The Patient Protection & Affordable Care Act
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Transcript The Patient Protection & Affordable Care Act
THE PATIENT
PROTECTION &
AFFORDABLE CARE ACT
KATIE BURCH, ESQ.
POTTS-DUPRE DIFEDE & HAWKINS
WASHINGTON, DC
.
New Guidance
for 2013 and
Beyond
OVERVIEW
Background
Key Provisions
Implementation Delays
Upcoming Changes
State Exchanges
“Play or Pay” Employer Sponsored
Coverage
90-Day Waiting Period
Patient-Centered Outcomes Research Trust Fund
Transitional Reinsurance Program
Conclusion
BACKGROUND OF THE ACA
Main Goals:
Increase # of Americans with Health Coverage
Decrease Cost of Health care
Key Provisions
Individual Mandate
State Exchanges
Medicaid Expansion
IMPLEMENTATION DELAYS
Mid-Term Election of 2010
Republicans gained 63 seats in House, 5 seats in Senate
Republicans won 10 governor’s races in states held by Democrats
Litigation Challenges
Individual Mandate
Medicaid Expansion
Contraceptive Mandate
Supreme Court Decision (June 28, 2012)
Individual Mandate was constitutional as a tax
Provision allowing the Dept. of Health & Human Services to withhold
all Medicaid funding was unconstitutional
Election of 2012
UPCOMING CHANGES IN 2013 & BEYOND
State Exchanges
“Play or Pay” Employer-Sponsored Coverage
90-Day Waiting Period
Patient-Centered Outcomes
Research Trust Fund
Transitional Reinsurance
Program
STATE EXCHANGES
Online marketplaces where individuals
and small businesses can purchase health
insurance coverage
STATE EXCHANGES
Purchasing Coverage on the Exchange
Bronze – 60% actuarial value
Silver – 70% actuarial value
Gold – 80% actuarial value
Platinum – 90% actuarial value
Individual & Small Business Health Options Program (SHOP)
Exchanges
Who is Eligible for SHOP Exchanges?
Premium Tax Credits & Small Business Subsidies
STATE EXCHANGES
Offering Coverage on the Exchange
Must be a Qualified Health Plan (“QHP”)
What is a QHP?
Health Insurance Issuer
Certified by the State Exchange
Guaranteed Issue
STATE EXCHANGES
Multiemployer Plans on the Exchange
Purchasing coverage on the Exchanges?
Offering coverage on the Exchanges?
Not health insurance issuer
No guarantee issue
Future guidance to address Multiemployer Plans’ role in
Exchanges?
STATE EXCHANGES
State v. Federal Exchanges
As of January 4, 2013, 19 states, including DC, have have
declared to their intentions to run their states’ Exchange
marketplaces
7 states are planning for State-Federal Partnership Exchange
25 states will default to Federal Exchange
“PLAY OR PAY”
EMPLOYER SPONSORED COVERAGE
Beginning January 1, 2014, large employers must offer minimum
essential coverage to full-time employees and dependents
95% Threshold
Who is a Large Employer?
Employs an average of at least 50 full-time employees, including fulltime equivalent employees
Large Employer = (Full-time Employees + Full-Time Equivalent
Employees) / 12
“PLAY OR PAY”
EMPLOYER-SPONSORED COVERAGE
Who is a Full-Time Employee?
An employee is considered to be full time in any month if he or she is
employed at least 30 hours per week, or, if the employer elects, had
130 or more hours of service in the calendar month
Who is a Full-Time Equivalent Employee?
Total hours of service (not to exceed 120 for any employee) for all
employees who were employed on average less than 30 hours of
service per week for the month, divided by 120
“Hours of service” includes paid time off for vacation, holidays,
illness, disability, jury duty, military duty and leaves of absence, but
excludes service relating to non-U.S. sourced income
What about Seasonal Workers?
