Health Care Reform: Where are we?

Transcription

1 Health Care Reform: Where are we? January 9, 2014 Edgewood Partners Insurance Center CA License 0B29370

2 Today s Agenda We ll review the following Affordable Care Act: What s been delayed What s not delayed Review Eligibility Including Variable Hour Employees Exchanges (Market Place) Market Trends Edgewood Partners Insurance Center CA License 0B

3 Affordable Care Act What s been delayed Employer Mandate Employers with 50 + full time employees required to provide coverage at an affordable cost or pay penalties One year delay in reporting requirements No penalties will be assessed until reporting requirements are finalized Employers encouraged to comply early (2014) Reporting of Minimum Essential Coverage (MEC) Detailed information will need to be provided to the IRS and covered member to assist with the individual mandate enforcement and subsidies Edgewood Partners Insurance Center CA License 0B

4 Affordable Care Act What s not delayed Current provisions Prohibition on pre-existing condition exclusions for children under 19 Prohibition on lifetime/annual limits for essential health benefits Required coverage for preventative services Summary of benefits and coverage (SBCs) Rescission prohibition PCORI fees Health FSA limits W-2 reporting Coverage for children up to 26 Patient protection provisions choice of providers and emergency coverage Medical loss ratio rules (80%& 85%) Additional Medicare tax for high wage earners Edgewood Partners Insurance Center CA License 0B

5 Mandates in /1/14 Individual Mandate Most U.S. citizens and legal residents are required to obtain health insurance If coverage is not obtained these individuals will be assessed a penalty The maximum penalty for 2014 is $95 per adult (up to $258 per family) or 1% of family income, whichever is greater Edgewood Partners Insurance Center CA License 0B

6 Plan Changes to All Plans in 2014 Effective PYB 1/1/14 Cost-Sharing Limits Annual out-of-pocket maximums limited to High Deductible Health Plan amounts (2014 limits: $6,350 individual/$12,700 family) Annual Limits Plans can t include dollar limits on coverage of essential health benefits Preexisting Condition Exclusions Plan may not exclude preexisting conditions of anyperson regardless of age Waiting Period Limits Plans can t impose waiting periods that exceed 90 days (in CA -60 days we ll come back to this) Wellness Programs Employers may offer increased financial incentives to wellness program participants Edgewood Partners Insurance Center CA License 0B

7 Plan Changes Coming to Non-GF and Small Group Plans in 2014 Effective PYB 1/1/14 Clinical Trials (non-gf) Plans must cover routine patient costs for clinical trials Deductible Limits (non-gf, small group) Annual deductibles limited to $2,000 individual/$4,000 family for innetwork services Bronze plans may exceed these limits Inclusion of Essential Health Benefits ( EHBs )(non-gf, small group) Plans must include ten EHBs (except self-funded) Premium Variation (aka Community Rating) (small group) RAF and existing age banding replaced Premium variation based on age, family size, geographic area, and tobacco use (except CA) Maximum rate differential between age groups is 3 to 1 19 geographic areas Potential one year age brackets ages in CA Early renewal options to defer implementation until Dec 2014 Edgewood Partners Insurance Center CA License 0B

8 Affordable Care Act What s not delayed Future provisions Automatic enrollment for employers with 200+ employees (TBD) Nondiscrimination rules for fully insured plans (TBD) Excise tax on Cadillac (high cost) plans (2018) Individual $10,200/ Family $27,500 adjustments expected until 2018 Includes HRA, HSA and FSA Edgewood Partners Insurance Center CA License 0B

9 Additional Pending Regulations Non-discrimination rules (non-gf) Fully insured group health plans may not discriminate in favor of highly-compensated employees Self-funded plans subject to section 105 (h) non-discrimination rules now New rules expected for both types of plans Auto-enrollment provision Applicable to employers with at least 200 full-time employees and offer health coverage Edgewood Partners Insurance Center CA License 0B

10 California s 60 day waiting period limit California limits waiting periods to 60 days effective in 2014 Poorly drafted law, subject to carrier interpretation General interpretation: Waiting periods may be no longer than 60 calendar days Practical impact 1 st of month following 30 days Applicable to new and newly eligible employees Applicable to groups of all sizes Effective 1/1/14 for new group plans or at the first renewal after 1/1/14 If employer waiting period exceeds 60 days, active employees must be given opportunity to elect coverage by 60 days Applicable to all policies issued in CA and to all CA residents regardless of the state in which their insurance is issued Not applicable to self funded accounts Edgewood Partners Insurance Center CA License 0B

