Preparing for the Final Stage of Student Health Insurance Compliance with PPACA & the Impact on Student Employees and Adjunct Faculty

Transcription

1 Preparing for the Final Stage of Student Health Insurance Compliance with PPACA & the Impact on Student Employees and Adjunct Faculty Presenters: Teresa Koster, Division President, Gallagher Koster John Scholl, Area President, Gallagher Benefit Services AICUM Fall Symposium October 3, 2013

2 2 Agenda I. Preparing for the Final Stage of Student Health Insurance Compliance with PPACA U.S Dept. of HHS Final Rule for Student Health Insurance Policies New PPACA Fees/Taxes on Individual/ Group Plans Further Clarification on New PPACA Rules Individual Mandate or Penalty? Medicaid Expansion State Exchanges/ Health Connector Massachusetts QSHIP Regulations II. Impact on Student Employees and Adjunct Faculty Identification of Full-Time Employees Employee Categories Adjunct Professors Student Employees Delay in Implementation of Employer Shared Responsibility Penalties

3 3 PREPARING FOR THE FINAL STAGE OF STUDENT HEALTH INSURANCE COMPLIANCE WITH PPACA

4 4 U.S Dept. of HHS Final Rule for Student Health Insurance Policies The U.S. Department of Health & Human Services (HHS) Final Rule, released in March of 2012, outlines the definition of Student Health Insurance Plans (SHIPs) and confirms how SHIPs must conform with PPACA Regulations Student Health Insurance Plans have been designated as INDIVIDUAL Plans and therefore must abide by PPACA regulations with few exemptions; guaranteed availability and renewability does not apply Accident-Only, Sports Accident, Stand-Alone Short-Term, Study Abroad and International Medical Plans (purchased with the expectation of a minimum of one month) are exempt from PPACA

5 5 U.S Dept. of HHS Final Rule for Student Health Insurance Policies Annual Plan Maximum Levels can be no less than: : $500,000 Per Policy Year 2014 and beyond: No Annual or Lifetime Maximum No Pre-Existing Condition Limitations Coverage for Pediatric Dental and Vision services up to age 19 No internal annual dollar limits can be applied to Essential Benefits Ambulatory Patient Services Emergency Services Hospitalization Maternity & Newborn Care Mental Health / Substance Abuse Disorder Services Rehabilitative Services Durable Medical Equipment / Devices Prescription Drugs Diagnostic Tests Wellness / Preventive Care

6 U.S Dept. of HHS Final Rule for Student Health Insurance Policies Student Health Insurance Plans must provide Preventive Services & Women s Health Services as outlined under PPACA without cost-sharing at In-Network Providers (including contraception) One-year enforcement Safe Harbor for certain non-exempt, non-profit organizations with religious objections to covering contraceptives; extended for policy year Accommodation Provision: Requires Insurance Plans to provide contraceptive benefits outside of the sponsored plan for eligible religious institutions and organizations for policy year Safe Harbor/Accommodation does not apply to Massachusetts schools due to State Mandated Benefit Targeted Medical Loss Ratio (MLR) must be 80% of Established Premium Insurer s MLR calculation methodology is based on their entire Student Health Insurance Block of Business For plans below 80% MLR, Insurance Companies must rebate premium to individual students 6

7 7 New PPACA Fees/Taxes on Individual/ Group Plans PPACA introduces a variety of new taxes and fees that are intended to raise revenues in order to: Support the individual health insurance market Help fund the state and federal exchanges Assist with conducting research that compares treatment effectiveness Total fees/taxes can represent a surcharge of 3-4% of fully insured premium that is included in the rate per insured Effective Date Duration PCORI Fee 10/1/2012 Phases out in 2019 Insurer Fee 1/1/2014 Permanent Reinsurance Fee 1/1/ Years ( )

8 8 Further Clarification on New PPACA Rules Health Insurance Market Rules Final Student Health Insurance Plans will be "exempt" from the carrier's Single Risk Pool rate development for all individual plans; however, rates charged by an Insurance Carrier may be based on a school-specific group community if, consistent with Section 2701 of the Market Rules, rates are developed without consideration of age, tobacco use, health status or gender The treatment of Student Health Insurance Plans under these final rules will serve as a "transitional period" -- HHS intends to monitor Student Health Insurance Plans during this transitional period to 2014 market reform

