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TRANSCRIPT
WASBO Federal Health Care Reform
Patient Protection and Affordable Care Act
What and Employer Needs to Know for
2015 & 2016
May 15, 2015
David A. Grunke
Sr. Director, Sales Operations
WPS Health Insurance
608.226.8030
How did we get here? The Federal Government and Health Care Financing
In the beginning 1798
1. A Chicken for Services 2. 1930’s Health Insurance from Employment
3. 1940’s Taft Hartley Act
4. 1960’s Medicare & Medicaid
5. 1970’s Federal fostering of HMOs
6. 1990’s HIPPA
7. 2000’s Consumer Directed Benefits, H.S.A.
8. 2010.…… 2018 PPACA
Why Are We Here?
A Simplified View of a Complex Problem
and a Complex Solution that Leads to
Actionable Items that can be Implemented
Today
Simple Solutions
1. Texas & California
18% 20% 25%
TX 26,000,000 4,680,000 5,200,000 6,500,000
CA 38,000,000 6,840,000 7,600,000 9,500,000
Totals 64,000,000 11,520,000 12,800,000 16,000,000
2. Expand Medicaid Eligibility
Wisconsin was 200% of FPL
3. Exchange 2014, 8 - 9 million, 7.5, 7.1, 6.7 million?
State & Federal Marketplace 2015, 16.4 million,
3/16/2015 Federal HHS 26 million adults without coverage
What is the Solution
PPACA the law
March 23, 2010
2,700 pages
PPACA the implementation
Today
Over 40,000 pages
The Secretary’s List
– “the Secretary shall establish”
– “the Secretary shall promulgate regulations”
– “the Secretary shall develop standards”
– “the Secretary shall periodically review”
– “as the Secretary deems are important”
– “the Secretary may develop and impose appropriate penalties”
– “the Secretary may adjust the rates”
– “if the Secretary determines necessary”
– “the Secretary has the authority”
– “the Secretary will”
– and The President Says………….
2.25.2015
Why not take the Medicaid Money or
What Money did WI Get
Federal Exchange Enrollees 205,000
Receiving Federal Premium Subsidies 183,000
Average Premium Subsidy $319.00 / month
WI annual Premium Subsidy $70,052,400
Plus Deductible & Co-insurance subsidy $???
Medicaid Expansion Federal funds $345,000,000?
• WI State Journal 3.5.15
How Much Does the Cost Sharing
(deductible & coinsurance) Subsidy Pay?
A Silver Plan would pay roughly 70 percent of your total
covered health care expenses.
What About Iowa
• PPACA created; Co-Opportunity
• Health Market area, Iowa Nebraska
Federal low interest loans in 2014 $146,000,000
Premium 120,000 members x $3000 $360,000,000
total $506,000,000
Operating Loss 11/1/2014 $ (45,700,000)
Cash on Hand 11/1/2014 $ 17,200,000
CMS rejected a $55,000,000 Loan Request
• National Co-op landscape
23 22 PPACA Co-ops
$3 Billion in Federal Loans
½ will fail per the Federal Government
Age:
< 18: 5% (6% all states)
18-25: 9% (11% all states)
26-34: 17% (17% all states)
35-44: 15% (17% all states)
45-54: 22% (23% all states)
55-64: 32% (25% all states)
Plan Selection by Metal Level:
Bronze: 20% (20% all states)
Silver: 72% (65% all states)
Gold 6% (9% all states)
Platinum: 1% (5% all states)
Catastrophic: 1% (2% all states)
Enrollment by Financial Assistance Status:
With financial assistance: 91% (85% all states)
Without financial assistance: 9% (15% all states)
2014
The Upshot
What Happened
PPACA Update
• Delayed or Eliminated 40+
• What is OUT?
– 1099 reporting - spring 2011
– Voucher Option - spring 2011
– CLASS – summer 2011
– Local “Co Ops”- Jan 2013 (1 down)
– Medicaid Expansion (state by state basis)
PPACA Update
• What is/was DELAYED?
