ESB Copyright 2013 American Fidelity Assurance Company ESB Copyright 2013 American Fidelity Assurance Company

Transcription

1 HEALTH CARE REFORM What You Need to Do from Now to 2015 This is only a brief summary that reflects our current understanding of select provisions of the law, often in the absence of regulations. All of the interpretations contained herein are subject to change as the appropriate agencies publish additional guidance. AGENDA SETTING THE STAGE Summarize the key provisions affecting plan sponsors Provide action steps for each Review long-term plan sponsorship options 1,000 pages of legislation drafted and enacted very quickly Rules are still being developed Federal agency guidance Role of states 2014 Cornerstone year of Health Care Reform State Exchanges Individual mandate Federal premium tax credit to purchase Exchange coverage Employer responsibility

2 STATE EXCHANGES INDIVIDUAL MANDATE States must build Exchanges or federal government will provide default Bronze, silver, gold, and platinum options Coverage will be guaranteed issue, no preexisting condition limits, no individual medical underwriting Must obtain minimum essential coverage or pay a tax, beginning January 1, 2014 Penalty is capped at average cost of bronze level Exchange coverage Exceptions if coverage is unaffordable, for low income taxpayers, and short coverage gaps FEDERAL PREMIUM TAX CREDIT May use to purchase Exchange coverage Available to certain individuals with household income up to 400% FPL Credit not available if eligible for: Adequate/affordable employer coverage Government provided coverage Penalty may apply if: No coverage offered to full time employees and dependents Coverage is unaffordable or inadequate Employee enrolls in Exchange coverage and qualifies for a federal premium tax credit Effective January 1, 2015 Transitional relief for non-calendar year plans Large employer : 50+ full time equivalents Members of a controlled group treated as single entity to determine large employer Full-time employees: 30+ hours/week or 130+ hours/month Includes non work time for which pay is due

3 Variable hour and seasonal employees: Optional measurement and stability periods Look back over measurement period to calculate actual hours worked Measurement period may be 3 12 months Stability period must be as long as measurement and not less than 6 months Special rules for educational institutions: Two methods for determining full time employees Use measurement period excluding employment breaks Treat employee as credited with hours for employment breaks Penalty for failing to offer coverage : 1/12th x $2,000 per month/per employee (after 1st 30 employees) Must offer to substantially all full time employees Includes children to age 26; does not include spouses Penalty if available coverage is inadequate or unaffordable: 1/12th x $3,000 per month (per employee who qualifies for a federal premium tax credit) Inadequate: plan pays <60% allowable costs Unaffordable: employee pays >9.5% household income for employee only coverage Affordability examples: Coverage is affordable Coverage is unaffordable Enroll in coverage anyway Enroll in spouse s plan Enroll in Exchange Mechanics: Notice Timing Method of payment

4 SUMMARY OF BENEFITS AND COVERAGE Questions? Plan sponsor must provide a Summary of Benefits and Coverage (SBC) Effective for annual enrollments/plan years beginning on or after September 23, 2012 Distribute with annual enrollment materials, following special enrollment events, and upon request SUMMARY OF BENEFITS AND COVERAGE (CONT D Government provided template Fully insured get SBC from insurer Self-funded employer fills in template In either case, the employer is responsible Must also provide Uniform Glossary upon request HEALTH FSA CONTRIBUTION LIMIT STAND-ALONE HRAS Employee contributions are limited to $2,500 Effective plan years beginning on or after January 1, 2013 Applies per individual Must amend plan by December 31, 2014 Stand-alone HRAs violate prohibitions on annual and lifetime limits Employees must elect HRA and other coverage (not just have the option to elect) HRAs may not be used to pay for individual market insurance coverage