9 9 Further Clarification on New PPACA Rules Miscellaneous Minimum Essential Coverage Provisions Final Determined that because Self-funded SHIPs can vary in the types of benefits provided, these plans should not be permanently designated as minimum essential coverage Self-funded SHIPs will meet minimum essential coverage for policy years beginning on or before December 31, 2014 For coverage beginning after December 31, 2014, sponsors of Self-funded SHIPs may apply to HHS to be recognized as minimum essential coverage

10 10 Individual Mandate or Penalty? The Individual Mandate is Constitutional and goes into effect in 2014 Initial Penalty is $95.00 or 1% of individual's income, whichever is greater on the individual s tax return Individuals NOT subject to penalty are: Undocumented Immigrants Those with individual income below the IRS tax filing threshold ($10,000 for individuals and $20,000 for families in 2013) Those who would be required to spend 8% of their individual income to purchase health insurance Incarcerated Individuals Members of a religion who oppose benefits from a health insurance policy Given the above exceptions, many students could be exempt from the tax penalty and may ultimately stay uninsured Recent news reports have expressed concern that young adults are more likely to accept the fine than pay for insurance

11 11 Medicaid Expansion The Supreme Court decision allows States to have a choice whether to join in Medicaid Expansion under PPACA States have option to expand Medicaid eligibility to adults ages with incomes below 133% of the Federal Poverty Level Students earning $15,282 or less, residing in States that have not expanded Medicaid are not eligible for a subsidized premium for Exchange Plans Massachusetts is one of 26 States that are moving ahead with Medicaid Expansion

12 12 State Exchanges Commonwealth Health Insurance Connector Authority was established in 2006

13 13 Health Connector The Massachusetts Health Care Insurance Reform Law was enacted in Among its many effects, the law and its amendments established an independent public authority, the Commonwealth Health Insurance Connector Authority, also known as the Health Connector. Among other roles, the Connector acts as an Exchange/Marketplace to offer private insurance plans to residents Website: Commonwealth Care Coverage Change: Government-subsidized insurance for people who qualify New federal subsidies will take effect in 2014 Households earning up to 400% of the federal poverty level may qualify for subsidies if they do not have access to affordable employer-sponsored coverage Currently, Commonwealth Care is limited to 300% Commonwealth Choice Coverage Change: Starting in 2014, individuals or households with incomes up to 400% of the federal poverty level will qualify for new federal subsidies for insurance Individuals earning up to approximately $43,000 or a family earning up to $88,000 a year may qualify for assistance

14 Consortium/Exchange Comparison GK/AICUM Consortium Plan vs. MA Health Connector Young Adult Plans Annual Rate Maximum Benefit Annual Deductible Annual Out-of-Pocket Maximum Coinsurance Rx Coverage ER Copay Travel Assistance/ Medical Evacuation/ Repatriation of Remains Coverage GK/AICUM SHIP Consortium Plan Undergraduate: $1,390 / year Graduate: $1,691 / year $500,000 Per Policy Year In-Network: $50 Out-of-Network: $200 In-Network: $5,000 Out-of-Network: $10,000 In-Network: 90% Out-of-Network: 70% Tier 1: $15 Tier 2: $30 Tier 3: $50 Up to Plan Max $100 Unlimited MA Health Connector Low no Rx Young Adult Plans As low as : $186 / month Unlimited In-Network: $2,000 Out-of-Network: N/A** In-Network: $5,000 Out-of-Network: N/A** In-Network: 80% Out-of-Network: N/A** No Coverage $250 None MA Health Connector Low with Rx Young Adult Plans As low as : $213 / month Unlimited In-Network: $2,000 Out-of-Network: N/A** In-Network: $5,000 Out-of-Network: N/A** In-Network: 80% Out-of-Network: N/A** $250 Rx Deductible Tier 1: $15 Tier 2: 50% Tier 3: 50% $250 None MA Health Connector High no Rx Young Adult Plans As low as : $199 / month Unlimited In-Network: $250 Out-of-Network: N/A** In-Network: $5,000 Out-of-Network: N/A** In-Network: 70% Out-of-Network: N/A** No Coverage $250 None MA Health Connector High with Rx Young Adult Plans As low as : $227 / month Unlimited In-Network: $250 Out-of-Network: N/A** In-Network: $5,000 Out-of-Network: N/A** In-Network: 70% Out-of-Network: N/A** Tier 1: $15 Tier 2: 50% Tier 3: 50% $250 None Comparison based on information provided on the MA Health Connector Website. Possible Premium Subsidy for Connector Plans vary based on reported household income. *Data obtained on 9/26/2013. **MA Health Connector Young Adult Plans are HMO Plans, therefore services received by Out-of-Network Providers are the responsibility of the member and are not covered by the Plan. 14

