Health Reform Update. Board of County Commissioners Study Session June 30, 2015

Transcription

1 Health Reform Update Board of County Commissioners Study Session June 30, 2015

2 Agenda Health Reform Impact Timeline Health Reform Compliance Status Play or Pay Compliance for Cadillac Tax Update 2016 IRS Reporting Requirements 2

3 Health Reform Impact Timeline Individual mandate Employees children eligible to age 26, with no other eligibility criteria Coverage for employees children nontaxable until they reach age 26 No cost-sharing for preventive care* Certain provider and emergency care access restrictions prohibited* Claims and appeals handling requirements* No lifetime (and limited annual) maximum dollar limits on essential health benefits No preexisting condition restriction for enrollees under age 19 OTC medication not eligible for reimbursement without a prescription Excise tax on prescription drug manufacturers and importers *Nongrandfathered plans only Summary of Benefits and Coverage Medical loss ratio refunds W-2 Reporting of health coverage (W-2s issued in 2013 for 2012) Comparative Effectiveness Research (CER/PCORI) fee of $1 per capita (for CY plans, due in 2013 for 2012 coverage) Women s preventive care benefits (2013 for CY plans) Health FSA employee pretax contributions capped at $2,500 Additional FICA taxes on highwage earners Elimination of deductibility of Medicare Part D subsidies Excise tax on medical device manufacturers CER/PCORI fee increases to $2 per capita (for CY plans, due in 2014 for 2013 coverage) Notice of health insurance exchanges and premium assistance availability Health insurance exchanges for individual and small group market Transitional reinsurance fee Excise tax on health insurance companies No annual dollar limits on essential health benefits Waiting periods limited to 90 days No preexisting condition restriction for any enrollee Increased restrictions on applying wellness program incentives, but higher amount allowed Cost-sharing limited to $6,350/$12,700* Annual deductibles limited to $2,000/$4,000 for small employer plans* Coverage of routine expenses for clinical trials* Licensed provider nondiscrimination* *Nongrandfathered plans only Automatic enrollment (deferred) Nondiscrimination requirements for insured health plans (deferred)* Quality of care and transparency reporting* *Nongrandfathered plans only Unknown Employer play or pay mandate Employer reporting due in 2016 on coverage provided during 2015 Cadillac Tax COMPLETED COMPLETED COMPLETED COMPLETED 3

4 Health Reform Compliance Status Green means in compliance, yellow in-process and red yet to be in compliance. Plan Design Status Administration Status Dependent children covered to age 26 New appeals process Remove lifetime maximums W-2 reporting of plan values Emergency room coverage same in and out of network SBCs OB/GYN treated as primary care Exchange notice 100% coverage for in-network preventive care Section 105(h) nondiscrimination Expansion of preventive care services Healthcare FSA contribution limited to $2,550 Obesity screening and counseling covered as preventive care Limit waiting period for medical coverage to 90 calendar days Remove pre-existing condition limitations for all covered individuals Play or Pay compliance All member out-of-pocket costs accumulate to OOP max for medical (and Rx) Gather Social Security numbers for employees and dependents for the 2015 reporting requirements Out-of-pocket maximums limited ($6,450/$12,900 for 2015) PCORI fee (comparative effectiveness research), Paid by ACG for HRA & Kaiser for medical Cadillac Tax beginning 2018 Transitional Reinsurance Fee due January 2016, paid by Kaiser 4

5 Play or Pay Compliance - Review Tier 1 to avoid the risk of an annual penalty of $2,000 per total number of Full-Time Employees (approximately $4M for the County ) the County must offer medical plan coverage that is at least minimum essential coverage to 95% in 2016 (70% in 2015) of Full- Time Employees (FTE) Minimum Essential Coverage plan pays at least a 40 percent actuarial value FTE any employee who works on average 30 or more hours per week, excluding Seasonal employees Tier 2 to avoid the risk of a penalty of $3,000 annually for each FTE who receives a subsidy from an insurance market (exchange) the medical plan coverage provided must be qualifying and affordable Qualifying the plan pays at least a 60 percent actuarial value Affordable the employee pays no more than 9.5% of their household income for the employee only coverage The County is required to track hours worked by employees who are not considered FTE (Regular Part Time hours, Job Share, new category Temporary Variable, Seasonal) to determine whether they qualify as FTE at a later date Have developed and will run report on a bi-weekly basis to identify impacts 5

6 Play or Pay Compliance Tier 1 Current Status The County currently offers coverage that complies with the minimum essential coverage requirement Deductible HMO plan value of 75% The County currently complies by offering medical plan coverage to more than 70% of FTEs As of April 30, 2015 Arapahoe County had a total of 2,034 employees 1,983 employees are eligible for medical plan coverage Elected Officials, Regular (Fulland Part-Time), Job Share and Temporary Grant Funded 51 Temporary employees not eligible for medical plan benefits 16 FTE as of April 30, 2015 based on look-back of time worked Received direction in 2014 to utilize a look-back period of 12 months with employers required to offer qualifying FTE employees coverage prospectively for the same period 99% FTEs eligible for medical plan coverage as of April 30, 2015 (97.5% if 51 Temporaries were all FTE) Departments and Offices have authority to hire so long as they have sufficient budget to fund the cost of wages 50 to 75 Temporary Employees since January

