Affordable Care Act (ACA) An Overview of Key Provisions

Transcription

1 Affordable Care Act (ACA) An Overview of Key Provisions Locey & Cahill, LLC Presentation to the: New York State Association of Management Advocates for School Labor Affairs, Inc. 36 th Annual Summer Conference July 16, 2013

2 Dependent Coverage to Age 26 Natural Born Child / Adopted Child Regardless of Marital Status Regardless of Financial Dependency Regardless of Residency Can be Employed with Health Insurance If Grandfathered, Provision Effective

3 2010 Changes ( ) No Pre-Existing Conditions Plan Appeal Processes No Lifetime Limits on EHB No Annual Limits on EHB (2014) Preventive Care No Cost Sharing Women s Preventive Health Services Including Birth Control/Contraceptives (08/01/2012) EHB = Essential Health Benefits 3

4 2011 Changes Minimum Medical Loss Ratios Clinical Services/Quality Costs = > 85% of Premium OTC Meds No Longer Eligible for FSA/HSA 2012 Changes Summary of Benefits and Coverage Annual Fees on Pharmaceutical Industry Patient-Centered Outcomes Research Trust Fund $1.00/Life (2012/2013) $2.00/Life (2013/2014) 4

5 2013 Changes Medical Expense Deduction 7.5% to 10.0% FSA Limits = $2,500 per year Medicare Part A Tax Increase 1.45% to 2.35% Individuals > $200,000 and Families >$250,000 Medical Device Tax = 2.3% Excise Tax W-2 Reporting of Aggregate Cost of Coverage Small Employers are Exempt (<250 W-2 s) 5

6 2014 Changes Individual Mandate to Purchase Insurance Health Insurance Exchanges Premium and Cost Sharing Subsidies Employer Requirement to Offer Coverage Delayed Until January 1, 2015 Wellness Rewards (30% to 50% of Premium) Fees on Health Insurance Sector 6

7 Individual Mandate to Purchase Health Insurance Penalties $95 Per Adult / $47.50 Per Child Not to Exceed $285 Per Family or 1.0% of Family Income $325 Per Adult / $ Per Child Not to Exceed $975 Per Family or 2.0% of Family Income $695 Per Adult / $ Per Child Not to Exceed $2,085 Per Family or 2.5% of Family Income 7

8 Individual Mandate to Purchase Health Insurance Does Not Apply If: You are part of a religion opposed to acceptance of benefits from a health insurance policy You are an undocumented immigrant You are incarcerated You are a member of an Indian Tribe You family income is below threshold for filing a tax return ($10,000 for an individual / $20,000 for a family in 2013) You have to pay more 8% of your income for health insurance, after taking into account any employer contributions or tax credits 8

9 Individual Mandate to Purchase Health Insurance Does Not Apply If You are Covered by the Following: Medicare Medicaid or CHIP (Children s Health Insurance Program) Tricare (for service member, retirees, and their families) The Veteran s health program An employer offered plan Insurance you purchase on your own that > or = to a Bronze Plan A grandfathered health plan in existence prior to ACA enactment 9

10 Health Insurance Exchanges in New York State What is an Exchange? An Exchange is an organized marketplace designed to help people shop for and enroll in health insurance coverage. Individuals, families and small businesses will be able to use the Exchange to help them compare commercial insurance options, calculate costs and select coverage online, in person, over the phone or by mail. The Exchange will also help people to check their eligibility for health care programs like Medicaid and sign up for these programs if they are eligible. The Exchange will also be able to tell what type of financial assistance is available to applicants to help them afford health insurance purchased through the Exchange. Insurance coverage can be purchased through the Health Benefit Exchange beginning in October 2013 and will be effective January 1, Source: New York Health Benefit Exchange web-site ( 10

11 Health Insurance Exchanges in New York State Levels of Coverage: The Affordable Care Act contains language which defines the Actuarial Value (AV) of a health insurance plan s coverage based on the percent of health care expenses covered by the plan for a typical population. Health insurance plans will be placed into four categories based on their Actuarial Value (AV): Platinum Plan Models Actuarial Value (AV) > or = to 90% Gold Plan Models Actuarial Value (AV) > or = to 80% Silver Plan Models Actuarial Value (AV) > or = to 70% Bronze Plan Models Actuarial Value (AV) > or = to 60% 11