5 MEDICARE TAX MEDICARE TAX Two components effective January 1, 2013 Additional 0.9% Medicare tax on wages New 3.8% Medicare contribution tax on unearned income Generally applies to income over $200,000 for individuals, $250,000 for couples Employers must withhold 0.9% tax once employee s wages exceed $200,000 PCORI FEE PCORI FEE Plan sponsors and insurers must pay a fee to help fund comparative effectiveness research Fee must be paid by the following July 31 st File tax form 720 First forms due July 31, 2013 Amount of the fee is based on the average number of covered lives $1 per individual for 1 st plan year ending after Sept. 30, 2012 $2 per individual for the next year Increases in subsequent years EMPLOYEE EXCHANGE NOTICE EMPLOYEE EXCHANGE NOTICE Employers subject to FLSA must provide information about the state Exchanges One or more employees Generally firms with $500,000+ annual business Plus hospitals, schools, and government agencies Internet compliance tool is available to determine applicability Notice must be provided: To all current employees (including full time and part time) by October 1, 2013 To all subsequent new hires in 2013, at the time of hire and for new hires in 2014 within 14 days

6 EMPLOYEE EXCHANGE NOTICE 2014 MANDATES May be paper or electronic (if satisfy DOL safe harbor rules) Two model notices were provided Model COBRA notice was also updated All plans must comply Waiting periods Annual limit prohibition Preexisting condition limits Coverage for adult children 2014 MANDATES RESTRICTIONS ON RESCISSIONS Additional requirements for non-grandfathered plans Essential health benefits (insured small group plans) Clinical trials Limits on deductibles (insured small group plans) Limits on out-of-pocket maximums Provider nondiscrimination Limited to fraud or intentional misrepresentation of material fact Plan document must allow and must provide notice May want to consider dependent verification reviews NONDISCRIMINATION EXCHANGE REINSURANCE FEE Fully-insured, non-grandfathered plans may not discriminate in favor of highly compensated individuals Self-funded plans are subject to similar rules, regardless of grandfathered status Effective for plan years beginning on/after 9/23/2010; IRS enforcement is delayed Insurers and plan sponsors of group health plans must pay fee to HHS Applies for 3 years beginning 2014 HHS estimate for 2014: $63/covered life

7 REPORTING Originally January 1, 2014, one year delay Employers with 50+ full-time employees must report extensive details about the employer s health coverage and workforce to the IRS Employers are also required to submit the same information to each employee plus contact information MINIMUM ESSENTIAL COVERAGE REPORTING Future regulations are expected to establish the form and content First reports will be due January 2016 Employers must collection information beginning January 1, 2015 Must provide a written statement to each employee named in the return each year AUTOMATIC ENROLLMENT Plan sponsors with 200+ full-time employees must automatically enroll newly eligible fulltime employees Must provide notice Employees may opt out Effective date to be established by regulations CADILLAC TAX Effective 2018: 40% non-deductible excise tax Imposed on aggregate value of health coverage that exceeds threshold amounts Applies for specified health coverage CADILLAC TAX General thresholds: $10,200 individual coverage $27,500 family coverage Indexed for inflation CPI-U: 3-4% per year Medical inflation: 7-10% per year

8 ACTION PLAN ACTION PLAN Assess the impact of the Free Rider Penalty Obtain/complete/distribute SBCs Amend Health FSA if necessary Consider status of stand-alone HRAs and possible revision Prepare to withhold additional Medicare tax Prepare to pay PCORI fee Send Exchange notices Grandfathered plans Reassess eligibility and value Gather documentation Plans losing grandfathered status Adopt additional plan design mandates Revise employee communication ACTION PLAN WHAT DO YOU DO NOW? Comply with 2014 mandates Budget for Exchange Reinsurance Fee Watch for guidance May want to begin considering costmanagement strategies or changes in health coverage 1. Understand your responsibilities 2. Assess whether costs are sustainable 3. Understand your choices 4. Design an implementation strategy 5. Implement your plan CHOICE SPECTRUM HEALTH CARE REFORM MADE EASY AFAS is ready to assist: HCReducation.com VIP s and monthly webinars Health Care Reform consulting (packages, retainer arrangements, and custom solutions)

9 HEALTH CARE REFORM MADE EASY AFAS is ready to assist (cont'd): Time management software to assist with the Free Rider Penalty Variable hour employee billing Notice compliance support and fulfillment Resources to help communicate plan changes to employees Thank you! This is only a brief summary that reflects our current understanding of select provisions of the law, often in the absence of regulations. All of the interpretations contained herein are subject to change as the appropriate agencies publish additional guidance.