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Agenda ACA Timeline • Willis Health Care Reform Survey Results
Guidance on Health Care Reform
Strategies for Consideration
Leveraging your ALFA Membership • Opportunities for Group Leveraging and Purchasing • Benefit Administration • Record Keeping
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Entire Law Upheld
ACA: Timeline • SBC Coverage Summary • W-2 Cost Reporting • PCORI Fee • MLR Payouts • Women’s Preventive
Services • Internal and External
Review
• FSA $2,500 Limit • 2.3% Medical Device Tax • .9% FICA – Med Surtax on High Earners • Itemize Medical at 10@ AGI (up from 7.5%) • PCORI fee Increase • Notice of State Exchanges and Subsidies • Elimination of Medicare Part D Tax Deduction
• Individual Mandate • Employer Mandate – Essential, Affordable • State Exchanges – Taxpayer – paid Credits • Annual Dollar Limit on EHB Lift • 90 Day Wait Maximum • Adult Child Grandfather Ends • Cafeteria Plans Permitted for Exchange Coverage • Pre-ex Ends For All • Medicaid Expansion • New Tax on Health Insurers • Reinsurance Fee • Enhanced Wellness Financial Incentives • OOPM Limit = HSA Limit
• Delayed Provisions • Auto Enrollment (> 200) • Insured Non Discrimination
Testing
• State Exchanges – Potential Expansion to Large Employers
• “Cadillac Excise Tax”
• All State Exchanges Open to <100
• Part D “Donut Hole” Phase Out Complete
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Willis National Health Care Reform Survey – What We Have Learned Employers will continue many existing strategies • Expansion of Wellness Offering • Redesign of benefit options and eligibility provisions
Most employers plan to “play” under the “play or pay” mandate • Continuation of the “compliance as we go” approach as opposed
to adopting a Total Rewards strategy Employers are concerned with cost, but underestimate the cost of
compliance • 60% of employers say that avoiding cost increases is the most
important consideration for their businesses • Over half of surveyed employers have not determined the cost of
Health Care Reform compliance
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Federal exchange for 32 states o Initial open enrollment to start
10/1/13 19 states/DC establish
exchanges 7 partnership exchanges 25 states default to federal
exchange Question about tax credits and
penalties for coverage on federal exchange
Federal Healthcare Reform Public Exchanges
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Guidance on Health Reform
Pay or Play” rules - Large employers must offer affordable health coverage (meeting MEC rules) to substantially all FTEs
Case study • Happy Village – 1000 employees (930 salaried; 70 hourly) • Health coverage offered only to salaried employees
Issue 1 – Offering coverage to substantially all FTEs • Regulations provide a 5% allowance for offering coverage • Happy Village fails the 95% test • Penalty is $2,000 for each FTE (less 30) prorated monthly • Happy Village penalty is $1,940,000 annually
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Guidance on Health Reform
Issue 2 - Determining FTEs • Ongoing Employees vs. New Hires ‒ Standard Measurement Period ‒ Stability Period ‒ Administrative Period
• Nuanced rules for ‒ Different categories of employees ‒ Seasonal employees ‒ Mid year employment status changes ‒ Rehires
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Guidance on Health Reform
SMP “Lookback Period” 6 months AP 2014
Stability Period = Calendar Year
Case Study for Ongoing FTE Calculation
10/1/13 4/1/13
1/1/2014 1/1/2015
Managing the Variable Hourly EE Eligibility Requirements
SMP “Lookback Period” 12 months AP 2015 Stability Period
10/1/14
SMP “Look Back” Period 12 Months
Transition Year
SMP – Standard Measurement Period AP – Administration Period SP – Stability Period
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Guidance on Health Reform
2015 Stability Period = Calendar Year
1/1/2015 1/1/2016
Managing the Variable Hour EE Eligibility Requirements – New Hires
SMP “Lookback Period” 12 months AP
2016 Stability Period
10/1/14
SMP “Look Back” Period 12 Months
New Hire “Initial Lookback Period” 12 months
1/1/2014
6/1/14 6/1/15
10/1/14 9/30/15
Initial Stability Period
10/1/15
2016 Stability Period
Federal Healthcare Reform Public Exchanges
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Guidance on Health Reform
Pay or Play” rules - Large employers must offer affordable health coverage (meeting MEC rules) to substantially all FTEs
Issue 3 - Affordable health coverage – cost of single coverage is not more than 9.5% of household income
• Safe harbor rule – single coverage cost not more than 9.5% of
employee pay (Box 1 of W-2)
• Penalty - $3,000 for each employee who obtains coverage and premium assistance through a state exchange (prorated monthly)
Meet all PPACA requirements
Continue employer sponsored healthcare model
Plan remains affordable for all employees
Tweak/Adjust existing coverage, contributions, reporting, etc.