11 Evaluate Your Workforce In 2015 full-time employees are defined as those who are employed for at least 30 hours of service per week An employee is an individual who is an employee under the common law standard (see appendix) Includes those paid by salary, hourly, per diem, or commission only Includes part-time, seasonal, and some contract/leased (PEOs vs. staffing firms) Includes individuals covered by a collective bargaining agreement Excludes a sole proprietor, partners in a partnership, or 2% S corporation shareholders Hours of service include: Actual hours worked, plus Hours for which payment is made or due for vacation, holiday, illness, incapacity, and layoff; and paid or unpaid for jury duty, military service, or FMLA Days- or weeks-worked equivalency methods for non-hourly employees May apply different methods for different employee classifications Hours of service performed for all entities in a controlled group are combined Hours of service worked outside the U.S. can be excluded Edgewood Partners Insurance Center CA License 0B

12 Employer Shared Responsibility the Pay or Play Mandate Effective 1/1/15 (transition rules may apply but not reissued) Applies to large employers 50 or more full-time employees (including full-time equivalents) (see appendix) Full-time means 30 or more hours per week (130 per month) Includes union workers getting benefits through union Based on entire control group In order to play and avoid the possibility of paying an employer must offer adequate and affordable group health plan coverage to substantially all full-time employees and their dependents Plan must provide minimum value (cover at least 60% of benefits) Plan must offer minimum essential coverage Employee premium cost for employee-only tier of coverage may not exceed 9.5% of employee s household income Edgewood Partners Insurance Center CA License 0B

13 Penalties if Employer Does Not Offer an Employer-Sponsored Plan the A Penalty Small employer (< 50 FTEs) No penalty applies Large employers (>= 50 FTEs) A penalty is potential if the employer does not offer coverage to all or substantially all (at least 95%) of its full-time employees (and their dependents) Dependents excludes spouses (Section 152 (f)(1) definition) Penalty is triggered as soon as one full-time employee receives health insurance premium assistance for enrolling in the public exchange $2,000 annual penalty per full-time employee in excess of 30 employees (determined monthly) Based on full-time employees not FTE s Penalties are not tax deductible Edgewood Partners Insurance Center CA License 0B

14 Qualifying Coverage/Affordable Cost Does the coverage you offer meet requirements under the new law? ACA requires Minimum Essential Coverage (MEC) MEC is a group plan Minimum value requirement actuarial value of at least 60% What is an affordable cost? Premium contribution by employee may not exceed 9.5% of household income Safe harbors for affordability 9.5% of W2 Box 1 (annual), or 9.5% of 130 X hourly rate (or monthly salary), or 9.5% of individual federal poverty level ($11,490 in 2014) divided by 12 (monthly) Applicable to employee only coverage employer does not have to contribute towards dependent costs Edgewood Partners Insurance Center CA License 0B

15 Penalties if Employer Fails to Offer Qualified Plan or Offers Qualified plan but not at Affordable Price the B Penalty Small employer (< 50 FTEs) No penalty applies Large employers (>= 50 FTEs) Penalty is triggered as soon as onefull-time employee receives subsidized health insurance coverage through a public exchange $3,000 annual penalty per full-time employee receiving subsidized coverage through a public exchange, not to exceed the total penalty due if didn t offer a plan (determined monthly) Penalties are not tax deductible Edgewood Partners Insurance Center CA License 0B

16 Offer of Coverage and Affordability Issues Cash in lieu Ok as long as employee offered a choice qualified coverage at an affordable cost Salary grossed up to include cost of benefits, employee has option of purchasing benefits by paying 100% of the premium Ok as long as cost of employee only benefits doesn t exceed 9.5% of household income or safe harbor Employer prorates employer s contribution towards benefits so that an employee working 40 hours receives a larger contribution than one working 30 or 20 hours Ok as long as employees working 30+ hours don t contribute more than 9.5% of household income for employee only coverage Employer not subject to penalties on employees working < 30 hours Edgewood Partners Insurance Center CA License 0B

