchange
information
Include information on:
− Exchange and services
− Potential subsidy eligibility
− Impact on employer
contribution
•
Model notices available
DOL: no legal penalties for failing to provide
notice, but compliance encouraged
Other consequences may apply (?)
Delivering the Notice
May be
provided
by firstclass
mail
Must be provided in
writing
• In a manner calculated
to be understood by the
average employee
May be
provided
electronically
(if DOL
requirements
are met)
24
COBRA and Exchanges
•
COBRA Model Notice was revised to include
language encouraging Qualified Beneficiaries (QBs)
to explore coverage through the Health Insurance
Marketplace
•
Loss of employer coverage is an Exchange/
Marketplace special event to allow enrollment
•
QBs may be eligible for Subsidy through exchange if
they decline COBRA
•
If they elect COBRA they are not eligible for subsidy
as they are covered by an employer plan
25
Q: What fees do we have to pay
under health care reform?
Who pays for the Affordable Care Act?
•
•
•
•
•
•
•
•
Drug Manufacturers
Health Insurers
Medical Device Manufacturers
Indoor tanning services
0.9% Individual Medicare Tax increase Earned
Income (1/1/2013)
3.8% Medicare Tax Net Investment Income (1/1/2013)
Taxpayers, in part through the Individual Mandate
Employers/Health Plans, in part through the Business
Mandate
27
Patient-Centered Outcomes
Research Institute (PCORI) Fees
•
Fee to fund research on informed health decisions
•
Paid by issuers and self-funded plan sponsors
− Special rules for multiple self-funded plans (including HRAs)
•
Paying the fee
− Using Form 720 by July 31 each year
− Beginning with plan years ending on or after Oct. 1, 2012
− Ending with the 2018 plan year
2012 plan year
$1 x average number
of covered lives
(belly buttons)
2013 plan year
$2 x average number
of covered lives
2014 and beyond
Increase based on
National Health
Expenditures
28
Reinsurance Fees
•
Fee to fund reinsurance program to stabilize
individual insurance market
− Program to operate 2014-2016
− Update – some groups will be exempted for paying fees in
2015 & 2016
•
Paid by health insurance issuers and self-funded plan
sponsors (with some exceptions)
•
Fees based on annual national contribution rate
− 2014: $5.25/month ($63/year) x avg number of covered lives
Nov. 15
Submit enrollment
count to HHS
Dec. 15 (or 30 days)
HHS notifies
issuer/sponsor of
amount due
30 days
Payment due
29
Health Insurance Providers Fee
•
Annual fee on health insurance providers
− Effective in 2014
− Due Sept. 30 each year
− Allocated according to market share: $8B in 2014 - $14.3B in
2018 (based on premium growth in later years)
Applies to:
Does not apply to:
Covered Entities
Companies with $25M or
less in net premiums
Including health
insurance issuers and
HMOs
Self-insured employers
Government and
non-profit entities
VEBAs
30
Indirect Employer/Health Plan Costs
•
TPA Fees
•
IRS Compliance and Reporting
•
Technical Systems for Compliance
•
Workforce Analytics
•
Employee Communication & Education
31
Q: Do I have to offer health
coverage to my employees?
Employer Shared Responsibility
Rules (Pay or Play)
Small Employers
(fewer than 50
FT/FTE
employees)
• No requirement to offer coverage
• Can get tax credits for providing
coverage
Large Employers
(50+ FT/FTE
employees)
• Must offer coverage to FT employees and
dependents to avoid penalties
• Coverage must be affordable and provide
minimum value
• Penalties delayed until 2015
33
Potential Penalties
Penalty A
• Employer did not offer coverage to substantially
all FT employees and dependents (children)
• $2,000 x (all FT employees – 30)
Penalty B
• Employer offered coverage to substantially all FT
employees/dependents
• But not all employees,OR coverage is not
affordable or does not provide minimum value
• $3,000 x each employee who gets subsidized
coverage (capped at Penalty A amount)
34
Avoiding Penalties
Offer coverage to FT employees and dependents that:
Is
affordable
•Employee’s contribution for selfonly (employee) coverage does
not exceed 9.5% of income
•Safe harbors for what income
and premium amount to use
Provides
minimum
value
•Plan covers at least 60% of costs
on average
•MV calculator or design-based
checklists
35
Q: Who is a full-time
employee?
Slides included but will not be covered –
Implementation Delayed
Full-time vs. Full-time Equivalent
If employer meets transition requirements can delay until 2015
Full-time employees
• Counted for large employer determination
• Must be offered coverage (along with dependents) to
avoid penalties
Full-time equivalent employees
• Counted as a fraction for large employer determination
• Do not have to be offered coverage
Seasonal employees
• Special rules apply for large employer determination
• Special rules apply for offering coverage (along with
variable hour employees)
37
Full-Time Employee
With respect to a calendar month
An employee who is employed on
average at least 30 hours of
service per week
130 hours of service in a calendar
month = the monthly equivalent of
30 hours of service/week
38
Full-Time Equivalent Employees
Add hours of
service in a month
for PT employees
(up to 120
hours/person)
Divide total hours
by 120
Result: Number of
FTEs for the month
39
Offering Coverage to FT Employees
New employees expected to work full-time
• Reasonably expected at start date to work full-time (not
seasonal)
• Offer coverage by end of first 3 full calendar months of
employment
Ongoing (current) employees
New variable hour employees
New seasonal employees
• Optional IRS safe harbor method to determine if they
average full-time hours over a period of time and must
be offered coverage
• “Look-back measurement method”
40
Safe Harbor for Variable
Hour/Seasonal Employees
Measurement Period
Counting hours of service (3-12 months)
Administrative Period
Time for enrollment/disenrollment (Up to 90 days)
Stability Period
Coverage provided (or not) – length depends on type of
employee and whether FT or not
41
Look-Back Measurement Method
2013
Nov. 1
Dec 31
Measurement Period
2014
Jan 1
Nov. 1
Measurement Period cont.
Dec 31
Admin Period
2015
Dec 31
Jan 1
Stability Period
42
Q: Can my plan still have a
waiting period?
Waiting Period Limits
•
Waiting periods limited to 90 days beginning with
2014 plan year
Strict 90 day limit
Other eligibility
conditions
permitted
• 1st of the month
following not
permitted
• DOL
recommendation:
use shorter period
for 1st of the month
enrollment
• Can’t use to avoid
90-day limit
• Limits on
cumulative hours
of service
requirement
(1200 hours/one
time only)
Variable hour
employees
• Measure hours for
up to 12 months to
determine FT status
• Offer coverage by
end of 13th month
44
Q: Can we give better benefits or
contributions to our executives
(or senior employees or some
other group)?
Nondiscrimination Rules May Apply
Prohibit discrimination in favor of
highly-compensated employees
Prohibited group and specific rules
vary by type of benefit
Discrimination has negative tax
consequences
Nondiscrimination Rules
Self-funded
Plans
Cafeteria
Plans
Fully-insured
Non-GF Plans
• Code section 105(h)
• Eligibility test
• Benefits test
• Eligibility to participate test
• Benefits and contributions test
• Concentration test
• Some safe harbors apply
• Rules similar to 105(h) will apply after
regulations are issued (no date given yet)
• Originally supposed to take effect in 2010
47
Questions?