The Affordable Care Act What Employers Need to Know.

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U.S. Managed Markets Sales: A unique market, a solid approach

The Affordable Care Act What Employers Need to Know

Today we will take a look at the new Affordable Care Act and the impact it will have on employers. Funding for this communication and support for the development of this content has been provided by Novo Nordisk.

[Speaker to introduce him/herself to the audience.]1Objectives2Review the tenets of the Affordable Care Act (ACA)1Identify elements of the ACA that affect employers2Review small and large employer market reforms3Understand requirement for wellness programs under the ACA4Todays session will meet the following objectives:Review the tenets of the Affordable Care ActIdentify elements of the ACA that affect employersReview small and large employer market reformsUnderstand the options and regulations for wellness programs under the ACA2

Reform existing insurance laws1 Expand Coverage

Basic tenets of health care reformReferences: 1. Centers for Medicare and Medicaid Services. http://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Market-Reforms/. Accessed June 22, 2015. 2. Kaiser Family Foundation. http://kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/. Updated May 26, 2015. Accessed June 10, 2015. 3. America's Health Insurance Plans. Time for Affordability website. http://ahip.org/Issues/January-1-2014-Provisions.aspx. Updated June 25, 2014. Accessed June 22, 2015. 4. Kaiser Family Foundation. http://kff.org/health-reform/state-indicator/state-health-insurance-marketplace-types/. Accessed June 22, 2015. 3Essential health benefitsactuarial valuecost-sharing limitationsgrandfathering rulesemployer mandateMLRrescissioninternal/external reviewsMedicaid expansion230 states including DC3 states open debate 18 states not moving forward Premium subsidies for low- and moderate-income Americans to buy health insurance314 states/DC state-based marketplace 7 states partnership marketplace 27 states with federal marketplaces4 Individual mandate3 There are some basic tenets of health care reform. The first is reform of existing insurance laws, mandating standards such as essential health benefits, employer mandates and such.1 Second is expanded coverage, which is accomplished by Medicaid expansion, premium subsides for low- to moderate-income Americans to purchase health insurance and individual mandates.2-4

References: 1. Centers for Medicare and Medicaid Services. The Center for Consumer Information and Insurance Oversight: health insurance market reforms. http://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Market-Reforms/. Accessed June 22, 2015. 2. Kaiser Family Foundation. Status of state action on the Medicaid expansion decision. http://kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/. Updated May 26, 2015. Accessed June 10, 2015. 3. America's Health Insurance Plans. What you need to know about 2015 premiums. Time for Affordability website. http://www.timeforaffordability.org/2015premiums/. Updated June 25, 2014. Accessed June 22, 2015. 4. Kaiser Family Foundation. State health insurance marketplace types, 2015. http://kff.org/health-reform/state-indicator/state-health-insurance-marketplace-types/. Accessed June 22, 2015.3No determination of eligibility based on health status1No exclusions for pre-existing conditions1Dependent children covered up to age 261No annual dollar limits, no lifetime limits1No cost-sharing for certain preventive services1Must provide comprehensive coverage; eg, essential health benefits (fully insured), metal tiers, cost-sharing limitations190-day maximum waiting period1

Key provisions of the ACA Reference: 1. Patient Protection and Affordable Care Act. US Government Publishing Office website. http://www.gpo.gov/fdsys/pkg/PLAW-111publ148/pdf/PLAW-111publ148.pdf. Published March 23, 2010. Accessed June 22, 2015.4

ACARead slide.4Reporting cost of coverage on Form W-21Applies to employers that filed more than 250 W-2s in the prior yearSummary of Benefits and Coverage (SBCs)2Exchange noticeEmployers must have furnished by October 1, 20133 Also, must furnish to new employees within 14 days of start date (no DoL penalty for failure to provide notice)3,4Reporting health coverage to the IRS5 Notice and disclosure requirementsReferences: 1. Internal Revenue Service. 2013. http://www.irs.gov/uac/Form-W-2-Reporting-of-Employer-Sponsored-Health-Coverage. Updated December 22, 2014. Accessed June 22, 2015. 2. Federal Register. http://webapps.dol.gov/FederalRegister/PdfDisplay.aspx?DocId=25818. Published February 14, 2012. Accessed June 22, 2015. 3. US Department of Labor. http://www.dol.gov/ebsa/faqs/faq-noticeofcoverageoptions.html. Accessed June 22, 2015. 4. US Department of Labor. http://www.dol.gov/ebsa/newsroom/tr13-02.html. Accessed June 22, 2015. 5. Schreiber SP. http://www.journalofaccountancy.com/News/20149733.htm. Published March 5, 2014. Accessed June 22, 2015. 5

There are also some new notice and disclosure requirements that as employers, you should be aware of:Reporting cost of coverage on Form W-2, which is now in effect and applies to employers that filed more than 250 W-2s in the prior year1 Also currently in effect is the Summary of Benefits and Coverage (SBC) and Exchange Notice2-4 Employers must furnish notices to new employees within 14 days of start date, although the Department of Labor has no penalty in place for failure to provide to new employees3,4 Employers are required to report health coverage to the IRS and to employees as of January 1, 20155