“PLAY OR PAY”
EMPLOYER-SPONSORED COVERAGE
Determining Coverage for New Hires: Variable Hour Employee
“Initial Measurement Period” – Safe Harbor
Between 3 and 12 months
Measure the new employee’s hours of service completed during the Initial
Measurement Period to determine whether the employee completed an
average of 30 hours of service per week or more
“Stability Period”
If the new employee is a full-time employee during the Initial
Measurement Period, the new employee is entitled to health coverage in
the subsequent Stability Period, regardless of the employee’s number of
hours of service during the Stability Period
Same length as the Stability Period for ongoing employees
At least 6 consecutive calendar months
No shorter than the Initial Measurement Period
Begins after the Initial Measurement Period and any associated Administrative Period
“PLAY OR PAY”
EMPLOYER-SPONSORED COVERAGE
Administrative Period
Employers may need time between the Measurement Period and the
associated Stability Period to determine which employees are eligible for
coverage, and then notify and enroll employees
Administrative period following the Measurement Period is related to the
90-Day Waiting Period Rule
“PLAY OR PAY”
EMPLOYER-SPONSORED COVERAGE
Determining Coverage for On -Going Employees
“Look-Back” Standard Measurement/Stability Period – Safe Harbor
A look-back of 3 to 12 months, as chosen by the employer, to determine
whether during the Standard Measurement Period the employee averaged
at least 30 hours of service per week
If the employee is considered a full-time employee, employee treated as a
full-time employee during the subsequent Stability Period, regardless of
the employee’s number of hours of service during the S tability Period
Who is an “On-Going Employee”?
Employed by the employer for at least one complete standard
Measurement Period
“PLAY OR PAY”
EMPLOYER-SPONSORED COVERAGE
What is Minimum Essential Coverage ?
Coverage is comprehensive and affordable
Comprehensive
Covers at least 60% of the total allowed cost of benefits that are provided
under the plan
Affordable
Employees’ contributions to health premiums are not more than 9.5% of
employees’ household incomes
Coverage offered to the employee is affordable based on the employee’s W-2
wages (as reported in Box 1)
“PLAY OR PAY”
EMPLOYER-SPONSORED COVERAGE
Penalties for Non-Compliance
Failing to Offer Coverage
Do not offer coverage and at least one full-time employee receiving
subsidized coverage in the Exchange:
Annual fee of $2,000 per full-time employee, BUT the first 30 employees are excluded
Example:
If the employer does not offer coverage for one month only
Penalty = 1/12 x $2,000 x (Number of full -time employees - 30)
Offering Inadequate Coverage
Unaffordable or inadequate coverage and at least one full-time employee
receiving subsidized coverage in the Exchange
Annual fee of $3,000 for each full-time employee receiving subsidized coverage, excluding
the first 30 employees
Example:
If the employer offers unaffordable coverage for one month only:
Penalty = 1/12 x $3,000 x (Number of full -time employees - 30)
“PLAY OR PAY”
EMPLOYER-SPONSORED COVERAGE
Penalties for Dependents?
An employer may also be subject to a penalty if it fails to offer
coverage to an employee’s dependents
BUT “Dependent” has been defined to only include an employee’s
children who are under 26 years of age
“Dependent” definition does NOT to include an employee’s
spouse
“PLAY OR PAY”
EMPLOYER-SPONSORED COVERAGE
Contributions to Multiemployer Plans
IRS requested comments in the most recent regulations for how the
“play or pay” requirements should apply to employers who contribute
to multiemployer plans
For 2014, an employer who contributes to a multiemployer plan will
be considered to have provided coverage to its full -time employee if:
Required to contribute under a collective bargaining agreement or related
participation agreement
Affordable, comprehensive coverage to employee (and dependents)
“Affordable” if the employee's required premium does not exceed 9.5% of the
wages reported to the multiemployer plan
“PLAY OR PAY”
EMPLOYER-SPONSORED COVERAGE
What Should Employers Being Doing to Prepare?
Large Employer?
Does health plan offer minimum essential coverage?
Is it “affordable”?
Is it “comprehensive”?
Adjustments to eligibility requirements to comply with Safe
Harbor methods?
90-DAY WAITING PERIOD
Section 2708 of the ACA – For plan years beginning on or
after January 1 , 2014, a group health plan or health insurance
issuer of fering health coverage cannot apply a waiting period
that exceeds 90 days
What is a Waiting Period?
