Download - Intecare PPACA Webinar 11/20/12
PPACA: What Every Employer Needs to
Know Now. A Comprehensive Guide to
Healthcare Reform
November 20, 2012
© 2012 Proskauer. All Rights Reserved.
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Today’s Presenters
LINDA KELLER
EVP, Consulting & Account Management
Intercare Insurance Solutions
pg. 2
SHANNON TAYLOR
EVP, Sales, Health & Performance
Intercare Insurance Solutions
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
PPACA: What Every Employer Needs to Know Now! A Comprehensive Guide to Healthcare Reform
pg. 3
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Agenda
Current Law Reminders
New Taxes & Fees
The Individual Mandate
PPACA and the Exchanges
Pay or Play
Strategies
4
© 2012 Proskauer. All Rights Reserved.
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Poll
How confident are you in your understanding of the
provisions of the Affordable Care Act?
pg. 5
Current Law Reminders
Questions #2
How many employees at your company?
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Medical Loss Ratio Rebates
Rebate < 85% (large groups)
Rebate <80% (small groups or
individuals)
MLR = % of premium revenue spent Claims/Medical Care
© 2012 Proskauer. All Rights Reserved.
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Preventive Care Rules
NOW!
August 2012
Initially Immunization
Screenings & preventative care for infants, children & adolescents
Additional care for women
Later expanded by HHS to include all FDA approved contraceptives Intrauterine devices
“Morning-after pill"
Newer forms of long-acting implantable hormonal contraceptives
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Summary of Benefits and Coverage
Distributed first open enrollment following September 23, 2012
Not exceed 4 double-sided pages
“Culturally and linguistically appropriate“
© 2012 Proskauer. All Rights Reserved.
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Timing - Summary of Benefits and Coverage
Open Enrollment – Before the 1st day on/after September 23, 2013
For participant who enroll other than open enrolment – 1st day of plan year on/after September 23, 2013 SBC must be provided at the following times:
Upon request - no later than 7 days
Within 90 days of enrolling under a HIPAA special enrollment
With open enrollment materials
If the SBC cannot be timely provided because the plan terms have not been finalized, the SBC must be provided within 7 days of finalizing the plan terms
© 2012 Proskauer. All Rights Reserved.
2012 Forms
Small Employer Exception
Entire cost of the coverage
Determined under rules similar to COBRA premiums
W-2 Reporting of Health Costs
$2,500 Health FSA Limit
Effective for plan years beginning in 2013
Limits annual employee contributions to $2,500
Indexed to the CPI starting in 2014
Does not limit employer contributions
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Medicare Payroll Tax Increase
0.9% FICA & SECA tax on wages over $200,000
Employer withhold on wages over $200,000
pg. 15
Private & Confidential • TX Insurance Lic #18311 • intercaresolutions.com16
90 Day Requirement
Plan year on or after January 1, 2014
90 days within the 1st day they are eligible
If employees can elect within 90 days but fail to elect within 90 days it is not a violation
© 2012 Proskauer. All Rights Reserved.
Mandates Still Requiring Guidance
NOTICE! Availability of Health Insurance Exchange
Effective March 23, 2013
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Non Discrimination Rules
Prohibits discrimination in favor of “highly compensated employees” with respect to eligibility & benefits
Fully-insured plans after release (already apply to self-insured)
Penalty: up to $500,000 Under ACA
© 2012 Proskauer. All Rights Reserved.
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Employer Auto Enroll
Employers must automatically enroll all full time eligible employees in the default medical plan
Must provide adequate notice to employees and opportunity to opt out
© 2012 Proskauer. All Rights Reserved.
Taxes & Fees
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
WhoWhatWhen
How Much
Comparative Effectiveness Research Fee
Annual fee on insured & self-insured plans beginning on/after
10/2/11
HRA/FSA nuances, etc.
