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1 The Western Pallet Association Click to edit Master title style Demystifying the Affordable Care Act January 19, 2015 Leanne Seeger, Vice President HUB International Employee Benefits

2 Today s Agenda How we got here What s happened since 2010 Employer Requirements for Employer Mandate Individual Mandate & Exchanges Strategies for Employers 2

3 Click to edit Master title style How We Got Here A Look Back

4 How Did We Get here? Premiums jumping 15-20% year vs Inflation at 2-3% High Hospital /MDs Fees - 17% of US Economy Longevity/Morbidity stats show USA falling behind Average Cost of $10,000/yr (2x Other Countries ) 4

5 How Did We Get here? Many denied coverage Individual policies being retro-cancelled Medical bills - #1 cause of Bankruptcy Insurance competition in many states lacking 15% of US Population not covered High Cost Emergency Rooms Smaller employers dropping their group coverage 5

6 Click to edit Master title style What s happened since The Affordable Care Act was passed in 2010 A Look Back

7 What s Happened Since 2010? The Good Preventive and Prenatal care now Dependent Children covered until age 26 Unlimited Lifetime Maximums in all Policies Caps on Deductibles and Out of Pocket maximums Copays and Coinsurance Included in Out of Pocket maximums Contraceptive coverage mandated Small Employer Tax Credits 7

8 What s Happened Since 2010? The Good Insurance Company Maximum Expense Rules Apply Clinical Trail coverage included Expansion of Medicare policies and Rx Coverage Creation of Private Purchasing Exchanges No Pre X clauses allowed for anyone Formation of Accountable Care Organizations 8

9 What s Happened Since 2010? The Bad 9 Individual Mandate buy insurance or pay taxes Employer Mandates with penalties starting 2015 Onerous employer reporting obligation Form W2 reporting requirement for larger employers with 250+ W2 s Pay or play requires extensive workforce analysis New 8 page Government version of Summary of Benefits & Coverage(aka SBC s) Exchange Notifications to be sent to all Employees at the employers cost ERISA Wrap - distribution to all employees at the employers cost

10 What s Happened since 2010? The Bad $2,500 limit on Flexible Spending Accounts Insurance Company and Medical Device Taxes Increase of Medicare Taxes of.9% (major funding vehicle) - $200,000 Individual / $250,000 Family) New fees Patient Outcomes (PCORI) and Reinsurance (TRP) - will result in higher premiums Premiums still increasing 10

11 What s Happened Since 2010? The Ugly Original Budget - 1 Trillion $; now 3 Trillion $$$ 11

12 What s Happened since 2010? The Ugly Enforced by DOL, HHS, IRS expanded 2700 pages of statute to 300,000 pages in regulations and other guidance Initial 5 Billion $ Fund for Uninsured now Exhausted 20,000 + new Government agents hired Increase in Dept of Labor Audits 12

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14 Click to edit Master title style Employer Health Reform Requirements for A Look Ahead

15 In Force Now Maximum Employee contributions cannot exceed 9.56% of W-2 income Must offer benefits to full time employees defined as 30 hours Part time Full Time Variable Hour Seasonal Ongoing workforce analysis Compliance & ERISA Plan Design 15

16 Reporting Requirements Each Employer of 50 + FTEs must Report Monthly on health coverage status of each eligible employee/dependent: Name / Address / SSN All covered individuals ( i.e. family members) Detail of coverage + other data Describe individual s coverage (or not) and premiums for feds Due in January 2016 (for coverage provided in 2015) 16

17 Taxes and Fees For Group Plans Comparative Effectiveness Research fees will be assessed ($1 per covered life for first year) Generally paid using IRS Form 720 starting in July 2013 Carrier doing for insured plans Fees collected for Plan Years 2012 through 2018 Reinsurance fees announced for 2014 $63 per covered life regardless of plan funding Carrier doing for insured plans Three year program Health Insurance Industry Fee (Insured plans only) Law imposes a tax on insurers based on their market share, which is used to allocate the dollar amount Congress stated Estimates % of premium (100 ees = $25,000) 17

18 Click to edit Master title style Employer Mandate ( A Closer Look) What the Employer Mandate means to your organization

19 The Employer Pay Or Play Mandate Effective 1/1/15 if 100 or more employees Effective 1/1/16 if 50 or more employees Employees of related companies must all be counted control group rules apply Moral of the story you may have more ACA Full Time Employees than you think and may be covered by the Mandate 19

20 Employer Pay Or Play Mandate The Penalties Failure to comply: 2 potential penalties $2,000 penalty $3,000 penalty Non-deductible excise taxes 20

21 Click to edit Master title style Individual Mandate Exchanges & Penalties Obamacare s Obligations on Individuals

22 Individual Mandate Individual mandate started in 2014 Requires individuals hold health coverage or pay a penalty assessed as taxes at greater of: $95 ( family) or 1.0% of adjusted income in 2014 $325 ( family) or 2.0% of adjusted income in 2015 $695 ( 2085 family) or 2.5% of adjusted income in 2016 Children fines = 50% of Adult fines Must show evidence of coverage Can expect 2017 tax to increase 22

23 Connecting The Dots How Financial Assistance Works Number of People in Household If Your Income is LESS THAN If Your Income is BETWEEN 1 $16106 $17,505 - $46,680 2 $21,709 $23,595 - $62,920 3 $27,312 $26,685 - $79,160 4 $32,914 $35,775 - $95,400 5 $38,517 $41,865 - $111,640 You may qualify for: Medi-Cal Premium Assistance Through Covered California 23

24 Confused? California Covered CA Example Benefits Metal Tiers Plan Designs on and off the Exchange Choices vary by region not all plans are available in all areas Costs varies by region Network differences EPO PPO HMO Reporting Requirements Tax forms to submit in 2015 for 2014: Form 1095-A and Form

25 Click to edit Master title style Strategies for Employers Wellness & Compliance Wellness and its Impact on Cost

26 Wellness Facts Wellness Programs return on average a 3:1 Return Health claims are about 1500 yr lower for Wellness participants Lost productivity costs are 2 x higher than Medical/RX costs Big Gains for Employers with effective wellness programs: 47% lower attrition 20% more revenue 16% more Market value 50% more shareholder returns 50% reduction in job related injuries 26

27 27 Wellness Opportunity For 2015 Law increases wellness incentives from 20% to 30% of total premium (employer and employee shares) 30% of the total premium can be shifted to participants: who don t participate in screening, who fail biometric screening and who either» don t engage in the wellness program or» fail to improve their health via the program Tobacco Surcharge New guidance enables 50% cost shift for tobacco use Separate from the 9.56% Affordability Rule, so you can layer over the lowest employee premium for basic plan Use to shift more premium to employees & to deter enrollment Can be imposed on family members Wellness regulations / HIPAA nondiscrimination continue to apply

28 Top 12 Employer Strategies Counting hours Watch employee hours Variable hour tracking Leverage Wellness Measure employee premiums (9.56%) Rule Controlled Group Offer basic plan with buy up option Consider partial selffunding to avoid taxes Avoid 2018 Cadillac tax Use a flat dollar defined approach Consider no spousal coverage Watch Dept of Labor audits 28

29 Click to edit Master title style Questions?

30 Thank You! Click to edit Master title style