7 Play or Pay Tier 1 Compliance Options for Do not offer medical plan coverage to Temporary FTEs and introduce approval process for staffing Temporary positions to manage FTEs Pros Insures that we avoid $4M penalty Avoids potential average annual cost of $9,022 per Temporary FTE No COBRA continuation as not eligible to enroll for medical plan coverage Cons Impacts Department / Office flexibility to staff to meet business demands may require capping hires Staff to manage new approval process At risk for Tier 2 penalty of $3,000 per FTE who receives a subsidy from Exchange (paid by Department / Office) with known potential cost increase 2. Offer medical plan benefits to Temporary FTE employees Pros Cons Insures that we avoid $4M penalty Maintains Department / Office staffing flexibility to meet business demands Avoids risk of Tier 2 penalty of $3,000 per FTE who receives a subsidy from Exchange (paid by Department / Office) Average annual cost of $9.022 per Temporary FTE with unknown potential increase in cost Staff time to enroll employees and ongoing eligibility maintenance Possible COBRA continuation and staff administration 7

8 Play or Pay Compliance Tier 2 Current Status The County currently offers coverage that complies with the qualifying requirement Deductible HMO plan value of 75% The County currently complies by offering affordable coverage No employee cost for Employee Only coverage under Deductible HMO plan Introduced new contribution level for part-time Regular and Temporary Grant Funded employees working on average 30 to 40 hours per week based on lowest rate of pay The County does not offer medical plan coverage to all FTEs and is at risk for a Tier 2 annual penalty of $3,000 per FTE receiving a subsidy from an insurance market (exchange) 16 Temporary FTEs as of April 30,

9 Play or Pay Tier 2 Compliance Options for 2016 If medical plan coverage offered to Temporary FTEs: Same employee contribution regardless of average hours worked (different than Regular, Job Share and Temporary Grant Funded employees) Two levels of employee contributions: 1) 30 to 40 hours worked, and 2) 40 hours worked (same as Regular and Temporary Grant Funded) Comparison below assumes a 6% rate increase 2016 Monthly Rates 40+ hours Kaiser Permanente -Deductible HMO Plan Monthly Rates County Cost Employee Cost Total Cost Employee $ $0.00 $ Employee + Spouse $ $ $1, Employee + Child(ren) $ $97.45 $ Employee + Family $1, $ $1, HRA funding not included 2016 Monthly Rates Hours Kaiser Permanente - Deductible HMO Plan Monthly Rates County Cost Employee Cost Total Cost Employee $ $ $ Employee + Spouse $ $ $1, Employee + Child(ren) $ $ $ Employee + Family $ $ $1, HRA funding not included If medical plan coverage not offered to Temporary FTEs, continued risk for a Tier 2 annual penalty of $3,000 per FTE receiving a subsidy from an insurance market (exchange) 9

10 Categorizing Employees Penalties apply for improperly categorizing employees During staffing process for new hires, required to determine expected hours to be worked and post job accordingly: Categories Temporary (expected to work 30+ hours on average per week) considered FTE under ACA Temporary Variable (expected to work less than 30 hours per week or it is unknown how many hours per week) not considered FTE under ACA Seasonal (expected to work less than 6 months and hired at the same time of year each year, i.e. election workers) not considered FTE under ACA 10

11 Cadillac Tax Effective in 2018 Payable by self-funded plans and insured plans (carrier will pass on to employer) Excise tax of 40% if total value of employee- and employer-paid health coverage exceeds $10,200 for single coverage and $27,500 for family coverage (indexed for inflation after 2018 some inflation adjustment may apply before 2018) Thresholds are increased for high-risk professions and retirees under 65 Following benefits are included when calculating the tax: Premium for medical coverage FSA and HRA (whether provided by employer or employee) On-site clinics EAP that provides medical benefits (maybe) International business travel (maybe) 11

12 Arapahoe County s Cadillac Tax Estimate Assumptions: Utilized 2015 Kaiser premiums then increased them 6% for 2016 and 8% for each subsequent year Included the full value of the County s HRA contribution $1,000 for employee only $2,000 for all other tiers Included employee FSA contributions for the 2015 contract year Unknowns or items that need clarification: Can the County increase the threshold for the high-risk profession (no at this point) Guidance is still unclear around HRA contributions Full value or true reimbursement amounts Geographic or demographic adjustments to the national thresholds: $10,200 for employee only $27,500 for all other tiers 12

