Health Care Reform. Some background and decision points; Focused on smaller employers. Copyright 2014, Hartman Employee Benefits, Inc.

Transcription

1 Health Care Reform Some background and decision points; Focused on smaller employers

2 Objectives for today Identify key details of health care reform that impact employers in central-pa Share information about trends and best practices in the central-pa market Identify areas where additional support is necessary from legal (or other) areas

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4 Disclaimer The content herein is not intended to replace advice provided by legal and tax counsel. For educational purposes only. Please let us know if you have questions about the content. Copyright Hartman Employee Benefits Inc, 2013

5 The Hartman Group: Statement of purpose and value proposition Our purpose is to create value for businesses and individuals in our communities by applying our expertise and relationships to particular client circumstances. We believe that our business interest is served as a natural consequence of creating value for others, and that true business success occurs through the mutual benefit of all participants, not at the expense of any participant. We are able to overlap the interests of our stakeholder groups our clients, our employees, our vendors, our communities, and our own organization. Our team provides brokerage and consulting services to employers of all sizes: from small business to national (and international) corporations; local municipalities to school districts and county governments; from two employee not-for-profits to state-wide 501(c)3 s. We support our clients through review and involvement in areas including the following: Renewals Analysis and plan management Compliance Benefits administration Population risk management Benefits enrollment / communication Hartman has the experience providing these services across ALL employee benefits, from health and pharmacy to dental, vision, disability, life, to executive carve-out programs and reinsurance/stop-loss procurement. Copyright Hartman Employee Benefits Inc, 2013

6 Agenda Area of consideration Is my organization an Applicable Large Employer (ALE)? Is my organization in the small group or large group market? Some background Areas for decision support Additional comments Questions Do I have Variable Hour Employees and understand the implications for 2015? Is the small business tax credit important to me? Is my new hire waiting period compliant with ACA? Am I interested in considering a self-funded / level-funded structure? Am I interested in considering a private marketplace / defined contribution strategy for my employees? Is restricting network access to my employees a strategy I will consider to manage costs? Am I prepared to make a decision around contribution strategy changes with my next renewal? Am I confident that my organization is fulfilling compliance requirements including CMS, CHIPRA, COBRA/MiniCOBRA? Am I interested in considering a policy to drop coverage?

7 Some background

8 Some general info prior to working through worksheet... Some trends in healthcare pre ACA Summary of areas impacted by ACA Taxes and fees Essential Health Benefits Employer mandate Modified community rating

9 Some background

10 What does ACA do? Changes incentives Individuals - premium tax credit, cost sharing subsidy, mandate Employers - employer mandate, minimum essential coverage, minimum value, affordable Taxes and fees Standardizing markets - pre-ex, small vs large Distribution process

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12 Essential Health Benefits (EHB) Why do EHB matter? Eliminates annual dollar and lifetime limits for all plans Note that small group market plans must offer all EHB

13 Employer mandate and pay or play Ref:

14 Modified Community Rating Small group and individual markets for insurance Pricing can be based upon region, plan, carrier, age, tobacco usage Pricing cannot be based upon other items, such as health status, gender, industry of employer 3:1 difference between ages 21 and 65

15 A quick case study on small group Copyright Hartman Employee Benefits Inc, 2013

16 Areas for decision support

17 Some specific items per worksheet... Area of consideration Is my organization an Applicable Large Employer (ALE)? Is my organization in the small group or large group market? Do I have Variable Hour Employees and understand the implications for 2015? Is the small business tax credit important to me? Is my new hire waiting period compliant with ACA? Am I interested in considering a self-funded / level-funded structure? Am I interested in considering a private marketplace / defined contribution strategy for my employees? Is restricting network access to my employees a strategy I will consider to manage costs? Am I prepared to make a decision around contribution strategy changes with my next renewal? Am I confident that my organization is fulfilling compliance requirements including CMS, CHIPRA, COBRA? Am I interested in considering a policy to drop coverage?

