Health Care Reform Update

Transcription

1 Health Care Reform Update ACA developments affecting credit unions Health Care Reform Discussion Topics Final rules and extensions for : Annette Bechtold Senior Vice President Regulatory Affairs and Reform Initiatives Digital Insurance Brad Pricer, JD, GBA Senior Manager Employee Benefits CUNA Mutual Group 1. Introduction 2. Health plan compliance a. Non compliant plans b. 90 day waiting period 3. Employer responsibilities a. Employer sharing (mandate) b. Reporting 4. Exchange/Marketplace Update 5. Question and Answer 1

2 Health Plan Compliance Non compliant plans Non-Compliant Plans Plan cancellations 11/14/13 Extension of non ACA compliant plans: President announces individuals and small groups have the ability to keep their existing plan, for 2014, if their state s Department of Insurance and their carrier allow it Some states already allowed, and group carriers offered, early renewals accomplishing the same outcome for small groups Administration: HHS released a template letter for carriers to use with consumers notifying them of the ability to stay in their plan Plan cancellations 3/5/14 Extension of non ACA compliant plans: Center for Medicare and Medicaid Services (CMS) announces a two year extension to keep plan Carriers who allow will have to provide notice to affected individuals and small businesses States can adopt in one or all markets Applicability: Plan years prior to October 1, 2016 Individual Small group (2 50) Future small group 2016 (50 100) 2

3 Health Plan Compliance 90 Day Waiting Period 90 Day Waiting Period Rule Cannot have a waiting period longer than 90 calendar days Plans must be written with waiting periods of 90 days or less Applicability Proposed rules apply to plan years beginning on or after January 1, 2014 Final rule amendments effective April 25, 2014 Applies to plan years beginning on or after January 1, 2015 Ninety Day Waiting Period Limitation FR DOC # Final Rules 2/24/14 Group Size Funding Type Fully insured Self funded Grandfathered plans? Yes No 3

4 90 Day Waiting Period Definitions Waiting period the period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of a group health plan can become effective Ninety Day Waiting Period Limitation FR DOC # Final Rules 2/24/14 Otherwise eligible having met the plan's substantive eligibility conditions being in an eligible job classification achieving job related licensure requirements specified in the plan's terms satisfying a reasonable and bona fide employment based orientation period (1 month*) * Proposed and subject to commentary 90 Day Waiting Period Eligibility Conditions Lapse of time period no more than 90 calendar days Cumulative service requirement cannot exceed 1,200 hours Variable hour employees cannot determine that a newly hired person is reasonably expected to work more than the required hours to be deemed eligible under the plan Ninety Day Waiting Period Limitation FR DOC # Final Rules 2/24/14 Proposed rules confirmed that the measurement (lookback) period plus the administrative period cannot exceed 13 months plus a partial month Non compliance $100 per day per violation Waived if waiting period is less than 90 days but employee takes additional time to elect 4

5 Employer Sharing Responsibility Company Ownership Structure Employer Definitions Employer Entity that is the employer of an employee under the common law test. IRS 4980H, IRS 414(b), (c), (m), or (o) Entities Counted as One Employer All entities treated as a single employer under 414(b), (c), (m), or (o) are treated as a single employer for purposes of 4980H. IRS (b) all corporations of a controlled group of corporations 414(c) trades or businesses under common control 414(m) all employees of an affiliated service group 414(o) Discretionary regulations to prevent the avoidance of any employee benefit requirement 5

6 Control Group Analysis BROTHER SISTER EXAMPLE Shareholder Company A Company B Common Ownership A 80% 20% 20% B 10% 50% 10% C 5% 15% 5% D 5% 15% 5% Total 100% Controlling Interest 100% Controlling Interest 40% Effective Control Result: Not a brother sister controlled group since effective control is not > 50% Employer Sharing Responsibility ACA Employer Responsibilities 6

7 Applicable Large Employer Definition and Requirement Employers with 50 or more full time equivalent employees must offer: Minimum essential coverage to at least 95% of full time employees and their dependent children up to age 26 Employer Sharing Responsibility FR DOC # Final Rules 2/22/14 Coverage must meet minimum value requirements and be affordable Determination All employees, including seasonal, are counted to determine status An employee is an individual who is an employee under common law standard Applicable Large Employer Calculation Type Definition Calculation Full time employees 30 hours or more of service Count one for each fulltime employee Seasonal employees Labor or services on a seasonal basis All other nonfull time employees All others no exceptions Total hours 120 = equivalent FT Monthly totals Full time and full time equivalent employees Add FT and equivalents + Annual total Average monthly totals 12 (rounded to the nearest hundredth) 7

8 Applicable Large Employer Who is an applicable large employer? Small Employer <50 full time equivalents Seasonal exception applies: The business had 50 or more employees: for no more than 4 calendar months AND solely due to seasonal employees Large Employer 50 or more fulltime equivalents FR DOC # Final Rules 2/22/14 Seasonal = Employee in a position for which the customary annual employment is six months or less Employer Sharing Applicable large employers must offer to: All employees averaging 30 hours or more of service per week (and their dependents) Dependents = children up to age 26, including month they turn 26; spouses excluded Employees performing services outside the U.S. for which an individual receives U.S. source income Monthly measurement separate determination per month 130 hours = Full time OR 120 hours for 4 week months and 150 for 5 week months Look back measurement = average of service hours over entire period Employer Sharing Responsibility FR DOC # Final Rules 2/22/14 8

