Transcript Summaries of Benefits and Coverage (SBCs)

Danny Miller
Partner, Conner & Winters, LLP
Agenda
• Introduction of Danny Miller
• Preventive Care Coverage
• Exemption for Religious Employers
• Additional Changes
• Market Reforms
• Q&A
• About GuideStone
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Healthcare Reform:
What’s Next?
Webinar
January 31, 2013
Danny Miller
© 2013 Conner & Winters, LLP
1627 I Street NW, Suite 900
Washington, D.C. 20006
PREVENTIVE CARE COVERAGE
PREVENTIVE CARE
• Effective for plan years beginning on or after
9/23/2010, plans must:
– Provide coverage for designated preventive care
services
– Cover such services without the imposition of any
cost-sharing requirements (such as a co-payment,
co-insurance or deductible)
• Not applicable to grandfathered plans
COVERED PREVENTIVE CARE SERVICES
• Evidence-based items/services rated A or B in U.S.
Task Force recommendations
• Immunizations for routine use
• Preventive care and screenings for infants,
children and adolescents
• Preventive care and screenings for women
For a complete list of covered services, see:
www.healthcare.gov/center/regulations/prevention.html
COVERAGE FOR CONTRACEPTIVES
• Effective for plan years beginning on or after
August 1, 2012, preventive care services must
be provided to women without imposition of
cost-sharing include contraceptives.
• Regulations exempt certain “religious
employers” from the requirement to provide
contraceptives without cost-sharing.
EXEMPTION FOR RELIGIOUS EMPLOYERS
“Religious employer” for purposes of exemption must
meet four requirements. The employer must meet all of
the following:
• Have the inculcation of religious values as its purpose
• Primarily employ persons who share its religious
tenets
• Primarily serve persons who share its religious tenets
• Be a church or integrated auxiliary of a church
Note: There is no explicit exemption for a church.
EXEMPTION FOR RELIGIOUS EMPLOYERS
Temporary Enforcement Safe Harbor
One year delay in effective date of rule for certain
religious organizations not entitled to the exemption
must:
• Be a non-profit entity
• From 2/10/2012 onward, not have provided some
or all of the contraceptive coverage otherwise
required at any time because of religious beliefs of
organization
• Provide notice to participants
• Self-certify that it meets the above requirements
EXEMPTION FOR RELIGIOUS EMPLOYERS
Notice of Proposed Rulemaking:
• Expressed intent is to address objections of many
religious organizations not otherwise covered under
the religious employer exemption.
• Two primary goals:
– Maintain provision of contraceptive coverage
without cost-sharing to individuals covered through
religious organizations in simplest way possible
– Protect such religious organizations from having to
contract, arrange, or pay for contraceptive coverage
EXEMPTION FOR RELIGIOUS EMPLOYERS
Notice of Proposed Rulemaking (cont’d)
• Seeking comments on proposals:
–
Insurance companies would cover
contraceptives free of charge if the religious
organization chooses not to.
–
In case of self-funded plan, TPA would provide
contraceptive coverage at no cost to
participants.
–
Religious organizations will not be required to
subsidize cost.
EXEMPTION FOR RELIGIOUS EMPLOYERS
•
•
Congress is considering legislation to broaden
religious conscience exemption:
–
Rubio-Blunt attempt to enact legislation allowing
all employers (not just church-related employers)
to decline to cover medical services that are
contrary to their religious beliefs was defeated in
Senate.
–
Churches and religious organizations are working
with members of Congress to secure legislation to
broaden the definition of religious employer.
Numerous lawsuits have been filed challenging
the religious conscience exemption.
ADDITIONAL CHANGES
NEAR-TERM PROVISIONS
Health FSAs Limited to $2,500
2013
Notice of Exchange Eligibility
2013
Comparative Effectiveness Fee1
2013
Quality of Care Reporting
2013
Risk Adjustment Fees1 for Exchanges
2014
1
These fees apply to both insured and self-insured plans.