17 Determining Employee Eligibility Who s eligible for coverage? Full-time employees New hire reasonably expected to work full-time (30+ hours) at date of hire Applicable even if employment is not permanent May include long-term substitutes Waiting period of up to 90 days applicable (AB1083 is no greater than 60 days) Ongoing if an employee averages 30+ hours weekly over an employer established measurement period then the employee is considered fulltime during a future stability period Variable hour employees Edgewood Partners Insurance Center CA License 0B

18 Variable Hour Employees Variable hour employees New employees variable hour if, based on facts and circumstances at start date, it cannot be determined that employee is reasonably expected to work on average at least 30 hours per week Includes all hours worked for employer, regardless of job classification Seasonal included with variable hour in 2014 Measurement periods employer established measurement periods of 3 12 months to determine whether an employee is full-time May have two measurement periods an initial period for new hires and standard period for ongoing employees Edgewood Partners Insurance Center CA License 0B

19 Variable Hour Employees (con t) Variable hour employees Administrative period employer has up to 90 days to determine employee eligibility, but the initial measurement period and administrative period combined can t exceed 13 months and a fraction of a month Stability period (benefit period) If employee is deemed to be full-time during the measurement period, employee will remain a full-time employee during a future stability period and benefit eligible provided the employee remains employed regardless of hours worked Stability period is greater of 6 months or the measurement period Edgewood Partners Insurance Center CA License 0B

20 Establishing Measurement Periods In general, the standard measurement period and the stability period must be uniform for all employees, but employers can have different periods for the following categories of employees: Each group of collectively bargained employees Collectively bargained and non-collectively bargained employees Salaried employees and hourly employees Employees in different states Our advice: Keep it simple and consistent (if possible) Use 12 months to minimize the administrative burden Establish a standard measurement and standard stability periods that align with open enrollment Edgewood Partners Insurance Center CA License 0B

21 Other Considerations Variable Hour Employees Change in employment status during the initial measurement period A material change in position to one that would be considered full-time if the employee had begun employment in that position Treat as FT as of the 1 st day of the 4 th month following change, or If earlier and the employee averaged 30 + hours during the initial measurement period, the 1 st day of the 1 st month following the initial measurement period Edgewood Partners Insurance Center CA License 0B

22 Other Considerations Variable Hour Employees Special unpaid leaves Refers to a period of unpaid leave under FMLA, military leave, and unpaid leave due to jury duty Applicable only to employee treated as a continuing employee, not one treated as termed and rehired Calculation of hours of service during measurement period Use average hours worked for weeks excluding the special leave and use this average for the entire measurement period, or Credit employee with hours worked during leave at average rate during weeks worked Edgewood Partners Insurance Center CA License 0B

23 Other Considerations Variable Hour Employees School Districts- breaks in service where no work is performed Two methods available Determine the employee's average hours of service by excluding any employment break period occurring during the measurement period and applying that average for the entire measurement period; or Impute hours of service for the employment break period at a rate equal to the average weekly hours of service for weeks that are not part of an employment break period. Not required to take into account more than 501 hours of service for all employment break periods occurring in a single calendar year Break period means > 4 weeks without any hours of service recorded Edgewood Partners Insurance Center CA License 0B

24 Other Considerations Variable Hour Employees Rehired employees Treat as a new hire if Period with no hours is at least 26 weeks Period with no hours is at least 4 weeks long and is longer than the employee s period of employment immediately preceding that period If not treated as a new hire then viewed as a continuing employee Measurement and stability periods that would have applied had the employee not experienced the period with no hours continued to apply If return during stability period in which treated as full-time, still treated as full-time through end of stability period Hours of service before gap in service as well as period with no hours taken into account during next measurement period Edgewood Partners Insurance Center CA License 0B

25 Determining Who is Eligible in 2015 Full-time employees if employees meet the ACA definition of full-time (30+ hours a week) they are eligible for benefits at 1/1/15 or plan renewal, as applicable for the employer Variable hour employees unknown if transition rule will apply; need to be prepared to add variable hour employees no later than 1/1/15 Need to measure now Edgewood Partners Insurance Center CA License 0B

26 Variable Hour Example Standard measurement period (on-going employees) = 12 months Start date: 10/15/13 End date: 10/14/14 Standard administrative period (cannot exceed 90 days) Start date: 10/15/14 End date: 12/31/14 Standard Stability Period: 1/1/15 through 12/31/15 New Hire Initial Measurement period = 12 months Start date: 4/10/14 (date of hire) End Date: 4/9/15 Administrative period (<90 days) Start date: 4/10/15 End Date: 5/31/15 Stability period: 6/1/15 5/31/16 Would also be part of 10/15/14 10/14/15 standard measurement period Edgewood Partners Insurance Center CA License 0B