9 Defining New Employees New Employee: Determining full time status initial enrollment period: employed for less than one complete standard measurement period not previously been employed is treated as a new employee under the rehire and continuing employee rules Employee Will work fixed hours and days Will average 30 hours of service per week or more Measurement method Full time Y Y Monthly Part time Y N Monthly Variable N? Look back Seasonal N? Look back *Employers may only use one measurement method Re hires: an employee must be treated as a continuing employee rather than a new hire, unless there is a period of 13 weeks or more with no hours of service. Employers can select a shorter number weeks (no less than four) as long as the break period exceeds the immediately preceding employment period Affordability Safe Harbors Affordability determination: An employee's contribution for single coverage under the employer's lowest cost medical option cannot exceed 9.5 percent of the safe harbor compensation determination for that year. Compensation determination: W 2 Box 1 W 2 pay for the year. Employer may prorate applicable amounts for partial years of employment. [Can be inaccurate because employers must estimate W 2 wages at the beginning of the year.] Rate of Pay Determining rate of pay: Hourly employees multiplying hourly pay rate in effect at the beginning of the year by 130 Salaried employees: monthly salary in effect at the beginning of the year Federal Poverty line (FPL) may use current FPL tables or those in effect six months prior to the beginning of plan year Employer Sharing Responsibility FR DOC # Final Rules 2/22/14 9

10 Determining Affordability Example: Safe Harbor Selected amount Monthly amount Contribution monthly max W 2 Lowest FT wage $25,000 $ Rate of pay Lowest FT wage $8.50/hr. $ Federal poverty line (FPL) FPL table for single individual $11,490 $ Minimum Value What is minimum value? The plan s share of the total allowed costs of benefits provided under the plan Minimum Value Must be at least 60% Anticipated amount plan would pay for covered costs for essential health benefits Anticipated amount both plan and participant would pay for covered costs for essential health benefits Methods of Determination Minimum value calculator Safe harbor established by HHS and IRS Actuarial certification from a member of American Academy of Actuaries Plans in the small group market satisfying any of the levels of metal coverage ACA, IRS Proposed Rule 5/3/13; Commentary due by July 2,

11 Eligibility for Transition Relief 2014 & 2015 Impermissible reduction in work force between 2/9/14 12/31/14 No Yes Transition relief does not apply Since 2/9/14, no change to minimum value, offer, classes, AND contribution at least 95% of prior Yes No Changed plan year start date after 2/9/14 No Yes Transition relief eligibility form submitted Yes No Transition relief applies Transition Relief 2014 & 2015 Number of full time equivalent employees (including total for all related entities) Year that assessment penalties would apply if all other transition criteria met Number of Employees: Less than 50 No No No No No Yes No Yes Yes Number of full time equivalent employees (including total for all related entities) Required minimum percentage of fulltimers receiving offer of coverage Number of Employees: Less than 50 n/a n/a n/a n/a n/a 95% n/a 70% 95% 11

12 Transition Relief for Non Calendar Year Plans No assessments will be made for any months prior to the first day of the 2015 plan year, IF: a. The plan was in place as of December 27, 2012; b. employer did not modify plan at any point thereafter to move the first day of the plan year to a later calendar date, and c. plan provides affordable coverage that meets minimum vale threshold as of the first day of the 2015 plan year to employees who, under the terms of a plan in effect as of February 9, 2014, are eligible as of the first day of the 2015 plan year. Additional Transition Relief for Certain Employers with Non Calendar Year Plans Additional relief is available to employers who, as of any date in the 12 month period ending on February 9, 2014, meets one of the following two rules: 1. Rules when considering all employees: a. covered at least 25% of its employees, or b. offered coverage under the plan to at least 33% of its employees during the last enrollment period prior to February 9, 2014, 2. Rules when considering only full time employees: a. covered at least 33% of its full time employees, or b. offered coverage under the plan to at least 50% of its full time employees during the last enrollment period prior to February 9,

13 Non Compliance Penalties Tier 1penalty» $2,000* per employee [26 U.S.C. Sec. 4980H(a)] (minus first 80 employees for 2015, then first 30 employees for 2016 and after) Assessed only if employer does not offer group health coverage to at least 70% FT employees (and dependent children to age 26) in 2014 and 95% for 2016 and after; AND At least one employee receives federally subsidized Marketplace coverage Employer Sharing Responsibility FR DOC # Final Rules 2/22/14 Tier 2penalty [26 U.S.C. Sec. 4980H(b)]» $3,000* per employee who actually receives federally subsidized Market place coverage Assessed only if employer offers group health coverage to FT employees that fails: 9.5% affordability test; OR 60% minimum value test *assumes 12 months of penalty assessments Employer Sharing Responsibility Nondiscrimination 13