– Employer penalty – January 1, 2015 (July 5, 2013)
• No Coverage $2000
• Unaffordable Coverage $3000
– Income Verification – January 2015 (July 3, 2013)
– Small Employer PGSB / SHOP Full options – January 2016 (2-100),
January 2015 (2-50)
• Small Employer PGSB / SHOP single carrier November 2014
PPACA Update
2015 Individual Enrollment period
• November 15, 2014 to January 15, 2015
for a January 1, 2015 effective date (November 22, 2013)
• Extended to February 15, 2015
• March 15, 2015 to April 30, 2015
for a May 1, 2015 effective date (February 15, 2015)
2016 Individual Enrollment period
• November 1, 2015 to January 31, 2016
(February 20, 2015)
PPACA Update
– Automatic Enrollment, 200+, 2014? (DOL Feb 9, 2014)
– 2015 Employer size 50-99 “Transition Relief” until January 2016
(CMS February 10, 2014)
– Mandated Employer Reporting, Section 6055,6056, (Treasury/IRS
March 6, 2014) Report in 2016 for 2015 Enrollment
– Elimination of Limitation on Deductibles for Employer Sponsored
Health Plans, (April 4, 2014)
PPACA Update
– Affordability index increased to 9.56% from 9.5% for 2015 by
IRS, August 8, 2014
– HSA maximum increased to $6450 for 2015 by IRS – August
2014
– Out of Pocket maximum increased to $6600 by HHS for 2015
– Summary of Benefits & Coverage (SBC)
• Rules proposed December 2014
• From 4 pages to 2 pages
• 3 coverage examples from 2
• September 1, 2015
$6450
$6600
PPACA Update
– Full Time Employee Calculator, Small Business Tax Credit
estimator, (April 25, 2014)
– PCIP, Exchange enrollment Dec 31, 2013?, April 30,2014? Now
June 30, 2014, (CMS April 26, 2014)
– COBRA notice update, (May 2, 2014)
– 2015 Exchange, Market Reform, SHOP Exchanges, Navigators, &
Premium Stabilization, 436 pages (HHS May 16, 2015)
– Risk Corridors – not budget neutral , Loss Ratio 22%,Reinsurance
attachment point down to $45,000 from $70,000 (CMS May 27,
2014)
– Facts about the Premium Tax Credit (IRS May 29, 2014)
PPACA Update
• What was REVERSED?
– Reduction (2.3%) in Medicare Advantage Plan funding to a 3.3% increase (2013, April 7, 2014)
• What is in LIMBO?
– Medicare Part A and B reduction in reimbursement, the doc fix
• Delayed March 31, 2014, March 31, 2015 - 25% cut in reimbursement
– “Essential Health Benefits” for large employers - IRS April 30 2013
– March 2015 MACRA
• Confirmed-
– Individual Shared Responsibility (IRS Individual Shared Responsibility (IRS 8/27/13)
• What is New-
– Medicaid – Doctor reimbursements for 2014 reduced to the 2012 level (Dec. 13, 2014 Federal
Budget)
– 2015 Medicare Advantage reduction 3%, 160 Billion by 2022 (CBO)
– 2016 Released April 6, 2015 – 0.9%
PPACA News
• CBO estimated fewer Americans will have to pay mandate penalties (CBO
June 8, 2014) – 6 million down to 4 million, $3 billion in lost revenue (tax)
– IRS February 15, 2015 “I did not know”
• Employer payment plans are considered to be group health plans (IRS May
13, 2014)
• Third party premium payments confirmed (HHS May 21, 2014)
• 2 million (22%) people listed different income than their IRS records (IRS
May 16, 2014)
• IRS sends out 800,000 incorrect tax forms (20%)
• Citizenship questions
• 2016 premiums?
