Health Care Reform/ Plan Strategy

Transcription

1 Health Care Reform/ Plan Strategy HealthFlex Mini-Summit March 2013

2 Health Care Reform Update

3 Agenda Quick Review: ACA* Major Reforms 2014 Clarity from Regulators Recent Guidance on Key Issues More Tomorrow at Conference Forum New Regulatory Guidance Applied Examples Pay or Play Rule * ACA: Affordable Care Act (Patient Protection and Affordable Care Act, PPACA) 3

4 ACA 2014: Near-Universal Coverage Individual Mandate Individual insurance market reforms Health Insurance Exchanges Government assistance for modest income premium tax credits (PTCs) Employer Shared Responsibility Pay or play or employer mandate Expanded Medicaid Medicare 4

5 Exchanges Regulated marketplaces for individuals and small employers to obtain health insurance Individuals: Exchange plan premiums subsidized with PTC for individuals with household income* % of FPL** SHOP: Small employers (<100 employees) can adopt exchange plans as employer coverage Employer covers all full-time employees No PTCs for employees Employee choice of plans delayed until 2015 in federal exchange Small Business Health Care Tax Credit continues for small businesses in 2014 (for up to 2 years) * Household income = modified adjusted gross income (MAGI) ** FPL federal poverty level 5

6 Who Qualifies for PTCs? Individuals who are NOT: Incarcerated Covered by Medicare or Medicaid Covered by other government coverage: CHIP, TRICARE, VA, etc. Offered affordable employer plan with minimum value Enrolled in employer plan (even if not affordable ) Household income > 400% FPL Household income < 100% FPL Married, filing separately 6

7 PTC Eligibility Requirements Two main requirements (both required to be PTC-eligible ) Household income* Between 100% and 400% of FPL Inadequate or no employer coverage No employer coverage Employer coverage is less than minimum value Employer coverage is not affordable to employee * Household income is considered modified adjusted gross income (MAGI); for UMC clergy, MAGI excludes housing. 7

8 PTC Eligibility: % of FPL* Household Income (MAGI) % FPL Single Family of 2 Family of 3 Family of 4 100% $11,850 $15,996 $20,142 $24, % $16,353 $22,074 $27,796 $33, % $17,775 $23,994 $30,213 $36, % $23,701 $31,992 $40,284 $48, % $29,626 $39,990 $50,355 $61, % $35,551 $47,988 $60,426 $73, % $47,401 $63,984 $80,868 $97,815 >400% >$47,401 >$63,984 >$80,868 >$97,815 * Estimated 2014 federal poverty level 8

9 UMC* Clergy and FPL 2% Medicaid* Eligible 48% Core PTC Eligible 7% Close to PTC-eligible 43% No PTC * Data based on clergy in HealthFlex only. 9

10 PTC Eligibility Minimum Value Employer plan must pay 60% of total costs of plan (actuarial determination) Employees whose employer plan does not cover minimum value can opt out and seek PTCs for exchange coverage Plan sponsors can use Minimum Value Calculator (published by IRS* and HHS**) HealthFlex and plans should easily satisfy this requirement. * IRS Internal Revenue Service ** HHS Department of Health and Human Services 10

11 PTC Eligibility Affordable Coverage Employee s required contribution (share of premium) for participant-only (single) coverage under employer plan cannot exceed 9.5% of household income* (MAGI) If employee contribution exceeds 9.5% of household income, employee can opt out; choose exchange coverage and PTC Final rule for dependent coverage not favorable Cost to cover dependents affordable as long as it does not cost employee more than 9.5% of MAGI to cover self-only * Employers often have no information about employees household income 11

12 Three Affordability Rules ACA has several differing definitions Eligibility for PTCs if employer plan is unaffordable 9.5.% of MAGI for self-only coverage Employer avoiding pay or play penalty Safe Harbor: 9.5% of W-2 wages (known to employer) for self-only coverage Individual avoiding the mandate penalty 8% of MAGI 12

13 Affordability Examples Rev. Ryan s MAGI = $47,000 Total compensation: $60,000 minus $10,000 housing exclusion $3,000 UMPIP contribution Grace UMC offers plan through annual conference Rev Ryan contributes $1,800 for self-only coverage (3.8% of MAGI) Rev Ryan has minimum essential coverage Ineligible for PTC 13