15 15 Massachusetts QSHIP Regulations On September 16, 2013 the Commonwealth Health Insurance Connector Authority (Health Connector) sent an to the Massachusetts Higher Ed Community requesting feedback on Regulations for Student Health Insurance (previously referred to as QSHIP Regulations) The Health Connector assumed responsibility for the Student Health Insurance Program in November 2012, pursuant to Chapter 224 of the Acts of 2012 In May 2013, Division of Health Care Finance and Policy Regulation CMR 3.00 was repealed and replaced by 956 CMR 8.00; at that time only technical changes were made to the Regulations Health Connector now plans to make substantive changes to 956 CMR 8.00 in order to, among other changes, align SHIP with PPACA Once regulations are drafted and released for public comment, stakeholders will have another opportunity to provide feedback before they are finalized Health Connector intends to maintain the insurance requirement for students attending a college or university in Massachusetts Gallagher Koster is requesting that the Connector consider modifying the limitations on costsharing in order to allow us to continue to provide cost-effective insurance options for students attending college in the Commonwealth

16 16 IMPACT ON STUDENT EMPLOYEES AND ADJUNCT FACULTY

17 17 Full-Time Status Determination Key in determining Employer Shared Responsibility Penalties Employer shared responsibility penalties delayed until January 1, 2015 Failure to offer coverage (i.e., triggers the $2,000 penalty) Must offer to 95% of all full-time employees Must offer coverage to children (but not spouses) Must have annual opportunity to accept or decline coverage Failure to offer affordable coverage (i.e., triggers the $3,000 penalty) Employee-only coverage cost to employee must not exceed 9.5% of employee s compensation Failure to offer coverage that provides minimum value (i.e., triggers the $3,000 penalty) Plan must pay for at least 60% of cost of benefits NOTE: Only full-time employees may trigger penalty and count toward penalty calculation

18 18 Employee Categories Full-time employee Hired to work at least 30 hours per week or 130 hours per month Part-time employee Hired to work less than average of 30 hours per week Variable hour employee As of the date of hire, employer cannot reasonably determined average hours May be full-time employee

19 19 Adjunct Professors Traditionally paid per credit hour May vary based upon course level, number of students enrolled, etc. Traditionally not paid on parity with tenure-track faculty because of difference in non-teaching requirements such as research and publication But PPACA rules require counting hours of service Until further guidance issued, employers must use reasonable method to determine hours of service Preamble to January 2013 regulations states that Adjunct Faculty must be given credit for time outside of classroom

20 Adjunct Professors Elements of position* Preparation, including Research for current information Course administration Course design Assignment design Lesson planning Instruction, including Class meetings Office hours Communication with students Assessment Homework Exams Reporting * Source: Comments by Robin J. Sowards and Heather Steffin 20

21 21 Adjunct Professors Two possible Safe Harbors proposed by American Council on Education (ACE) Percentage of full-time course load versus non-tenure track course load Ratio of hours teaching to non-classroom work Percentage of full-time course non-tenure track course load Suggestion that non-tenure track be the comparator because tenure track faculty have additional responsibilities such as research, publication, academic advising, and administration Under this method, adjunct faculty would be classified as full-time employees if the course load they teach meets or exceeds three-quarters of the course load for a fulltime, non-tenure-track (NTT) teaching faculty member in that academic department

22 22 Adjunct Professors Ratio method Credit adjunct faculty with one hour of work outside the classroom for each hour teaching in the classroom (ACE position) Credit adjunct faculty with two hours of work outside the classroom for each hour teaching in the classroom (popular among CUPA members) Credit adjunct faculty with three hours of work outside the classroom for each hour teaching in the classroom None of these methods tracks actual hours of service None of these methods takes into account course level

