Transcript W53_Radakovich_Emplo..

Employers and The
Affordable Care Act – Why
Are We Still Confused?
Presented by: Katherine L.
Radakovich, MBA, SPHR
Chief Human Resources Officer
Chartiers Center
Welcome
• Presenter introduction
• Show respect for differing ideas,
thoughts, and questions
• Silence electronic devices
• Time for Q & A will be provided at
the end of the presentation
• This is not a substitution for legal
advice
Katherine L. Radakovich, MBA,
SPHR
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Seminar Objectives
• Using the information provided
today, participants and Employers
will be able to:
– Recognize and understand key
components of the ACA
– Differentiate and analyze
compliance requirements
– Confidently create an action plan to
comply with the ACA and be ready
for a DOL audit
Katherine L. Radakovich, MBA,
SPHR
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How do you feel about
compliance and the ACA?
Katherine L. Radakovich, MBA,
SPHR
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PPACA
• PPACA –Patient Protection and
Affordable Care Act - ACA
• One of the most significant laws
affecting the workplace in recent
history
• Time to reshape benefit packages
• Communication is key
• Compliance delays
• Interpretation and guidance
changes on a daily basis
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SPHR
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Recent Top 5 Employer
Concerns
• May 2015 Fisher and Phillips LLP
released 5 current employer
concerns:
•
•
•
•
•
The employer mandate
The individual mandate
Wellness programs
Reporting requirements
Automatic enrollment and
nondiscrimination regulations
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SPHR
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Understand what is (and
is not) delayed
• Employer Mandate
– 2015 – large employers (with 100+
employees) are required to offer
ACA compliant (affordable) health
care coverage to 70% of their
employees. 95% in 2016 (1/1/15)
– Employers with 50-99 – delayed
requirement until 2016 (1/1/16)
– Also known as “shared
responsibility” or “play or pay”
Katherine L. Radakovich, MBA,
SPHR
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Understand what is (and
is not) delayed
• 2014 – Requirements (not delayed)
– Eliminating pre-existing conditions
exclusions
– Imposing the 90 day waiting period
– Eliminating annual dollar limits on
essential health benefits
– Include coverage for clinical trials
– Eliminating maximums on annual
deductions and limiting out of pocket
costs
– Eliminating the ability of
grandfathered plans to exclude adult
children who have access to other
employer coverage
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SPHR
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2014-2015 Requirements
• Individual Coverage Mandate
– Individuals are required to obtain
health coverage or pay a penalty
– Supreme Court rules it is
constitutional
• Health Insurance Exchanges
– States establish insurance
exchanges that sell qualified health
plans to individuals and small
business – or participate in the
Federal Exchange
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SPHR
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2014-2015 Requirements
• No Pre-existing Condition Limits
– Elimination of ALL pre-existing
condition exclusions
• Dependent Coverage Expansion
– Grandfathered plans may no longer
deny coverage to dependent
children even if they are eligible for
other employer coverage
– Spouses are not considered
dependents
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SPHR
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2014-2015 Requirements
• Limited Waiting Periods
– Group health plan waiting periods may
not exceed 90 days
– Coverage must begin on the 91st day of
employment
– June 2014 – Final Rule - Orientation
period can last 1 month before
beginning the 90 day waiting period
– This rule applies to plan years starting
January 1, 2015.
– Final rule defines the 1 month
orientation period beginning the first
of of employment and ends the same
day in the following month. Coverage
must start by the first day of the fourth
month.
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SPHR
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2014-2015 Requirements
• Wellness Programs
– Employers can offer employees
incentives up to 30 % (may increase
to 50%) of the cost of coverage for
participation in wellness programs
– HIPAA Wellness Program Rule
issued
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SPHR
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2014-2015 Requirements
• Automatic Enrollment
– Employers with more than 200 full
time employees are required to
auto-enroll employees in the health
plan
– Delayed until regulations are issued
• Employer Shared Responsibility
– Employers with 100 + employees
may face a penalty if the group
health plan does not provide
affordable, minimum essential
coverage to at least 70% of full time
employees.
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SPHR
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2014-2015 Requirements
• Provision applies if:
– The employer does not offer
minimum essential coverage to all
full-time employees and their
dependents
– The employer offers minimal
essential coverage that is not
considered affordable or does not
provide minimum value
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SPHR
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2014-2015 Requirements
• Additional reporting requirements
– Employers are required to file
annual reports with the IRS (and
provide annual statements to
employees)
– Must contain specific plan
information, and certification of
minimum essential coverage
– Reports due to employees by
January 31st of the following the
year the report is submitted to the
IRS
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SPHR
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Are you ready for a DOL
audit?