ADDITIONAL COMING CHANGES
Exchanges, Subsidies and Market Reforms
2014
Large Employer (200+) Automatic Enrollment
2015
Exchanges for Large Employers (100+)
2017
Cadillac Plan Tax
2018
MARKET REFORMS
2014: FOUR COMPLEX MECHANISMS
• Individual Mandate
– Individual Insurance Market Reforms
• Health Insurance Exchanges
– Government Assistance for Modest Income 
Premium Tax Credits (PTCs) (federal subsidies)
• Employer Shared Responsibility (“pay or play” or
employer mandate)
• Expanded Medicaid
HEALTH INSURANCE EXCHANGES
• Exchanges: Competitive, regulated marketplaces
for individuals and small employers to obtain
health insurance.
– Exchange plan premiums subsidized with PTC for
individuals with household income less than 400% of
federal poverty level (FPL).
 Household income = modified adjusted gross
income (MAGI).
– Individuals with Medicare, Medicaid or “affordable”
employer coverage are excluded from these
exchange subsidies.
HEALTH INSURANCE EXCHANGES
• State-based (or regional) single risk pool.
– Many states not ready; Federal exchange will step in.
• Only “insurance companies” may offer coverage
through Qualified Health Plans (QHPs)
• Premium rate variation limits: Age (3:1 limit),
tobacco use (1.5:1), family size and geography
• Platinum (90%), gold (80%), silver (70%) and
bronze (60%) plans
QUALIFIED HEALTH PLANS
• Must be issued by licensed provider.
• Must provide an “essential health benefits
package”
• “Essential health benefits package” refers to
coverage that:
– Provides essential health benefits
– Does not exceed specified out-of-pocket and
deductible limits
– Does not impose a deductible on preventive
health services
STATUS OF STATE EXCHANGES
WHO CAN ACCESS EXCHANGES?
• U.S. Citizens and Legal Residents not
incarcerated
• Small employers (<100 employees)
– Large employers (100+ employees) after
2017 (at State discretion)
EXCHANGE SUBSIDIES
•
•
•
Premium paid by individual/household limited from 2% to
9.5% of household income (this applies regardless of actual
total premium for exchange plan coverage)
Federal “subsidies” are a Premium Tax Credit (PTC)
Claimed on individual’s tax return (April following the
applicable tax year)
– Refundable (can exceed federal income taxes)
 Timing/cash flow issue for those needing the
assistance
– Can be advanced (during the tax year (up to 16 months
before return is filed))
– Assignable (payable directly to health insurance
company (exchange plan))
EXCHANGE PTCS
Individuals (households)* with MAGI between 100%
FPL and 400% FPL receive PTC to purchase exchange
coverage.
FPL 2014 (est.)
Individual
Family of 4
100%
$11,850
$24,450
400%
$47,400
$97,800
* PTCs are not available to employees of plan sponsors adopting exchange
plans as employers.
WHO QUALIFIES FOR PTCS?
Individuals purchasing a Qualified Health Plan (QHP)
on an exchange who are not:
• Covered by Medicare or Medicaid
• Covered by other government coverage, e.g., CHIP,
TRICARE, VA, etc.
• Offered an affordable employer plan that covers
minimum value
• Enrolled in an employer plan (even if not
affordable)
MINIMUM VALUE
• Minimum value: Employer plan must pay 60% of
total costs of plan (actuarial determination).
– Employees whose employer plan does not cover
minimum value can opt-out and seek PTCs for
exchange coverage.
• It may be difficult for consumer-driven or high
deductible plans to satisfy this requirement.
“AFFORDABLE” COVERAGE
•
•
•
Employee’s required contribution (share of premium)
for participant-only (single) coverage under employer
plan cannot exceed 9.5% of household income*
(MAGI).
Safe Harbor (proposed): Employers may use
employee’s W-2 compensation.
It appears that an employer could charge more for
dependent coverage and not create an affordability
issue — however, this is still not clear.
* Employers often have little information about employees’
household income.
No
Yes
Yes
No
No
No
Yes
Yes
ILLUSTRATIVE EXCHANGE PREMIUMS
% FPL
138%
150%
200%
250%
300%
400%
MAGI
Single
$16,353
$17,775
$23,701
$29,626
$35,551
$47,401
Maximum Monthly Contribution
(Share of Premium)
Family of 4 % of MAGI
Single Family of 4
$33,746
3.00%
$41
$84
$36,681
4.00%
$59
$122
$48,907
6.30%
$124
$257
$61,134
8.05%
$199
$410
$73,361
9.50%
$281
$581
$97,815
9.50%
$375
$774
INDIVIDUAL MANDATE
Beginning 2014, penalty (tax) applies to individuals:
•
Who have income above threshold level ($9,350 –
single; $18,700 – married filing jointly); and
•
Who do not enroll for healthcare coverage.