12 Health Insurance Exchanges in New York State What Would a Bronze Plan Look Like? Deductible = $2,000 per individual / $4,000 per family Out-of-Pocket Maximum = $5,000 per individual / $10,000 per family Preventive Care = No Member Cost Adult Routine Exams/Physicals (including immunizations) Well Child Care (including immunizations) Women s Preventive Health (including birth control) Essential Health Benefits = Deductible and Co-Insurance or Co-Payment 12

13 Health Insurance Exchanges in New York State Qualified Health Plan (QHP) Certifications Issued QHP Rate and Benefit Information Deadline NYS DFS Notice to Insurers by no later than All Plans Posted on Exchange Web-Site Open Enrollment Begins

14 Kaiser Family Foundation Subsidy Calculator Family Income = $50,000 (2014 dollars) No Employer Coverage Two Adults (ages 39 and 40) / Two Children All Members are Non-Smokers Household Income = 318% Poverty Level in Unsubsidized Premium = $11,499 (Silver Plan Level) Maximum % of Income for Premium = 9.5% Premium Member Pays = $7,125 Federal Tax Credit Subsidy = $4,374 * This is for illustrative purposes only based on a number of assumptions. 14

15 Employer Requirement to Offer Coverage Step 1 What Employers are Affected: All Employers who have at least 50 full-time equivalent employees are subject to this mandate. This includes employers with a combination of full-time and part-time employees who equal 50 full-time employee equivalents. Full-Time Employees are defined as working 30 hours per week for 120 days on average during a year. There is a look back period allowed of not less than 3 months and not more than 12 months as a measurement period. If you have part-time employees, you have to divide your total monthly part-time hours by 120 to determine the full-time employee equivalent of this segment of your population. If you have less than 50 full-time equivalent employees you are exempt 15 from this mandate.

16 (Employer Requirement to Offer Coverage) Employer Requirement to Offer Coverage Step 1 (continued) Sample Calculation: Full-Time Employees: 40 + Full-Time Equivalent Employees: 16 ((20 Part-Time Employees x 96 (24 x 4) Hours) 120) = 16 = Total Full-Time Equivalent Employees 56 Assumptions: Employer has 40 Full-Time Employees Employer has 20 Part-Time Employees who average 24 hours per week 16

17 (Employer Requirement to Offer Coverage) Employer Requirement to Offer Coverage Step 2 Do You Offer Coverage to 95% of Your Full-Time Employees?: If Yes, Mandate Applies and the Process Continues. If No, Employer may be Subject to Penalties as Follows: If you have at least one employee receive a premium tax credit or cost sharing subsidy in an Exchange you must pay the penalty. Penalty = $2,000 per year times the number of full-time employees minus 30 and this penalty increases each year after 2014 by the growth in health insurance premiums. 17

18 (Employer Requirement to Offer Coverage) Employer Requirement to Offer Coverage Step 3 Do You Offer Affordable Coverage?: Affordable Coverage = Bronze Plan or Better If Yes, Mandate Applies and the Process Continues. If No, Employer may be Subject to Penalties as Follows: Employees may purchase coverage in a Health Insurance Exchange and receive a premium tax credit. To receive a premium tax credit family income must be less than 400% of the Federal Poverty Level. Penalty = $3,000 annually for each full-time employee receiving a premium tax credit up to $2,000 per year times the number of full-time employees minus 30 and this penalty increases each year after 2014 by the growth in health insurance premiums. 18

19 (Employer Requirement to Offer Coverage) Employer Requirement to Offer Coverage Step 4 Do any Employees Pay >9.5% of their Income for Your Coverage?: If No, Employer Meets Standard = No Penalties. If Yes, Employer may be Subject to Penalties as Follows: Employees may purchase coverage in a Health Insurance Exchange and receive a premium tax credit. To receive a premium tax credit family income must be less than 400% of the Federal Poverty Level. Penalty = $3,000 annually for each full-time employee receiving a premium tax credit up to $2,000 per year times the number of full-time employees minus 30 and this penalty increases each year after 2014 by the growth in health insurance premiums. 19