• Affordable coverage
– What is considered affordable coverage
under the employer mandate?
• Employee’s contribution to self only benefits
cannot exceed 9.5% of the employees
household income
• Employers have no practical way of knowing
what an employee’s “household income is”
• Employees can shop on the exchange if the
employer does not provide affordable or
minimum coverage
• Employees may qualify for federal tax credits
• In 2015 large employers will face fines of
$2000 per employee, for failure to provide
compliant coverage AND employees qualify for
tax credits (2016 Mid-size employers must
comply)
• Small employers (50 or less employees) are
not required to provide health care coverage
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SPHR
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Who is eligible for tax
credits?
• An employee qualifies for tax credits
when:
– Singles who make less than $46,000
– Family of 4 who earns less than $94,000
– Employers may pay fines up to $2,000 per
employee over the first 30 employees
– Employers may pay fines up to $3000 per
each employee that actually receives tax
credits
• If an employee seeks coverage on the
exchange AND the employer offers
compliant coverage the employee will
not receive tax credits and the employer
will not be assessed a penalty
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SPHR
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Safe Harbor Methods
• To be compliant with affordable
coverage – utilize safe harbor
methods:
– Employees required premium co-share for
the lowest cost, self-only coverage that
provides minimum value not being
greater than 9.5% of the employee’s W-2
taxable income
– Taxable calculation currently excludes:
• Employee’s contribution to health savings account
• Employer 401(k) plans, or other nontaxable Section 125
plans (cafeteria plans)
– Cost of Dependent coverage
• Not calculated in the affordable coverage percentage
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SPHR
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Safe Harbor Methods
– Coverage is minimum value if
• The plan covers 60% of an employee’s
medical expenses. (Actuarial value)
– Minimum value is provided prior to
Wellness program participation
• Minimum value calculation may be
calculated assuming that every
employee satisfies the terms of the
program relating to prevention or
reduction of tobacco use.
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SPHR
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Full Time Employees
• Under the Employer Mandate:
– Coverage must be provided to
employees who work an average of
30 or more hours per week
– The measurement period to meet
the 70% coverage and then 95%
coverage levels can be 3 -12 months
– Stability period cannot be shorter
than 6 months
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SPHR
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Qualifying for “fewer than
100 employees”
• Employers must certify
– Employer must average 50 full time
employees – includes part time employees’
whose combined hours equal full time
employee equivalents
– Feb 2014 – through the end of December
2014 – the employer cannot reduce its
workforce or hours of service to meet the
condition of having fewer than 100
employees
– Must maintain and/or not reduce the health
coverage offered as of February 2014 until the
last day of the 2015 plan year
– Employers are not penalized for employees
who receive Medicaid coverage
– Mandate delay adds to the penalty confusion
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SPHR
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Who is a Full Time Employee or a
Full Time Employee Equivalent?
• FTE = 30 hours/week average (130
hours/month)
• Hours include ANY PAID LEAVE
• Reasonable counting method
– Month to Month
• Penalty determined on a monthly basis
• 3 month breather if coverage is offered
the 1st day of the 4th month
– Measurement and Stability Period
– May use different methods or
measurement periods for different
classes
• Hourly v. Salary, Union v. Non-Union,
different states NOT variable hour v. non
variable hour
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SPHR
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Who is a Full Time Employee or
a Full Time Employee
Equivalent?
• Break in service/Leave of Absence
Rules
– Must treat rehired employees as
new employees
• If period of no service was 13 weeks or
more
– Under rule of parity
• Treat as continuing employee as same
status for that stability period
• For employees returning after special
unpaid leave (FMLA, Jury) – exclude
special unpaid leave or credit hours at
average weekly rate
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SPHR
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Health Care Strategy
Planning
• Keep in mind the following when
making decisions about employee
health plans:
– The actual cost of play or pay
– The effect of changing the composition
of the workforce – reducing employee
hours, hiring part time, etc.
– How to treat retirees – do you offer
retiree coverage?