18 Group Size Employer Mandate Provisions apply to an Applicable Large Employer (ALE) 50 full-time employees (or a combination of full-time and part-time employees that is equivalent) Part-time employees count as a fraction (aggregate monthly hours divided by 120) Market Size Provisions apply to group health plans offered in the large group market or small group market 101 total employees (State option to use 51 until 2016) Part-time employees count as a whole Ignores old market terms of eligible or enrolled

19 Calculation Format FT PT* S** Total Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Tot. Avg. Count all US W-2 employees Consider controlled groups with common ownership Employer Mandate Calculation *Adj. for full-time equivalent based on 120 hours/mo. **Adj. for seasonal workforce if 4 months

20 Counting Example 1 During each month of the prior calendar year 20 full-time (35 hrs/ wk.) 40 part-time (90 hrs/mo.) 0 seasonal Mandate/ ALE Market Size FT PT 30 FTE (40 x 90 / 120) 40 Seasonal 0 0 Total Determination Large Employer ( 50) Large Group ( 51)

21 Counting Example 2 Mandate/ ALE Market Size During each month of the prior calendar year 40 full-time 0 part-time 80 seasonal full-time from Sept. Dec. FT PT 0 FTE 0 Seasonal ( 4 months) (80 x 4 / 12) Total Determination Small Employer (<50) Large Group ( 51)

22 Counting Example 3 During each month of the prior calendar year 40 full-time 0 part-time 80 seasonal full-time from Sept. Dec. plus 20 in August Mandate/ ALE Market Size FT PT 0 FTE 0 Seasonal [(80 x 4)+(20 x 1)] / 12 Total Determination Large Employer ( 50) Large Group ( 51)

23 Employer Mandate Provisions Original Offer minimum essential coverage to full-time (30 hrs) employees and dependents Penalty of $2,000 x (# full time employees 30) Offer affordable and minimum value coverage to full-time employees Penalty up to $3,000 per employee Transition Relief Delayed for employers size until 2016, employers 100+ until 2015 Offer to 70% of full-time employees in 2015, 95% in 2016 The max. penalty excludes 80 in 2015 (30 in 2016) Non-Calendar transition relief (plans maintained as of 12/27/12)

24 Mandate Redefines Full Time Full time at 30 hours per week What about variable hour employees Measurement period Administrative period Stability period Applies to newly-hired and ongoing employees

25 Small Group Market Provisions Rate Development Adjusted Community Rating Individual vs. family Geographic area Age (3:1 limit) Tobacco use (1.5:1 limit) Ignores medical risk, gender, industry Member-based list bill Plan Designs 10 Categories of Essential Health Benefits Pediatric dental & vision No annual or lifetime limits Cost sharing limitations capture Total out-of-pocket maximum Metallic ratings from Bronze 60% - Platinum 90%

26 Quick check! Area of consideration Is my organization an Applicable Large Employer (ALE)? Is my organization in the small group or large group market? Do I have Variable Hour Employees and understand the implications for 2015? Is the small business tax credit important to me? Is my new hire waiting period compliant with ACA? Am I interested in considering a self-funded / level-funded structure? Am I interested in considering a private marketplace / defined contribution strategy for my employees? Is restricting network access to my employees a strategy I will consider to manage costs? Am I prepared to make a decision around contribution strategy changes with my next renewal? Am I confident that my organization is fulfilling compliance requirements including CMS, CHIPRA, COBRA/ MiniCOBRA? Am I interested in considering a policy to drop coverage?

27 Small Group Rates Member Last Name Member First Name Age on 5/1/201 4 Tobacco Use Member Cost Household Cost Prior Year Rate $ Change % Change Young Employee 30 N $ $1, $1, $ % Young Spouse 30 N $ Young Child 2 N $ Brady Employee 50 Y $ $3, $1, $1, % Brady Spouse 50 Y $ Brady Child 24 Y $ Brady Child 22 Y $ Brady Child 20 N $ Brady Child 18 N $ Brady Child 16 N $ Group Total $4, $3, $1, %

28 Contribution Strategies Illustrative Composite Rating Share tobacco charges? Reflects old premium tiers Employee costs consistent per enrollment tier Based on snapshot of enrollment Member-Based Rating Reflects actual charges based on employees current age, tobacco use, size of family Employee cost is highly variable Employer contributes fixed dollar or percent of household premium?

29 Individual product quotes Highmark - Gold (Dauphin, non-tobacco) Plan feature Group - Shared PPO 1500 Ind - Shared Cost PPO 1500 Single deductible $1500 x2 $1500 x2 Coinsurance rate 90% 90% OOM $2800 x2 $4000 x2 ER copay $125 90% ad Urgent care $60 $40 PCP $30 $20 Highmark - Gold (Dauphin, nontobacco) Age Group - Shared PPO 1500 Ind - Shared Cost PPO $ $ $ $ $ $ Specialist $50 $40 Imaging $100 90% ad ** 55 $ $ Xray-Diag. $50 90% ad ** ** Unclear on highlight sheet Rx $8-$40-$70 $8-$45-$95 ** Copyright Hartman Employee Benefits Inc, 2013

