6/20/13 Presented By: Mike Marchini, Beckie Lewis, & Liz Logsdon or

Transcription

1 CBIZ PRESENTS Affordable Care Act: The Impact on Your Business & Your Employees 6/20/13 Presented By: Mike Marchini, Beckie Lewis, & Liz Logsdon or

2 Determine Which PPACA Provisions Apply to You and Your Employees A General Overview Timeline of Effective Dates The 2014 Centerpiece Employer Shared Responsibility -Small Employers -Large Employers Individual Mandate Exchanges Health Insurance in the New Marketplace Employer Planning Considerations Open Dialogue and Questions

3 This presentation is not intended to be legal, accounting, or other professional advice. The information contained herein is not intended to replace or substitute for accounting or other professional advice. The information contained herein is provided as general guidance and may be affected by changes in law or regulation. Attorneys or tax advisors must be consulted for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein. As required by US Treasury rules, we inform you that any US federal tax advice contained herein is not intended or written to be used and cannot be used by any person for the purpose of avoiding any penalties that may be imposed by the IRS.

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5 For Better or Worse: Increasing Access Under PPACA Changes in Insured Populations (McKinley & Co. MPACT Study) US membership (millions) Individual Small Group Uninsured Medicaid Medicare Large Group Risk ASO Feds Military 2012: : Individual Market is expected to grow by $19M lives due to financial subsidies, penalties and employer opt-outs. Small Group market is projected to decline due to employer opt-outs. Uninsured will decline as subsidies and penalties drive people to buy insurance. Medicaid eligibility will increase.

6 The Whole View Creates government regulated Individual and Small Group health insurance marketplaces Institutes penalties for employers who fail to offer affordable comprehensive coverage Levies taxes and fees against health insurers and other groups to fund subsidies and risk management mechanisms Prohibits health plans from denying coverage or rating applicants based on their health status! Levels the playing field between health plans and mitigates the impact of guaranteed issue and pricing uncertainty in the short term Institutes penalties for failing to purchase health insurance Lowers the cost of coverage for the low and middle income populations in the Individual market. Small business tax credits expanded.! "# $$ 6

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8 " #$ % Uniform Summary of Benefits & Coverage (SBC) - provided to all participants; effective first open enrollment period after 9/23/2012. No penalty in year 1 if working in good faith to comply. Notice of Material Plan Changes - 60 days advance notice of material plan changes made mid-year; effective for plan years beginning on or after 9/23/2012 Quality of Care Reporting to HHS - target due date 3/23/2012; guidance has not been provided W-2s Starting in 2012 must include aggregate cost of health coverage (both employer and employee share). Box 12 Code DD. Required for employers with 250+ W-2s Note: Insured group health plans must comply with the nondiscrimination rules (IRC 105 (h)) currently applicable to self-funded plans. Plans cannot discriminate in favor of highly compensated individuals as to the eligibility and benefits. This provision is not applicable to grandfathered plans. The IRS has delayed the effective date of this provision-no penalties imposed until after implementing regulations are issued %

9 " #$ % & Uniform Summary of Benefits & Coverage (SBC) - provided to all participants; effective first open enrollment period after 9/23/2012. No penalty in year 1 if working in good faith to comply. Distribute at open enrollment, to new hires, at change of family status, and within 7 days of request. Notice of Material Plan Changes - 60 days advance notice of material plan changes made mid-year; effective for plan years beginning on or after 9/23/2012 W-2s Starting in 2012 must include aggregate cost of health coverage (both employer and employee share). Box 12 Code DD. Women s Preventive Care without Cost -- effective for plan years on or after 8/1/12 for non-grandfathered plans (n/a for grandfathered plans). Flexible Spending Account Maximum of $2,500 - applicable to employee contributions; does not apply to dependent care flexible spending accounts. &

10 " #$ % & Patient-Centered Outcome Research Fee (PCOR) or Comparative Effectiveness Research Fee (CERF) For plan years ending after 9/30/12, $1 per member (includes dependents) per year, next year $2 then indexed. IRS Excise Tax Form 720. Fully Insured carriers will handle Self-Funded client responsibility. IRS Form 720 due 7/31 annually Plans starting 11/1/11, 12/1/11, or 1/1/12 due 7/31/13. Notice of Availability of Health Exchange Employers to inform employees prior to October 1, 2013 about exchanges available in their state, services they provide and how to obtain more information. Temporary Model Notice has been issued. Quality of Care Report No implementation guidance yet. Health plans report to HHS details about benefit coverage, provider reimbursements, improvements in health outcomes, wellness features, etc. 10

