Transcript Document

THE KINNEY FIRM
MARK J. KINNEY
(952) 892-7022
[email protected]
The Affordable Care Act – Developments and
Implications for Cities and Counties
South Central Service Cooperative
August 30, 2013
Introduction
• The Patient Protection and Affordable Care Act
(ACA) faces ongoing challenges
• Federal agencies have been unable to meet timelines
for issuing required guidance on key issues
• Technical and logistical issues challenge exchanges
• Political opposition continues; debt ceiling fight
looms in September
• Key provisions delayed
COPYRIGHT © 2013 MARK KINNEY
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AUGUST 30, 2013
Delay in Employer Penalties to 2015
• No penalties will be assessed against “applicable
large employers” in 2014 for failing to offer coverage
in compliance with federal standards. Until 2015,
– Employers will not be assessed $2,000 per full-time
employee (less the first 30) for failing to offer coverage
to 95% of their full-time employees
– Employers will not be assessed $3,000 for each
employee who becomes entitled to a subsidy on the
exchange because employer-sponsored coverage is
not “affordable” or does not provide “minimum value”
• Reprieve is temporary; penalty scheme applies in
2015
• Other provisions of the ACA will continue on track
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AUGUST 30, 2013
Concerns Remain
• Pay or Play rules have been delayed but not suspended:
many public employers face an unfunded mandate
• Unions concerned over reduction in hours to avoid new
coverage mandates. James Hoffa of the Teamsters
expressed these concerns in a recent letter to Pelosi and
Reed:
Right now, unless you and the Obama Administration enact
an equitable fix, the ACA will shatter not only our hardearned health benefits, but destroy the foundation of the 40
hour work week that is the backbone of the American middle
class.
• Anecdotal reports of hours reduction throughout public
sector (i.e., State of Virginia cutting hours for 7,000
government workers to 29 hours a week)
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AUGUST 30, 2013
Applicable Large Employers
• Status based on prior calendar year
• 50 full-time employees or full-time equivalents (FTEs)
• Employers at or near this level should start tracking
hours on January 1, 2014
• Controlled group rules must be taken into account in
determining whether employees of more than one
entity must be counted
• Public employers may have opportunity to modify
controlled group status by changing makeup of
boards of directors
• Analysis required for leased employees, independent
contractors, seasonal workers
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AUGUST 30, 2013
Measurement and Stability Periods
• Without planning, pay or play penalties may be
incurred on a monthly basis in 2015 as employees
move in and out of eligibility for subsidies based on
hours worked
• Safe harbor rules allow employers to identify fulltime employees over “look back measurement
periods” and offer coverage during “stability
periods”
• Employers with calendar year plans need to
establish these policies now for 2015
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AUGUST 30, 2013
Sample Measurement Periods for Ongoing
Employees in Calendar Year Plan
• First stability period:
– January 1, 2015 through December 31, 2015
• Administrative period (open enrollment):
– October 15, 2014 through December 31, 2014
• First lookback measurement period
– October 15, 2013 through October 14, 2014
• Transition rules in proposed regulation allowed
initial 6-month lookback measurement period with
12-month stability period.
• Transition rule may not be included when
regulations are finalized – not needed.
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AUGUST 30, 2013
Variable Hour and Seasonal
Employees
• Measurement period begins on date of hire (or first day of
calendar month following hire date)
• Employers may prefer longer measurement period to delay
cost increase (up to 12 months permitted)
• Administrative period can be shorted to 1 month
• Stability period may not be shorter than measurement
period
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VARIABLE HOUR/SEASONAL EMPLOYEE
Init Msmt Period 6 Start 9 1 2014
Admin Period
3.0
Stability Period 12
31
Yes
2012
J F M A M J
2013
2014
J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
2015
J F M A M J
2016
2017
J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
ONGOING EMPLOYEE
Stnd Msmt Period 12 Start
Admin Period
3.0
Stability Period 12
10 1 2014
Employee:
Anderson, John F.
Average Weekly Hours During Stnd Measurement Period:
Is Employee Entitled to Coverage During Stability Period?
