esb-714-0512copyright 2012 american fidelity assurance company fccma june 1, 2012
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ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
FCCMA
June 1, 2012
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
WEATHERING THE HEALTH CARE
REFORM STORMWhat You Need to Know Today
About Health Care ReformThis is only a brief summary that reflects our current understanding of select provisions of the law, often in the absence of regulations. All of the interpretations contained herein are subject to change as the appropriate agencies publish additional guidance.
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
• Provide a road map for Health Care Reform• Gain a high level familiarity with key
provisions affecting plan sponsors• Develop an immediate action plan and begin
looking at plan sponsorship options long-term
OBJECTIVES
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
SETTING THE STAGE
• 1,000 pages of legislation drafted and enacted very quickly
• Rules are still being developed
– Federal agency guidance
– Role of states
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
• Only a portion of the rules impact plan sponsors
• Only a portion of those take effect in the near future
• Recommended path
PHASED IMPLEMENTATION
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
• Plan design mandates• Health FSA/HRA/HSA provisions• Administrative requirements• Plan sponsorship provisions
HCR ROADMAP
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
PLAN DESIGN MANDATE EXCEPTIONS
• Truly stand alone retiree plans• HSAs• HIPAA excepted benefits
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
GRANDFATHERING• Available for plans providing coverage on
March 23, 2010– Changes to benefits or contributions– Value of grandfathering – Notice/recordkeeping requirements– Special rule for insured collectively-bargained
plans
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
2010 MANDATES
• All plans must comply– Preexisting conditions– Lifetime limits– Annual limits– Adult children– Rescissions
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
2010 MANDATES
• Additional requirements for non-grandfathered plans– Insured plan nondiscrimination– Preventive care– Provider access– Internal/external review claims procedures
ESB-714-0512
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
2014 MANDATES
• All plans must comply– Waiting periods– Annual limit prohibition– Preexisting condition limits– Adult children – grandfathered plans– Wellness incentives (optional)
ESB-714-0512
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
2014 MANDATES• Additional requirements for non-grandfathered
plans– Essential health benefits (insured small group
plans)– Clinical trials– Limits on deductibles– Limits on out-of-pocket maximums– Provider nondiscrimination
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
ACTION PLAN
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
HCR ROADMAP
• Plan design mandates• Health FSA/HRA/HSA provisions• Administrative requirements• Plan sponsorship issues
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
• Coverage/reimbursement for adult children
• Over-the-counter drugs require a prescription– Supplies and insulin – no prescription needed
– Restrictions on use of debit cards
• HSA non-qualified withdrawal penalty
HEALTH FSA/HRA/HSA PROVISIONS
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
• Health FSA limit– Employee contributions are limited to $2,500
– Effective January 1, 2013
HEALTH FSA/HRA/HSA PROVISIONS (Cont’d)
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
ACTION PLAN
• Remind participants about changes for over-the-counter drugs
• Amend plan, if necessary, to comply with the $2,500 limit on employee contributions to a Health FSA
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
HCR ROADMAP
• Plan design mandates• Health FSA/HRA/HSA provisions• Administrative requirements• Plan sponsorship provisions
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
ENROLLMENT
• 30-day open enrollment• Automatic enrollment
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
REPORTING
• W-2 reporting of value of health coverage• Quality reporting• Coverage and workforce reporting• Cadillac Tax reporting
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
• Notice of grandfathered status• Patient protection notices• Transparency disclosures• Summary of Benefits & Coverage (SBC)• 60 day notice of plan changes• Employee educational information for new
hires
NOTICE AND DISCLOSURES
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
• Create a plan for complying with the W-2 reporting requirements
• Complete/obtain and prepare to send Summary of Benefits and Coverage
ACTION PLAN
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
• Plan design mandates• Health FSA/HRA/HSA provisions• Administrative requirements• Plan sponsorship provisions
HCR ROADMAP
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
• Cornerstone year of Health Care Reform– State Exchanges
– Individual mandate
– Federal premium tax credit to purchase Exchange coverage
– “Employer responsibility”
2014
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
• Penalty may apply if:– No coverage offered to full-time employees
and dependents
– Coverage is “unaffordable” or “inadequate”
– Employee receives federal premium tax credit for Exchange coverage
FREE RIDER PENALTY
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
• Definitions:– Large employer
– Full-time employee
– Inadequate
– Unaffordable
FREE RIDER PENALTY (CONT’D)
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
FREE RIDER PENALTY (cont’d)
• Monthly penalty for no coverage: – 1/12th x $2,000 per month/per employee (after 1st
30 employees)• Penalty for unaffordable/inadequate coverage:
– 1/12th x $3,000 per month/per employee with federal premium tax credit
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
• Effective 2018: 40% non-deductible excise tax • Imposed on aggregate value of health
coverage that exceeds threshold amounts
CADILLAC TAX
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
• General thresholds: – $10,200 individual coverage– $27,500 family coverage
• Indexed for inflation• Applies for specified health coverage
CADILLAC TAX (cont’d)
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
2. ASSESS HEALTH COSTS
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
• Comparative Effectiveness Research (CER) Fee
• Exchange Reinsurance Fees• Indirect Fees
– Prescription drug manufacturer annual fee– Medical device excise tax– Health insurance company annual fee
FEES
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
• Insurers must provide rebates to enrollees if target loss ratios are not achieved– Individual & small group markets – MLR 80%
– Large group market – MCR 85%
• Employers must allocate rebates to employees• Rebates may be in the form of a premium credit,
check, or by pre-paid debit card
MEDICAL LOSS RATIO (MLR)
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
• Distribute applicable MLR rebates that may be received
• May want to begin considering cost-management strategies or changes in health coverage
ACTION PLAN
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
HCR ROADMAP
• Plan design mandates• Health FSA/HRA/HSA provisions• Administrative requirements• Plan sponsorship issues
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
• Plan design mandates – reassess grandfathering, implement any new changes, watch for nondiscrimination guidance
• FSA/HRA/HSAs – plan for $2,500 FSA limit• Administrative – address W-2 compliance,
complete and prepare to send Summary of Benefits and Coverage
NEXT STEPS
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
• Plan sponsorship – consider whether to begin reducing cost via plan design changes
• Communicate plans and changes to employees
NEXT STEPS (cont’d)
Fix slide template
NEXT STEPS (cont’d)
• Plan sponsorship – distribute MLR rebates if applicable, consider whether to begin reducing cost via plan design changes and explore other expense management
• Communicate plans and changes to employees
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
LOOKING AHEAD
ESB-714-0512 Copyright 2012 American Fidelity Assurance Company
Thank you!This is only a brief summary that reflects our current understanding of select provisions of the law, often in the absence of regulations. All of the interpretations contained herein are subject to change as the appropriate agencies publish additional guidance.
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