11 The 2014 Centerpiece of the Affordable Care Act Pay or Play 11

12 How Are Employers Defined and Affected? Small Group Employers averaging less than 50 full time employees, including full-time equivalents (FTE). Large Group Employers averaging at least 50 full time employees, including full-time equivalents (FTE). Full time employees include: Common law employees that work (or are paid) on average at least 30 hours per week A percentage of employees who are not full time employees (add the hours of all employees not full time. Then divide by 30 hrs/wk to determine the number of FTE). Controlled groups of companies, Partnerships, or Affiliated Service Groups must be aggregated together to determine if they are Large Employers. 12

13 Employer Size Example Full time is 30 hours/week 40 FTE: 30 hours/week = 1 FTE Example: 20 employees working 15 hours/week +10 Employer Shared Responsibility; Large Employer Transition Relief choose any 6 consecutive months in 2013 for this calculation Seasonality exception: >50 full-time employees (including seasonal) for 120 days or less during the calendar year. 13

14 Small Group Impact Must provide Minimum Essential Coverage (MEC): Required coverage categories; defined at state level Hospitalization Ambulatory Services Emergency Services Laboratory Services Maternity & Newborn Care Mental Health & Substance Abuse Prescription Drug Rehabilitative Services & Devices Preventive & Wellness Services and Chronic Disease Management Pediatric Services (including oral and vision care) *Definition of Small Group will be defined at the State level; in most cases it will be 2-50 eligible employees (including in Maryland) but could be up to 100 eligible employees in some states. 14

15 Small Business - Accounting Small Business Health Care Credit (after December 31, 2009) A. Less than 25 full-time equivalent employees (30 hours a week) B. Average wage under $50,000 C. Most cover at least 50% of healthcare coverage for some of your employees D. Credit (2014) 1. 50% of premium costs 2. Phased-out for wages between $25,000 - $50,000 Note: Special credit for employees with 10 or fewer employees with average wages of under $20,000. This credit is 100% of premium costs. Phased-out between employees.

16 New Employees An employer may impose a waiting period of no longer than 90 days before a full-time employee (or dependent) who is otherwise eligible for the employer's group health plan may enroll in coverage. Note: 1 st of the month following 90 days does not meet the requirement! 16

17 Shared Responsibility Payment General Rule Large employers that- Have at least one employee that goes to the Marketplace/Exchange and qualifies for a subsidy; AND either Does not offer coverage to its employees OR does not offer minimum essential coverage (MEC) to at least 95% of its full time employees, Offers MEC to at least 95% its full time employees, but it is unaffordable (payroll deduction), or Offers MEC to at least 95% its full time employees through a plan that does not provide minimum value (plan design). 17

18 Four Basic Triggers Waiting Period Waiting period cannot be more than 90 days for employees to elect health coverage Minimum Essential Coverage (MEC) State defined Services & Supplies to be Covered Minimum Value - Plan design must pay at least 60% of the total cost of covered services. (Determine using minimum value calculator, actuary, or design based safe harbor) Affordable Coverage Employee contribution is less than 9.5% of Income for Single Coverage (Determine using Box 1 of employee s W2, hourly rate of pay, or Federal Poverty Level) 18

19 The Four Categories Of Employment Full Time Hired to work 30+ hours per week. Benefit eligible Part Time - Hired to work <30 hours per week Not required to be benefit eligible Seasonal Hired for less than 120 days in a year Not required to be benefit eligible Note: Employers are permitted to use a reasonable, good faith interpretation of the term seasonal employee for purposes of these rules for 2014 Variable Hours unknown at time of hire. May be benefit eligible 19

20 Example: Timeframe for Determining 30+ Hours for Variable Employees Year 1 5/1/ /31/ /31/2013 First Measurement (Look-Back) Period (6 months used in this example. Can be 3-12 months) First Administrative Period (61 days in this example. Can be up to 90 days) Year 2 (repeat for future years) 1/1/ /31/2014 First/Standard Stability Period (plan year used in this example. Must be at least 6 months and no shorter than initial measurement period) 11/1/ /31/ /31/2014 Second/Standard Measurement Period (12 months) Second/Standard Administrative Period (61 days)