27 New Taxes And Fees Impacting Employers Comparative Effectiveness Research Fee Health Insurance Industry Fee Reinsurance Assessment Who What When Annual fee on fully insured and self-insured plans beginning on/after 10/2/11 HRA/FSA nuances, etc. Annual fee on all fully insured plans beginning in 2014 Includes Dental/Vision Excludes ASO Annual fee on insured and self-insured plans, Excludes Dental/Vision How Much Annual fee of $1, then $2 indexed, per participant until 2019 First payable July 2013 Excise tax form 720 Estimated costs: 2-2.5% of premium in 2014 Increasing to 3-4% in future years Estimated costs: $63 PMPY in 2014 $40 -$60 PMPY in 2015 $25 -$35 PMPY in 2016 Pricing Impact Fully insured: Carrier pays, built into rates ASO: Client must calculate and pay own fee Full amount built into rates for plans 1/1/14+ Partial load for plans effective in 2013 based on portion of premium earned in 2014 Fully Insured: Full amount built into rates for 1/1/14+; partial load in 2013 ASO: Client is liable and must submit payment In addition to fees and taxes that will directly impact the employer, there are new excise taxes on pharmaceutical companies and medical devices that may also increase the cost of coverage Edgewood Partners Insurance Center CA License 0B

28 Exchanges what are they? On-line marketplaces for purchasing medical and other types of coverage Public exchanges vs. private exchanges Public Offer four plans covering comparable benefits that vary based on % of benefits covered Range from Bronze plan (60% of costs) to Platinum plan (90% of costs) In CA all plans available use a closed or narrow network Covered CA costs for individual plans increased significantly for young males, less for older participants Private Subsidies only available through public exchanges, based on income Defined contribution approach with technology Defined contribution approach allows employer to better manage costs Marketplace environment shifts benefit decisions from employer to employee Subsidies not available Decision support technology to help employees right size coverage based on personal needs Edgewood Partners Insurance Center CA License 0B

29 Public Health Care Exchange Defined By 1/1/2014, all 50 states must have established (or defer to feds) An American Health Benefits Exchange (ABHE) Eligible users: Individuals A Small Business Health Options Program Exchange (SHOP) Eligible users: Small employers of less than 50/100 employees (state specific) Employee notifications late summer 2013, open enrollment October 2013 Expansion of Exchange in 2016 to 100 plus employees Exchanges perform 5 basic services: Certify health plans meet "essential health benefits package" standards Offer certified plans for purchase to qualified individuals & employers Provide assistance evaluating and enrolling in a plan Facilitate application for federal premium assistance tax credits and costsharing reductions Serve as single, streamlined access point for eligibility determination and enrollment in ALL subsidized state health coverage programs Medicaid, SCHIP, Exchange plans, etc. Edgewood Partners Insurance Center CA License 0B

30 California s Exchange (Covered California) Small Business Groups (the SHOP) Available only to small business groups with <50 full time employees. In 2016 will change to those with <100. Currently narrow networks only (limited providers to help limit premiums). Full networks pending contracts with carriers. Available for any effective date, with annual renewal thereafter. Tax credits may be available to small group employers with less than 25 employees. Edgewood Partners Insurance Center CA License 0B

31 California s Exchange (Covered California) Individuals and Families Open Enrollment each year beginning in October for January 1 coverage. May qualify for subsidy, premium and/or financial assistance only if your employer doesn t offer affordable coverage to you. Could apply to some Retirees who are not yet Medicare eligible Part-time employees are encouraged to explore this option Do not qualify if eligible for Medi-Cal or Medicare Employees can access explore plan options available, see if they qualify for a subsidy or premium assistance and/or enroll. Use the shop and compare tool on the website to see if you qualify and any associated plans/costs. Physical locations not available. Phone and internet assistance only. Edgewood Partners Insurance Center CA License 0B

32 California s Exchange (Covered California) Available plans to Individuals and Families in this area Anthem Blue Cross HMO & PPO Blue Shield of California PPO Only Health Net PPO Only Kaiser HMO Only Western Health Advantage HMO Only All plans include mandatory essential health benefits All plans fall into a Bronze, Silver, Gold or Platinum tier, with increasing benefits and cost in each progressive tier Enrolling families with multiple members are individually rated. Individuals are rated each according to their own age Edgewood Partners Insurance Center CA License 0B