Meet some PPACA requirements
Allow low wage workers to qualify for government subsidies/ Medicaid
Pay $3,000 penalty for those ee’s who leave plan and receive subsidy
Increase cost sharing for dependents, and/or eliminating spouses coverage
Option 1
Maintain Status Quo
Option 2
Mostly Play
Option 3
Compliant Creative Strategy
Meet all PPACA requirements
Offer minimum possible coverage that would avoid penalties
60% plan design with no coverage for spouses
Contributions set at 9.5% of wages for self-only coverage, and 100% cost for child coverage
Strategies for Consideration
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Strategies for Consideration: Example of a “Redesign” Offer a multi plan offering to meet minimum compliance guidelines while
offering affordable options to all employees
Plan A
Current Medical
Option(s)
Estimate: $850 PEPM
Plan B
“Bronze Option” for
ACA Compliance
Estimate: $400 PEPM
Plan C
Fixed Indemnity, Hospital
Confinement, Critical Illness,
and Accident
Estimate: $250 PEPM
Cost may vary based on plan designs offered
Tradition Plan(s)
Minimum Compliance
Plan
Alternative Reimbursement
Plans
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Strategies for Consideration: “Defined Contribution” Provide all employees
equal amount to spend on healthcare and ancillary benefits with a wide range of choices and allow employees to select coverage based on their risk preferences
TECHNOLOGY & SERVICES CONSULTING & DESIGN
Integrated Benefit Administrator and ACA Compliance Technology
Plan Design Management (Design) • Health & Welfare Plan Design • Financial Budgeting/Underwriting • Employee Communication
Vendor Management (Deploy) • Contract Management/Renewal • Performance Standards and Audits • Implementation
Account Management (Define) • Strategic Planning • Compliance Management • Program Implementation
Benefit Exchanges (Design) • Total Benefit Marketplace • Supports Legacy Plans • Supports Defined Contribution
Traditional Administration (Define) • Highly Flexible Implementation • Employee Benefit Portal • Call Center
Regulatory Compliance (Deploy) • Compliance Testing Process • Integration with HRIS • Record Keeping
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ACA Total Solution Delivery
- Solution Spectrum +
Benefit Administration
Only
Maintain Existing “Core Benefits”
and offer Alternative
Reimbursement Plans
Maintain Existing “Medical Benefits” and offer
Ancillary Plans
Adopt Full ALFA Group
Purchasing Strategy
Defined Contribution Marketplace
• Employee Benefit Portal
• Online Enrollment • Call Center • Improved Employee
Communication • Eligibility
Management • ACA Record Keeping • Reduce HR Team
workload
• Benefit Administration
• Continue current Medical, Dental, Life and Disability carriers
• Offer Alternative Reimbursement Plans
o Fixed Indemnity
o Hospital Confinement
o Critical Illness o Accident
• Benefit Administration
• Continue current Medical and Dental carriers
• Offer Ancillary Plans o Life o Disability o Fixed
Indemnity o Hospital
Confinement o Critical Illness o Accident
• Benefit Administration
• Offer Choice of Plans o Medical o Dental o Life o Disability o Fixed
Indemnity o Hospital
Confinement o Critical Illness o Accident
• Benefit Administration
• Provide all employees equal amount to spend on healthcare and ancillary benefits with a wide range of choices and allow employees to select coverage based on their risk preferences
+ Cost of Benefit Administration -
ALFA Solution - Group Leveraging Strategy Preferred Pricing from Carriers
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ALFA Solution – Preferred Pricing Carriers
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Medical
Dental
Vision
Life and Disability
Voluntary
Stop Loss (Self Insured Medical)
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Questions?
