11 36292wpbenwlp 03/13. 22 33 44 55 subsidies for individuals for exchange plans only to be...
TRANSCRIPT
PowerPoint Presentation
It’s been more than two years since the Affordable Care Act was enacted, and collectively, the industry is still not sure. We’re still awaiting guidance from the federal and state governments on some 1,200 “undetermined” items.
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*
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Individuals not already on a government plan (such as Medicaid) will have three options:
1. Employer-sponsored coverage.
2. Individual plan through either an individual market exchange or a plan off the exchange.
*
*
*
*
*
*
Earn between 100% and 400% of federal poverty level (FPL)
Not have access to minimum essential coverage through their employer or
have access to coverage, but it is
not affordable
Premium credits – For any level plan
Cost-sharing subsidies – Silver Plan only
Income ranges of 100% - 400% FPL
Individual:
$11,490 to $45,960
Family of four:
$23,550 to $94,200
People who buy an exchange plan will be eligible for credits and subsidies if their income is between 133% and 400% of the federal poverty level and they don’t have access to other affordable minimum essential coverage.
Based on current guidance, a plan is affordable if the individual’s share of the premium is no more than 9.5% of his or her income.
Credits may be applied to any exchange plan, from the bronze plan (which pays about 60% of covered costs) to the platinum plan (which pays about 90% of covered costs).
*
*
*
2015:
2016:
2017 and beyond:
KAISER EXAMPLE $50k annual pay example over 2014,15 & 16
The Individual Mandate regulation came out at the end of January. As expected, the penalty starts very small ($95 or 1% of taxable income) and increases over time.
As expected the regulation does provide many pathways for someone to be “exempted” from the individual mandate, including religious reasons and affordability. Importantly, individuals will not be subject to the mandate if they are < 100% FPL and live in a state that has not yet expanded its Medicaid program. We are concerned all of these exempted folks are still eligible for guaranteed issue.
However, we were pleased to see that it appears that an individual will need to actively pursue an exemption instead of exemptions being automatically granted to folks.
*
*
*
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sponsors/administrators of
self-insured plans
Individuals
Individuals
sponsors/administrators of
self-insured plans
adjusted for subsequent
.9% increase on Medicare,
in excess of $200K
40% on plan costs exceeding “Cadillac” thresholds
Reform-related
taxes and fees
Like the Comparative Effectiveness Research Fee, which helps fund the Patient-Centered Outcomes Research Trust Fund, established by the Patient-Centered Outcomes Research Institute. We will pay this fee for our fully insured customers and will include it in the total renewal amount. We will not pay the fee for our ASO customers, since they often have multiple carriers.
*
*
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of defining EHBs
If no selection, default is SG plan with the highest enrollment
Background
Individual and Small Group plans must cover essential health benefits
Applies to nongrandfathered plans both on and off exchange
Does not apply to Large Group plans, ASO plans or grandfathered plans
Each state will select a benchmark plan to define EHBs. If a state does not select a plan, the default is the Small Group plan with the highest enrollment.
10 categories of EHBs identified in the law. If any category is not covered by the benchmark, those benefits will have to be supplemented (for example, pediatric vision/dental, habilitative services)
Pediatric vision coverage must be included as part of the plan both on and off exchange
*
*
*
Any category not covered by the benchmark must be supplemented
Habilitative services
Pediatric vision
Pediatric dental
On exchange plans need not include if standalone dental is available on exchange
Off exchange plans need not include if reasonably assured that enrollee is also enrolling in an exchange-certified standalone dental plan
Plan must cover the greater of
One drug in each category and class, or
The same number of drugs in each category and class as the EHB benchmark
Background
Individual and Small Group plans must cover essential health benefits
Applies to nongrandfathered plans both on and off exchange
Does not apply to Large Group plans, ASO plans or grandfathered plans
Each state will select a benchmark plan to define EHBs. If a state does not select a plan, the default is the Small Group plan with the highest enrollment.
10 categories of EHBs identified in the law. If any category is not covered by the benchmark, those benefits will have to be supplemented (e.g., pediatric vision/dental, habilitative services)
Pediatric vision coverage must be included as part of the plan both on and off exchange
*
*
*
Mental Health parity rules apply to Individual and SG plans
Adult vision and dental are not EHBs, even if covered under the benchmark
States may require services to be covered beyond the EHB benchmark coverage
State will be responsible for the cost of these services for plans offered on the Individual exchange or SHOP.
Issuers may choose to cover services beyond EHBs
Substitution of benefits or quantitative limits within specific EHB category is permitted
Must be actuarially equivalent
Large group and self-funded plans do not need to cover all 10 categories of EHBs. However, if they do cover EHBs
The out-of-pocket maximum applies to any EHBs
EHBs cannot have annual or lifetime dollar limits
Plan must cover the greater of
One drug in each category and class, or
The same number of drugs in each category and class as the EHB benchmark
Adult vision and dental will not be considered EHBs, even if covered as a part of the benchmark plan today.