Period of time that must pass before coverage for an employee or
dependent who is otherwise eligible to enroll for plan coverage can
become effective
i.e. Administrative Period
90-DAY WAITING PERIOD
How does it apply to:
Full-Time Employees?
Variable Hour Employees?
Part-Time Employees?
90-DAY WAITING PERIOD
Example (Variable Hour Employee):
ABC Company – Full-Time Employee Coverage Only (30 or more hours per
week)
Samantha’s start date is November 26, 2014
Samantha expected to work 20-45 hours per week
ABC Company’s Initial Measurement Period is 12 months
Samantha is determined to be eligible on November 25, 2015
If Samantha then elects coverage, Samantha’s first day of coverage will
be January 1, 2016
PATIENT-CENTERED OUTCOME
RESEARCH TRUST FUND (“PCORTF”)
What is it?
Funds the Patient-Centered Outcomes Research
Institute (“PCORI”)
What is the purpose of PCORI?
“To conduct research to provide information about the best available
evidence to help patients and their health care providers make more
informed decisions. PCORI’s research is intended to give patients a
better understanding of the prevention, treatment and care options
available, and the science that supports those options”
How is it funded?
Per Member fee on Group Health Plans and Health Insurance Issuers that
provides accident or health coverage
PCORTF (CONT’D.)
Who Pays the Fee?
Health insurers will pay the fee on behalf of their insured population
For self-insured plans, the fee is paid by the plan sponsor
For multiemployer plans, the plan sponsor is the board of trustees
DOL permits PCORI fee to be paid from plan assets under ERISA
PCORTF (CONT’D.)
When does the PCORI fee become effective?
Policy and plan years ending after September 30, 2012 and before
October 1, 2019
For calendar year plans, the requirement to pay fees begins with the
2012 plan year
When is Payment Due?
Report and pay PCORI fee no later than July 31 of the calendar year
following the last day of the policy or plan year
PCORTF (CONT’D.)
Fee Assessment
Fee Amount x Number of Average Covered Lives
Generally, fee amount is $2 per Member
Adjusted annually based on national health expenditures
What is a Covered Life?
All participants and beneficiaries, including retirees and those receiving
COBRA coverage
Calculating Average # of Covered Lives
Actual Method
Snapshot Method
Form 5500 Method
TRANSITIONAL REINSURANCE PROGRAM
ACA §1341 – Requires that a Transitional Reinsurance
Program be established in each State to help stabilize
premiums for coverage in the individual market from 2014
through 2016
$10 billion in 2014
$6 billion in 2015
$4 billion in 2016
What is the purpose of the TRP?
Designed to alleviate the need to build into premiums the risk of
enrolling individuals with significant unmet medical needs
(considered “high risk pools”)
TRANSITIONAL REINSURANCE PROGRAM
Who Pays?
Contributing Entities
Health insurance issuers and group health plans that offer major medical
coverage
Exclusions
HRAs, HSAs, FSAs, Employee Assistance Plans (EAP), Disease
Management Programs, and HIPAA-excepted plans (i.e. stand-alone
dental and vision plans)
TRANSITIONAL REINSURANCE PROGRAM
How does it work?
Dept. of Health & Human Services collects the reinsurance
contributions from all Contributing Entities
Allocated funds to the states based on need
States make reinsurance payments to individual market insurers that
cover “high risk” individuals
States can assess a higher reinsurance contribution within their
state, but cannot not assess this contribution against plans that are
governed by the Employee Retirement Income Security Act (ERISA)
TRANSITIONAL REINSURANCE PROGRAM
How is the fee calculated?
Estimated annual contribution rate will be
$63 per Covered Life in 2014
What is a Covered Life?
Includes Participant and all Dependents and Retirees (except for those for which Medicare is
primary)
Similar Counting Methods used to calculate PCORTF fees
# of Covered Lives x National Contribution Rate
Example
$63 per Covered Life x 15,000 Covered Lives = $ 945,000
RECAP
State Exchanges
“Play or Pay” Employer Sponsored Coverage
90-Day Waiting Period
Patient-Centered Outcome Research Trust Fund
Transition Reinsurance Program