23 23 Adjunct Professors Academic institution must adopt standard that will count classroom time and time outside of classroom Consider using ratio method and making adjustments for course level 100 level course = 1:1 ratio 200 level course = 2:1 ratio 300 level course = 3:1 ratio Consider asking Adjunct Faculty to track hours and use as a basis for calculations Consider course load method Academic institution should document its decision

24 24 Student Employees Students have multiple opportunities to obtain coverage Parents plans (if under age 26) Student medical coverage Employer-sponsored coverage If considered full-time employees under PPACA, employer must offer coverage to avoid penalties

25 25 Student Employees Many students work on campus as part of their academic programs Have enjoyed special status under employment law depending upon type and amount of work Generally, under the Fair Labor Standards Act, students who are employed as part of their overall educational programs are not considered to be employees, regardless of effort expended But, under PPACA, must use common law definition of employee Under the common law standard, an employment relationship exists when the person for whom the services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished Sufficient if person has right to control or direct, not whether person actually exerts control or direction

26 26 Student Employees Proposed Nature of Work Safe Harbor (ACE) Graduate programs Students have stipends as part of their academic education ACE recommendation to adopt FLSA as reflected in the DOL s Field Operations Handbook Would take into account whether work is part of overall education program Proposed Work Study Safe Harbor (ACE) Students whose work is not intertwined with academic course Working as form of financial aid ACE recommendation is to exclude hours of student enrolled at least half time in academic coursework

27 27 Student Employees Resident Counselors or Resident Assistants Paid on a stipend basis and provided room and board Not paid on hourly basis Graduate level student teachers Paid on a stipend basis Campus office workers or other campus positions Paid on hourly basis May work full-time hours during summer Take breaks for finals in addition to regular academic breaks May exceed four week break If additional guidance not provided, must track hours and provide coverage if fulltime employees to avoid penalties or consider reducing hours

28 28 Delayed Implementation PPACA requires report relating to individuals who have health coverage and the type of coverage provided (under section 6055) by insurers, self-insuring employers, and other parties that provide health coverage It also requires similar information reporting (under section 6056) by employers with respect to the health coverage offered to their full-time employees These reporting requirements have been delayed Because the employer penalties are tied to the reporting obligations, the Treasury Department has indicated that no employer penalties will be assessed until 2015 Health plan sponsors (both employers and insurers) are encouraged to participate in reporting for 2014 to assist in creating a smooth process for 2015 Brief regulations issued on July 9, 2013

29 29 Delayed Implementation Results No Penalty is Assessed During 2014 The penalties are to apply in 2015, and it is unclear whether any additional relief will be offered beyond January 1, 2015 It is important for a non-calendar plan year plan to begin planning to avoid penalty by the first day of the 2014 plan year (given that penalties may be assessed as early as 1/1/15)

30 30 Delayed Implementation Employers may delay compliance with the following provisions until January 1, 2015: Coverage need not be offered to substantially all full time employees (30 or more hours) Full time employee need not be defined as 30 or more hours per week Single (i.e., employee-only) coverage need not be affordable Coverage need not meet minimum value The employer need not use a look back period to determine eligibility for coverage for seasonal or variable hours employees until a potential eligibility date of January 1, 2015 Reporting of coverage information to the government will be voluntary

31 31 Delayed Implementation Important Caveats Insurance carriers may have filed policy forms that are already modified for compliance with provisions, for example, defining full time using a 30 hour standard Employers may be subject to policy form limitations if they are using fully insured products For non-calendar year plan years beginning in early in 2014 (February or March), it will be important to proceed with modifying provisions for the employer shared responsibility requirements if wish to limit penalties No announcement of transitional relief for fiscal year plans for 2015 The penalty provision may be applicable to those plans as of January 1, 2015, regardless of plan year

32 32 Delayed Implementation Areas in which we are still awaiting guidance: Application of automatic enrollment requirements Application of nondiscrimination rules to fully insured plans Reporting obligations of employer sponsored plans and health insurance carriers Actual date on which employer penalties will apply We must assume January 1, 2015, regardless of plan year, unless guidance is offered to the contrary

33 33 QUESTIONS?

34 34 Contact Information Teresa Koster, Division President Gallagher Koster Phone: John Scholl, Area President Gallagher Benefit Services Phone: