Health Care Reform 2010 Key Employer Issues

Transcription

1 Health Care Reform 2010 Key Employer Issues Lisa M. defilippis in Cleveland, OH Joe Lazzarotti in White Plains, NY Monique Warren in White Plains, NY

2 Health Care Reform Putting the Current Law in Context 2. Summary & Essential Concepts 3. Timeline for Employer & Group Health Plan Mandates 4. Employer Subsidies 5. Other Impacts on Employers 6. Preliminary To Do List

3 Context Affordable Health Care for America Act passed Nov 7, 2009 by 220-to-215 vote 219 Democrats + 1 Republican in favor Patient Protection and Affordable Health Care Act (Senate Bill, HR 3590) passed Dec 24, 2009 by 60- to-39 vote All 58 Democrats + 2 Independents President s Summit February 25, 2010 House passed Senate Bill and Reconciliation Bill Mar 21, 2010 President signed Senate Bill into Law Mar 23, 2010 At least 12 states filed suit Mar 23, 2010 Sen DeMint introduced bill to repeal Law Mar 24, 2010 Senate voted on Reconciliation Bill Mar 24, 2010 President signed Reconciliation Bill into Law Mar 30, 2010

4 PPACA Summary of the Law I. Coverage Quality & Affordability II. Public Programs III. Care Quality & Efficiency IV. Public Health Initiatives V. Health Care Workforce Initiatives VI. Transparency and Reporting in Health Care VII. Access to Innovative Medical Therapies VIII. Class Act IX. Revenue Provisions X. Amendments Title HCERA

5 Summary of the Law A House-keeping Note: Keep in mind that certain effective dates and other details are unclear at this time and will require clarification by Congress and/or the applicable enforcement agency. Presentation Date: April 21, 2010

6 Summary of the Law Essential Concepts The Exchange collection of approved insurance plans each state makes available Intended for individuals and small groups In 2018, states also can extend to ERs with over 100 EEs Individual Mandate essentially all individuals must have minimum coverage beginning in 2014 or pay penalty Large ER Mandate provide minimum coverage or pay penalty ( pay or play )

7 Summary of the Law Premium subsidy available to individual earning no more than 400% FPL who purchases Exchange coverage ( subsidized Exchange coverage ) EE who is offered ER coverage is not eligible for subsidized Exchange coverage unless ER coverage fails affordability or value test Grandfathered Plans those in existence on March 23, 2010 do not have to comply with some but not all mandates; collectively-bargained plans do not have to comply with some but not all mandates until termination of CBA

8 Summary of the Law Essential Health Benefits services including ambulatory patient, emergency, hospitalization, maternity/new-born care, mental health and substance abuse, Rx, rehab and devices, lab, preventative, wellness and disease management, pediatric including oral and vision. In 2014, costsharing limits apply (levels: 60%, 70%, 80%, 90%) Minimum Essential Coverage coverage under a grandfathered plan, an eligible employer sponsored plan, an individual plan, Medicare, Medicaid, CHIP, TRICARE etc.

9 ER/GHP Mandate Timeline Immediate Effective for PY 6 Months after Enactment Eliminate life-time dollar limits on essential benefits * Can t rescind coverage except in case of fraud* Certain preventive care must be covered with no cost-sharing Cover children to age 26 even if married* Insured plans cannot discriminate in favor of highly compensated EEs No pre-ex condition exclusion for children services

10 ER/GHP Mandate Timeline Immediate Effective for PY 6 Months after Enactment Appeals process requirements Emergency service requirements Anti-dumping restrictions OB/Gyn and pediatrician designation requirements

11 ER/GHP Mandate Timeline Effective 2011 Must report the value of each employee s ERprovided health coverage on W-2 Health FSAs, HSAs, HRAs cannot reimburse provide tax-free reimbursement for over-the-counter drugs Effective 2012 Must comply with standardized summary of benefit disclosure rules to be developed 60-day notice of material change Quality reporting to HHS and participants