References: 1. Internal Revenue Service. Form W-2 reporting of employer-sponsored health coverage. http://www.irs.gov/uac/Form-W-2-Reporting-of-Employer-Sponsored-Health-Coverage. Updated December 22, 2014. Accessed March 3, 2014. 2. Federal Register. Summary of benefits and coverage and uniform glossary. Vol. 77. No. 30. US Department of Labor website. http://webapps.dol.gov/FederalRegister/PdfDisplay.aspx?DocId=25818. Published February 14, 2012. Accessed March 7, 2014. 3. US Department of Labor. FAQ on notice of coverage options. http://www.dol.gov/ebsa/faqs/faq-noticeofcoverageoptions.html. Accessed June 22, 2015. 4. US Department of Labor. Technical Release No. 2013-02: guidance on the notice of employees of coverage options under Fair Labor Standards Act: 18B and updated Model Election Notice under the Consolidated Omnibus Budget Reconciliation Act of 1985. http://www.dol.gov/ebsa/newsroom/tr13-02.html. Published May 8, 2013. Accessed June 22, 2015. 5. Schreiber SP. Simplified employer health coverage reporting announced. Journal of Accountancy website. http://www.journalofaccountancy.com/News/20149733.htm. Published March 5, 2014. Accessed June 22, 2015. 5

Taxes and feesReferences: 1. Mojiri-Azad RL. http://www.irs.gov/pub/irs-drop/n-14-56.pdf. Accessed June 22, 2015. 2. Federal Register. http://www.gpo.gov/fdsys/pkg/FR-2014-03-11/pdf/2014-05052.pdf. Published March 11, 2014. Accessed June 22, 2015. 3. Federal Register. http://www.gpo.gov/fdsys/pkg/FR-2013-03-04/pdf/2013-04836.pdf. Published March 4, 2013. Accessed June 22, 2015. 6Fully insured plans onlyInsurer excise tax: based on carrier market share3Adds estimated aggregate fee of $3.3B in 20163Likely increase 2016 through 20193Fully and self-insured plansPCORI excise tax:$2.08/covered life in 20151 Indexed to annual CPI (ends with 2019 plan year)1Reinsurance fee: $44/covered life in 20152 There are also some taxes and fees associated with the ACA that are of interest:The PCORI excise tax is $2.08 per covered life in 2014 and indexed to CPI annually; however, this tax will end with the 2019 plan year1 The Reinsurance fee is $44 per covered life in 2015, down from $63.00 per covered life in 20142The Insurer Excise Tax is estimated based on carrier market share and adds an estimated aggregate fee of $3.3 billion in 2016. This tax will likely increase from 2016 through 20193

References: 1. Mojiri-Azad RL. Notice 2014-56: Sections 4375 & 4376--insured and self-insured health plans. Internal Revenue Service website. http://www.irs.gov/pub/irs-drop/n-14-56.pdf. Accessed June 22, 2015. 2. Federal Register. Patient Protection and Affordable Care Act; HHS notice of benefit and payment parameters for 2015. Vol. 79. No. 47. http://www.gpo.gov/fdsys/pkg/FR-2014-03-11/pdf/2014-05052.pdf. Published March 11, 2014. Accessed June 22, 2015. 3. Federal Register. Health insurance providers fee. Vol. 78. No. 42. http://www.gpo.gov/fdsys/pkg/FR-2013-03-04/pdf/2013-04836.pdf. Published March 4, 2013. Accessed June 22, 2015.6"Cadillac tax" effective 2018Reference: 1. Excise tax on high cost employer-sponsored health coverage, 26 USC 4980I (2010).7High-risk professions include1:Qualified retirees Electrical/telecommunications repair workers Law enforcement/fire protection workersOut-of-hospital emergency medical providers Longshore workers Construction, mining, agriculture, forestry, and fishing workers Higher threshold for high-risk professions1:

$11,850/single$30,950/family Fully and self-insured plans

$10,200/single$27,500/family 40% excise tax on plan value in excess of1:

The "Cadillac tax" goes into effect in 2018 and applies to fully and self-insured plans requires employers to pay a 40% excise tax on the value of total health care premiums in excess of fixed threshold limits of: $10,200 per employee per year (PEPY) per individual coverage$27,500 PEPY per family coverage1However, if you are part of the following high-risk professions, threshold limits of $11,850 per employee per year and $30,950 per employee per year per family coverage apply1:Qualified retireeElectrical or telecommunications repair person Law enforcement or fire protection workersOut-of-hospital emergency medical providersLongshore workers, orPersons engaged in construction, mining, agriculture, forestry, and fishing industries

Reference: 1. Excise tax on high cost employer-sponsored health coverage, 26 USC 4980I (2010).