Penalty =
•
2014: Greater of $95 or 1% of income
•
2015: Greater of $395 or 2% of income
•
2016: Greater of $695 or 2.5% of income
For family, penalty capped at 300% of individual rate
EMPLOYER MANDATE
• Effective 2014, there are penalties for large employers
that offer no coverage or provide inadequate/
unaffordable coverage.
• A “Large employer” is one with 50 or more full-time
equivalent employees.
– Who is an FTE?
 Employees who work 30 or more hours/week
 Full-time equivalent employees (total, aggregate
monthly part-time hours / 120)
• Penalties apply only if at least one full-time employee
participates in and receives subsidies from an
exchange.
EMPLOYER MANDATE
• Penalties for large employers that fail to offer
“minimum essential coverage”:
– Must pay excise tax for each FTE (after
subtracting first 30 FTEs)
– Excise tax = 1/12 of $2,000 for each month in
which at least one FTE receives subsidies from
exchange
•
“Minimum essential coverage” includes coverage
under an “eligible employer-sponsored plan.”
•
Preamble to proposed subsidy regulations
indicates self-insured plans can be “eligible
employer-sponsored plans.”
EMPLOYER MANDATE
• There are penalties for large employers that
offer “inadequate” or “unaffordable”
coverage.
• Excise tax = lesser of:
– $3,000 for each FTE receiving subsidy; or
– $2,000 for each FTE (not including first 30
FTEs).
Note: Part-time employees are not included
in penalty calculation even though they are
counted for purposes of determining if
employer meets the 50 FTEE threshold.
Are you a large employer?
(at least 50 FT equivalent workers)
Including FT (30+ hours/week) and PT workers (prorated)
Excluding seasonal workers (up to 120 days per year)
Are any of your FT employees receiving
premium credit for exchange coverage?
No
Penalty
Do you have more than
30 FT employees?
Do you provide health
insurance?
No
Pay monthly
penalty 1/12 x
$2,000 x (number
of FT employees –
30)
Pay monthly penalty, lesser of:
1/12 x $2,000 x (number of FT
employees – 30)
1/12 x $3,000 x (number of FT
employees receiving credits for exchange
coverage)
QUESTIONS?
• How will the following types of employees be counted
for purposes of the “pay or play” penalties?
– Full-time or part-time faculty (where FT/PT status is
determined based on credit hours)
– Adjunct faculty
– Student workers and/or student spouse employees
• Does affordable medical coverage of full-time employees
include coverage for spouses and children?
• What constitutes “acceptable coverage” in PPACA?
QUESTIONS?
• What “access” to affordable healthcare do employers in
Texas have to provide their employees?
• Will either FT or PT student workers be exempted from
eligibility for employer health insurance when employed
by the college at which they are enrolled? Will the
eligibility standards be the same as for FICA and FUTA?
• What policies should colleges implement for summer,
seasonal workers to avoid incurring the cost of these
workers becoming eligible for employer-provided health
coverage?
QUESTIONS?
• How does an employer decide whether it is better to
just pay the penalty as opposed to providing coverage?
• Is there any precedent as to whether an employer, who
elects to pay the penalty in the beginning and then finds
the penalty increasing above the probable cost of
obtaining insurance, will be able to return to offering
insurance?
• How does the law affect HRAs? Will schools that offer
just an HRA be subject to a fine for not providing
healthcare coverage?
QUESTIONS?
• In states that do not offer state-run exchanges, how can
employers get information on the rules for federal-run
exchanges? Will employers with under 100 employees
be eligible?
• How will this impact group student plans?
• Will Christian communities be asked to compromise any
foundational Biblical principles with the new reforms?
• Where does the health reform act stand on the
abortion/birth-control issue?
GuideStone and
healthcare reform
• Next steps:
• Full Implementation
• Impact to churches/institutions and GuideStone
coverage
• Stay informed!
• Healthcare reform education:
www.GuideStone.org/HealthReform
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Resources
• Visit us at www.GuideStone.org or call us at
1-888-98-GUIDE (1-888-984-8433)
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