gbrshrm ppaca presentation 7.20.13
DESCRIPTION
Healthcare Update with Jim Casadaban for Greater Baton Rouge Society for Human ResourceTRANSCRIPT
PPACA(The Patient Protection and Affordable Care Act)
Presented by Jim Casadaban, MBA
HUB International Gulf SouthJuly 18, 2013
Greater Baton Rouge SHRM
Overview & Historical Look Back PPACA
(The Patient Protection and Affordable Care Act)
2
Status of Federal Health Care Reform
Supreme Court Upheld the Law Except as to Medicaid expansion More court challenges but won’t delay
Political Landscape No changes to political makeup in
Washington Possibility of major change to the law is
slim Congress could work to de-fund some
provisions
Timing and Rollout Now Proceed Federal agencies now working to release
updated regulations (10,000+ pages)3
4
PPACA Provisions Effective in 2011
Coverage of children to age 26 (regardless of marital or full-time student status)
No pre-existing condition exclusions for children under age 19
Removal of lifetime benefit limits
Annual limits phase out begins – complete in 2014
No rescission of coverage (retroactive termination of benefits)
No FSA reimbursement for over-the-counter medications
5
PPACA Provisions Effective in 2011 – Cont.
Minimum Loss Ratio (MLR) requirements for insurance carriers’ on fully-insured medical plans- 80% for small market (<100 employees)
- 85% for large market segment
Small employer tax credit
Health carrier administrative changes (many plans already allowed)- Primary care provider designation, if required,
allowed for any contracted provider
- Access to any OB/GYN provider
- Access to pediatric specialists as child’s primary care provider
PPACA Provisions Effective in 2013
60 day prior notification of plan modifications
Summary of Benefits and Coverage distribution (SBCs)- Must be distributed to all eligible employees
- Carrier responsibility to prepare form for insured plans
Implement $2,500 limit on employee contributions to health flexible spending accounts (FSAs) for plan years beginning in 2013
Form W-2 reporting requirement- Starting with W-2 reports issued in January 2013
- Delay for employers that have not issued 250 W-2s (look back)
Requirement for employers to notify employees of the availability of health insurance Exchanges- Deadline was March 1st – delayed to October 1st deadline
(Wait – we expect modifications!)
6
“Expected” 2014 PPACA Compliance
Taxes and fees – see handout
No waiting period over 90 days for group health plan coverage
No pre-existing condition exclusions
Preventive/wellness benefits
Variable hour/seasonal employee designations
7
“Expected” 2014 PPACA Compliance – Cont.
HIPAA non-discrimination rules relaxed to promote more generous wellness plan safe harbor design
Plan design requirements (maximum OOP amounts, max deductible, clinical trial coverage, essential health benefits for small employers, minimum value)
Additional exchange notification
8
PPACA Taxes and Fees
Comparative Effectiveness Research fees- $1 per covered life/year for first year, then
increases to $2/year
Reinsurance fees 2014 - 2016- $63 per covered life/year regardless of plan funding
Carrier Tax on fully insured plans- 3% beginning September 30, 2014
Cadillac Tax - 40% excise tax on amount over $10,200 for
individual and $27,500 for family
- Begins 2018
99
The Employer & Individual Mandates
PPACA (The Patient Protection and Affordable Care Act)
10
11
Mandates
Individual Mandate - effective January 1, 2014- All individuals must be covered by a group
plan or individual policy
- Failure to comply results in penalty when filing Federal taxes
Employer Mandate - effective 1st renewal on/following January 1, 2015 (Just delayed)
- Applies to all firms or control groups that regularly employ more than 50 FTE’s of labor
- Must offer coverage to all full-time employees (30 hours per week)
12
Individual Mandate
Requires individuals hold health coverage or pay a penalty (limited exceptions)
- Fines (assessed as “taxes”) for failure to purchase at greater of:
$95 or 1.0% of adjusted income in 2014 $325 or 2.0% of adjusted income in 2015 $695 or 2.5% of adjusted income in 2016
Annual election for exchange
Individual subject to penalty unless he shows evidence of coverage for at least nine (9) months of the year
- Generous grace periods for Exchange premium payment
Employee can still waive employer coverage - No tax credits for employee or family:
If affordable coverage offered by employer or, If the person actually elects coverage
13
Employer Mandate – Delayed to 2015
To comply, an employer must offer (key word is “offer” – employees can still waive coverage):- A minimum level of health plan
coverage to full-time employees and their dependents (children to age 26, not spouses) that is also
- Affordable for the employee – 9.5% (but not the family members)
No coverage offered results in $2,000 annual penalty per employee, minus 30
Failure to comply and employee purchases coverage through the Exchange with a Federal premium subsidy results in $3,000 penalty (per applicable employee)
Plans tested on “base” option only
14
Play or Pay?