12 ER/GHP Mandate Timeline Effective 2013 Medicare portion of EE s FICA tax increases to 2.35% (from 1.45%) for earnings over $200,000 ERs with more than 200 EEs must automatically enroll EEs in health plan EEs can opt out; waiting period can apply Notice requirement Health FSA contribution must be capped at $2,500 Subject to inflation adjustments ER must pay $2/per participant per PY to help fund Patient-Centered Outcomes Research Trust Fund

13 ER/GHP Mandate Timeline Effective 2014 Nondeductible pay or play penalties apply to ERs with 50 or more FT EEs FT = 30 hrs/wk Count PT EEs for purposes of determining ER size only (not for penalty calculation) by determining FTE: FTE/month = total PT EE hours divided by 120

14 ER/GHP Mandate Timeline Effective 2014 If minimum essential coverage is not offered to each FT EE and dependents and one or more FT EE obtains subsidized exchange coverage, ER must pay penalty equal to $2,000 per FT EE (excluding first 30) If minimum essential coverage is offered but one or more FT EE obtains subsidized Exchange coverage, ER must pay penalty equal to lesser of $3,000 x number FT EEs who decline ER coverage and receive subsidized Exchange coverage or $2,000 x number total FT EEs

15 ER/GHP Mandate Timeline Effective 2014 Each offering ER must provide free choice voucher to each qualified EE Offering ER is one who offers and contributes to cost of minimum essential coverage Qualified EE is one who has income below 400% FPL, whose required contribution for the ER coverage would be more than 8% (but less than 9.8%) of household income, and who enrolls in Exchange coverage EE uses voucher to purchase Exchange coverage Voucher is equal to highest ER contribution for ER provided coverage and would offset the pay or play penalty

16 ER/GHP Mandate Timeline Effective 2014 Eliminate waiting periods over 90 days Eliminate annual limits on essential benefits (already subject to restrictions for 2011) Eliminate all pre-ex condition exclusions (already eliminated for children in 2011) Delayed compliance for collectively bargained plans until last-to-expire CBA

17 ER/GHP Mandate Timeline Effective 2014 Annual reporting Whether minimum essential coverage Waiting period # FT EEs covered ER contribution Coverage for clinical trials

18 ER/GHP Mandate Timeline Effective 2018 Cadillac Plan Tax: 40% excise tax to extent coverage value exceeds $10,200/$27,500 (HSA contributions count) Higher limits for high risk occupations and early retirees (age 55-64) Excludes dental-only and vision-only Insurer pays if insured; ER pays if self-funded

19 Employer Subsidies Temporary Reinsurance for Retiree Coverage Effective June % reimbursement for cost of early retiree health benefits in excess of $15k and up to $90k (retirees between ages 55 and 64) Must be used to lower plan cost Ends after 2013

20 Employer Subsidies Small Employer Tax Credit Until 2013, up to 35% of small ER s contribution if ER has < 25 FTEs and average wages are less than $50,000 (25% for tax-exempt ER) After 2013, for up to 2 years, up to 50% of small ER s contribution for coverage purchased through the Exchange (35% for tax-exempt ER) ER size determined on control group basis No credit for contributions for owners coverage Credit applies for only 2 consecutive years

21 Other Impacts on ERs/GHPs 2010 Adoption assistance tax-free benefit threshold increased to $13,170 (from ($10,000) 2011 Federal Government LTC insurance (voluntary, auto-enroll) 2013 ERs enjoying retiree Rx coverage 28% subsidy will have to offset for that in the sense that the ER won t be able to take deductions for retiree Rx expenses for amounts equal to that subsidy 2014 Limit on financial incentive for participation in wellness program increases to 30% (from 20%); can increase to as much as 50%

22 Preliminary To Do List Review your ER plan for compliance with nearterm requirements (e.g., age 26 dependent, no life-time limits, etc) Consider how to estimate impact of penalty provisions and consider options Consider how to influence future developments (lobbying, commenting on regulations, etc) Professional and industry associations JL Government Relations Stay up-to-date with changes, clarifications, and guidance Professional and industry association publications JL legal updates, etc.

23 JL s Interdisciplinary Approach Executive Compensation Employee Benefits Health Care Reform Wage & Hour Government Affairs /Lobbying Labor & Multiemployer plans Tax