– Understand future cost savings of
wellness plans
– Eliminate coverage for part time
employees
– No longer offer to cover employee
spouses
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SPHR
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Planning for Federal
Reporting Requirements in
2015
• New regulatory reporting in 2015
– Evaluate the processes you are
using to track an employee’s key
information:
• Address
• Social Security Number
• Number of individuals covered any
given time on the health plan
• Dates employee was covered during a
calendar
• This information will be required for
reporting
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SPHR
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Planning for Federal
Reporting Requirements in
2015
• IRS Reporting
– Internal Revenue Code (Title 26)
• Information gathering begins in 2015
• First reports filed in 2016
–
–
–
–
6055 and 6056
Information gathering begins in 2015
Draft form available as of 8/28/14
Watch for further communication – final
rulings
– Completed by anyone who provides
minimum essential health coverage
– Section 6056 reporting applies only to
large employers
– Currently the IRS is evaluating reporting
methods
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SPHR
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Planning for Federal
Reporting Requirements in
2015
• Who will be responsible for
reporting requirements?
– HR’s new role
• HR will keep employees informed on
employer health coverage and about
the exchanges
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SPHR
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Self Compliance Tool
Affordable Care Act
Provisions
• Be ready for an audit
– Use the self compliance tool
– Does not cover all aspects of the
law
– http://www.dol.gov/ebsa/healthref
orm/ - most up to date guidance
– Compliance aid is continually
updated as changes are made
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SPHR
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Self Compliance tool will help
you determine the following:
• Determine Grandfather Status and what that
means for you, the employer
• Determine compliance with Dependent
coverage of children to Age 26
• Determining compliance to Rescission
Provisions
– A cancellation or discontinuance of coverage that
has a retroactive effect; treats a policy as void
from start date (do not pay premiums)
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SPHR
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Self Compliance tool will
help you determine the
following:
• Compliance with Lifetime Limits
and restrictions on annual limits
• Compliance with Pre-existing
condition exclusion for individuals
• Compliance provision of
supplying the Summary of
Benefits and Coverage to
employees and Uniform Glossary
• Compliance with the Patient
Protection Provisions
– Employee has the right to designate
primary care provider of choice
covered in the plan
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SPHR
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Self Compliance tool will
help you determine the
following:
• Compliance in the coverage of
preventive services
– Plan must provide preventive services
without cost sharing
• Compliance in the internal claims
and appeals process and external
review
– Health insurers offering group health
plans must offer effective internal
claims and appeal process
– Must comply with State or Federal
external review process
– Ensure your group health plan offers
this provision
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SPHR
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Self Compliance tool will
help you determine the
following:
• Self Compliance tool provides
questions to help employers
review its group health plan and
ensure compliance with ACA
Employer provisions
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SPHR
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Cost Controlling Steps while
complying with the ACA
Employer Provisions
• Provide Consumer (employee)
engagement tools
– Teach employees to be better
health care consumers
– Choose a plan that offers cost
transparency tools for employees to
make smart provider choices
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SPHR
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Cost Controlling Steps while
complying with the ACA
Employer Provisions
• Consumer Directed Plans
– Implement or expand a CDP
– Assists in the elimination of high
cost plans
• Wellness Programs
– Offer wellness incentives
– Cannot violate the HIPAA
Nondiscrimination Rules
• Spousal Coverage
– Eliminate or limit spousal coverage
– Spousal surcharges
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SPHR
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Cost Controlling Steps while
complying with the ACA
Employer Provisions
• New delivery models
– Encourage employees to use highperformance networks –
accountable healthcare
organizations, designated centers of
excellence
• Specialty pharmacy benefits
– Specialty drugs can make up 30% of
a plans costs
– Require step therapy – trying lessexpensive medication to manage
condition first
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SPHR
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Sharing the cost
• 2015 Employee Contributions
– Move to a private exchange
• Gives employee’s the choice of
provider
• Mixed views on whether it will save
employers money
– Large organizations will make
employees responsible for at least
20% of coverage costs.
– “Skinny” plans do not meet ACA
affordability or minimum value test
• Low value plan
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SPHR
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Do not ignore the ACA
• In summary – to-dos
– Determine if you are in compliance
• Self audit tool
– Determine if you are a “large”
employer
• Subject to play or pay
– Determine your 2015 plan design
– Determine which employees will be
eligible for open enrollment
– Determine whether or not your
organization will be subject to the
“auto-enroll” requirement (pending
ruling status)
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SPHR
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Summary
• Use the ACA as a catalyst to
strategize employee benefits for
recruiting and retention purposes
• ACA is constantly evolving
– Assign an expert in your
organization to monitor the ACA
• Its time to get ready for
2015/2016 Reporting
Requirements
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SPHR
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