LEGISLATIVE UPDATE AND INDUSTRY FORECAST

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1 LEGISLATIVE UPDATE AND INDUSTRY FORECAST September 2014 by Marcy M. Buckner National Association of Health Underwriters

2 THE BIG YEAR IS HERE! 2014 is bringing great changes to the world of health benefits. The kinds of coverage available and the requirements and options have changed for individuals, employers and employees. Policy changes of this magnitude are very difficult to undo. The need for an educated insurance broker to guide consumers and help them make strategic plan decisions is greater than ever.

3 WELCOME TO WASHINGTON!

4 POLITICAL LANDSCAPE Washington s political dynamic is fractured. House actions are tempered by conservative pressure and tight Democratic majority in the Senate and President Obama. GOP is struggling with health reform strategy as is the Democratic leadership. Democrats running for reelection in 2014 are currently the most solutionoriented group. The good news is that there have been small signs of bipartisan cooperation lately.

5 BOTTOM LINE

6 IS CONGRESS MOVING TOWARDS GREATER BIPARTISAN COLLABORATION ON HEALTHCARE- RELATED TOPICS? MAYBE!!! Recent examples: Passage of SGR cap that included deductible cap repeal Increased number of bipartisan bills to fix aspects of PPACA being introduced and moving through committees 30 Hours issue, Exchange related improvements, etc. BUT NO ONE IS HOLDING HANDS AND SINGING YET ELECTIONS LOOM LARGE!!!

7 FORTY HOURS IS FULL-TIME There are two current versions of the bill. The House passed their 40 hour bill introduced by Todd Young (R-IN) with original co-sponsors, Pete Olson (R-TX), Mike Kelly (R-PA), Tim Walberg (R-MI) and Erik Paulsen (R-MN). The bill passed by a vote, with 18 Democrats voting in favor. The House-approved bill was sent to the Senate where it will likely not make it to the floor as a stand-alone anytime soon. Bill may be hampered by CBO score of $73 billion cost over 10 years and prediction it could cause up to 1 million to lose employer coverage. In the Senate, Susan Collins (R-ME) and Joe Donnelly (D-IN) have introduced bipartisan companion legislation. In the Senate, discussions have centered around potentially reducing the number to 35 hours or another compromise figure.

8 BROKER BILL: S. 650 AND H.R Access to Independent Health Insurance Advisors Act of 2013 (MLR bill) introduced on March 21 by Senator Mary Landrieu (D-LA). Other original cosponsors: Senators Johnny Isakson (R-GA), Mark Begich (D-AK) and Lisa Murkowski (R-AK). Companion bill in the House by Michigan Rep Mike Rogers (R-MI) and Georgia Rep John Barrow (D-GA). Senator Landrieu has been trying to attach it to various moving Senate bills. Is their an opening for regulatory action with the recent MLR relief in the proposed exchange rule? NAHU included MLR relief in comment letter to CMS on 4/21/14. Announcement of new rules expected in early summer 2014.

9 EXCHANGE FIX BILL: THE ENHANCING ACCESS FOR AGENTS AND BROKERS ACT. S S.2175 introduced by Senator Landrieu (D-LA) with original co-sponsors, Senators Jeanne Shaheen (D-NH), Joe Manchin (D-WV), Mark Warner (D-VA), Mark Begich (D-AK) and Heidi Heitkamp (D-ND). Includes: Establishing a toll-free concierge hotline for broker enrollment and policy questions. A listing of all certified agents on healthcare.gov. A fix to the NPN issue that has plagued agents from day one of open enrollment and a requirement that HHS notify the broker community of all policy changes relative to QHPS and exchange enrollment within five business days in layperson s language, including specific information about how agents and brokers can best help their clients take advantage of any policy or regulatory changes in a timely manner.

10 EXCHANGE FIX BILL : THE CHOICE ACT S Introduced by Senator Landrieu (D-LA) as well. Will make improvements to the direct enrollment process for independent agents, including making improvements that will allow independent agents better access to web-based entities.

11 IS THE ELEPHANT IN THE ROOM! Action on any health reform-related legislation is being put off by both parties since no one wants to force tough votes that could give an opponent a political advantage. House Majority Leader Cantor s loss in his recent primary election has sent shock waves through both parties. Senate Democrats have pulled the HHS appropriations bill from consideration until after November. House is unlikely to vote on anything that won t generate a complete GOP majority turnout.

12 DOES THE GOP HAVE A SOLUTION? Recently GOP has made a lot of noise about replacing rather than repealing the health reform law. But do they have anything that is ready for prime time? Burr/Coburn/Hatch Patient CARE Act GOP Study Committee Bill Roe/Scalise Increasingly unlikely vote will happen before Election Day 2014

13 IS IT STILL POSSIBLE THAT THE JUDICIARY BRANCH COULD UNRAVEL HEALTH REFORM? Contraceptive mandate case ruled on by the Supreme Court Hobby Lobby Case. Two challenges to the ability of the federal government to issue health insurance premium tax credits and enforce the employer mandate via federally facilitated and partnership exchanges have been ruled on by district courts others are making their way through federal district and appellate courts. Business as usual for now. Ultimately this issue may be decided by the Supreme Court, but no earlier than next Spring and it will more likely be in 2016.

