national health reform: what employers need to kno conference... · 2016-09-22 · 1 national...

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National Health Reform:What Employers Need to Know

Texas Council of Community MHMR Centers

June 17, 2010

Stacey Pogue, Senior Policy Analyst, [email protected] for Public Policy Priorities

900 Lydia Street - Austin, Texas 78702(512) 320-0222 – www.cppp.org

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Health Reform Impact onCommunity Centers

• Increases access to coverage for clients

• Changes payer mix

• Lays foundation for changes to delivery ofand reimbursements for health care

• New employer responsibilities:

– Employer requirements

– New requirements for job-based coverage

– HR dept. is trusted information source onhealth insurance matters

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Health Reform: The Big Picture

• Establishes a system formaking comprehensivecare available to all lawfullypresent Americans at anaffordable price

• Competition in health insurance marketplacecannot be based on avoiding risk

• Lays a foundation for controlling costs andimproving quality of care

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Timeline

20142013201220112010

• 2010: Early insurance market reforms begin.

• 2010-2014: Start building new systemsneeded to support covering large numbersof uninsured.

• 2014: Big expansion of coverage starts.

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Health ReformBuilding Blocks

• No lifetime limits

• Parent’s coverage for young adults to age 26

• No pre-existing condition denials for kids

• More accountability for premiums

• New federal high risk pool

• Small employer tax credits

• Medicare improvements

First Year Reforms

2010 -2011

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• Can’t deny coverage

• No pre-existing condition exclusions

• Can’t charge more if you get sick

• Limits on premium increased based on age

• Minimum essential benefits and morestandardized plans

• Small business tax credits increase

Private Market

2014

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• Eligibility up to 133% of the federalpoverty level ($29,300/yr for family of four)

• Adds ≈ 1 million adults in Texas

– Need improved eligibility system

• Full federal funding 2014-2016

• Maximum state share of 10%

– Significant new state costs

Medicaid Expansion

2014

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• Exchange = state-based, organized insurance market

• Clear, comparable information on cost, coverage, value

• Open to:– Individuals without job-based insurance– Small employer groups– State option for 100+ firms in 2017– Members of Congress

• Premium assistance for <400% FPL($88,000 for a family of four)

• Sliding-scale deductibles/copays andout-of-pocket caps

Exchange &Affordability

2014

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>$88,400 for afamily of four;>400% of FPL

Job-based coverage, or Full-cost coverage in the exchange

$66,200-$88,400;300-400% of FPL

Job-based coverage, or Subsidized exchange coverage: premiums capped

at 9.5% of income

$44,100-$66,200;200-300% of FPL

Job-based coverage, or Subsidized exchange coverage: premiums capped

at 6.3 – 9.5% of income

$29,300-$44,100;133-200% of FPL CHIP

• Job-based coverage, or• Subsidized exchange coverage:

premiums capped at 3% - 6.3%of income

<$29,300 for afamily of four;

< 133% FPLMedicaid Medicaid

Children Adults(non-disabled adults,

not eligible for Medicare)

Fam

ily

Inco

me

Health Reform Coverage Options by Income

Family income based on 2009 federal poverty income levels for a family of four

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$22,100-$44,100

100-200%FPL

$44,100-$66,200

200-300%FPL

$66,200-$88,200

300-400%FPL

>$88,200>400%FPL <$22,100/yr for

a family of four<100%FPL

Texas Uninsured by Income Today…6.1 million uninsured in 2008

682K

622K

1.24Million

1.96Million

1.61 Million

Annual income limits given for a family of four, 2009federal poverty level, U.S. Census, CPS

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• Requirement to have coverage if youhave an affordable option

• Several exemptions

• Needed for affordable coverage aftermarket reforms

• Penalty is 1/6 of thecost of coverage

Individual Mandate

2014

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• Larger employers face penalties if full-timeworkers get subsidized exchange coverage

– Penalty is 1/4 of the cost of coverage

• Small employers have no new obligations;won’t face penalties

– May qualify for tax credits (2010)

– Can purchase at a fair price in exchange

– Or employees can directly get affordableexchange coverage

EmployerResponsibility

2014

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How is Health Reform Paid For?

