Patient Protection and Affordable Care ActWhat Employers Need To Know Now

2014 and beyond

John J. Sarno, Esq. Employers Association of NJ

October 28, 2013 4:00 – 5:30 PM

2013 Garden State Council SHRM Conference – October 27-29 – Atlantic City, NJ

44% of Americans think that the Affordable Care Act has been repealed.

Star Ledger, Sept. 13, 2013

• About 500,000 New Jerseyans are eligible to purchase a healthcare plan on the Health Insurance Marketplace

• Most work full-or part-time for a small employer• About 80% will be eligible for a subsidy• 525,300 undocumented workers in N.J. not

eligible

Personal responsibility mandate – January 1, 2014

Open enrollment on Health Insurance Marketplace

October 1 – March 31, 2014

Eligibility for Premium Subsidy

Individuals with incomes up to 400 FPL.

$46,000 / year (2013)

$94,200 / year (family of 4)

Expected amount of subsidize for N.J. - $700 million

Notice to Employees – October 1, 2013(thereafter at the time of hire)

Part A: General information about Health Insurance Marketplace, coverage standards and help paying premiums

Part B: General information about coverage offered by employer (if any)

Detailed information about plan is optional

COBRA Notices

HHS Technical Advice requires COBRA Notice contain general reference to Insurance Healthcare Marketplace

Employer Healthcare Plans

• Essential Benefits• Consumer Protections • Minimum Value• Affordable

Employee will not get subsidy if employer offers coverage that meets standards.

Health Insurance Marketplace

A one-stop web portal where individuals and small businesses can shop for plans, compare prices, and receive other information.

Plans must 1) offer essential benefits, 2) have consumer protection standards, 3) have a minimum value, and 4) be affordable.

States define “small business.” Cannot exceed 50 employees.

Carriers

• Horizon Blue Cross Blue Shield• AmeriHealth• Health Republic Insurance of NJ (non-profit

cooperative)

“Average” Employer Plan

“Essential Health Benefits” requires minimum set of benefits, with no lifetime of annual coverage limits

• Ambulatory patient services• Emergency services• Hospitalization• Maternity and newborn care• Mental health and substance abuse coverage• Prescription drugs• Rehab services and medical devices• Preventative and wellness/chronic disease management

Consumer Protections

All Plans• No lifetime maximums of essential benefits• No annual maximums on essential benefits, except as

allowed by the secretary of HHS• Provide coverage for children up to age 26• No pre-existing condition exclusion on children under

age 19• No rescissions of coverage

Consumer Protections(continued)

• Cover preventive services at 100%• Includes immunizations, child preventive care and women’s health

screenings

• Insured health plans must comply with nondiscrimination requirements

• Generally prohibits discrimination in favor of highly compensated individuals as to eligibility and benefits under the plan

• New Appeals process for insurers • Waiting periods cannot exceed 90-days for

employee or dependent otherwise eligible to enroll

In-Network, Out-of-Network

Plans will typically provide essential benefits and preventive services in-network.

Out-of-network – no co-pays, deductibles or limitations.

Minimum Value

Platinum (pays 90% of the value of benefits)

Gold (80%)

Silver (70%)

Bronze (60%)

Calculating Value of Benefits

IRS will provide an Actuarial Value Calculator. Employer enters information about plan’s coverage and cost-sharing and calculates value. Must be at least 60% or penalty may apply.

N.J. Benchmark – Small Employer

Horizon’s HMO Access HSA Compatible does not include pediatric dental and vision.

N.J. Small Group Health Plan(50 or fewer employees)

N.J. Regulations still apply• 75% coverage of “eligible” employees (25 or

more hours).• Coverage on spouse’s plan, Medicare, Medicaid

or FamilyCare count.• Coverage on Marketplace does not count.

Affordability

Full-time employee cannot pay more than 9.5% of household income for his/her share of premium for single coverage. Lowest cost plan.

Safeharbor: Employer may use W-2 income for employee. (Box 1)

Rate of Pay Safeharbor – Hourly rate multiplied by 130 hrs/month. Determine affordability using monthly premium based on monthly wage. For salaried employee, monthly wage can be used. Does not apply where wages were reduced during the year.