Annual fee of $1, then $2 indexed, per
participant until 2019
First payable July 2013Sunset after 2019
Health Insurance Industry Fee
Annual fee on all insured plans beginning
2014
Includes Dental/VisionExcludes ASO
Estimated costs:2 – 2.5% of premium
in 2014
Increasing to 3 – 4% in future years
Reinsurance Assessment
Annual fee on insured & self-insured plans, 2014
– 2016
Excludes Dental/Vision
Estimated costs:
2014 - $60 - $90 PMPY2015 - $40 - $60 PMPY2016 - $25 - $35 PMPY
New Taxes & Fees with Employer Impact
The Individual Mandate
Beginning 2014
Individual Mandate
Individuals must maintain health insurance
24
Those who do not maintain minimum essential coverage, and who are not exempt from the mandate, will be required to pay a penalty for noncompliance
© 2012 Proskauer. All Rights Reserved.
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Individual Mandate – Exceptions:
pg. 25
Not lawfully present in the U.S Incarcerated Residing outside of the U.S HHI is less than the federal income tax filing
threshold
Determined by HHS to have suffered a hardship
Health care sharing ministry Members of Indian tribes Bona fide residents of any possession of the
U.S
No penalty imposed without coverage for > 3 months - Only one 3-month period allowed in a year
Individual Mandate Penalty
The penalty for noncompliance is the greater of either:
26
A. percentage of the amount by which HHI exceeds the personal exemption amount ($5,950 in 2012, doubled for joint filers) plus the standard deduction amount ($3,800 in 2012),
• Percentage is 1% in 2014, 2% in 2015, and 2.5% thereafter, or
Individual Mandate Penalty
27
B. A flat dollar amount assessed on each taxpayer and any dependents.• The annual flat dollar amount is phased in—$95 in 2014, $325 in 2015, and $695 in
2016 and beyond (adjusted for inflation)
• Reduced by one-half for children under 18, and
• For families, capped at 300% of the annual flat dollar amount
Penalty cannot exceed national average for bronze exchange plans
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Sample Calculation of Individual Penalty
pg. 28
Personal exemption is $5,950 in 2012 (doubled for joint filers)The standard deduction amount is $3,800 in 2012
PPACA and the Exchanges
PPACA & Exchanges
All states to establish an Exchange by January 1, 2014
• The American Health Benefit Exchange
• Small Business Health Options Program (SHOP) Exchange for individuals and small businesses
Types of Exchanges:• State Exchange
• Partnership Exchange
• Federally Facilitated Exchange
30
© 2012 Proskauer. All Rights Reserved.
Will The State Be Ready?
31Source: Kaiser Family Foundation; Accurate as of 11/16/2012
PPACA & Exchanges
Qualified Health Plans:• Certified as qualified by an Exchange;
• Provides the essential health benefits package; and
• Offered by a licensed insurer that agrees to offer at least one “silver” and one “gold” level plan in the Exchange
Essential Health Benefits: Defined by a Benchmark Plan selected by each
State; Benchmark would serve as reference plan to
determine if employers plan meets minimum requirements
32
© 2012 Proskauer. All Rights Reserved.
33
Essential Health Benefits
PPACA & Exchanges
Prior to 2016, small employers are 100 or less but states may limit to 50 employees or less
Prior to 2017, only small employers (100 employees or fewer) can participate
Starting in 2017 and thereafter, states may allow all employers
Initial open enrollment period: October 1, 2013 through March 31, 2014.
For benefit years in 2015 or later, the annual open enrollment period will be from October 15 to December 7
Special enrollment provisions will be included
34
© 2012 Proskauer. All Rights Reserved.
The Metals
Exchanges to Offer Four Levels of Coverage:
35
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Pay or Play?
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Poll
Will healthcare reform law require all businesses, more
than 50 employees, to provide health insurance?
pg. 37
Employer “Pay-or-Play” Mandate
In 2014, the pay-or-play mandate requires employers of 50 FTE (Full Time Equivalents) or more to offer quality, affordable health insurance coverage to full time employees (those working on average at least 30 hours per week) and their families
Failure to offer such coverage potentially subjects the employer to a tax penalty for a given month if a full time employee receives a federal premium tax credit or cost-sharing reduction and is enrolled in coverage through a health insurance exchange
38
© 2012 Proskauer. All Rights Reserved.
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
When is an Employer Subject to Pay-or-Play?
FTE employees are determined by taking the sum of the employer’s full time employees (using a 30 hour per week standard) and the number determined by dividing the hours of service of employees who are not full time employees by 120
Employer employs 40 full time employees and 20 part-time employees who each work 60 hours per month.