13 DHMO Actives (medical premium & HRA) & Retirees (medical premium only) DHMO Actives Plan - Excise Tax DHMO Retirees Plan - Excise Tax In 2018, an excise tax will be applied if the total value of employee and employer-paid health coverage 1 exceeds $10,200 for single and $27,500 for family coverage. Any amounts in excess of these limits will be subject to a 40% excise tax. $30,000 DHMO Cost Trended In 2018, an excise tax will be applied if the total value of employee and employer-paid health coverage 1 exceeds $10,200 for single and $27,500 for family coverage. Any amounts in excess of these limits will be subject to a 40% excise tax. $35,000 DHMO Cost Trended $25,000 Family Limit $30,000 Family Limit $20,000 Emp + Family $25,000 Emp + Family Emp + Spouse $20,000 Emp + Spouse $15,000 Emp + Child(n) $15,000 Emp + Child(n) $10,000 Single Limit $10,000 Single Limit $5,000 Single $5,000 Single $ $ Retirees under age 65

14 Traditional HMO Active (medical premium only) & Retirees (medical premium only) HMO Actives Plan - Excise Tax HMO Retirees Plan - Excise Tax In 2018, an excise tax will be applied if the total value of employee and employer-paid health coverage 1 exceeds $10,200 for single and $27,500 for family coverage. Any amounts in excess of these limits will be subject to a 40% excise tax. $30,000 HMO Cost Trended In 2018, an excise tax will be applied if the total value of employee and employer-paid health coverage 1 exceeds $10,200 for single and $27,500 for family coverage. Any amounts in excess of these limits will be subject to a 40% excise tax. $40,000 HMO Cost Trended $25,000 Family Limit $35,000 Family Limit Emp + Family $30,000 Emp + Family $20,000 Emp + Spouse $25,000 Emp + Spouse $15,000 Emp + Child(n) $20,000 Emp + Child(n) $10,000 Single Limit $15,000 $10,000 Single Limit $5,000 Single $5,000 Single $ $ Retirees under age 65

15 Triple Options Actives (medical premium only) TOP Actives Plan - Excise Tax In 2018, an excise tax will be applied if the total value of employee and employer-paid health coverage 1 exceeds $10,200 for single and $27,500 for family coverage. Any amounts in excess of these limits will be subject to a 40% excise tax. $45,000 Triple Option Cost Trended $40,000 Family Limit $35,000 $30,000 $25,000 $20,000 Emp + Family Emp + Spouse Emp + Child(n) $15,000 $10,000 $5,000 Single Limit Single $ No retirees are currently on the Triple Option plan 15

16 Totals Projected totals shown take into account medical premiums, HRA funding and FSA elections Excise Tax Projection Excise tax per year $71,179 $130,438 $269,429 1 Health coverage is defined as the value of medical, HRA, HSA and FSA benefits (whether provided by employer or employee), on-site clinics, etc. 16

17 Employer and Insurer Reporting Reporting of health insurance coverage Large Employers to report on health insurance coverage Why Allows IRS to enforce the individual mandate Allows IRS to enforce the employer mandate Allows IRS to assess premium tax credits for coverage purchased through a Marketplace Who Insurers and self-funded employers (Kaiser s Responsibility) Employers subject to employer mandate (Arapahoe County s Responsibility) What Name, address, and EIN of employer Name, address, and SSN/TIN for each responsible individual receiving MEC during prior calendar year Name, address, and TIN of each family member receiving MEC during prior calendar year Months during which the employee (and any family members) were covered for at least one day Name, address, and EIN of employer Number of FTEs for each month of the year Certification that employer offered its FTEs and children minimum essential coverage Name, address, and SSN of each FTE employed during the year, and months during which enrolled/offered coverage Each FTE s share of premium for lowest cost, minimum value coverage, by month Controlled group information Much more When Beginning 2016 calendar year not plan year How To responsible individual: Jan. 31 To IRS: Feb. 28 (or March 31 if electronic) Insured coverage: The insurer issues Form 1095-B to the primary insured, copies to the IRS with Form 1094-B Self-insured coverage: Form 1095-C from the employer to the primary insured; a copy of all Forms 1095-C issued by the employer are transmitted to the IRS with a Form 1094-C (Where a self-insured employer provides coverage to individuals who were non-employees throughout the year (such as retirees, partners, outside directors and COBRA beneficiaries) it may report their coverage on either Form 1095-B or Form 1095-C) Employer provides to the full time employee on Form 1095-C from the employer; a copy of all Forms 1095-C issued by the employer are transmitted to the IRS with a Form 1094-C 17

18 Insurer Reporting Forms DRAFT AS OF February 19, 2015 DO NOT FILE Kaiser s Responsibility DRAFT AS OF February 19, 2015 DO NOT FILE 18

19 Employer Reporting Forms DRAFT AS OF February 19, 2015 DO NOT FILE Arapahoe County s Responsibility DRAFT AS OF February 19, 2015 DO NOT FILE 19

20 How will the County manage reporting? Utilize current SAP system 20