Affordable Care Act Update & Strategic Planning. Presented by: Kurt Swartz September 16, 2015

Transcription

1 Affordable Care Act Update & Strategic Planning Presented by: Kurt Swartz September 16, 2015

2 Affordable Care Act- Update 2 Agenda ACA Changes & Overview ACA Reporting Section 6055 & 6056 Large Group to Small Group Transition Self-Funding Private Exchanges Transparency Tools

3 ACA Changes & Overview 3

4 Affordable Care Act Changes 4 U.S. Supreme Court Decision June 25, 2015 (King v. Burwell) Upholds subsidies on the Federal Marketplace Large Group Definition Change January 1, FTE groups shift to small group Carriers offer transition relief option for FTE groups Increase in ACA 6055/6056 reporting penalties Intentional disregard from $250 per violation to $500

5 Employer Reporting Core Concepts 5 ACA added Sections 6055 and 6056 to the Internal Revenue Code Section 6055 is related to enforcement of the Individual Mandate Section 6056 is related to enforcement of the Employer Mandate The new sections require health insurers and/or employers to file information returns with the IRS each year Mandatory Filings will begin in 2016 (for 2015) Information required for the returns includes: Identification of employees (and dependents) who were eligible for employer sponsored coverage Months of the year when eligible individuals were enrolled in coverage

6 Employer Reporting Forms 6 Form 1094-B Form 1095-B Form 1094-C Transmittal of Health Coverage Information Returns Health Coverage Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns Form 1095-C Employer-Provided Health Insurance Offer and Coverage Draft versions of the forms and instructions released in June of 2015 Draft versions of the forms and instructions for 2015 are available on irs.gov website

7 Employer Reporting Requirements for Various Employer and Coverage Types 7 Plan Type / Employer Size Less Than 50 FTEs ALEs Fully Insured No Employer Reporting C and 1095-C Self Insured 1094-B and 1095-B 1094-C and 1095-C 2 No Coverage No Employer Reporting 1094-C and 1095-C 3 Footnotes 1. Insurance Carrier Files Forms 1094-B and 1095-B 2. ALEs are permitted to use a single combined form for Sections 6055 and 6056 reporting 3. Only if the ALE has at least one Full-Time Employee

8 Form 1094-B Overview 8 Form Name: Purpose: Who Files: How Many: How: Transmittal of Health Coverage Information Returns Enforcement of the Individual Mandate Insurance Company (fully insured plans or self-funded plan sponsors) 1 per insurer or self-insured plan Paper or Electronically Note: Entities filing at least 250 returns under Sections 6055 or 6056 are required to file electronically When: Due the last day of February or the last day of March if filed electronically

9 Form 1094-B 9

10 Form 1094-B Line x Line Review 10 Line 1: Filer s Name Insurance Company or Plan Sponsor Line 3: Name of Person to Contact Who can answer the IRS s questions Line 9: Total Number of Forms 1095-B Submitted With This Transmittal

11 Form 1095-B Overview 11 Form Name: Purpose: Who Files: How Many: Health Coverage Enforcement of the Individual Mandate Insurance Company (fully insured plans or self-funded plan sponsors) 1 each to the IRS and to the covered individual per employee/individual covered any time during the year Paper or Electronically How: Note: Entities filing at least 250 returns under Sections 6055 or 6056 are required to file electronically When: With the IRS on or before the last day of February or the last day of March if filed electronically and To the covered individual on or before the last day of January (February 1, 2016 because January 31 is a Sunday)

12 Form 1095-B 12

13 Form 1095-B Line x Line Review 13 Line 1: Name of Responsible Individual the policyholder or the primary insured individual for a group plan (not the employer) Line 8: Line 9: Enter Letter Identifying Origin of the Policy Code List: A. Small Business Health Options Program (SHOP) B. Employer-sponsored coverage C. Government-sponsored program D. Individual market insurance E. Multiemployer plan F. Miscellaneous minimum essential coverage Line 16: Small Business Health Options Program (SHOP) Marketplace Identifier, if applicable further instructions coming for 2015 Name The insurance carrier, the self-funded plan sponsor or the government agency

14 Form 1095-B Line x Line Review (Continued) 14 Part IV Covered Individuals (Enter the information for each ) Column (a): Name of Covered Individuals Column (b): SSN groups may not have this for all dependents (birthdays are okay if SSN is not available don t enter both) Column (d): Covered all 12 months or list the individual months coverage was in effect

15 Form 1094-C Overview 15 Form Name: Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns Purpose: Who Files: How Many: How: Enforcement of the Employer Mandate Members of Applicable Large Employers (ALEs) with at least one full-time employee 1 to the IRS per ALE member Paper or Electronically Note: Entities filing at least 250 returns under Sections 6055 or 6056 are required to file electronically When: Due the last day of February or the last day of March if filed electronically Note: Medium sized ALEs must still file in 2016