14 Affordability Examples Rev. Ryan has wife and three kids Rev. Ryan pays $6,000 family coverage Contribution = 12.8% of MAGI But, $1,800 is cost for self-only coverage is < 9.5% of MAGI (3.8%) Plan is affordable for Ryan and family (despite costing 12.8% of MAGI) Ryan, wife and kids have minimum essential coverage are ineligible for PTCs Dependents can decline employer coverage and not receive Individual Mandate penalty (>8% of MAGI) 14

15 Health Insurance Exchanges State-based, single risk pool State-based exchange (17 states) Federally-facilitated exchange (FFE) (26 states) Partnership exchange (7 states) All exchanges eligible for PTCs Only insurance companies may offer coverage HHS suggests future guidance may cover church plans Church Alliance effort allow church plans (October 31, 2011 and January 4, 2012 comment letters) Outlook less positive after Final Multi-State Plan Program Regulations rejected church plan argument 15

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17 Insurance Market Reforms Guaranteed Issue and Renewal: Insurers cannot deny or cancel coverage due to health condition, health claims or pre-existing conditions Community-rating: Premium rate variation limits Age: 3:1 (age 21 to 64) Tobacco use: 1.5:1 Family size Geography (regional cost factors) Rates for young/healthy will rise Rates for older, less healthy will fall 17

18 Exchange Plans Bronze Silver Gold Platinum Group Plans Actuarial Value 58-62% 68-72% 78-82% 88-92% 60% Covered Services Essential Health Benefits Essential Health Benefits & Preventive Services Essential Health Benefits & Preventive Services Essential Health Benefits & Preventive Services Essential Health Benefits & Preventive Services No Annual Limits No Annual Limits No Annual Limits No Annual Limits Preventive Services (Need not cover Essential Health Benefits) No Annual Limits (if covered) 2014 Deductible Maximums $2,000 Indvidual; $4,000 Family $2,000 Indvidual; $4,000 Family $2,000 Indvidual; $4,000 Family $2,000 Indvidual; $4,000 Family None 2014 Out of Pocket Maximums* $6,250 Indvidual; $12,500 Family $6,250 Indvidual; $12,500 Family $6,250 Indvidual; $12,500 Family $6,250 Indvidual; $12,500 Family $6,250 Indvidual; $12,500 Family * 2013 values (IRS will publish 2014 values soon) 18

19 Exchanges and Employers Employee enrolls in exchange and chooses a qualified health plan (QHP) Exchange verifies employer coverage if possible (in 2014 only FEHBP or SHOP) Enrolls individual based on attestation of no employer coverage or unaffordable Exchange verifies random individuals Notifies individual that it will contact employer Exchange contacts employer Employer can appeal exchange eligibility 19

20 Illustrative Exchange Premiums* $650 $1,950 * Premiums based on Mercer estimate 20

21 Value of PTCs Single Individual Single % FPL Premium as % of Income Median Income Enrollee Cost for Silver Plan (Mercer) PTC "Subsidy" 138% 3.00% $16,332 $490 94% 150% 4.00% $17,752 $710 91% 200% 6.30% $23,669 $1,491 81% 250% 8.05% $29,587 $2,382 69% 300% 9.50% $35,504 $3,373 57% 400% 9.50% $47,339 $4,497 41% >400% No Max >$47,339 $7,800 0% 21

22 Value of PTCs Family of Four Family of Four % FPL Premium as % of Income Median Income Enrollee Cost for Silver Plan (Mercer) PTC "Subsidy" 138% 3.00% $33,474 $1,004 96% 150% 4.00% $36,385 $1,455 94% 200% 6.30% $48,513 $3,056 87% 250% 8.05% $60,641 $4,882 79% 300% 9.50% $72,770 $6,913 70% 400% 9.50% $97,026 $9,217 61% >400% No Max >$97,026 $23,400 0% 22

23 HRAs in 2014 Agency FAQ disfavors stand-alone HRAs Stand-alone HRAs will run afoul of prohibition on annual limits on essential health benefits HRAs integrated with health plan allowed HRAs cannot be integrated with individual insurance policies (e.g., those bought from exchanges or in private market) Non-integrated HRAs allowed for retirees 23

24 Exchange Notice March 1, 2013 postponed Likely late Summer 2013 Closer to October 1, 2013 exchange open enrollment Duty of all employers Fair Labor Standards Act (broad definition) Local church obligation Provided to all employees Awaiting guidance on Notice form/content 24