Mental health parity rules will now apply to Individual and SG plans. States may require services to be covered beyond the benchmark plan EHB coverage
State will be responsible for the cost of these services for plans offered on the Individual exchange or SHOP.
Issuers may choose to cover services beyond EHBs
Substitution of benefits within a specific EHB category is permitted as long as actuarially equivalent
Substitution or addition of quantitative limits on an EHB benefit is permitted as long as substantially same, which we are interpreting as “actuarially equivalent”
No annual or lifetime dollar limits on any EHBs
*
*
*
*
markets for individuals
and small employers
Rating constraints, product constraints, new benefit mandates, and new taxes will have the biggest impact.
The impact will vary significantly between
each individual and
each small employer.
Different studies forecast a range of impact
One report, led by former CBO Director Doug Holtz-Eakin of the American Action Forum, found that on average, premiums for young, healthy people in the individual and small group market would jump 169% while the costs for older, less healthy people would decrease by an average of 22%
A study by the actuarial firm Milliman in Ohio shows the changes expected for small employers will range from a decrease of 25% to an increase of 130%
In Indiana, Milliman found that the increase in premiums in the individual market beginning in 2014 could range from 75%-95% and rates for others would decrease
*
*
*
The ACA does not address Open Enrollment periods Off Exchange
The goal of open enrollment periods is to limit risk exposure in a guaranteed issue environment that would allow individuals to wait until services are needed before enrolling in health insurance coverage.
Currently, no state has enacted legislation or regulation to address this topic
Many states have open enrollment requirements.
*
*
*
NY and ME require year round open enrollment.
OH has year round open enrollment products for people who do not otherwise have access to coverage.
CA requires an open enrollment period to allow currently covered individuals to move to an equal or lesser plan if they have had 18 months of continuous coverage.
WI requires carriers to allow current enrollees to move to less rich coverage at renewal.
Child-only open enrollment periods exist in CA, CO, GA, KY, IN, MO.
Child only open enrollment periods exist in CA, CO, GA, KY, IN, MO.
CA open enrollment is during the child’s birthday month
CO has open enrollment twice per year (January, July). CO child only requirements sunset on 1/1/14.
GA open enrollment is in January. GA child only requirements sunset on 1/1/14.
KY open enrollment is every January. KY child only requirements sunset on 1/1/14.
IN is once per year as set by each carrier but only for carriers that sell child only plans.
*
*
*
Use the modified community rating I just mentioned.
Include the essential health benefits package.
Provide at least 60% actuarial value.
*
*
*
Employees may:
Buy any product on shop within employer-set limitations (all tier, one tier, etc.), using the employer contribution.
Decide to not buy health insurance through their employer, either choosing coverage through a spouse or going uncovered and paying the penalty.
Buy health insurance on an individual exchange with a federal premium subsidy instead of an employer contribution (provided they don’t have access to minimum essential coverage through work, their premium exceeds 9.5% of wages, which falls between 133-400% of the federal poverty level.
Buy individual coverage off-exchange, with no employer contribution or federal subsidy.
*
*
*
For example, by plan selection:
Employers may allow employees to select a specific metal tier from which an employee may choose a qualified health plan (all exchanges required to offer employers this option through SHOP).
Employers may select specific qualified health plans from different metal tiers of coverage from which an employee may choose a qualified health plan (option of state/exchange)
Employers may select a single qualified health plan to offer employees (option of state/exchange).
There may be variations based on the contribution mechanism:
The employer may offer a flat dollar contribution regardless of plan/tier selection, based on a set percentage of a benchmark plan (premium varied based on age of employee under post-reform 3:1 rating band).
*
*
*
*
Options for Small Employers
Employers who have 50 or fewer employees will have at least the following options in 2014:
Offer a fully insured plan through either:
A SHOP exchange – Employer may be eligible for a temporary two-year tax credit to offset part of the employer premium contribution
The off-exchange market
Offer an ASO plan, if allowed by state law, where EHB and metal level requirements don’t exist
*
*
*
July 11
December
January 1
be ready by October
State option
Exchange Timelines
Many of the details, regulation and guidance regarding these programs are still up in the air.
Things that we need before the end of the year (2013) include:
We have a proposed regulation on essential health benefits released in November 2012 but are waiting for the final rule.
Additional guidance on exchanges. There is still a lot of info we need – both policy-related and technical in nature.
*
*
*
March 18, 2013
DURING 2013, EMPLOYERS MAY RELY UPON PROPOSED REGULATIONS
REQUIREMENT EFFECTIVE JANUARY 1, 2014
Fiscal year plans must comply the first day of
plan year beginning in 2014
This information can be accessed at www.irs.gov.