30 Other considerations about individual vs group health insurance Tax treatment Section 125 availability for group premium not available to individual Employer contributions to group premium deductible (and excludable) not available to individual Wage offset if eliminating a benefit defraying savings Employee perspective (driven, possibly, but rate of eligibility for APTC and CSS) Note lack of APTC for higher compensated AND, possibly, lower... Comparability of benefits Potential penalties if ALE and not offering coverage

31 Small business tax credit What are the rules? 25 or fewer FTE and $50,000 or less average wage (note SHOP is 50 or fewer FTE) Self-employed are not eligible Must contribute at least 50% of cost (no need to offer contribution to PT or dependents) Tax credit eligible up to 50% (or 35% for tax exempt) though it is greatest for employers with fewer than 10 employees with wages of $25,000 or less Official determination for eligibility is administered in London, KY; Application can be submitted by mail or over the telephone SHOP marketplace (FFM) was delayed until (at least) 2015

32 Insurers providing applicable products Carrier Available? Comments CBC Yes 3 HMO and 1 PPO GHP Yes Entire small group portfolio Highmark BS Yes 2 EPO Highmark BCBS Yes 4 EPO BCNEPA Yes 2 EPO and 1 PPO HealthAmerica No United No UPMC Yes 10 EPO, 3 HMO, 4 PPO IBC Yes 35 total (PPO, HMO, EPO) - -

33 New hire waiting period Timing - Plan years beginning on (or after) Jan. 1, 2014 Focus on (90) calendar days max What we see? Change to 1st of month following (or corresponding with) 60 days Note that funding arrangement does NOT matter Advice recommended when looking to other basis (other than time elapsed) definition for eligibility

34 Quick check! Area of consideration Is my organization an Applicable Large Employer (ALE)? Is my organization in the small group or large group market? Do I have Variable Hour Employees and understand the implications for 2015? Is the small business tax credit important to me? Is my new hire waiting period compliant with ACA? Am I interested in considering a self-funded / level-funded structure? Am I interested in considering a private marketplace / defined contribution strategy for my employees? Is restricting network access to my employees a strategy I will consider to manage costs? Am I prepared to make a decision around contribution strategy changes with my next renewal? Am I confident that my organization is fulfilling compliance requirements including CMS, CHIPRA, COBRA/ MiniCOBRA? Am I interested in considering a policy to drop coverage?

35 Self funded strategies Carriers developing self funded models down from traditional (100+) market Rationale includes underwriting considerations and differences in taxes/fees New, downmarket models are level funded with opportunity for reimbursement based upon claims activity/settlement

36 Self-funded strategies rationale for consideration... Area Small group insured Small group self funded Employer size 2-50 approx Requires all EHB? Yes No (but if offered, same rules) Premium structure Age banded Composite Tax/Fee benefit? No (but embedded) Yes (to some extent) Medical underwriting? No Yes

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38 Self-funded plan considerations Area Traditional self funded Level funded ASO Vendors Cash flow volatility TPA, Network, Reinsurance unbundled Weekly or monthly per claims activity Often bundled None (level funded by enrollment) Year end settlement Pay as you go After run out ( days) Key stop loss terms Contract basis, spec, agg Same Beware of 12/12 contract sales? Yes! Yes!

39 Stop loss premium Admin. Attach. Max Attach. Admin Stop loss premium Copyright Hartman Employee Benefits Inc, 2013

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41 Level funded strategies Carrier Name Market size Comments CBC Highmark BS Highmark BCBS HealthAmerica Level Funded ASO Small group ASO Coventry Stable Funding o 20+enrolled up to 100 o o o o Average # of employees for 2013 is used to determine group size. Quotes considered on a case by case basis for groups with enrolled Level funded only Groups requires UW approval after financial D&B report is reviewed Average # of employees for 2013 is used to o 25+enrolled up to 99 o Average # of employees for 2013 is used to determine group size. o o o o o o Standard medical/rx options available for the under 100 market Groups 20-50, rates will be illustrative group subject to MedPoint review to finalize rates Must use HM admin. and stop loss Level funded option also available in the 51+ market Level Funded ASO with standard benefits options. Rating based on medical UW with possible rebates based on performance Geisinger TBD o Small Group ASO is being reviewed, additional details forthcoming. o Varies by region, Quotes considered on case by case basis BCNEPA Small Group ASO o o Group size preferred 25+ enrolled Definition TBD o o Quotes Considered on case by case basis Agg./Spec. stop-loss contracts available

