ppaca: staying compliant & strategic

PPACA:Staying Compliant &

StrategicCBIZ – CFO Breakfast Series

August 28, 2014Presented by: Robert J. Aschentrop

Director, CBIZ Benefits & Insurance Services, Inc.

Agenda YTD – Changes and Clarifications

Compliance Preparation

Emerging trends, ideas & strategies

Success? Informative and open discussion Q&A throughout Leave with 1-2 valuable takeaways

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2014 ACA provisions had a material impact on the health care market…

Levies taxes and fees to fund subsidies and risk management mechanisms

Penalties for failing to purchase health insurance

Individual Mandate

Taxes and Fees

Key 2014 ACA

provisions

Cannot deny coverage or rating applicants based on health status

Levels the playing field and mitigates impact of guaranteed issue and pricing uncertainty short term

Penalties for employers who fail to offer affordable comprehensive coverage

Lowers cost for low and middle income populations in the Individual market

Government regulated Individual and Small Group health insurance marketplaces

Risk Management Mechanisms

Employer Mandate

Guaranteed Issue (GI) and Rating

Changes

Tax Credits and Subsidies

Insurance Exchanges

Source: Congressional Budget Office

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Changes and Clarifications in 2014

Changes and Clarifications - 2014

• Draft IRC section 6056 (ER) and 6055 (SF) reporting

• Form 1095-C• Very specific ER, plan, and participant info• Report to IRS and to each FTE

• FTE statement provided by 1/31 for prior yr.

• Two alternative Reporting Methods1. Certification of Qualifying Offer2. Report without separate ID of FTE’s

• MEC to 98% of all EE’s and dependents

• Filing due no later than 2/28 each year for prior year plan (3/31 if filed electronically)

• Compliance Prep: Does your current system(s) capture the relevant data necessary for the required reports?

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Changes and Clarifications – 2014 cont.

• 2015 Affordability Standards • 9.56% of EE’s household income (up from 9.5%)

• Specific EE data necessary

• Health Plan Identifier (HPID)• Used for transmittal of electronic health information• Must be obtained by 11/5/14 for self-funded plans

with claim receipts >$5M thru CMS Enterprise Portal

• 11/5/15 deadline for plans <$5M• 11/7/16 – all plans must utilize

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• Orientation Period Rules (not to be confused with measurement period rules!)

• Allows for one calendar month minus one day before standard waiting period, then the maximum of a 90-day waiting period could commence.

• Must offer by 1st day of 4th month or risk ER shared responsibility exposure

• Small Business Tax Credit• Eligibility - <25 FTEE w/ avg. income <$50,800

(indexed)• Must cover 50% of single coverage cost• Only available if plan is purchased on the SHOP and

only available through 2015 currently.• Credit is up to 50% of premium amount paid by ER

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• Cost-Sharing restrictions on Essential Health Benefits

• Out-of-Pocket limits match those of HSA• $6,350/$12,700 (2014)• $6,600/$13,200 (2015)

• Generic vs. Brand Name Drugs• No requirement to count cost difference in

MOOP

• Updated COBRA and CHIP notices• Expanded language regarding marketplace options

• 60-day enrollment window for marketplace• Note: Individuals can ONLY enroll in a

marketplace plan during federal open enrollment or after a qualifying life event.

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Preparing for Compliance


• Health Reform Checklist• 2015 preparation and beyond• Concise resource tool

• Chart of Affordable Care Act (ACA) Notice Requirements

• Detailed description of ER responsibilities

• Health Reform Bulletins• Nearly instant updates on regulation

clarification and guidance as ACA compliance questions are addressed

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Measurement Periods

• Tracking Employees• Standard measurement for ALL ongoing EE’s• Initial measurement period of new EE’s• Administrative periods for standard and initial periods

• Why should you care?• If you are an ER that will utilize longer measurement

periods due to turnover, etc you will need to provide an audit trail.

• Technologies• Equifax / Healthe(fx) / Payroll vendors

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Preparing for Communication

1. How does our communication strategy provide an audit trail for future compliance reporting?

2. Are we optimizing our cost and effort each year in our communication and open enrollment process?

3. Is our employee handbook, benefits guide, and on-boarding process compliant for new hires?

4. How are we communicating ACA compliance with our employees?

5. Are you still using a “passive” open enrollment process? 13

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Emerging Trends and Strategies

Funding Analysis

Fully-insured vs. Self-funding• Risk/cost gap differential is narrowing due to ACA taxes• Watchful eye on discrimination regulations for fully-insured plans• Employee engagement considerations

» Strategic HRA plan» Centers of value

Emerging trend of ‘cost plus’ self-fundingParadigm shift in network and reimbursements

» Doctor Network, but no hospital network» Greater of Medicare + 20% or Cost + 8%» Fiduciary liability of balance billing taken by TPA

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Network Analysis

Does a company plan network need to be all doctors and all hospitals to all employees?