Large Group Employer Mandate
Proposed Regulations released December 28, and were published in Federal Register on January 2, 2013
Outline of 4/23 Public Hearing comments due April 3, 2013
Example on fiscal year rule:
Fiscal year plans that existed the day before this rule was issued (12/27/12) may take advantage of a delayed compliance date.
For example, if an employer sponsors a plan that has a fiscal year that runs from July 1 to July 1, the plan would not have to comply until July 1, 2014.
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WHAT EMPLOYERS ARE SUBJECT TO THE MANDATE?
50 or more full-time employees (full-time = working 30 or more hours per week)
or-
Combination of full-time and part-time employees that equals 50 “full-time equivalent employees”
Status is determined based on actual hours worked by employees in prior calendar year
Large Group Employer Mandate
For the first year there are special rules for determining whether an employer is subject to the mandate – these special rules present a planning opportunity for employers.
*
*
*
Companies are combined together to determine employee count
Use established “controlled group” test in Internal Revenue Code Sec. 414
Thus, a smaller employer might need to comply if it is part of a controlled group
Aggregation rules are not applied to companies to determine potential liability and payment under the employer mandate
30-employee reduction is applied across the companies, not to each company
Large Group Employer Mandate
Subsidiaries are a consideration:
Parent Company has 40 employees + two subsidiaries with 5 employees each = 50 life group
In this example, all companies would have to offer coverage to their full-time employees, or face a penalty.
However, this does represent a planning opportunity for the parent company.
*
*
*
“Stability” period
“Administrative” period
Collectively bargained
Salaried and hourly
Employees working in different states
The process of determining which employees are full-time can be complex and time-consuming if you have a diverse workforce with many new employees, or you have employees who sometimes work 30 hours and sometimes work less than 30 hours (variable hour employees).
Essentially the employer is looking back to the previous year to determine whether an employee must be offered coverage in the future.
For example, to determine whether you would need to offer coverage to full-time employees in 2014, you would look at how many hours on average each employee worked in a certain period in 2013.
For 2013, an employer can just look at a 6-month period, but that period has to end no later than July 1, 2013, so employers should be planning now.
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SUMMARY
An employer with 50 or more full-time employees will be subject to a nondeductible excise tax penalty if either:
The employer does not offer health coverage to least 95% of its full-time employees (and their dependents*), and any full-time employee receives a premium tax credit (subsidy) for coverage on the exchange
The annual penalty is $2,000 times total number of FTEs, minus the first 30 employees
The monthly penalty is 1/12 of $2,000 times total number of FTEs, minus the first 30 employees
Large Group Employer Mandate
*Dependents = children to age 26, but not spouse
Here’s a simple example of how to calculate the penalty if the employer does not offer coverage for a whole year:
20 x $2,000 = $40,000 for the year.
Here’s a more complicated example where an employer doesn’t offer coverage for some months of a year:
In 2015 Company E does not offer coverage during the months of May, June, July and August.
20 x 1/12 of $2,000 = 20 x $166.67 = $3,333.40
June: Same as May
July: 80 full time workers – 30 = 50
50 x 1/12 of $2,000 = 50 x $166.67 = $8,333.5
Total fine = $23,333.80
OR…
The employer offers health coverage to at least 95% of its full-time employees (and their dependents*), but at least one full-time employee receives a premium tax credit (subsidy) for coverage on the exchange.
The annual penalty is $3,000 per employee receiving a subsidy
The monthly penalty is 1/12 of $3,000 per employee receiving a subsidy
This penalty cannot exceed the penalty imposed if an employer did not offer coverage at all.
Large Group Employer Mandate
This may occur because:
to that employee, or
the coverage the employer offered that employee was either unaffordable to the employee, or
the coverage did not provide
minimum value
Here’s an example of how the penalty is calculated if an employer offers coverage but an employee receives a premium subsidy for several months during a year:
In 2015 Company F offers insurance to 97% of its full-time workers, but five workers get aid to lower cost their cost of coverage for four months of the year.
The penalty is as follows:
5 workers get aid
5 x 1/12 of $3,000 = 5 x $250 = $1,250 per month
$1,250 x 4 months = $5,000 total penalty
*
*
*
Supposed to take effect several years ago
On April 18, 2011, the Department of Labor held a public forum
The Labor Department has stated it will issue regulations on the auto enrollment requirement in the future, and will give employers adequate notice of when to comply.
Although the Labor Department has previously said that it would require auto enrollment in 2014, that date has been pushed off to the indefinite future.