16 Form 1094-C (Page 1) 16

17 Form 1094-C Page 1 Line x Line Review 17 Line 1: Name of ALE Member (Employer) Employer s name Line 9: Name of the Designated Government Entity (only if applicable) only if a DGE is filing on behalf of an employer Line 18: Total number of Forms 1095-C submitted with this transmittal Line 21: Is ALE Member a Member or an Aggregated ALE Group Client needs to know their status as a member of a Control Group for tax purposes

18 Form 1094-C Page 1 Line x Line Review(Continued) 18 Line 22: Certifications of Eligibility (select all that apply) : Qualifying Offer Method: Qualifying offers were made to eligible full-time employees for all 12 months of the year Advise not to use as it complicates return Qualifying Offer Method Transition Relief Section 4980H Transition Relief 98% Offer Method Preferred method if employer offers coverage to 98% of fulltime employees Signature Line:

19 Form 1094-C (Page 2) 19

20 Form 1094-C Page 2 Line x Line Review 20 Part III ALE Member Information - Monthly Column (a): Minimum Essential Coverage Offer Indicator 95% FTEs Column (b): Full-Time Employee Count for ALE Member May be skipped if 98% Offer Method was selected Column (c): Total Employee Count for ALE Member FT and PT Employees Column (d): Aggregated Group Indicator Column (e): Section 4980H Transition Relief Indicator A Transition Relief (ALEs with fewer than 100 full-time employees) B or more Transition Relief (ALEs with 100 or more full-time employees)

21 Form 1094-C (Page 3) 21

22 Form 1094-C Page 3 Line x Line Review 22 List Names and EINs for other ALE Members of the Aggregated ALE Group, who were members at any time during the calendar year Attach additional sheets if necessary

23 Form 1095-C Overview 23 Form Name: Purpose: Who Files: How Many: How: When: Employer-Provided Health Insurance Offer and Coverage Enforcement of the Employer Mandate Members of Applicable Large Employers (ALEs) with at least one full-time employee 1 each to the IRS and to the Employee per full-time employee eligible for MEC coverage any time during the year Paper or Electronically Note: Entities filing at least 250 returns under Sections 6055 or 6056 are required to file electronically With the IRS on or before the last day of February or the last day of March if filed electronically and To the covered individual on or before the last day of January (February 1, 2016 because January 31 is a Sunday)

24 Form 1095-C 24

25 Form 1095-C Line x Line Review 25 Part II Employee Offer and Coverage If the answers to the below questions are the same for all 12 months of the calendar year, only one entry is required. Otherwise, each line must be answered separately for each month Line 14: Offer of Coverage (enter required code) 1A MEC, MV, Affordable, Family Eligibility 1B MEC, MV, Employee Only 1C MEC, MV for Employee; MEC for Dependents 1D MEC, MV for Employee; MEC for Spouse 1E MEC and MV for Employee; MEC for Spouse and Deps. 1F MEC only 1G Part-Time Employee Coverage 1H No offer of coverage 1I Qualified Offer Transition Relief 2015 Incomplete offer of coverage

26 Form 1095-C Line x Line Review(Continued) 26 Part II Employee Offer and Coverage (Continued) Line 15: Employee Share of Lowest Cost Monthly Premium, for Self-Only Minimum Value Coverage Line 16: Applicable Section 4980H Safe Harbor (enter code, if applicable) 2A Employee not employed during the month 2B Employee not a full-time employee 2C Employee enrolled in coverage offered 2D Employee in a section 4980H(b) limited nonassessment period 2E Multiemployer interim rule relief 2F Section 4980H affordability Form W-2 safe harbor 2G Section 4980H affordability federal poverty line safe harbor 2H Section 4980H affordability rate of pay safe harbor 2I Non-calendar year transition relief applies to this employee

27 Form 1095-C Line x Line Review(Continued) 27 Part III Covered Individuals Only for Self-Insured Coverage (Fully-Insured groups have this information reported by the carrier on Form 1094-C) Column (a): Name of Covered Individuals Column (b): SSN groups may not have this for all dependents (birthdays are okay if SSN is not available) Column (d): Covered all 12 months or list the individual months coverage was in effect

28 Employer Reporting Next Steps Review 2015 Forms and Instructions 2. Determine each entities expected filing requirements for 2015 in advance 3. Address any shortfall in current data collection 4. Implement necessary data retention process 5. Schedule preparation, employee distribution and filing of returns with the IRS for early 2016 as appropriate

29 Large Group To Small Group Transition 29

30 Large Group To Small Group Transition 30 Who: When: Impact: Options: FTE Groups 2016 Plan Year Member Level Rating ACA Metal Level Plan Mandated Pediatric Benefits Additional Taxes and Fees Transition Strategy

31 Large Group To Small Group Transition Continued 31 Determining Group Size: Carriers base group size on the average FTE Count during the most recent full calendar year Transition Timing: FTE groups will transition on their plan year starting in January Renewals for these groups will be based on small group rating requirements