– 3 R’s
PPACA News
• Emergency Room use up, ½ of ER doctors polled said they have seen more
ER visits since January 1, 2014, 86% expect ER visits to rise over the next
3 years (ACEP May 21, 2014)
• Reinsurance contributions the form should be available no later than
November 15, 2014 (CMS May 22, 2014)
• Poverty Guidelines
2015:
Single $11,670 / $46,680
Family of 4 $23,850 / $95,400
2016: Single $11,770 / $47,080
Family of 4 $24,250 / $97,000
Who Is Eligible
Small Business Health
Options Program
SHOP
or
PGSB for ALL
WI School District Impact
• 30-40% of School Districts
• An Outcome Based Answer
• 99 or less employees based on PPACA
counting
• Winners & Los????
SHOP for Business Platinum, Gold, Silver Bronze (PGSB)
1. a. The Small Business Health Options Program (SHOP)
Marketplace (PGSB) was established within PPACA to
help small businesses provide health coverage to their
employees. Provide a Federal Tax Credit
b. Mirror Coverage; PGSB “Off Market Place”
2. a. The SHOP Marketplace for coverage starting January
1, 2015 will be expanding via the Federal Facilitated
Market Place. - May 27, 2014 HHS & WI OCI.
b. For the expansion 1/1/2016 (2-49 market)
SHOP for Business
3. 1/1/2014 – PGSB Benefits, rate compression 1/3, Male /
Female equalization, no Underwriting.
4. 1/1/2015 – The SHOP Marketplace is open to employers
with 50 or fewer full-time equivalent employees (FTEs)
using PPACA counting.
5. 1/1/2016 – PGSB (2-99 market) 80-85% of businesses
in WI
6. The business controls the coverage offered and how
much the business pays toward employee premiums
within PPACA guidelines
SHOP for Business
7. Employers will be able to compare health plans available in
the SHOP Marketplace, within the PGSB valued plans. This
will make it easier to compare and find a plan that works for
each business and it’s employees.
8. Businesses that enroll in SHOP coverage and have fewer
than 25 employees, may qualify for the Federal Small
Business Health Care Tax Credit worth up to 50% of
premium costs. The tax credit is available only for plans
bought through the SHOP Marketplace.
9. Starting November 15, 2014, small businesses will be able
to apply, compare plans, and enroll in a SHOP plan
online.
SHOP for Business
10. Employees will be able to enroll in the employer selected
plan(s) online, making the process easier for both the
employer and employee.
11. In Wisconsin, businesses will be able to offer more than
one plan, increasing employee choice and allowing
employees to select a health plan that works for them.
12. Premium billing and payment services will be provided to
all employers in FF-SHOPS
13. Off Marketplace, current payment structure
The 12 Steps Let’s Review
1. Determine Your Size
2-25, 2-49, 50-99, 100+, CMS Calculator
2. Are you going to Play or Pay
The Calculation, The Decision
3. Minimum 10 Essential Health Benefit Level 60% “Bronze Level”, Wellness / Preventive April 30, 2013 IRS
4. Employee Notices
Notice of Exchange DOL
5. Minimum Employee Contribution 9.56% of your lowest full time wage earner
6. Tax Impact Pay, Penalties, increased employer wage. Direct. Indirect.
The 12 Steps Let’s Review
7. Eligibility for Benefits Full time, 30 hours
8. Maximum Waiting period for benefits - No more than 90 days
9. Benefit options 2-49 - PPACA Metal Tiers, 1/1/2016 – 2-99 PPACA Metal Tiers
10. Provider network options Narrow vs Wide
11. Grandfather Status If you like your plan (50-100 for 2015)
12. Cadillac Tax 2018
Direct Taxes
• Effective 1/1/2014
– Health Insurer Tax 2.5% of Premium 2014
Insurers 3.5% of Premium 2015
2.5-4% of Premium 2016
– Reinsurance Fee $5.25 PMPM 2014
Insurers & Employers $3.50 PMPM 2015
$2.25 PMPM 2016
– PCORI (2013 - $1.00) $2 PMPY Employer & Insurer
• Other than these factors, PPACA has somewhat limited
impact on large group plans, 100+
Direct Taxes
Pay or Play Tax ($12 billion lost revenue tax in 2014,
CBO 7.27.13)
– Pay Tax, $2000 per employee less 30
– Due if member’s coverage is below 60% AV or cost of
coverage is too high relative to income, the tax is $3000,
not to exceed $2000 (2015)
– Large groups need to be aware of which employees the
federal government will consider to be full-time - 30 vs.