Automatic enrollment applies to employers with 200 or more lives
Automatic Enrollment
The automatic enrollment requirement was supposed to take effect several years ago. It applies to employers with 200 or more
On April 18, 2011 the Department of Labor held a public forum to gather comments on the auto enrollment provision. There were almost 170 participants representing all sectors of business.
Since then, the Labor Department has stated that it will issue regulations on the auto enrollment requirement in the future, and will give employers adequate notice of when to comply.
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*
Must “take steps” in 2014
DEPENDENTS MEANS ALL OF THE FOLLOWING TO AGE 26
Children
Stepchildren
Foster children
Employers may rely on employee representations on identity and ages of children
Large Group Employer Mandate
Accordingly, any employer that takes steps during its plan year that begins in 2014 toward satisfying the section 4980H provisions relating to the offering of coverage to
full-time employees’ dependents will not be liable for any assessable payment
under section 4980H solely on account of a failure to offer coverage to the
dependents for that plan year.
There is no adjustment of the 1/1/15 effective date for fiscal year plans as there is for the mandate itself.
However, since this offer of coverage requirement for dependents is a new interpretation and since these are proposed regulations, employers may want to file comments with the federal agencies asking for an adjustment in the effective date to accommodate fiscal year plans.
*
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*
MINIMUM ESSENTIAL COVERAGE
Plan coverage must provide minimum value (MV) by covering at least 60% of the total allowed cost of benefits that are expected to be incurred under the plan
HHS/IRS will provide an MV calculator, similar to the AV calculator, to be used to determine whether the plan provides minimum value
Plan must be affordable, defined as an employee-only plan premium less than 9.5% of employee’s household income
(may look only at employee’s income from employer)
Three safe harbors
Three safe harbors addressed on next slide
*
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*
*
Employee Form W-2 safe harbor
Rate of pay safe harbor
Federal poverty level safe harbor
Large Group Employer Mandate
Even though the ACA says that affordability is measured based on an employee’s “household” income, employers do not have access to the income of an employee’s spouse or dependents.
Thus, affordability can be based on employee income, or looking at federal poverty level.
Use employee Form W-2 wages in Box 1. This has to be done employee by employee and is the most cumbersome, although smaller employers can use it.
Use a rate of pay calculation. To do this, the employer takes the hourly rate of pay for each hourly employee eligible for coverage, multiply that rate by 130 hours per month, and then determine affordability based on the resulting monthly wage amount.
But note that this method can only be used if the employer did not reduce the employee’s wages during the year.
*
*
*
*
Scenario 1 [4980H(a)]
If for any single month - Employer does not offer coverage to at least 95% of FTEs (and dependents), and - At least one employee receives federal subsidy to purchase coverage through exchange for that month
*
*
*
Scenario 2 [4980H(b)]
If for any single month - Employer offers coverage to at least 95% of FTEs (and dependents), and - At least one employee receives federal subsidy to purchase coverage through the exchange for that month
*
*
*
RECORDKEEPING REQUIREMENTS
stability periods, determination of
ASSESSMENT AND PAYMENT OF EXCISE TAX
IRS will send notice after it examines employee tax returns and employer informational filing under IRC 6056 (employer reporting to IRS on health insurance)
Employer has opportunity to respond to
notice before paying
for payment
Miscellaneous Provisions
Notes on multi-employer plans (union plans)
For 2014 only, employer is not subject to penalty if it meets 3 conditions:
Employer is required to make a contribution to a multi-employer plan w/r/t the FTE under a collective bargaining agreement (or related participation agreement);
Coverage under the multi-employer plan is offered to the FTE and the FTE’s dependents; and
Coverage offered is affordable and provides minimum value.
*
*
*
And you can also rest assured that we are here to support you with any questions or needs you may have. You can visit our website at makinghealthcarereformwork.com, where you’ll find:
Comprehensive health care reform information – including an interactive timeline outlining what you can expect and when.
Tools to help you make informed decisions – such as an interactive timeline.
Helpful links, guides, forms and more.
Legal
BLUE CROSS AND BLUE SHIELD OF GEORGIA, INC. AND BLUE CROSS BLUE SHIELD HEALTHCARE PLAN OF GEORGIA, INC. ARE INDEPENDENT LICENSEES OF THE BLUE CROSS AND BLUE SHIELD ASSOCIATION. THE BLUE CROSS AND BLUE SHIELD NAMES AND SYMBOLS ARE REGISTERED MARKS OF THE BLUE CROSS AND BLUE SHIELD ASSOCIATION.
Legal
HEALTH CARE REFORM Navigating the labyrinth. Minimizing the chaos.
Individuals who buy an exchange plan MAY BE ELIGIBLE FOR CREDITS AND SUBSIDIES.
FOUR TIERS:
– 60% actuarial value
Employees who don’t buy insurance at work may do so through an exchange.