14 What s Coming From the Administration?

15 RECENT AND PENDING REGULATORY ACTION Treasury Employer reporting forms out instructions expected in late August. Final 90 Day Waiting period Rule allows for an orientation period Non-discrimination rules for non-grandfathered fully insured groups of all sizes. Department of Health and Human Services Final 2015 Exchange rule SEP Bulletin Additional FAQs and Guidance Department of Labor New Notices for COBRA and CHIPRA Proposed rule would allow notice modifications via guidance instead of more formal regulatory process

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17 EXCHANGE MARKETPLACE THE VISION As envisioned, streamlined, easy to use, consumer friendly, neutral online marketplace for health insurance with one-stop shopping for Medicaid, CHIP, subsidized coverage and other individual coverage. Subsidized coverage will only available for individuals purchasing through an exchange, not those in an employer group. People with adequate and affordable group coverage cannot leave group plan for subsidized individual exchange coverage. In FFE and Partnership states, producers will be able to assist consumers in three ways: (a) an issuer-based pathway, through which an agent or broker uses an issuer s website to assist the consumer; (b) a Marketplace pathway, through which an agent or broker assists the consumer using the Marketplace website; (c) through the web-based broker. 17

18 THE REALITY

19 RECENT ACTIONS TO ADDRESS AGENT EXCHANGE ISSUES Letter to President by Senator Shaheen NAHU Letter to President Obama Bipartisan House Letter Multiple opportunities to Provide Testimony Before the NAIC Senate Legislation on Broker Issues Senate Letter to HHS SEP Letter from NAHU Routine Meetings with HHS/White House Chapter Information on Healthcare.Gov Improvements to Direct Enrollment/Web Broker Access Authorization field expansion resolution Meetings with new leadership at HHS and White House

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21 What are employers talking about?

22 WILL THE EMPLOYER MANDATE DELAYED FURTHER OR REPEALED? The employer mandate has been delayed until Jan. 1, 2015 Several recent scholarly articles from pro-aca groups have questioned the need for the employer mandate overall. However, it is still very unlikely that the mandate will be repealed or delayed further for political reasons. GOP-controlled House would be highly unlikely to allow an employer mandate repeal to pass without an individual mandate repeal too. Administration shows no sign of any further regulatory delay. 22

23 NEW EMPLOYER MANDATE REGULATION - FEBRUARY 2014 Small Businesses with less than 50 employees will not be required to offer cover OR fill out any reporting forms Large employers with 100 or more employees will not be penalized for not offering coverage if they offer to at least 70% in 2015 (previously 95%), and 30 employee deduction is an 80 employee deduction in No penalty enforcement in Offer requirement of 95% will be required beginning in employee deduction will begin in Employers with 50 to 99 employees will have to report on workers and what was offered in 2015 but will not be subject to any penalties until 2016

24 FINAL RULES ON EMPLOYER REPORTING Section 6055 requires self-insured health plans, insurance issuers, and governmental units to report to the IRS and provide a statement to individuals ONLY for those actually enrolled in minimum essential coverage. Purpose is to determine compliance with the individual mandate. Section 6056 requires employers with 50 or more full time equivalent employees to track by month and report to the IRS whether full-time employees were offered coverage - accepted or not. Purpose is to determine compliance with the employer mandate. Tracked monthly but reported annually Reporting tracking begins in 2015 (previously 2014), with filing early in 2016.

25 EMPLOYER RESPONSIBILITIES UNDER PPACA IT S NOT JUST THE MANDATE Employers are also responsible for maintaining a PPACA-compliant plan, which includes adherence to market reform requirements, notice requirements, etc. While health insurance carriers assume some responsibility for fully insured plans, there are compliance burdens for all size employers too The DOL has the primary responsibility for enforcing ACA plan compliance via audits and other means Audit triggers - employee complaints, DOL s referrals, and plan s relationships with third-parties including agents. There can be significant penalties for noncompliance, with fines of up to $100 per day per violation. Educating and assisting employers with their compliance responsibilities can be a significant opportunity for a producer

26 EMPLOYERS WILL ALSO HAVE TO HELP THE EXCHANGES VERIFY COVERAGE HHS will use data from insurance exchange markets to determine whether people have coverage when the individual mandate takes effect in 2014 Determining whether an individual has coverage for individual mandate enforcement will involve getting information from both employees and employers These procedures are separate from the IRS procedures for determining employer penalties under the employer play-or-pay mandate Mandatory employer reporting for both the individual and employer mandates will not begin until 2015 In 2014, employees will be able to present a voluntary reporting form to employers to assist with verification Voluntary reporting will help preserve the stability of employer groups and help prevent employees from being awarded subsidies inappropriately that will eventually have to be paid back

27 EMPLOYER COMMUNICATIONS WITH EMPLOYEES, EXCHANGES AND THE IRS Step 1 Employer provides employees with information about coverage and availability of Exchanges Step 2 Employee provides Exchange with information to determine eligibility for the premium tax credit Step 3 Exchange verifies information and makes preliminary eligibility determination regarding the premium tax credit Step 4 Exchange notifies employer that employee may receive a premium tax credit Employer has right to appeal Exchange s determination of employee s eligibility within 90 days Step 5 Employer files information with IRS and employee 6056 requirements Employee files personal return Step 6 Assessment of employer tax penalties Employer has right to appeal tax liability to IRS Source: Ernst and Young Washington Council

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29 BOTTOM LINE

30 RESOURCES TO HELP NAHU Compliance Corner Documents and other tools and Webinars Customized Answers to Compliance Questions FAQs NAHU PPACA Certification Course and new Self-funded Certification Course NAHU Washington Update ACA Decision tool for Employer Clients NAHU has an online decision tool to use with your employer clients. mis/sso/bounceback.aspx?doredirect= The Kaiser Family Foundation maintains the most accurate subsidy calculator available, although it has its limitations

31 Q & A