29
No
2012
J F M A M J
2013
2014
J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
2015
J F M A M J
2016
2017
J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
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Employee:
Anderson, John F.
Average Weekly Hours During Initial Measurement Period:
Is Employee Entitled to Coverage During Stability Period?
AUGUST 30, 2013
Same-Sex Marriage and Benefits
• Defense of Marriage Act (DOMA) found unconstitutional in
United States v. Windsor
• Minnesota legalized same-sex marriage effective August 1,
2013
• Same-sex spouses in Minnesota will be entitled to
coverage in public employer group health plans, whether
insured or self-insured
• Same-sex spouses in Minnesota will be treated the same
as opposite-sex spouses for all other benefits in public
employer plans
• Benefits provided to same-sex spouses in Minnesota will
receive favorable tax treatment on both the state and
federal level
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Collective Bargaining Reopeners
• “Final regulations have not been issued under many
provisions of the Patient Protection and Affordable
Care Act (ACA). This creates considerable
uncertainty regarding the Employer’s financial
obligations. This agreement may be reopened and
all material terms of compensation, hours, and fringe
benefits (include health benefits) may be subject to
negotiation and change as reasonably necessary to
comply with the ACA and to address any increase in
cost that the ACA may require.”
• Some state laws prohibit reopening collective
bargaining agreements (e.g., Minn. Stat. Sec.
179A.20).
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AUGUST 30, 2013
2013 RFP – Major Medical
• Public Notice in seven regional newspapers and Star
Tribune
• Outreach to other Minnesota health insurance carriers
and third party administrators
• Incumbent BCBS submitted only bid
• Other potential bidders declined to bid. Reasons
included:
– Focus on ACA compliance burdens
– Perceived difficulty to win on price alone
• Service Cooperatives committed to improving ties with
competitors outside RFP process
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BCBS Bid Highlights
• Overall increase in administrative fees of 6%;
maximum 5% increase in years 2 and 3
• Actual administrative fees will vary based on plan
type
• Impact moderate because administrative fees are a
small portion of total expensive (approximately 5%)
• New provider contracts focus on accountable care
• Potential for decrease in trend for claims
(representing approximately 95% of costs) due to
focus on quality and cost efficiency
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AUGUST 30, 2013
2013 RFP on VEBA, HSA, HRA, FSA
• Initial bid by SelectAccount increased administrative
fees by more than 80%
• HealthEquity offered much lower rates, but paid less
interest on cash balances in VEBA and HSA
• Responding to competition, SelectAccount lowered
fees and HealthEquity increased interest payable
• Taking into account both rates and interest payable,
SelectAccount offered statewide advantage of
approximately $189,000 per year
• Bid awarded to SelectAccount; HealthEquity remains
viable future prospect
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AUGUST 30, 2013
2013 RFP on VEBA, HSA, HRA, FSA
• Administrative fees for multiple stacked accounts
(VEBA, HSA, HRA and/or FSA) increased from $1.83
to $2.11 per employee per month (pepm)
• Lower fees apply to standalone Thrift or Basic VEBA
or HSA
• Slightly higher fees will apply after 2014 for groups
that do not utilize web-based enrollment tool, ACH
deposits, and debit cards or crossover
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AUGUST 30, 2013
Notice Pursuant to Treasury Department
Circular 230, and Disclaimer
To comply with certain Internal Revenue Service ("IRS") rules, we
must inform you that any U.S. federal tax advice contained in this
presentation, including handouts or verbal explanation, is not
intended or written to be used, and cannot be used, by any person
for the purpose of avoiding any penalties that may be imposed by
the IRS. Under IRS rules governing tax advice, a taxpayer may rely
on professional advice to avoid federal tax penalties only if that
advice is provided in a tax opinion that conforms with extensive
federal requirements. We understand that you do not intend to use
or refer to anything contained in this presentation to promote,
market, or recommend any particular entity, investment plan, or
arrangement.
DISCLAIMER: This presentation is intended for general information
purposes only. It does not create an attorney-client relationship
and should not be construed as legal advice or legal opinions on
any specific facts or circumstances.
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