42 Private marketplace A Marketplace is where an individual or employer can buy insurance online Can include public (e.g. FFM) or private (insurer vs agency based) Cost sharing subsidy and APTC for individual ONLY available through the Federally-Facilitated Marketplace (FFM) All plans offered in the individual and small group markets will offer Essential Health Benefits (EHB) Motivation for private marketplace: Defined Contribution

43 Private Market vs Federal Marketplace Options Private Market Federal Marketplace Cost sharing subsidy and APTC No Yes Government verification of personal information No Yes Essential health benefits Yes Yes Deny insurance coverage for pre-existing conditions No No Cover preventive services with no cost-sharing Yes Yes Apply online Yes, though private website Yes, through the FFM website Small employers can purchase Yes Yes Can apply now Yes No Compare benefits with Summary of Benefits and Coverage (SBC) Yes Yes

44 Carrier based solutions Carrier CBC Highmark BS Highmark BCBS HealthAmerica Name mycoverageselector mybenefits Market size 20+ enrolled 10+ enrolled Comments Includes 14 medical, 3 rx, 3 dental, 2 vision Includes 4 med, 4 dent, 3 vis, and accident/critical illness products Geisinger No platform as of 1/28/14 BCNEPA Other private solutions include Liazon and others

45 Restricted network access Insurers previously competed based upon risk selection; Now, they are competing based upon underlying cost (and steerage to preferred providers) and member satisfaction with choice Thus, insurers may offer plans that use a combination of different network designs Insurers may offer plans that include different levels of in-network benefits

46 Restricted network access Insurers may offer plans that include different levels of in-network benefits Types of provider networks General Provider Network Limited Provider Network Regional Provider Network Tiered Provider Network Offers the widest most extensive choice of providers Offers a network that is smaller than the insurer s general network Offers a network that is limited to a specific geographic region Assign s providers to different levels (tiers) which typically ties to a different benefit level per tier Example: BCBS PPO (includes national BlueCard network) Example: BCNEPA EPO (13 county territory providers) Example: GHP medical home model (w/ Proven Health Navigator) Example: Highmark CommunityBlue PPO

47 Compliance areas Pre-ACA Medicare Part D and CMS disclosure COBRA and PA Mini- COBRA Other notices (incl. CHIPRA) Nondiscrimination testing ERISA req s incl. SPD, 5500 filing Note HRA detail... Wellness programming ACA created disclosures Notice of FFM Summary of Benefits and Coverage (and Uniform Glossary) Notice of Grandfathered status W-2 reporting [for larger groups] 6055 and 6066 [details pending] PCORI fee filing if selffunded Other recent updates DOMA ruling

48 Quick check! Area of consideration Is my organization an Applicable Large Employer (ALE)? Is my organization in the small group or large group market? Do I have Variable Hour Employees and understand the implications for 2015? Is the small business tax credit important to me? Is my new hire waiting period compliant with ACA? Am I interested in considering a self-funded / level-funded structure? Am I interested in considering a private marketplace / defined contribution strategy for my employees? Is restricting network access to my employees a strategy I will consider to manage costs? Am I prepared to make a decision around contribution strategy changes with my next renewal? Am I confident that my organization is fulfilling compliance requirements including CMS, CHIPRA, COBRA/Mini COBRA? Am I interested in considering a policy to drop coverage?

49 Additional comments

50 ACA 1.0 => 1.1 => 2.0 =>?? Medicaid... ACA gun to the head metaphor, State choice, no expansion announced, Arkansas announcement, Tom Corbett proposal to CMS... what happens next? FFM... tweaks (improvements) to existing structure, determinations by States in the future, private (WBE) alternatives... what happens next? What happens when costs don t approach CPI plus x hurdle? Does The Bitter Pill type message refocus attention on hospitals? Finances... given the structure of the enrollment and underwriting rules, is the risk pool ok after 2014? And from a cost perspective, how is the health of the financing structure (i.e. taxes and fees)? So, going from 1.1 => 2.0, how will we pay for it?

51 Strategic HR implications Incentives review expansion of HIPAAallowed disparity for wellness programming under PPACA, as well as new strategies with HRA s, as well as contributions (given possible age banding) to find best fit with practice values and goals... keeping in mind Philosophically where does providing employee benefits fit, especially with consideration for alternative outlets (e.g. FFM) and given add l alternative of change to wage rates, not to mention ALE penalities for not providing coverage in and nondiscrim... Architecture are there opportunities to match the benefits structure more in line with practice values following Defined Contribution approach (i.e. Private Marketplace) or not? Further, are there opportunities to better manage cost by way of self funded in a new, predictable way due to market developments?

52 Questions

53 Thank you!