50 FTE: 40+(20×60÷120)=50
Employer employees 35 full time employees and 20 part-time employees who each work 96 hours per month
51 FTE: 35+(20×96÷120)=51
39
© 2012 Proskauer. All Rights Reserved.
Determining Full Time Employee Status For Purpose of the Pay or Play Tax
Proposed “Look-back/stability period safe harbor” method
The employer selects a 3-12 month “measurement” period to determine which employees averaged at least 30 hours per week
40
Nov 2012
Look-Back
May 2013May
2012© 2012 Proskauer. All Rights Reserved.
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What are the Pay-or-Play Penalties?
Employers who “opt out” of providing benefits
Employers who do not provide quality health coverage to all full time employees (and their dependents) are penalized If at least 1 full time employee is eligible for, or
receives, a tax credit and enrolls in exchange coverage, the employer is subject to an annual penalty of $2,000 × all full time employees (except for the first 30) applies
Penalty is assessed monthly (i.e., $167.67 per full time employee per month)
41
© 2012 Proskauer. All Rights Reserved.
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What are the Pay-or-Play Penalties?
Example 1: No full time employee receives a tax credit No penalty assessed
Example 2: One or more full time employees receive a tax credit The annual penalty is calculated by taking the number of full time
employees minus 30, multiplied by $2,000
If there are 50 full time employees, the penalty would not vary if only one employee or all 50 employees received the credit; the employer’s annual penalty would be (50-30) × $2,000, or $40,000
42
© 2012 Proskauer. All Rights Reserved.
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
What are the Pay-or-Play Penalties?
Employers who provide “unaffordable” coverage
Coverage is affordable only if the premium for single coverage under the employer’s lowest cost plan with at least a 60% “actuarial value” does not exceed 9.5% of individual W-2 wages
Annual penalty is the lesser of $3,000 for each full time employee who receives a tax credit and enrolls in exchange coverage, or $2,000 multiplied by all full time employees (subtracting first 30) Penalty is assessed monthly (i.e., $250 per
subsidy-receiving full time employee per month)
43
© 2012 Proskauer. All Rights Reserved.
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
What are the Pay-or-Play Penalties?
Example 1: No full time employee receives a tax credit
• No penalty assessed
Example 2: One or more full time employees receive a tax credit
For an employer with 50 full time employees, annual penalty is lesser of:
• the number of full time employees minus 30, multiplied by $2,000, or
• the number of full time employees who receive tax credits multiplied by $3,000
Assuming 10 full time employees received tax credits, the potential annual penalty on the employer would be $30,000
However, if the employer had 30 full time employees who received tax credits, then the potential annual penalty on the employer would be capped at $40,000 (20 employees × $2,000) rather than $90,000 as calculated (30 employees × $3,000)
44
© 2012 Proskauer. All Rights Reserved.
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Affordability
pg. 45
133%
100%
Contribution as a % of Household Income
Hou
seh
old
In
com
e a
s a
% o
f FP
L
Affordable (Income exceeds 400% of FPL)No Penalty to Employer
Potential Penalty to Employer(Income is 100-400% of FPL and employee contributes more than 9.5% of W-2 wages
State Medicaid Expansion
Medicaid (At or below 100% of Federal Poverty Level)No Penalty to Employer
(100-138%*)
9.5% and above
400%
0%
*Medicaid expansion by State and interpretation
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Impact of Medicaid Decision on Employers
Medicaid Expansion Requirements States must cover all individuals under age 65 with income below 133% of
the poverty line
"Essential benefits" must be provided to all Medicaid recipients
© 2012 Proskauer. All Rights Reserved.
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Impact of Medicaid Decision on Employers
© 2012 Proskauer. All Rights Reserved.
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Premium Credit Eligibility
Must be a part of a tax filing unit
Must be enrolled in a public exchange
Cannot be eligible for Medicare, Medicaid, CHIP, coverage related to military service, an employer-sponsored group health plan, a grandfathered plan, and other coverage recognized by HHS
Employer doesn't have minimal essential coverage
48
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Sample Calculation of Credit
a) Federal Poverty Level 200%
b) Family Size 4
c) Maximum Premium $2,778
d) Actual cost of Insurance Plan $5,000
e) (d) minus (c) is tax credit $2,222
pg. 49
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
What Comes Now?