Which brings us to the bottom line. Exchanges won’t replace the private health insurance market. They’re simply another means for obtaining coverage.
For more information, visit anthem.com/HealthCareReform
It’s been more than two years since the Affordable Care Act was enacted, and collectively, the industry is still not sure. We’re still awaiting guidance from the federal and state governments on some 1,200 “undetermined” items.
*
*
*
Individuals not already on a government plan (such as Medicaid) will have three options:
1. Employer-sponsored coverage.
2. Individual plan through either an individual market exchange or a plan off the exchange.
*
*
*
*
*
*
Earn between 100% and 400% of federal poverty level (FPL)
Not have access to minimum essential coverage through their employer or
have access to coverage, but it is
not affordable
Premium credits – For any level plan
Cost-sharing subsidies – Silver Plan only
Income ranges of 100% - 400% FPL
Individual:
$11,490 to $45,960
Family of four:
$23,550 to $94,200
People who buy an exchange plan will be eligible for credits and subsidies if their income is between 133% and 400% of the federal poverty level and they don’t have access to other affordable minimum essential coverage.
Based on current guidance, a plan is affordable if the individual’s share of the premium is no more than 9.5% of his or her income.
Credits may be applied to any exchange plan, from the bronze plan (which pays about 60% of covered costs) to the platinum plan (which pays about 90% of covered costs).
*
*
*
2015:
2016:
2017 and beyond:
KAISER EXAMPLE $50k annual pay example over 2014,15 & 16
The Individual Mandate regulation came out at the end of January. As expected, the penalty starts very small ($95 or 1% of taxable income) and increases over time.
As expected the regulation does provide many pathways for someone to be “exempted” from the individual mandate, including religious reasons and affordability. Importantly, individuals will not be subject to the mandate if they are < 100% FPL and live in a state that has not yet expanded its Medicaid program. We are concerned all of these exempted folks are still eligible for guaranteed issue.
However, we were pleased to see that it appears that an individual will need to actively pursue an exemption instead of exemptions being automatically granted to folks.
*
*
*
*
sponsors/administrators of
self-insured plans
Individuals
Individuals
sponsors/administrators of
self-insured plans
adjusted for subsequent
.9% increase on Medicare,
in excess of $200K
40% on plan costs exceeding “Cadillac” thresholds
Reform-related
taxes and fees
Like the Comparative Effectiveness Research Fee, which helps fund the Patient-Centered Outcomes Research Trust Fund, established by the Patient-Centered Outcomes Research Institute. We will pay this fee for our fully insured customers and will include it in the total renewal amount. We will not pay the fee for our ASO customers, since they often have multiple carriers.
*
*
*
of defining EHBs
If no selection, default is SG plan with the highest enrollment
Background
Individual and Small Group plans must cover essential health benefits
Applies to nongrandfathered plans both on and off exchange
Does not apply to Large Group plans, ASO plans or grandfathered plans
Each state will select a benchmark plan to define EHBs. If a state does not select a plan, the default is the Small Group plan with the highest enrollment.
10 categories of EHBs identified in the law. If any category is not covered by the benchmark, those benefits will have to be supplemented (for example, pediatric vision/dental, habilitative services)
Pediatric vision coverage must be included as part of the plan both on and off exchange
*
*
*
Any category not covered by the benchmark must be supplemented
Habilitative services
Pediatric vision
Pediatric dental
On exchange plans need not include if standalone dental is available on exchange
Off exchange plans need not include if reasonably assured that enrollee is also enrolling in an exchange-certified standalone dental plan
Plan must cover the greater of
One drug in each category and class, or
The same number of drugs in each category and class as the EHB benchmark
Background
Individual and Small Group plans must cover essential health benefits
Applies to nongrandfathered plans both on and off exchange
Does not apply to Large Group plans, ASO plans or grandfathered plans
Each state will select a benchmark plan to define EHBs. If a state does not select a plan, the default is the Small Group plan with the highest enrollment.
10 categories of EHBs identified in the law. If any category is not covered by the benchmark, those benefits will have to be supplemented (e.g., pediatric vision/dental, habilitative services)
Pediatric vision coverage must be included as part of the plan both on and off exchange
*
*
*
Mental Health parity rules apply to Individual and SG plans
Adult vision and dental are not EHBs, even if covered under the benchmark
States may require services to be covered beyond the EHB benchmark coverage
State will be responsible for the cost of these services for plans offered on the Individual exchange or SHOP.
Issuers may choose to cover services beyond EHBs
Substitution of benefits or quantitative limits within specific EHB category is permitted
Must be actuarially equivalent
Large group and self-funded plans do not need to cover all 10 categories of EHBs. However, if they do cover EHBs
The out-of-pocket maximum applies to any EHBs
EHBs cannot have annual or lifetime dollar limits
Plan must cover the greater of
One drug in each category and class, or
The same number of drugs in each category and class as the EHB benchmark
Adult vision and dental will not be considered EHBs, even if covered as a part of the benchmark plan today.