25 Stay Tuned Exchange Notice Guidance More about HRAs Reporting employees covered to IRS Exchange plan premiums W-2 reporting for church plans Nondiscrimination Rule [Code 105(h)] Important to clergy versus lay benefits 25

26 HealthFlex Plan Strategy

27 Connecting HealthFlex with Health Care Reform and Plan Sponsors HealthFlex will change And HealthFlex will stay the same HealthFlex will need plan sponsor input more than ever And plan sponsors will need HealthFlex guidance, updates and assistance more than ever 27

28 Multi-Year Active Plans Strategy Objectives/Rationale Align with shifting health care landscape; complement exchanges Provide for greater plan sponsor cost efficiencies, predictability, stability Optimal platform to manage potentially two separate populations 28

29 Multi-Year Active Plans Strategy Objectives/Rationale Continue migration toward participant consumerism/responsibility Solid path even if ultimately transition to exchange Streamline plans/equitable risk pool management Avoid future excise (Cadillac Plan) tax impact 29

30 HealthFlex Potential Options Going Forward 2014 Maintain self-insured plans Maintain self-insured plans with private exchange option * Public exchange premium tax credit (PTC) subsidy eligibility applies to Options 1 and 2. May involve some loss of scale to plan 30

31 HealthFlex Potential Options Going Forward 2014 Facilitate employer HRA* direct funding for Options 1 and 2 Center for Health wraparound wellness products for participants in private or public exchanges * HRA: Health reimbursement account (if permissible under regulations) 31

32 Potential Active Plan Offerings By PPO 1 or 2 CDHPs (Gold equivalents) 1 CDHP (Silver equivalent ) 1 HDHP/HSA* (Silver equivalent ) Single carrier vs. multi-carrier? ASO group vs. fully-insured individual? * HSA: Health savings account 32

33 Potential Active Plan Offerings By 2016 Tier 1 Gold or Gold + Equivalent B1000 (with HRA maximum $250 funding) Gold or Gold + Equivalent $2,000/$4,000 deductible HRA funding: $1,000/$2,000 $3,000/$6,000 deductible HRA funding: $1,000/$2,000; fixed office visit co-payments (?) 33

34 Potential Active Plan Offerings By 2016 Tier 2 Silver Equivalent $4,000/$8,000 deductible HRA funding: $1,000/$2,000 Silver + Equivalent HSA $2,500/$5,000 deductible HSA funding: $500/$1,000 Out-of-pocket (OOP) maximum: $6,250/$12,500 34

35 Transition to 2017 Potential Changes Platinum Equivalent 2015: Eliminate B500 Platinum Equivalent 2016: Eliminate B750 Gold/Gold + Equivalent 2015: Add $3,000 deductible CDHP HRA funding: at $1,000/$2,000; fixed office visit co-payments (?) 35

36 Potential Active Plan Changes for RX Plans : Potential benefit changes* but no plan additions/deletions Dental/Vision : Potential addition of plans with increased annual maximums HRAs 2016: Additional HRA funding only available on remaining PPO (B1000) * Including increased floor for unpaid balances available to participants based off payment history (nothing older than 60 days) effective immediately 36

37 Potential Active Plan Changes for Private Exchanges Conceptually similar to Extend Health offering Plan sponsor to contract directly with exchange carrier/platform Via adoption agreement; HealthFlex would facilitate transition Single or multi-carrier Employer funds participant s account HRA/DC funding*; or possibly other non-tax favored vehicle Participant (as consumer) uses funds to purchase benefits Private exchange generates tailored list of recommendations Participant purchases individual products/services that align with his/her needs * Regulations not 100% clear (or final) on use of HRA/DC for funding of individual plans within a private exchange 37

38 Potential Plan Offerings Actuarial Equivalency B750 (HRA funding optional) - Eliminate in 2016 B1000 (HRA funding optional) CDHP (C2000); (HRA = 1,000/2,000) CDHP (C3000); (HRA = 1,000/2,000) - Add in 2016 CDHP (D4000); (HRA = 1,000/2,000) - Add in 2016 HDHP; 2,500/5,000 deductible; OOP Max: 6,250/12,500 HSA = 500/1,000 - Add in 2016 Actuarial Equivalency Platinum Gold + Gold Gold Silver Silver 38