40 hours
Cadillac Tax
2018????
What –
• 40% Excess Value Tax
• $10,200 Single, $27,500 Family
• Based on total cost of plan not just employer contribution
• FSA and HSA Employee & Employer contributions count
• Retirees & High Risk Professions
Cadillac Tax
IRS Notice 2015–2016, Feb. 23, 2015
• Seeks comments - May 15, 2015, 24 pages
Change is most likely
• Demographic adjustment
• Geographic adjustment
• Inflation adjustment
Now
• Benefit Adjustments
• HDHP
Individual – Coverage Mandate
• Federal Market Plans
• Premium and Cost Sharing Subsidies
• Medicaid
• Expand to 138% of Federal Poverty Rate, 28 States & DC
• Non Federal Plans
Health Insurance Premium and
Cost Sharing Subsidies Provides refundable and advance-able tax credits and cost sharing
subsidies to eligible individuals.
• Premium subsidies are available to families with incomes between
133-400% of the federal poverty level to purchase insurance through
the Exchanges.
• Cost sharing subsidies (deductible, coinsurance, copays) are
available to those with incomes up to 250% of the poverty level.
Implementation Update: On May 23, 2012, the IRS released final
regulations related to the health insurance premium tax credits.
Corrections to this regulation were published on July 17, 2012.
Additionally, on January 30, 2013, IRS released a final rule on the
premium tax credit test for affordability of employer-sponsored
insurance.
The PPACA Marketplace Landscape?
• What Wisconsin Looked Like in 2014 & 2015
– What geography will each insurer cover (OCI September 19, 2013)
• SHOP-
– 2014; 5-none, 13-one, 10-three or more
– 2015; 0-none, 7-one
• Individual
– 2014; 13 with one insurer
– 2015; 3 with one insurer
– How much will the mandated insurance cost (October 1, 2013)
• Additional benefits, “value” of the policy
• No underwriting
• Rate compression – gender, age
• Taxes
The PPACA Insurance Landscape Individual & Small Group (2-49) 2014, Mid group (50-99) 2016
WHAT PPACA Changed
– Insured Products
• Pool Rated, the BIG pool;
– Individual
– Small Group 2-49, 50-99 (2015)
• Rate Compression, age 1 to 3
• No male / female rating factor
• 16 “areas” in Wisconsin
• No Underwriting
Market Reaction
– Self Funded/Administrative Services (ASO)
• Lower Group Size
• New Products
The PPACA Insurance Landscape
WHERE do we find Products
– On Exchange / Health Insurance Marketplace
• Healthcare.gov, Insurers, Agents, Navigators
– Individuals, to get premium tax subsidy
– Small Group, to get premium tax credit
– Off Exchange / Marketplace
• Insurers, Agents
– Individual, non subsidy (PPACA Like)
– Small Group (2-99), non subsidy (PPACA Like)
– Large Group
What did 2015 look like
• Who is in, Who is out
• Network, Expansion or Contraction
• Geography, Expansion or Contraction
• Benefits
• Compensation
• Delivery channel
• Price
What did 2015 look like
• Small Business Health Options Program (SHOP)
– Under 50, PPACA counting employers
– Wisconsin is IN
• May 27, 2014 HHS & WI OCI
– Employer Options
1. All medical plans across a single metal level and all dental plans
across a single coverage
OR
2. A single medical plan and a single dental plan
– Premium billing and payment services will be provided to all employers
in FF-SHOPs
What will the Future Look Like
2016 Small Group , SHOP Expanded to 100
• Many employers and employees will be affected by the change in the small
group definition. Such a change could affect over 150,000 establishments with
more than 3 million workers.