20 (Employer Requirement to Offer Coverage) United States Department of Health & Human Services 2013 Poverty Guidelines for the 48 Contiguous States and the District of Columbia Persons in Poverty Guideline Family/Household 1 $11, , , , , , , ,630 For families/households with more than 8 persons, add $4,020 for each additional person. 20

21 Wellness Rewards Participatory Wellness Programs A Wellness Program that either does not require an individual to meet a standard related to a health factor in order to obtain a reward or that does not offer a reward at all. Health-Contingent Wellness Programs These types of Wellness Programs require an individual to attain or maintain a certain health outcome in order to obtain a reward (such as not smoking, attaining certain results on biometric screenings, or meeting targets for exercise). 21

22 Wellness Rewards Health-Contingent Wellness Program Requirements: The total reward for such wellness programs offered by a plan sponsor does not exceed 30%* of the total cost of coverage under the plan. The program is reasonably designed to promote health or prevent disease. For this purpose, it must have a reasonable chance of improving health or preventing disease, not be overly burdensome, not be a subterfuge for discriminating based on a health factor, and not be highly suspect in method. The program gives eligible individuals an opportunity to qualify for the reward at least once per year. The reward is available to all similarly situated individuals. For this purpose, a reasonable alternative standard (or waiver of the otherwise applicable standard) must be made available to any individual for whom it is unreasonably difficult due to a medical condition to satisfy the otherwise applicable standard during that period (or for whom it is medically inadvisable to attempt to satisfy the otherwise applicable standard). In all plan materials describing the terms of the program, the availability of a reasonable alternative standard (or the possibility of waiver of the otherwise applicable standard) is disclosed. *Reward could be as much as 50% if determined to be appropriate to reduce tobacco use. 22

23 Federal Health Insurance Premium Tax (2014) Beginning in 2014, the legislation will impose an annual fee which is based on each health insurance company s share of the total market, adjusted for size and corporate structure. This tax which applies to all insured health insurance plans will be one of the major funding sources for the ACA. The current estimates on the effect of this tax on insured plans is approximately 2.15% of paid claims beginning in Temporary Reinsurance Program Tax (2014) Creates a temporary reinsurance program to collect payments from health insurers to provide payments to plans, both inside and outside the exchanges, that incur high claims costs from enrollees. The current estimates of the effect of this tax on all plans is approximately $5.25 per contract per month. Estimated Total Impact = 3.0% to 4.0% Increase in Premiums 23

24 2018 Changes Tax on High-Cost Insurance Cadillac Tax ACA 2018 Limits: Individual Coverage = $10,200 Family Coverage = $27,500 Excise Tax = 40% of Each Dollar Over Limit Applies to aggregate expenses of employer-sponsored health insurance plans which based on our current understanding will include the actuarial value of a Health Reimbursement Arrangement (HRA), if offered by the employer. 24

25 CEWW Schools Health Ins. Consortium Plan (Sample District Plan A Only) Fiscal Year Monthly Premium Annual Premium Individual Family Individual Family Total Cost Excise Tax 2012/2013 $ $1, $7, $19, $3,673, n/a 2013/2014 $ $1, $7, $20, $3,820, n/a 2014/2015 $ $1, $8, $22, $4,164, n/a 2015/2016 $ $2, $9, $24, $4,539, n/a 2016/2017 $ $2, $10, $26, $4,947, n/a 2017/2018 $ $2, $11, $29, $5,393, $123, /2019 $1, $2, $12, $31, $5,878, $317, Assumptions: 1. 9% Annual Premium Increase 2. Census = 59 Individuals and 163 Families 3. Threshold = $10,200 Individuals and $27,500 Families 4. Does not Include Medicare-Aged Retirees 25

26 Affordable Care Act Q&A 26