Mental health parity rules will now apply to Individual and SG plans. States may require services to be covered beyond the benchmark plan EHB coverage
State will be responsible for the cost of these services for plans offered on the Individual exchange or SHOP.
Issuers may choose to cover services beyond EHBs
Substitution of benefits within a specific EHB category is permitted as long as actuarially equivalent
Substitution or addition of quantitative limits on an EHB benefit is permitted as long as substantially same, which we are interpreting as “actuarially equivalent”
No annual or lifetime dollar limits on any EHBs
*
*
*
*
markets for individuals
and small employers
Rating constraints, product constraints, new benefit mandates, and new taxes will have the biggest impact.
The impact will vary significantly between
each individual and
each small employer.
Different studies forecast a range of impact
One report, led by former CBO Director Doug Holtz-Eakin of the American Action Forum, found that on average, premiums for young, healthy people in the individual and small group market would jump 169% while the costs for older, less healthy people would decrease by an average of 22%
A study by the actuarial firm Milliman in Ohio shows the changes expected for small employers will range from a decrease of 25% to an increase of 130%
In Indiana, Milliman found that the increase in premiums in the individual market beginning in 2014 could range from 75%-95% and rates for others would decrease
*
*
*
The ACA does not address Open Enrollment periods Off Exchange
The goal of open enrollment periods is to limit risk exposure in a guaranteed issue environment that would allow individuals to wait until services are needed before enrolling in health insurance coverage.
Currently, no state has enacted legislation or regulation to address this topic
Many states have open enrollment requirements.
*
*
*
NY and ME require year round open enrollment.
OH has year round open enrollment products for people who do not otherwise have access to coverage.
CA requires an open enrollment period to allow currently covered individuals to move to an equal or lesser plan if they have had 18 months of continuous coverage.
WI requires carriers to allow current enrollees to move to less rich coverage at renewal.
Child-only open enrollment periods exist in CA, CO, GA, KY, IN, MO.
Child only open enrollment periods exist in CA, CO, GA, KY, IN, MO.
CA open enrollment is during the child’s birthday month
CO has open enrollment twice per year (January, July). CO child only requirements sunset on 1/1/14.
GA open enrollment is in January. GA child only requirements sunset on 1/1/14.
KY open enrollment is every January. KY child only requirements sunset on 1/1/14.
IN is once per year as set by each carrier but only for carriers that sell child only plans.
*
*
*
Use the modified community rating I just mentioned.
Include the essential health benefits package.
Provide at least 60% actuarial value.
*
*
*
Employees may:
Buy any product on shop within employer-set limitations (all tier, one tier, etc.), using the employer contribution.
Decide to not buy health insurance through their employer, either choosing coverage through a spouse or going uncovered and paying the penalty.
Buy health insurance on an individual exchange with a federal premium subsidy instead of an employer contribution (provided they don’t have access to minimum essential coverage through work, their premium exceeds 9.5% of wages, which falls between 133-400% of the federal poverty level.
Buy individual coverage off-exchange, with no employer contribution or federal subsidy.
*
*
*
For example, by plan selection:
Employers may allow employees to select a specific metal tier from which an employee may choose a qualified health plan (all exchanges required to offer employers this option through SHOP).
Employers may select specific qualified health plans from different metal tiers of coverage from which an employee may choose a qualified health plan (option of state/exchange)
Employers may select a single qualified health plan to offer employees (option of state/exchange).
There may be variations based on the contribution mechanism:
The employer may offer a flat dollar contribution regardless of plan/tier selection, based on a set percentage of a benchmark plan (premium varied based on age of employee under post-reform 3:1 rating band).
*
*
*
*
Options for Small Employers
Employers who have 50 or fewer employees will have at least the following options in 2014:
Offer a fully insured plan through either:
A SHOP exchange – Employer may be eligible for a temporary two-year tax credit to offset part of the employer premium contribution
The off-exchange market
Offer an ASO plan, if allowed by state law, where EHB and metal level requirements don’t exist
*
*
*
July 11
December
January 1
be ready by October
State option
Exchange Timelines
Many of the details, regulation and guidance regarding these programs are still up in the air.
Things that we need before the end of the year (2013) include:
We have a proposed regulation on essential health benefits released in November 2012 but are waiting for the final rule.
Additional guidance on exchanges. There is still a lot of info we need – both policy-related and technical in nature.
*
*
*
March 18, 2013
DURING 2013, EMPLOYERS MAY RELY UPON PROPOSED REGULATIONS
REQUIREMENT EFFECTIVE JANUARY 1, 2014
Fiscal year plans must comply the first day of
plan year beginning in 2014
This information can be accessed at www.irs.gov.