High-Performance Networks• Targeted network of physicians and facilities with quality

outcomes• Premium cost and co-pay/co-insurance cost differentials

Emerging trend of ‘cost plus’ self-fundingParadigm shift in network and reimbursements

» Doctor Network, but no hospital network» Greater of Medicare + 20% or Cost + 8%» Fiduciary liability of balance billing taken by TPA

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Contribution Strategy Considerations

Today:Defined benefit vs. defined contribution methodologyDifferent employer contributions for different plan designsFocus on “affordability” calculation for lowest cost plan

2015:Introduction of MEC plans at lower cost to ER and EEPush in Washington for qualified “Copper” level plans

Beyond:Close eye on larger group exchange plans and premiums

* More efficient purchasing of insurance could hurt ER’s performance

Traditional employer-sponsored coverage may look very different

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Transparency Tools

How is your company utilizing the existing pricing and quality tools available and evaluating others

in the market?

Technology in the market is finally catching up• Carrier-owned and independent solutions• Beginning to chip away at a market with historically cloaked

pricing

Emerging trend of ‘reference-based’ benefitsSelf-funded employers set limits on procedural and facility costs

» Limit is the discretion of the employer – often calculated as plan avg. plus 10%

» EE free to choose provider and facility, but may incur costs outside of the medical plan

» Materially promotes cost transparency, quality of outcomes, of consumer awareness

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Private Exchanges

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Some employers are re-tooling thebenefit enrollment process…

1. Group & Individual Approaches:• Single carrier and multi-carrier designs• 3-10 medical plan designs for any given group• Emphasis on voluntary products

2. Key Components:• Defined Contribution from Employer• Technology-driven decision & enrollment tools• Employee Education

High Risk for Low Participation

Today:Typical participation range 70-90% of non-waiver eligible EE’s

2015:25-50% participation of non-waiver, newly-eligible EE’s

So What?1. Fully-insured plans – carriers are loading the premium for

anticipated risk

2. Self-insured plans – limited re-insurance contracts for spec S.L.– Most contracts will likely charge a material risk premium for low

participation– Short-form health questionnaires will likely be required by carriers20

Nondiscrimination Reminder• Self-funded Plans- Nondiscrimination rules have been in

effect since 1974 under Section 105(h)– Essentially states that contribution strategies and/or access to richer

medical plans in favor of highly compensated employees is illegal.• Penalty = taxation of premium and benefits received by

HCEs

• Fully-Insured Plans – Rules are set forth in ACA, but guidance has not been issued. Until further notice, discriminatory practices are still allowed in the fully-insured plan environment.

• Penalty is expected to be more severe than self-funded when regulations are finally issued.

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Discussion ?

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Robert J. Aschentrop, Business Consultant CBIZ Benefits & Insurance 913.234.1959 | [email protected]

With 15 years of financial industry experience, Robert joined CBIZ in 2010 to help build the employee services consulting practice. His chief focus in this capacity is analyzing the way companies finance, mitigate and transfer business and health risk. Robert started in the financial service industry in graduate school while working for the Iowa State University Foundation. He worked with individual, corporate, and foundation donors. This passion to serve as both the personal relationship contact and advisor for these clients helped develop his vision for the way ‘trusted advisor” relationships should be defined. Prior to joining CBIZ, Robert was a Kansas City commercial market vice-president for US Bank and served as the Executive Director for the Northland Community Foundation, working with high net worth individuals and corporations from a tax and asset perspective, to establish charitable foundations utilizing optimal and/or unique assets.

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SAVE THE DATE

Thursday, October 30, 2014 7:30am – 9:00am(continental breakfast served)

LOCATION: Carriage Club | 5301 State Line Road, Kansas City, Missouri 64112

2014 CFO Breakfast Series Quarter 4 ACCOUNTING & TAX UPDATE

FEATURING VARIOUS EXPERTS | CBIZ & MAYER HOFFMAN MCCANN P.C.

What is the IRS doing today? Tangible Personal Property Regulations Kansas Income Tax & how it effects YOU Reducing Income Tax: Structures and Incentives

Look to the Horizon – Accounting in the Next Year

Private Company Accounting Financial Reporting Changes for 2014

TOPICS WILL INCLUDE:

ppaca: staying compliant & strategic

Business

clarifications