Health reform reduces the federal deficit:

New Revenue• Higher Medicare tax on individuals/couples earning more than

$200K/$250K per year (2013)• Fees on health care industries gaining millions of new customers• Large employer and individual responsibility requirements

Cost Savings• Reduces overpayments to Medicare Advantage plans (currently cost

13% more than regular Medicare)• Reduces the rate of growth in Medicare’s costs

New revenue $ Cost savings $New costs for

expanded coverage

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Under Reform - 2019

Employer

159 million

56%

Medicaid/CHIP

51 million

18%

Nongroup &

Other

26 million 9%

PrivateExchanges

24 million

9%

Uninsured

23 million

8%

Employer

162 million

57%

Medicaid/CHIP35 million

12%

Uninsured

54 million

19%

Nongroup &Other

30 million 11%

Current Law - 2019

Source: The Congressional Budget Office Cost Estimate of H.R. 4872, Reconciliation Act of 2010, Mar. 20, 2010

282 Million U.S. ResidentsUnder Age 65

Americans’ Coverage in 2019:If nothing changed compared to health reform law

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How Texans Could Gain Coverage If ReformWere Fully Implemented Today

Exchange with help

Exchange at full cost

Medicaid adults: newly eligible

Medicaid/CHIP kids: eligibleNOW but not enrolled

Remain uninsured 1.5M

500K

1M

500K

2.5M

0 0.5 1 1.5 2 2.5 3

≈ 2 Texans gain private exchange coverage for each 1 gaining through Medicaid

Of the 6.1 million uninsuredTexans today…

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Employer Responsibilities

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Employer Responsibility

• Strictly speaking, the law does not require employers to offercoverage.

• But does require larger employers to contribute financially iftheir employees get subsidized coverage in the Exchange.

• Penalties are a fraction of the cost of coverage.

• Small employers (50 or fewer full-time workers) have noobligation to provide coverage, and are exempt from penaltiesif they choose not to offer coverage and their workers get helpin the exchange.

• Employer-sponsored insurance is the foundation for coveragetoday. Employer responsibility provisions encourageemployers to maintain existing coverage.

• No exceptions in law for state or local public/governmentalemployers.

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Are you are large employer?50+ full-time equivalent workers

Are any of your full-time employees in asubsidized exchange plan?

Do you have more than 30 full-time employees?

Do you provide health insurance?

Pay penalty, lesser of:

$2,000 x (# of full-time OR $3,000 x # of full-timeworkers – 30) workers who receive

credits in the exchange

Nopenalty

Pay penalty$2,000 x

(# of full-timeworkers -30)

yes

yes

yes

yes

No

Adapted from Congressional Research Service, Summary of Potential Employer Penalties Under the PPACA

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Nopenalty

Pay penalty$2,000 x


yes

yes

yes

yes

No


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Are you a large employer?

Large employer = 50+ full time equivalent employees

Full time = 30+ hours/week on average

Example employer = 38 FT; 20 PT working 24 hr/wk each.

How to count employees to determine if you are a large employer

Employee Type How to Count Example Employer

Full-time(30+ hrs/ week)

Count as one employee each = 38

Part-time(<30 hrs/wk)

Prorate. Take total hours workedby part-time employees in month

divided by 120

(20 employees x

96 hours) / 120

= 16

Seasonal Don’t count if work <120 days/ yr 0

54 FT equivalents= large employer

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Nopenalty

Pay penalty$2,000 x


yes

yes

yes

yes

No


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Are any of your FT employees ina subsidized exchange plan?

• In general, employees are NOT eligible forsubsidies in the exchange if they are offeredemployer-sponsored insurance (ESI) or areeligible for Medicaid

• Exceptions if ESI:– Is unaffordable; if employee’s premium share is >

9.5% of household income (several questions remainhere) and family income is < 400% FPL

OR

– Has <60% “actuarial value”

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Actuarial Value

• Measure of the share of covered benefits the plan payson average.

• Employees pay remainder of covered benefits throughcopays, coinsurance, and deductibles.

• Function of plan design. Ex: switch to HDHP, AV goesdown; end lifetime limit, AV goes up.

• Examples of actuarial value– Children’s Medicaid: 100%

– Typical PPO ESI: 80%-88%

– Typical high-deductible health plan ESI: 76%

• Most firms that offer coverage already meet 60%standard

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Process

• Employee applies to exchange for coverage

• Using info reported to feds, exchange willdetermine eligibility based on:– No access to ESI

– ESI does not have minimum 60% actuarial value

– ESI is not affordable; > 9.5% of family income andincome < 400% of FPL

– Affordability determined by exchange; NOT employer

• Exchange notifies employer of potential penalty

• Employer can appeal

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Nopenalty

Pay penalty$2,000 x


yes

yes

yes

yes

No


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Nopenalty

Pay penalty$2,000 x


yes

yes

yes

yes

No


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Penalty: No Coverage Offered• If at least one FULL TIME employee gets subsidy in

exchange• Monthly assessment of 1/12 of $2,000 per full-time worker,

after subtracting out the first 30 workers from the penaltycalculation.

• $2,000 penalty is 23% of employer’s cost for familycoverage*

• No penalties for part-time employees (even if they getexchange subsidy)

• Penalty amount indexed after 2014 to national averagepremium growth rate.

• Example employer– 38 FT; 20 PT working 24 hr/wk each = 54 FT equivalents– 1/12 ($2,000) * (38 FT employees – 30)– $167 * 8 = $1,333/mo (or $16,000/yr assuming constant

employment)

*On average, Texas employers in 2008 paid 68% of the cost of familycoverage, or $8,840 of a $13,000 family premium.