Large Group Employer Mandate
Proposed Regulations released December 28, and were published in Federal Register on January 2, 2013
Outline of 4/23 Public Hearing comments due April 3, 2013
Example on fiscal year rule:
Fiscal year plans that existed the day before this rule was issued (12/27/12) may take advantage of a delayed compliance date.
For example, if an employer sponsors a plan that has a fiscal year that runs from July 1 to July 1, the plan would not have to comply until July 1, 2014.
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WHAT EMPLOYERS ARE SUBJECT TO THE MANDATE?
50 or more full-time employees (full-time = working 30 or more hours per week)
or-
Combination of full-time and part-time employees that equals 50 “full-time equivalent employees”
Status is determined based on actual hours worked by employees in prior calendar year
Large Group Employer Mandate
For the first year there are special rules for determining whether an employer is subject to the mandate – these special rules present a planning opportunity for employers.
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Companies are combined together to determine employee count
Use established “controlled group” test in Internal Revenue Code Sec. 414
Thus, a smaller employer might need to comply if it is part of a controlled group
Aggregation rules are not applied to companies to determine potential liability and payment under the employer mandate
30-employee reduction is applied across the companies, not to each company
Large Group Employer Mandate
Subsidiaries are a consideration:
Parent Company has 40 employees + two subsidiaries with 5 employees each = 50 life group
In this example, all companies would have to offer coverage to their full-time employees, or face a penalty.
However, this does represent a planning opportunity for the parent company.
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“Stability” period
“Administrative” period
Collectively bargained
Salaried and hourly
Employees working in different states
The process of determining which employees are full-time can be complex and time-consuming if you have a diverse workforce with many new employees, or you have employees who sometimes work 30 hours and sometimes work less than 30 hours (variable hour employees).
Essentially the employer is looking back to the previous year to determine whether an employee must be offered coverage in the future.
For example, to determine whether you would need to offer coverage to full-time employees in 2014, you would look at how many hours on average each employee worked in a certain period in 2013.
For 2013, an employer can just look at a 6-month period, but that period has to end no later than July 1, 2013, so employers should be planning now.
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SUMMARY
An employer with 50 or more full-time employees will be subject to a nondeductible excise tax penalty if either:
The employer does not offer health coverage to least 95% of its full-time employees (and their dependents*), and any full-time employee receives a premium tax credit (subsidy) for coverage on the exchange
The annual penalty is $2,000 times total number of FTEs, minus the first 30 employees
The monthly penalty is 1/12 of $2,000 times total number of FTEs, minus the first 30 employees
Large Group Employer Mandate
*Dependents = children to age 26, but not spouse
Here’s a simple example of how to calculate the penalty if the employer does not offer coverage for a whole year:
20 x $2,000 = $40,000 for the year.
Here’s a more complicated example where an employer doesn’t offer coverage for some months of a year:
In 2015 Company E does not offer coverage during the months of May, June, July and August.
20 x 1/12 of $2,000 = 20 x $166.67 = $3,333.40
June: Same as May
July: 80 full time workers – 30 = 50
50 x 1/12 of $2,000 = 50 x $166.67 = $8,333.5
Total fine = $23,333.80
OR…
The employer offers health coverage to at least 95% of its full-time employees (and their dependents*), but at least one full-time employee receives a premium tax credit (subsidy) for coverage on the exchange.
The annual penalty is $3,000 per employee receiving a subsidy
The monthly penalty is 1/12 of $3,000 per employee receiving a subsidy
This penalty cannot exceed the penalty imposed if an employer did not offer coverage at all.
Large Group Employer Mandate
This may occur because:
to that employee, or
the coverage the employer offered that employee was either unaffordable to the employee, or
the coverage did not provide
minimum value
Here’s an example of how the penalty is calculated if an employer offers coverage but an employee receives a premium subsidy for several months during a year:
In 2015 Company F offers insurance to 97% of its full-time workers, but five workers get aid to lower cost their cost of coverage for four months of the year.
The penalty is as follows:
5 workers get aid
5 x 1/12 of $3,000 = 5 x $250 = $1,250 per month
$1,250 x 4 months = $5,000 total penalty
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Supposed to take effect several years ago
On April 18, 2011, the Department of Labor held a public forum
The Labor Department has stated it will issue regulations on the auto enrollment requirement in the future, and will give employers adequate notice of when to comply.
Although the Labor Department has previously said that it would require auto enrollment in 2014, that date has been pushed off to the indefinite future.
Automatic enrollment applies to employers with 200 or more lives
Automatic Enrollment
The automatic enrollment requirement was supposed to take effect several years ago. It applies to employers with 200 or more
On April 18, 2011 the Department of Labor held a public forum to gather comments on the auto enrollment provision. There were almost 170 participants representing all sectors of business.