Maximum Out -of-Pocket Premium Payments

400% of poverty level

Single - $4,115

Single/Spouse - $5,537

Family 3 - $6,958

Family 4 - $8,379

Source HHS (2009)

The Marketplace, Prices and Subsidies – N.J.

29 plans within 4 categories

Platinum

Gold

Silver – benchmark plan (70% of healthcare costs)

Bronze

• 27-year old earning $25,000/yearSilver plan - $260/month

with subsidy - $145/month

• Family of 4 earning $50,000Silver Plan - $943/month

with subsidy - $282

Bronze plan with subsidy -$131/month

Navigators

Center for Family Services – South Jersey

Food Bank of Monmouth and Ocean Counties

Urban League of Hudson County

Public Health Solutions – Essex County

Employee Protections

Employer can not interfere or discriminate against an employee for seeking or receiving subsidy.

Does failure to provide notice constitute “interference?”

Delayed until January 1, 2015Based on 2014 scenario

“Large” Employer Penalty

Employers with 50 or more “full-time” employees will be penalized for not offering coverage or coverage that does not meet standards.

All employees counted in a calendar month (part-time, temporary, seasonal).

“Full-time” employee is someone who is employed to perform services on average of 30-hrs per week or 120 hrs/month.

Part-time employees are grouped together to create “full-time” equivalents.

Aggregate number of hours worked by part-time workers in any month and divide by 120 to determine number of full-time equivalents.

“Services” includes all hours an employee is paid or entitled to be paid – vacation, sick, holiday, jury

Hourly Workers – Records of hours worked and paid have time off

Salaried Workers – Records of equivalency

Add “full-time equivalent” number to total full-time employees to determine whether employer has 50 “full-time” employees.

Used only for the purpose of determining whether employer has 50 or more employees.

Seasonal employees’ hours are included when determining whether employer is “large”

But

An employer will not be a “large” employer if it employed 50 or more full-time employees for no more than 120 days in the preceding calendar year.

Firms with “common ownership” are combined

Penalty for not offering insurance or to less than 95% of full-time employees and at least one FTE receives a subsidy to pay for insurance on the Exchange

• $2,000 per full-time employee after first 30 employees

Penalty for offering unaffordable or less than minimum value when employer offers to at least 95% of FTE and at least one FTE receives subsidy

• $3,000 for each full-time employee receiving a subsidy or $2,000 per full-time employee after first 30

Full-time employee means an employee who is employed on average of 30 “hours or service” per week or 130 hours/month

FTE are not counted

“Hours of service” means hour paid or paid time off.

Employees paid a commission must have reasonable method of crediting hours of service

Reduction of Hours

Employee Retirement Income Security Act (ERISA)

Unlawful employment practice to intentionally interfere with benefits, including healthcare benefits

Crawford v. TRW Automotive(6th Cir. 2009)

Employer closes plant and shifts work over to another facility. Laid off workers are not recalled and are not transferred to other facility. Many fall short of the 30-year enhancement pension benefit.

Employer’s decision is motivated by over-capacity at the plant, although pension-payment savings was also considered.

Court finds that decision to close plant was motivated primarily by over capacity.

Auditing and Enforcement

• U.S. Department of Treasury (IRS)• U.S. Department of HHS• U.S. Department of Labor

Combined databases – Form W-2, Form 5500, Social Security Administration database.

N.J. Conscientious Employee Protection Act (CEPA)

“Objecting” to the reduction of hours

Wrongful Termination

Discharging employees to avoid penalty

Possible exception to employment at-will rule

W-2 Reporting

• Employers are required to disclose the value of health coverage provided to an employee on a W-2

• This value includes medical coverage, HRA contributions, and possibly EAPS and wellness programs– Contributions to HSAs, Archer MSAs, and health FSAs are not

included– Need additional guidance – Does not include Dental or Vision care

Effective for taxable years beginning January 1, 2011

Automatic Enrollment

All new “full-time” employees will be automatically enrolled, subject to regulations. Notice will include opportunity to opt out. Current employees will be auto enrolled.

Applies to employers with 200 or more “full-time” employees and who offer a health care plan.

Regulations have not been issued.

Workplace Wellness

• Clarifies HIPAA Privacy Rules• Increases maximum reward under “health-

contingent” wellness program to 30 percent of employee’s premium

• Premiums can increase based on tobacco use

Questions?

Thank You