• Groups sized 51 to 100 will face more restrictive rating rules, which will
increase relative premiums for some groups, such as those with younger and
healthier populations, and reduce them for other groups, such as those with
older and sicker populations.
• Groups sized 51 to 100 will face additional benefit and cost-sharing
requirements, which could reduce benefit flexibility and increase premiums.
• The more restrictive rating and benefit requirements could cause more groups
sized 51 to 100 to self-insure, especially among those whose premiums would
increase under the new rules.
• If adverse selection occurs among groups sized 51 to 100, premiums for
groups sized 1 to 50 could increase.
REPORTING REQUIREMENTS UNDER CODE
SECTIONS 6055 AND 6056
• 1095-B Health Coverage. Insurers and self-funded plans will provide one
to each enrollee. The form provides information on the coverage provided.
• 1094-B Transmittal of Health Coverage Information Returns. Transmittal
form insurers and self-funded plans will file with IRS along with all the
Forms 1095-B.
• 1095-C Employer-Provided Health Insurance Offer and Coverage.
Large employers will provide one to each enrollee. The form provides
information on the coverage provided, and on to whom and when the
coverage was offered.
• 1094-C Transmittal of Employer-Provided Health Insurance Offer and
Coverage Information Returns. Transmittal form insurers and self-funded
plans will file with IRS along with all the Forms 1095-C.
• 1095-A Health Insurance Marketplace Statement. Exchanges will
provide to their enrollees.
What will the Future Look Like
2017
The perfect STORM
• PPACA “Essential Benefits” on ALL plans
2013 15- 60% of plans
• Reinsurance expires, 80% over $45,000
• Risk Corridors expire
• PPACA “PGSB” for all
COPYRIGHT 2014 – GRUPPO MARCUCCI. REPRODUCTION PROHIBITED WITHOUT PERMISSION.
CURRENT: TRADITIONAL MODEL FUTURE: EXCHANGE MODEL
Employer (wholesale) Individual (consumer)
Employer Hands-on Employer hands-off
Limited choices Expanded choices
Custom benefit design Standard offerings
Defined benefit Defined contribution
Offline Online purchasing
Retirement and health care silos Total rewards
Employer sponsored insurance trends
57
Things to Watch
• The Definition of “Preventative Care”
– Primary Preventive Services (section 2713)
– Value Based Insurance Design (VBID)
• University of Michigan
• Harvard University Medical School
• CVS Caremark
• Aetna
• Brigham and Woman’s Hospital
– 5-6% increase in Premiums
Things to Watch
Premium Subsidies
– In the Federal Appeals Court
• King v. Burwell – The Supreme Court will hear the
case in March 2015
• Four Words “established by the state”
• Decision June 2015
• 36 States
– Not for Profit Hospital Charges
The Take A-ways
• The COST of health care is ultimately
financed either directly or indirectly by
each of us.
• The VOLUME of health care that we use,
can be controlled by us as individuals or it
will be controlled by someone else
The Take A-ways
• “Don’t just stand there, do something,
even if it is wrong” Alexander Janonis
• “If not now, when” Golda Meir / Hillel
Resources
Internal Revenue Service
• http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions
United States Department of Labor
• http://www.dol.gov/ebsa/healthreform/
Centers for Medicare & Medicaid Services
• http://cciio.cms.gov/resources/regulations/index.html
U.S. Department of Health & Human Services
• http://www.hhs.gov/news/press/2010pres/07/20100722a.html
• http://www.healthcare.gov/
The Henry J Kaiser Family Foundation Health Reform Source
• http://healthreform.kff.org/
Center for Study Health System Change
• http://www.hschange.com/