39 2018 Excise Tax Projection of 2014 Rates to 2018 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 Part Only Part + 1 Part+1Ch Part+2Ch Part+Fam 2014 PPO Avg 2014 CDHP Avg 2018 PPO Avg 2018 CDHP Avg 39

40 Exchange Plan and HealthFlex Plan Comparison Benefit Silver HealthFlex Equivalent Actuarial value 70% 70% Covered services Essential and preventive benefits Essential and preventive benefits; and more (vision, wellness, etc.) Essential benefits No dollar limits No dollar limits 2014 deductible maximums 2013 cost sharing maximums will be indexed to 2014 levels HSA rules $2,000 (I) $4,000 (F) (in-network) Up to $6,250 (I) $12,500(F) (in-network) $3,000 (I) $6,000 (F) (in-network) Up to $6,000 (I) $12,000 (F) (in-network) Silver plan used to determine any government subsidies through the exchange 40

41 Illustrative Premiums Exchange vs. HealthFlex Equivalent Household Income/MAGI Maximum Monthly Contribution (Share of Premium) % FPL Single Family of 4 138% $41 $84 HealthFlex Average (Silver Equivalent) Premium Single HealthFlex Average (Silver Equivalent) Premium Family 250% $199 $ % $375 $774 >400% (no PTC) $650 $1,950 $619 $1,553 41

42 Comparison of Actuarial Equivalent HealthFlex Plans vs. Public Exchanges Plans Plan Actuarial Value Networks Wellness Initiatives Group Efficiencies HealthFlex Same 70% Broad No Change Yes Maintain Yes Exchange Same 70% Narrow Unknown No No 42

43 2014 HealthFlex Plan Sponsor Options and Considerations Funding Maintain current contribution structure (premium billing structure) Offer rearranged contribution structure Charging 9.5% or more of MAGI* for participant-only premium (moves some participants to exchanges through affordability test) * MAGI: modified adjusted gross income 43

44 2014 HealthFlex Plan Sponsor Options and Considerations Funding (continued) Salary (taxable) offset for: Everyone at same level Everyone at differing levels based on PTC eligibility (Additional SECA, pension and other costs must be considered) Offer/fund HRA for participants in: HealthFlex group self-insured plan(s), and Potentially for those in private exchange (if permissible under regulations) 44

45 2014 HealthFlex Plan Sponsor Options and Considerations Plan Coverage Remain all in HealthFlex no change Move all in to public exchange Remain in HealthFlex with public exchange option (requires changes to HealthFlex rules) Potential move to private exchange with public exchange option 45

46 Key Planning Considerations Income Verification Strongly recommend obtaining customized household income information Premium Cost Sharing Due to affordable coverage requirement, potential consideration for change in cost-sharing strategy 46

47 Key Planning Considerations Appointment/equity issues may persist between PTC-eligible and non-ptc-eligible clergy Sponsor exchange equivalent plan for non-subsidy eligible participants and certain subsidy eligible participants Provide non-subsidy eligible population opportunity for access to HRA funds subsidy eligible participants cannot utilize HRA s in the exchanges Pass on blended premium cost to SPUs Funding answer potentially could be: Defined contribution (HRA) nontaxable mechanism, or Through varying taxable compensation or other benefits 47

48 Key Planning Considerations Pay or play consideration for large UMC employers (50+ full-time employees) Offer no coverage $2,000 penalty per FTE* (excluding first 30 FTEs) Offer coverage and at least one (even if only one) FTE qualifies for exchange PTC $3,000 penalty per FTE receiving PTC (limited to no coverage penalty) Potential for a few affected SPUs in each conference * FTE full-time employee 48

49 Potential HealthFlex Plan Policy Changes HealthFlex mandatory clergy coverage rule No change: Plan charges plan sponsor a penalty for each clergy who opts out (whose local church opts out) Minimal change: Plan does not charge penalty for clergy at local churches who opt out for ACA-expanded Medicaid Plan sponsor flexibility: Plan does not charge penalty for clergy at local churches who opt out for Medicaid or to seek PTC on an exchange 49

50 Plan Sponsor Decision Supports Executive Summary and Primer HCR Impact Overview PowerPoint (with voiceover) Consultations: 1. HCR Impact Overview 2. Population Analysis Modeling Plan Sponsor Release Form Financial Model Overview (with voiceover) Continued consultations FAQ and planning considerations Sample communications and household income survey questions 50

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