Evaluate your company culture and align incentives accordingly
Don’t just focus on 2014 – think beyond
Ramp up your communication plan – there’s a lot more to come!
Poll
How likely are you to terminate your medical plan in or
after 2014?pg. 51
Shannon Taylor, EVP of Sales, Health & Performance
Strategies
pg. 53
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Financial Impacts of PPACA
pg. 54
As a result, we are focused on solutions in 3 core areas with our clients:
1. Optimized PPACA and benefits strategy
2. Integrated Health & Performance program
3. Active promotion of consumer accountability
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Elements of the Perfect Storm P
lan
Cost
Per
En
rollee*
2011 2012 2013 2014 2015 2016 2017 2018 $5,000
$10,000
$15,000
$20,000
The chart is for informational purposes only and is intended as an aid in understanding and analyzing impacts of the changing aspects of current health care regulations and requirements. *Employer Cost per Enrollee for a PPO Plan (2011–2018) Source: Kaiser Family Foundation (premium data)
• PPACA effective
• MLR compliance
• Medical utilization trends slow
The Calm Before the Storm
Kaiser Family Foundation predicts health care costs per enrollee will increase
+26% from 2013–2014
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Elements of the Perfect Storm P
lan
Cost
Per
En
rollee*
2011 2012 2013 2014 2015 2016 2017 2018 $5,000
$10,000
$15,000
$20,000
The chart is for informational purposes only and is intended as an aid in understanding and analyzing impacts of the changing aspects of current health care regulations and requirements. *Employer Cost per Enrollee for a PPO Plan (2011–2018) Source: Kaiser Family Foundation (premium data)
• Declining Population Health
• Employer Requirements
• New Industry Taxes & Fees
• Cost Shifting
The Perfect Storm - 2014
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Key Questions to Answer - PPACA
1. What is the estimated household income distribution of your employee population?
2. How many employees may qualify for Medicaid or significant premium subsidies in the state or federal exchange?
3. How many employees will elect to enroll in Medicaid or purchase an individual policy in the exchange using a premium subsidy?
4. Will the number of employees and dependents covered change significantly beginning in 2014?
5. What is the actuarial value of your benefit plans in relation to the plans offered in the health insurance exchanges?
6. How does modifying required employee contributions or benefit designs change estimated future plan costs?
7. How will employer penalties, affordability requirements, individual mandate penalties, and premium tax credit percentages change over time?
8. Will any plans be subject to the excise tax on high cost health plans beginning in 2018?
9. What steps can employers take to minimize the financial impact of healthcare reform?
10.How will your plans be impacted if your state(s) do not carry out the Medicaid expansion?
11.Are there other non-financial considerations related to your health plans that make them a valuable employee retention tool?
pg. 57
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Navigating The Perfect Storm
pg. 58
Develop a Multi-Year Benefit Strategy
ImprovePopulation Health
Create Better Healthcare Consumers
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Develop a Multi-Year Benefit Strategy
Develop a benefits strategy that complies with regulations, minimizes adverse cost impacts by phasing in the right solutions over time and delivers the best return on your investment
pg. 59
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Improve Population Health
pg. 60
Implement an integrated health & performance program to mitigate health risks, lower utilization and improve employee health and productivity
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
Create Better Healthcare Consumers
pg. 61
Create a consumer accountability strategy to increase employee ownership of health expenditure decisions and develop a culture of awareness, appreciation and employee engagement
Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
The Perfect Storm Survival Guide
pg. 62
The information provided in this slide presentation is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the firm, our lawyers or our clients. No client-lawyer relationship between you and the firm is or may be created by your access to or use of this presentation or any information contained on them. Rather, the content is intended as a general overview of the subject matter covered. Proskauer Rose LLP (Proskauer) is not obligated to provide updates on the information presented herein. Those viewing this presentation are encouraged to seek direct counsel on legal questions. © Proskauer Rose LLP. All Rights Reserved.
Q & A
© 2012 Proskauer. All Rights Reserved.