32 Rating Impact 32 Member Level Rating: Each employee and any covered dependent receive a premium rate based on their own individual age Most carriers have one rate for 0-18 years of age Separate rates for years of age Metal Level Plans: Plan selections limited to Bronze, Silver, Gold or Platinum Bronze 60% coverage Silver 70% coverage Gold 80% coverage Platinum 90% coverage

33 Rating Impact 33 Mandated Benefits: Pediatric Dental Provides coverage to all covered dependents through the end of year they turn 19 Limits parents out-of-pocket exposure to $350 per child or $700 for multiple children Pediatric Vision Provides coverage to all covered dependents through the end of year they turn 19 Provides coverage for Exams, Frames, and Lenses annually, at no cost to the member

34 Rating Impact 34 Additional Taxes and Fees: Marketplace Fee Fees that are charged to any health insurance issuer participating and offering health plans on the state or federal health insurance marketplace Risk Adjustment Fee Fees that will pay for the administrative expenses of a program that will pay carriers who insure more members who are likely to have high claim costs

35 Transition Strategy 35 Some insurance carriers have identified a provision in the law that will allow FTE groups to avoid the onset of the small group transition until their plan year starting in 2017 Requires the group to make a two-year renewal decision Cannot make carrier changes in 2016 Some groups may change renewal/plan year to October to delay transition for up to an additional 10 months

36 Self-Funding

37 Self-Funding - Lingo 37 Self-funded - Is an arrangement whereby an employer provides health or disability benefits to employees with its own funds. (AKA) self-insured, Administrative Services Contract (ASC), Administrative Services Only (ASO) Admin - Administrative Fee paid for claims process and customer service and overall plan administration Spec - Specific Stop-loss insurance against shock claims (Premature Birth) Agg - Aggregate Stop-loss insurance against numerous claims with dollar amounts under the specific stop-loss cap from all employees Discount - Negotiated reimbursement to providers by the plan administrator Maturity Number of claim months built into the cost projection Illustrative Rates or Cost Due to the unknown of actual claims costs, all projections of cost are estimated based on actuarial assumptions

38 Components of Self-Funding 38 Administration Stop-loss Insurance (Specific & Aggregate) Claims

39 Pros and Cons of Self-Funding 39 PROS Reduced administrative cost Group specific rating based on anticipated utilization Fewer ACA taxes and fees Composite rating No metal level plan requirements No pediatric dental and vision requirements Flexibility in plan design CONS Additional administration by group Uncertainty of claims expense from month to month Difficult to exit

40 ACA Taxes and Fees Comparison 40

41 Self-Funded Quotes 41 Helpful hints and questions to ask: Is the projected claims experience the same duration of time - Maturity? Is the specific stop-loss at a contract or member level? Is Rx included in the stop-loss? What is the anticipated discount from the plan administrator? Is the plan administrator also the stop-loss carrier? When is the group reimbursed in the event of a specific stop-loss claim?

42 Private Exchanges 42

43 Private Exchanges 43 Employer Sponsored Exchanges/Marketplace Increasing Popularity Due to cost and increased plan options Multiple Carrier Options BCBSM/BCN, I-Select (Priority Health & HAP) Defined Contribution Strategy Determine an allowance for coverage and allow your employees to buy up or down in coverage Automated Enrollment

44 Private Exchanges 44 BCBSM/BCN GlidePath 100+ FTE Groups 5 BCBSM Plan Options 5 BCN Plan Options Combined To Offer 10 BCBSM and BCN Options Automated Online Enrollment Telephonic Enrollment (Only private exchange to offer live enrollment service)

45 Private Exchanges 45 BCBSM/BCN Coverage4Companies 100 or Fewer FTE Groups 5 Suites of Plans (Option A E) Traditional options mixed with HSA options 3 Suite with 2 BCBSM and 2 BCN Options 1 Suite with 4 BCBSM Options Only 1 Suite with 4 BCN Options Only Automated Online Plan Selection

46 Health Care Transparency 46

47 What is Health Care Transparency 47 Health care transparency is like Flo from Progressive Patients have the ability to check pricing for services through their insurance carrier s website Check patient reviews Check physician encounters with treatment type Check re-admittance rates The missing link in Consumer Directed Health Care

48 Leverage Transparency 48 Why should you leverage transparency? Reduce member out of pocket in deductible and coinsurance Carrier incentives - Priority Health Improved treatment and reduced re-admittance Reduced claims experience for self-funded and experience rated groups

49 Cost Look Up Tools 49

50 Michigan Planners 50 Independent Insurance Agency Since 1962 Specializing in Customized Employee Benefit Management Industry Leading Customer Service Portfolio with Compass Human Resource Management System Employee Benefits Retirement Compliance Michigan Planners

51 Questions miplanners.com Garfield Rd. Clinton Twp., MI S. Union St. Traverse City, MI 49684