7It doesn't stop thereReferences: 1. Internal Revenue Service. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Questions-and-Answers-for-the-Additional-Medicare-Tax. Updated March 5, 2015. Accessed June 23, 2015. 2. American Institute of CPAs. http://www.aicpa.org/interestareas/tax/resources/trustestateandgift/toolsandaids/pages/estateandtrustimpactof38medicaresurtax.aspx. Accessed June 23, 2015. 3. Federal Register. http://www.gpo.gov/fdsys/pkg/FR-2013-08-30/pdf/2013-21157.pdf. PublishedAugust 30, 2013. Accessed June 23, 2015.8Medicare surtax0.9% on wages (individuals with $200,000+ MAGI or joint filers with $250,000+ MAGI)1 3.8% on non-wage income2

(+half for a child) or 1% of the family income3 2014$95/person

(+half for a child) or 2% of the family income3 2015$325/person

(+half for a child) up to $2,085/family or 2.5% of family income over filing limit3 2016$695/person Individual responsibility tax3Two more taxes to be aware of are the Medicare surtax and the individual responsibility tax. The Medicare surtax is 3.8% on non-wage income and 0.9% on wages for individual filers with $200,000 or more MAGI (modified adjusted gross income) or joint filers with $250,000 or more MAGI.1,2 The individual responsibility tax, which will be fully phased in by 2016 has the following calculations:The greater of $695 for each adult and half that amount for each child in the household, up to $2,085 for a family (updated for inflation) 3 OR 2.5% of household income above the filing limit, but not more than the cost of a bronze-level (basic, high-cost sharing) insurance policy.3

However, for 2015, the penalty is $95 per person (half that amount for a child) or 1% of the family income.3

References: 1. Internal Revenue Service. Questions and answers for the additional Medicare tax. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Questions-and-answers-for-the-additional-medicare-tax. Updated March 5, 2015. Accessed June 23, 2015. 2. American Institute of CPAs. Estate and trust impact of 3.8% net investment income tax. http://www.aicpa.org/interestareas/tax/resources/trustestateandgift/toolsandaids/pages/estateandtrustimpactof38medicaresurtax.aspx. Accessed June 23, 2015. 3. Federal Register. Shared responsibility payment for not maintaining minimum essential coverage. Vol. 78. No. 169. http://www.gpo.gov/fdsys/pkg/FR-2013-08-30/pdf/2013-21157.pdf. Published August 30, 2013. Accessed June 23, 2015.82016: small employers defined as 1-100 employees1All fully insured, small group plans must cover the 10 essential health benefits2Metal levels meet an actuarial value 2%2,3Small group market reforms 9

Bronze 60% AVSilver70% AVGold80% AVPlatinum 90% AVReferences: 1. Federal Register. http://www.gpo.gov/fdsys/pkg/FR-2013-10-30/pdf/2013-25326.pdf. Published October 30, 2013. Accessed June 23, 2015. 2. Patient Protection and Affordable Care Act. US Government Publishing Office website. http://www.gpo.gov/fdsys/pkg/PLAW-111publ148/pdf/PLAW-111publ148.pdf. Published March 23, 2010. Accessed June 23, 2015. 3. US Department of Health and Human Services. https://www.cms.gov/CCIIO/Resources/Files/Downloads/av-calculator-methodology.pdf. Accessed June 23, 2015.There are small group market reforms and in 2016, small employees will be defined as having 1-100 employees.1 Congress has allowed states to maintain their current definition of 1 (or 2) to 50 employees until 2016.1 Small, fully insured employers must offer the 10 essential health benefits which are2:Ambulatory patient services Emergency servicesHospitalization Maternity and newborn careMental health and substance use disorder servicesPrescription drugsRehabilitation and habilitation services and devices Laboratory servicesPreventive and wellness services; chronic disease managementPediatric dental and vision services

Creation of metal levels of coverage that meet an actuarial value (AV) 2%.2,3 The AV is essentially the co-insurance under the plan.3

References: 1. Federal Register. Patient Protection and Affordable Care Act; program integrity: exchange, premium stabilization programs, and market standards; amendments to the HHS Notice of Benefit and Payment Parameters for 2014. Vol. 78. No. 210. https://www.gpo.gov/fdsys/pkg/FR-2013-10-30/pdf/2013-25326.pdf. Published October 30, 2013. Accessed June 23, 2015. 2. Patient Protection and Affordable Care Act. 42 USC 18001 (2010). US Government Publishing Office website. http://www.gpo.gov/fdsys/pkg/PLAW-111publ148/pdf/PLAW-111publ148.pdf. Published March 23, 2010. Published March 23, 2010. Accessed June 23, 2015. 3. US Department of Health and Human Services. https://www.cms.gov/CCIIO/Resources/Files/Downloads/av-calculator-methodology.pdf. Accessed June 23, 2015.9

All employees treated as a single risk pool regardless of where coverage is obtained1Risk pooling Sma...

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