21 Large Group Shared Responsibility: Calculating the Penalty Minimal essential coverage not offered to at least 95% of full time employees and at least one employee goes to Exchange and receives premium tax credit $2,000 per year per FTE (less first 30) Must be offered to employee plus dependents beginning in 2014 and beyond (Dependent does not include spouse of an employee) Coverage not minimum value (60% actuarial value) or not affordable (i.e., employee s premium exceeds 9.5% of household income) and at least one employee goes to Exchange and receives premium tax credit Lesser of $3,000 per year for each FTE using Exchange and qualifying for premium credit, or $2,000 per year per FTE (less first 30) Penalties are indexed on the cost of health care Remember that any penalty is NOT tax deductible. Transitional Relief for Non-Calendar Year Plans: If, for example, plan year runs 7/1 to 6/30, the plan will not risk being subject to penalties until 1 st day of the plan year beginning 2014 (i.e. 7/1 in this example) assuming coverage offered to minimum 1/3 of employee population (FT & PT) or plan covered minimum 1/4 of employee population as of 12/27/12. 21

22 Calculating the Penalty Example FT Employees; No Coverage or No MEC offered to at least 95% of employees 1 Employee goes to exchange and receives a subsidy Penalty $2,000 per employee, minus the first 30 (100 30) = 70 x $2,000 = $140,000 22

23 Calculating the Penalty Example FT Employees; 20 employees go to exchange and receive a subsidy if you do offer coverage but it is deemed not affordable or does not meet minimum value: Penalty is the lesser of: (100 30) = 70 x $2,000 = $140,000 OR 20 x $3,000 = $60,000 23

24 Employer Penalties for those with 50+ Employees or FTEs: -./ 0 &* 1 2 $$! $$ 2 - '()*** $ +* # $$, $ $ 4 $5 '+)*** '()*** $ +* # $$, $ $ 24

25 Health Care Reform 2014 Waiting Period cannot be more than 90 days for employees to elect health coverage. Employer Health Insurance Reporting: Employers will have to provide a report to the IRS as to the access, eligibility, waiting periods, costs, number of covered employees and other coverage detail. No guidance issued yet. Elimination of Annual or Lifetime Limits: Plans can no longer impose restricted annual limits on essential benefits, including grandfathered plans. Ban on Pre-Existing Conditions: Applies to everyone in 2014 (not just dependent children), including grandfathered plans. Dependents to Age 26 even if other employment-based coverage is available. Applies to grandfathered plans in 2014 (already applies to non-grandfathered plans). State, Federal, and Partnership Exchanges are scheduled to open. Tax applies for the uninsured (individual mandate). 25

26 Health Care Reform 2014 Transitional Reinsurance Program Tax. For 2014, the tax is $63 per member per year. The fee also applies for 2015 and 2016 at lesser amounts, to be determined. Self-funded plans are responsible for payment of the fee (report to HHS the number of covered lives by 11/15/14, HHS to have until 12/15/14 to notify employer of the amount which must then be paid within 30 days). Carriers and TPAs may report and pay the fee on behalf of plans annually. Annual Fee non-tax-deductible fee applicable to health insurance companies to fund health insurance exchange subsidies. For 2014, a fee of $8 billion will be charged on a pro-rated basis based on 2013 market share by premium revenue. The amount charged increases to $14.3 billion by Some insurers are estimating that the fee will be approximately 2%-3% of fully insured premium. Will most likely not apply to self-funded plans. Value of Wellness Rewards can increase to 30% of the cost of coverage. Clinical Trials - plan must cover cost of routine tests associated with clinical trials. New COBRA Model Election Notice to be used immediately. 26

27 Health Care Reform Upcoming Requirements 2015 Elimination of HIPAA Certificates of Coverage 2017 Large employers (100+) can purchase coverage through the exchanges 2018 Cadillac tax, 40% excise tax on the value of high-cost health plans ($10,200 single; $27,500 family).

28 Health Insurance in the New Insurance Marketplace 28

29 Increasing Access Under PPACA Changes in Insured Populations (McKinley & Co. MPACT Study) US membership (millions) Individual Small Group Uninsured Medicaid Medicare Large Group Risk ASO Feds Military 2012: : Individual Market is expected to grow by $19M lives due to financial subsidies, penalties and employer opt-outs. Small Group market is projected to decline due to employer opt-outs. Uninsured will decline as subsidies and penalties drive people to buy insurance. Medicaid eligibility will increase.