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Penalty: Coverage Is Offered• If at least one FULL TIME employee gets subsidy in exchange

– Premium > 9.5% of family income (CBO: ≈1 million Americans/year)– Plan < 60% actuarial value

• Penalty is the lesser of:– Monthly assessment of 1/12 of $3,000 per full-time worker who gets

subsidized exchange coverage; or– Monthly assessment of 1/12 of $2,000 per full-time worker, after

subtracting out the first 30 workers from the penalty calculation (sameas penalty if no coverage offered).

• Example employer– 38 FT; 20 PT working 24 hr/wk each = 54 FT equivalents– 4 FT employees get subsidized exchange coverage– 1/12 ($3,000) * (4 employees)– $250 * 4 = $1,000/mo (or $12,000/yr assuming constant all year)– $1000/mo penalty is less than $1,300/mo under other calculation

• No penalties for part-time employees (even if they get exchangesubsidy)

• Penalty amount indexed after 2014 to national average premiumgrowth rate.

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Free Choice Vouchers

• Lets qualified employees take employer contribution toexchange as voucher to help purchase coverage

• Employers required to provide vouchers if:– Pays any portion of premium, and

– Offers minimum coverage (60+% act. value)

• Qualified employee =– one whose share of premium is between 8-9.8% of household

income

– Household income < 400% of FPL

• Employer pays no penalty related to vouchers

• Employees with vouchers will not get premium subsidies

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Auto Enrollment Requirements

• Applies to employers with 200+ FTemployees

• If you offer coverage, must automaticallyenroll new FT employees in a plan.

• Will require adequate notice and opt-out

• No regulations on this yet, but could takeeffect once regulations are out (could bebefore 2014).

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Reporting Requirements

• Written notice about the exchange

– Exchange services and how to contact

– Potential eligibility for financial help inexchange

– Potential loss of employer’s contributiontoward coverage if buying in the exchange(w/o a free choice voucher)

• Notices required March 1, 2013 for currentemployees and all new hires after that.

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Reporting Requirements

• Print value of health insurance benefit on W-2for information only (www.factcheck.org).

• New reports to federal government– Certification that FT employees (and dependents)

have choice to enroll in minimum essential, employer-sponsored plan

– Waiting period length

– Premiums for lowest cost plan

– Actuarial value

– # of FT employees (ID info on each)

– Info on plan for which employer pays largest share

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Other Items for Employers

• CLASS: A new voluntary insurance program to providecommunity-based assistance services and support.Premiums through payroll deduction. Starts in 2012 or2013; 5 years to qualify for benefits.

• Early retiree reinsurance. Temporary program toreimburse employment-based plans for 80% of costsincurred by early retirees over the age of 55 but noteligible for Medicare between $15,000 and $90,000annually. Payments under the program must be used tolower costs of the plan. Provides $5 billion to fund theprogram. Application out soon.

• Requirements for nursing moms

• “Cadillac” excise tax in 2018. 40% tax on amount thatexceed:– $10,200/individual and $27,500/family (indexed)

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What is required of youremployer-sponsored health plan?

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First-Year Reforms

• Several changes effective in law 9/23/10

• Must be in your plan at next policy/planrenewal date

– Ex. 1/1/11 for plans that run on calendaryears.

• Reforms apply differently to:

– Self-insured vs fully insure

– Grandfathered vs new plans

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Grandfathering• All plans in existence on 3.23.10 are “grandfathered” and

exempt from compliance with some reforms.• Can renew plans and add new employees and

dependents w/o losing status• Grandfathered plans will lose status if:

– Eliminates most or all benefits to diagnose or treat a specificdisease

– Raise co-insurance (ex: 20% to 25%)– Signficantly raise co-payments. > higher of $5 or the percentage

equal to medical inflation + 15 pts– Signficantly raise deductibles. > the percentage equal to

medical inflation + 15 pts– Significantly lower employer share. Can’t decrease >5% pts.– Add or tighten annual limits– Change insurers (for fully insured plans)

• Must disclose grandfathered status to enrollees• http://www.healthreform.gov/newsroom/keeping_the_he

alth_plan_you_have.html

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Use of This Presentation

The Center for Public Policy Priorities encourages you to reproduce and distribute these slides, whichwere developed for use in making public presentations.

If you reproduce these slides, please give appropriate credit to CPPP.

The data presented here may become outdated.

For the most recent information or to sign up forour free E-Mail Updates, visit www.cppp.org.

© CPPP

Center for Public Policy Priorities900 Lydia StreetAustin, TX 78702

P 512/320-0222 F 512/320-0227

national health reform: what employers need to kno conference... · 2016-09-22 · 1 national...

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