33 Exchange/Marketplace Employer Response If an individual is determined to be eligible for a tax credit, the Exchange will notify the employer. Employer has 90 days from the date of the notice from the Exchange to appeal a determination that it (the employer) does not provide minimum essential coverage or provides coverage that is not affordable. Important that the Exchange Notice identifies who to contact at the employer to respond to these inquiries. Edgewood Partners Insurance Center CA License 0B

34 Preparing for 2014/2015 and beyond If you are a CA employer, update waiting periods Evaluate your workforce and the types of employees (full-time, part-time, per diem, seasonal, etc.) Determine whether you are a large employer If you are a large employer: Establish measurement and stability periods Determine affordability measurements Define your benefits objectives Review your plan documents to insure compliance with ACA Evaluate your employment and payroll recordkeeping processes /procedures Review plan costs and estimate for 2018 Cadillac tax Do you need to start bargaining now? Provision indicating that District does not intend to pay tax Edgewood Partners Insurance Center CA License 0B

35 Market Trends Tremendous amount of activity and innovation Narrow networks and ACOs Private exchanges and defined contribution plans Self-funding Benefit captives Voluntary products Concerns Plans changed Non-GF small group plans to conform to ACA mandated metal plans Costs are going up Taxes and fees ACA mandated coverage and benefit enhancements Participation requirements and underwriting criteria Impact of offering coverage to newly eligible employees Availability of 60% AV plans Valid waivers critical Impact on individuals (particularly low income) Offering a minimum value, affordable plan to employees & dependents allows employers to avoid penalty but may invalidate employees ability to get subsidies Edgewood Partners Insurance Center CA License 0B

36 Decision Support Technology what s new? Decision Support Plan comparisons Ebix/Benergy, PlanSource, Enwisen Marketplace plan recommendation model Analyzes health, preferences and finances to recommend benefits Employer benefits integration Optum Health, Health Equity > 1,000 ee s: Workable Solutions, Global Health Engines, Wealth Management Systems Avatars Trustnode, Code Baby Multi-media/video communication GuideSpark, Jellyvision Edgewood Partners Insurance Center CA License 0B

37 New providers and networks New options becoming available Focus on enhanced quality of care and/or controlling cost Choice vs. cost? Accountable Care Organizations (ACOs) Groups of doctors, hospitals, and other health care providers, who come together to give coordinated high quality care, especially to the chronically ill Goal is to coordinate patient access to care at the right time, while avoiding unnecessary duplication of services and preventing errors Narrow networks Offer fewer choices in health care providers Goal is to reduce costs by excluding highest cost providers from networks Patient Centered Medical Homes (PCMH) A health care setting that targets highest risk patients in each market, with comprehensive care replacing episodic care Goal is to provide flexible care tailored for local delivery, aimed at patients with complex chronic health conditions Sutter HMO Edgewood Partners Insurance Center CA License 0B

38 New tools to manage plans & control costs Telemedicine Use of medical information exchanged from one site to another via electronic communications to improve a patient s clinical health status and access to medical treatment 4 of 5 doctor visits and access to medical treatment can be better handled by phone (AMA) As little as 2 minutes average wait time to talk to a doctor by phone vs. over 3 weeks average wait to schedule a non-urgent appointment Assures access in an environment with millions of new participants Ideal for self-insured clients positive ROI Priced on a per call or PMPM basis Anthem launched for fully insured this month ($49/call) Available from most carriers for self-funded clients now Consult A Doctor, TelaDoc, and other third party providers Edgewood Partners Insurance Center CA License 0B

39 New tools to manage plans & control costs Pricing Transparency and Comparison Tools Shop and compare pricing for medical services by location Doctor reviews and comparisons Cast Light, Health Care Blue Book, Change HealthCare, My Health and Money, The Leapfrog Group Carriers have similar proprietary tools Consumer options: No cost (limited features) Subscription based Employer provided (plans/claims integration) Ideal for self-insured clients Identifies savings opportunities Custom rewards programs for employees who visit in-network doctors Edgewood Partners Insurance Center CA License 0B

40 Q&A and Thank You Edgewood Partners Insurance Center CA License 0B