Since then, the Labor Department has stated that it will issue regulations on the auto enrollment requirement in the future, and will give employers adequate notice of when to comply.
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Must “take steps” in 2014
DEPENDENTS MEANS ALL OF THE FOLLOWING TO AGE 26
Children
Stepchildren
Foster children
Employers may rely on employee representations on identity and ages of children
Large Group Employer Mandate
Accordingly, any employer that takes steps during its plan year that begins in 2014 toward satisfying the section 4980H provisions relating to the offering of coverage to
full-time employees’ dependents will not be liable for any assessable payment
under section 4980H solely on account of a failure to offer coverage to the
dependents for that plan year.
There is no adjustment of the 1/1/15 effective date for fiscal year plans as there is for the mandate itself.
However, since this offer of coverage requirement for dependents is a new interpretation and since these are proposed regulations, employers may want to file comments with the federal agencies asking for an adjustment in the effective date to accommodate fiscal year plans.
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MINIMUM ESSENTIAL COVERAGE
Plan coverage must provide minimum value (MV) by covering at least 60% of the total allowed cost of benefits that are expected to be incurred under the plan
HHS/IRS will provide an MV calculator, similar to the AV calculator, to be used to determine whether the plan provides minimum value
Plan must be affordable, defined as an employee-only plan premium less than 9.5% of employee’s household income
(may look only at employee’s income from employer)
Three safe harbors
Three safe harbors addressed on next slide
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Employee Form W-2 safe harbor
Rate of pay safe harbor
Federal poverty level safe harbor
Large Group Employer Mandate
Even though the ACA says that affordability is measured based on an employee’s “household” income, employers do not have access to the income of an employee’s spouse or dependents.
Thus, affordability can be based on employee income, or looking at federal poverty level.
Use employee Form W-2 wages in Box 1. This has to be done employee by employee and is the most cumbersome, although smaller employers can use it.
Use a rate of pay calculation. To do this, the employer takes the hourly rate of pay for each hourly employee eligible for coverage, multiply that rate by 130 hours per month, and then determine affordability based on the resulting monthly wage amount.
But note that this method can only be used if the employer did not reduce the employee’s wages during the year.
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Scenario 1 [4980H(a)]
If for any single month - Employer does not offer coverage to at least 95% of FTEs (and dependents), and - At least one employee receives federal subsidy to purchase coverage through exchange for that month
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Scenario 2 [4980H(b)]
If for any single month - Employer offers coverage to at least 95% of FTEs (and dependents), and - At least one employee receives federal subsidy to purchase coverage through the exchange for that month
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RECORDKEEPING REQUIREMENTS
stability periods, determination of
ASSESSMENT AND PAYMENT OF EXCISE TAX
IRS will send notice after it examines employee tax returns and employer informational filing under IRC 6056 (employer reporting to IRS on health insurance)
Employer has opportunity to respond to
notice before paying
for payment
Miscellaneous Provisions
Notes on multi-employer plans (union plans)
For 2014 only, employer is not subject to penalty if it meets 3 conditions:
Employer is required to make a contribution to a multi-employer plan w/r/t the FTE under a collective bargaining agreement (or related participation agreement);
Coverage under the multi-employer plan is offered to the FTE and the FTE’s dependents; and
Coverage offered is affordable and provides minimum value.
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And you can also rest assured that we are here to support you with any questions or needs you may have. You can visit our website at makinghealthcarereformwork.com, where you’ll find:
Comprehensive health care reform information – including an interactive timeline outlining what you can expect and when.
Tools to help you make informed decisions – such as an interactive timeline.
Helpful links, guides, forms and more.
Legal
BLUE CROSS AND BLUE SHIELD OF GEORGIA, INC. AND BLUE CROSS BLUE SHIELD HEALTHCARE PLAN OF GEORGIA, INC. ARE INDEPENDENT LICENSEES OF THE BLUE CROSS AND BLUE SHIELD ASSOCIATION. THE BLUE CROSS AND BLUE SHIELD NAMES AND SYMBOLS ARE REGISTERED MARKS OF THE BLUE CROSS AND BLUE SHIELD ASSOCIATION.
Legal
HEALTH CARE REFORM Navigating the labyrinth. Minimizing the chaos.
Individuals who buy an exchange plan MAY BE ELIGIBLE FOR CREDITS AND SUBSIDIES.
FOUR TIERS:
– 60% actuarial value
Employees who don’t buy insurance at work may do so through an exchange.
Which brings us to the bottom line. Exchanges won’t replace the private health insurance market. They’re simply another means for obtaining coverage.
For more information, visit anthem.com/HealthCareReform