30 ' Individuals are required to maintain minimum essential health coverage for themselves and their dependents, or pay a tax penalty. Penalty for noncompliance greater of 1% of family income or $95 per adult (+ $47.50 per child) per year and escalating to greater of 2.5% of family income or to $695 per year in 2016 Individuals will only be able to deduct unreimbursed medical expenses to the extent exceeds 10% of AGI 30

31 Health Care Reform Changes Access Points Key Health Insurance Access Points for most individuals beginning in 2014 & Beyond Employer s Plan Medicaid Medicare The Exchange Marketplace Individual - Federal or State SHOP (Small Group) Federal or State Private 31

32 Health Insurance Marketplace or Exchanges Flavors of Exchanges State-Based, Federal Based or State/Federal Partnership 17 State-based, 27 Federal Based, 7 Partnership Status of Area States MD - State based PA - Federal based WV - Federal-state partnership VA Federal base DC State based 32

33 Things to know about The Public Exchange Products Value (Richness of Benefits) are designed using Olympic Medals: Platinum Plan (Actuarial Value of 90%) Gold Plan (Actuarial Value of 80%) Silver Plan (Actuarial Value of 70%) Bronze Plan (Actuarial Value of 60%) Actuarial Value Ex: Platinum Plan on average covers 90% of all essential benefit expenses, Gold 80%, etc. Premium Rates vary by: Plan, Area, Family Size and Age (NOT GENDER and NOT HEALTH STATUS!) Note: Only health factor is tobacco use (1.5:1 limit) Premium Rates for the Old cannot be more than 3X s that of the Young. If Young Rate is $100, Max Old Rate $300

34 PPACA Subsidy Eligibility Assuming that an employer plan provides minimum value coverage, then an employee s income and the cost of coverage will determine whether or not that employee is eligible for a PPACA subsidy. Employee Eligibility for PPACA Subsidies Employee Premium Contribution as a % of W-2 Wages 0.0% 9.5% 9.5%+ 400%+ Not Eligible for Subsidy Federal Poverty Level 138%* - 400% Not Eligible for Subsidy Subsidy Eligible 0 138%* Medicaid Eligible Not Eligible for PPACA Subsidy An employer would be subject to a penalty only if employees with annual incomes between 138% (or 100%) and 400% of FPL are charged more than 9.5% of their income for single coverage in the lowest cost plan, and if they subsequently receive their coverage and a subsidy through an exchange. 34

35 2012 Federal Poverty Level Chart ()*+", Household size 100% 138% 150% 200% 300% 400% 1 $ 11,170 $ 15,415 $ 16,755 $ 22,340 $ 33,510 $ 44,680 2 $ 15,130 $ 20,879 $ 22,695 $ 30,260 $ 45,390 $ 60,520 3 $ 19,090 $ 26,344 $ 28,635 $ 38,180 $ 57,270 $ 76,360 4 $ 23,050 $ 31,809 $ 34,575 $ 46,100 $ 69,150 $ 92,200 5 $ 27,010 $ 37,274 $ 40,515 $ 54,020 $ 81,030 $ 108,040 6 $ 30,970 $ 42,739 $ 46,455 $ 61,940 $ 92,910 $ 123,880 7 $ 34,930 $ 48,203 $ 52,395 $ 69,860 $ 104,790 $ 139,720 8 $ 38,890 $ 53,668 $ 58,335 $ 77,780 $ 116,670 $ 155,560

36 Employer Planning Considerations Next Steps Determine how many full time & part time employees you have to determine if you are a large or small employer in terms of healthcare reform. Add or change new hire practice to determine whether an individual is fulltime, part-time, variable or seasonal. If variable or seasonal, track hours worked. Make sure current waiting period for new employees is no greater than 90 days.

37 Next Steps (continued) Employer Mandate: Determine which employees are full-time (30+ hours per week) and make benefit eligible. Determine which employees are part-time (fewer than 30 hours per month). There s no requirement that they be benefit eligible. Determine which employees are seasonal (less than 120 days per year). There s no requirement that they be benefit eligible. Determine which employees are variable. You may have to offer them benefits to avoid a penalty. If using a measurement, administrative and stability period: Define it for new employees (initial) and define it for on-going employees (standard).

38 More Next Steps Determine which of your current plan offerings offer minimum essential coverage and meet the minimum value test. (60% actuarial value). Determine if plan is affordable. (What is the monthly cost to the employee for single coverage for your lowest premium plan option that meets minimum essential coverage? Compare against the lowest eligible employee s salary. It must be less than 9.5% to be affordable. ). If not meeting minimum value/affordability, consider: Reducing value of current plan(s) while maintaining minimum essential coverage requirement Increasing employer subsidy for employee only coverage and require greater employee contributions for dependent coverage.

39 Questions? Thank You for Your Time 39