Penalties may seem lower than cost of coverage…
Lost tax advantage
Reporting burden’s remain
Recruitment and retention challenges
Counting employees can be complex
Cost of coverage can be adjusted
Other financial implications
Carriers will address plan designs
The Exchange – aka “Marketplace”
PPACA (The Patient Protection and Affordable Care Act)
15
16
Positioning for Reform: Exchanges (Marketplace)
Employers may face penalties because of what the government learns from Exchange-collected data
Individuals report on their annual income tax returns
Annual Employer Reporting Requirement (Jan. 2016 for 2015 data)- Report on health coverage of each eligible employee and family
members, broken out on a monthly basis – Reporting to IRS: Name/address/SSN All covered individuals (employees and dependents) Detail of coverage (month-by-month) Describe individual coverage and premiums
- Reporting rules still unclear
17
Positioning for Reform: Exchanges (Marketplace)
Exchanges used for enforcement against individuals & employers:- Exchange will know individual’s
household income (IRS data check), whether employed (using IRS information), and whether employer coverage is affordable
- Law directs state exchanges to report to federal government
Enforcement will be after the fact
18
States’ Positions on Exchanges
As of June 14, 2013…
Source: Center on Budget and Policy Priorities
19
States’ Positions on Medicaid Expansion
As of June 24, 2013…
Source: Center on Budget and Policy Priorities
20
The Healthcare Income Continuum
Coverage Gap
PPACA when fully enforced provides coverage and assistance for most Americans from 0 to 400% of Federal Poverty level Income
If Medicaid expansion is refused, Louisiana will have no insurance help for citizens between 11% and 138% of FPL
0-11% Existing Medicaid
11% to 138% New Medicaid Expansion
139% to 400% Exchange Subsidy Eligible
401% of FPL and above, you are on your own!
Federal Poverty Level Income0% 11% 138% 400%
21
Sample Exchange Purchases
(Benchmark)
“Metal” Level Bronze Silver Gold Platinum
Typical Sample Annual Premium $10,908 $12,120 $13,332 $15,350
Family Income $35,000/year (149% of FPL)
Premium Tax Subsidy $10,734 $10,734 $10,734 $10,734
Family pays: $174 $1,386 $2,598 $4,616
Payment % of Income 0.4% 4.0% 7.4% 13.2%
Family Income $88,000/year (375% of FPL)
Premium Tax Subsidy $3,760 $3,760 $3,760 $3,760
Family pays: $7,148 $8,360 $9,572 $11,590
Payment % of Income 8.1% 9.5% 10.9% 13.2%
Expect Exchange coverage to be priced like group coverage (no plans/rates released yet). Family members offered coverage CANNOT use tax credits to access Exchange coverage – Even if affordable to employee only
21
1
2
Example for a Family of 4 (ages 40, 36, 6, 4):
22
Ineligible for Subsidies
Incarcerated
Income above 400% of FPL
Offered coverage at work that meets employer mandate criteria
Medicaid or CHIP eligible (income <138% FPL)
Claimed as a dependant on someone’s taxes
In the country unlawfully (but you do get 90 days of Medicaid coverage while your citizenship is being verified)
Unable to attest to residency in a single state
Once a subsidy is accepted, individual MUST file tax return for that year
22
IRS Measurement Guidance
PPACA (The Patient Protection and Affordable Care Act)
23
23
24
Who is an Employee?
Down the rabbit hole…- Title I of the PPACA leads to
- Section 1551 of the PPACA which leads to
- Section 2791 of the Public Health Service Act which leads to
- Section 3(6) and 3(5) of the Employee Retirement Income Security Act (ERISA) which says an employee is
- “any individual employed by an employer”
The Supreme Court’s definition of a common law employee applies
25
IRS Measurement Guidance
Full time employee: Expected to work on average at least 30 hours per week
Variable hour employee: If, based on the facts and circumstances at the start date, the employee is not reasonably expected to work on average at least 30 hours per week
Seasonal: Make a reasonable, good faith interpretation of facts- Can the job only be performed at certain times of the year?
- Educational employees are not “seasonal,” but sports coaches might be
- Summer camp counselors instructors are seasonal
- Golf course workers may or may not be (location?)
- Short term workers (duties tied to projects of short term duration) are not seasonal
26
IRS Measurement Guidance
Tracking hours allows an employer to deny coverage to any employee who was not full-time when hours were being tracked
When hours are being tracked, employee may access federal tax credits
Transitional Initial Annual
Track hours to know who should be offered coverage in 2015
Track hours worked for new hires who will be variable hour or seasonal
Track hours each year for current employees who will be variable hour or seasonal
27
IRS Measurement Guidance
High turnover employeesAn employer cannot simply assume the worker will not be there very long (for example, a substitute teacher, or a project worker, perhaps)
Rehires: After 26 weeks post-termination, a worker can be treated as a new hire- An employer can treat an employee with a short absence of at least 4
weeks as new hire if rehired, provided the employee’s period of non-employment is longer than the period of just-prior employment
- If a variable hour employee returns, credit with prior service if required under above rule
- If a full-time employee returns, then offer coverage as soon as possible, ideally on date of return to work
28
Rules for Counting Hours
For variable hour & seasonal employees, count:- Actual hours of service
- Hours of paid time off such as vacation, sick leave, holiday pay, jury duty pay, military leave
- Credit for hours of federally-mandated leave (FMLA, etc.) using average hours method
- On-call or travel time that is paid under Federal law
What to Prepare for Now?
PPACA (The Patient Protection and Affordable Care Act)
29
29
30
Have a Strategic Plan
2013 2014 2015 2016
Understand your plan and demographics Know effective date (non-calendar year renewals) Know who your FT employees are Budgeting: Who will you offer coverage to? Begin measuring variable hour workers Wellness: Outcomes based penalties cap up to 30%
(50% for smokers) Exchange notices (October 2013) Preventive care rule and benefit mandates Health FSA limit: $2,500 Pre-existing conditions exclusions removed in 2014 Address possible stop loss issues vis-à-vis clinical trial
coverage
We are
here
Employer Mandate: Affordable minimum coverage to all FT EEs (more than 130 hours/mo)
- Minimum coverage to EE + Child(ren) with affordability
- Mandate does not require coverage to spouses or PT workers
Exchanges – Public and private coming online
- Consider spousal coverage, tax credits and exchange options
31
Top Employer Strategies to Avoid Financial Impact of Reform
Increase dependent
coverage costs paid by EE
Review retiree coverage options
Increase deductibles or copayments to keepcosts below “Cadillac
tax” threshold
Increase employee
contributions
Offer basic plan along with “buy up”
option for executives and management
Cut other benefit offerings and steer
dollars to medical plan
Manage staff: a) Reduce # of FT EEsb) Reduce # of EEs below 50
(beware controlled groups)c) Use more variable hour EEs and
delay offering benefits
Manage plan design:a) Consider self-fundingb) Set EE premiums for plan
based on estimated W-2 for affordability
c) Offer Flex Credit approach
Leverage wellness
Thank you!Jim Casadaban, MBA
HUB International Gulf South
504.620.4473 | [email protected]
For more information, visit our website:www.hubhealthreform.com