14 Classes of Employees Generally, participants may be treated differently if the distinction between or among groups is based on a bona fide employmentbased classification consistent with the employer's usual business practice Generally acceptable classifications: Exempt v. non exempt Different geographic locations Collectively bargained v. non collectively bargained Current v. former employee HIPAA Nondiscrimination Rules 906,545, IRS/DOL/HHS Issue Final Regulations Allowable Variations to Look Back Period Look back/measurement variations: Different applicable large employers may use different starting or ending dates and lengths of measurement and stability periods along with different measurement methods, e.g. look back or monthly measurement Measurement and stability periods may differ in length or starting and ending dates for different categories of employees, as specified in the regulations Allowable categories of employees: Salaried employees and hourly employees Employees whose primary places of employment are in different states Collectively bargained employees and non collectively bargained employees Each group of collectively bargained employees covered by separate collective bargaining agreements Employer Sharing Responsibility FR DOC # Final Rules 2/22/14 14

15 Employer Sharing Responsibility Employer Reporting Obligations: Applies to: Health insurers Plan sponsors of self insured group plans Executive dept. of a governmental unit providing coverage under governmentsponsored program Any other person that provides minimum essential coverage Exemption for: Health savings accounts Health reimbursement arrangements Certain wellness programs Insurers and Self-Funded Employers PPACA Section 6055 Required information: All must provide: Name, address and TIN of primary insured Name, dates of coverage and TIN of each individual covered under policy Identification if coverage is a qualified health plan. If so, any advance payments of premium tax Employer provided coverage: Name, address and EIN of employer maintaining plan Employer s premium portion Filing and notification: Calendar years: Starting in 2015 Timing: Filed no later than February 28 (March 31, if filing electronically) of year immediately following relevant plan year Notification to individuals: Name, address, and phone of person reporting Information reported on return for that individual On or before January 31 of year after relevant plan year 15

16 Large Employer Reporting Employer s Obligation Applies to: Every applicable large employer required to meet the requirements of section 4980H during a calendar year Exemption for: Employers who are not applicable large employers for the calendar year Written notification: To each full time employee Name, address and phone of person reporting Information reported on return for that individual PPACA Section 6056 Required information All must provide: Employer name, date, EIN Name & phone of contact person # full time employees per month Certification of minimum essential coverage offer to employees & dependents, by month Info by employee if offering: Months coverage was available Employee s share of the lowest cost monthly premium (self only) providing minimum essential coverage, by month Name, address and TIN of each full time employee and the months, employee was covered Filing and notification Calendar years: 2015 Timing: Filed no later than February 28 (March 31 if filing electronically) of the year immediately following the year relative to return Electronic filing required if filing 250 or more Employee notification: On or before January 31 of the year following the year report is made Combined Reporting Employer s Obligation PPACA Section 6055 & 6056 Applies to: Employers who have an obligation under either Section 6055 & 6056 Large employers who self insure file IRS Form 1095 C, both parts relating to Section 6055 and 6056 Large employers who have insured plan file IRS Form 1095 C, only complete part relating to Section

17 Exchanges/Marketplace Update 17

18 Plan Types Public Marketplace Private Marketplace Operated by State, state partnership with federal government or federally facilitated Carrier, broker, other private entity or partnership of entities Participating carriers Approved carriers Select carriers Type of plans offered Individualized selection of plans and products Public and Private Marketplaces Select plans submitted and approved Yes, limited by Marketplace All plans filed with the state narrowed down by employer/individual Yes; limited by employer Availability of subsidies Yes No, unless web broker Availability of small employer tax credit Yes No Can work with broker Yes, if certified Yes, if approved Marketplace Employer Menus Public Marketplace Health options: Employers may select from approved QHPs: One carrier plan (only option for FFEs in 2014) Multiples plans and carriers Metal tier with multiple carriers One carrier with multiple plans Other insurance options: Dental and vision offerings will vary by state Only available from health carriers Life and disability will be rare Additional offerings: Whatever is offered by health carrier selected Private Marketplace Health options: Employers may select from all plan options: One carrier plan One carrier with multiple plans Metal tier with one carrier Other insurance options: Multiple options from medical or ancillaryonly carriers Products include: dental, vision, disability, life, voluntary, pet, accident, cancer, etc. Additional offerings: Wellness programs Administration and payroll Compliance, education and other resources 18

19 Private Marketplace The 3 C s of Benefit Marketplace: The employer has an expectation of being removed from the day to day management of a benefit plan such an enrollment, changes, terminations, managing eligibility, reconciling multiple carrier bills, making premium payments, etc. 1. Consolidated benefits administration An online employee enrollment system that integrates into the carriers & payroll service provider An online employer administrative system that easily provides the important data to manage the program Benefit administration service team to manage the day to day activities of the benefit program. 2. Complete array of benefit choices Health Plans: 8 15 health plan choice to meet the many demographics within the workforce Ancillary Benefits: build your own dental, vision, life, disability, accident, critical illness, and more New Benefits: such as telemedicine & concierge medicine 3. Customer service including decision support before, during, & after enrollment Educational tools including videos Decision support for medical, dental, vision, life insurance, & disability insurance Plan recommendations based on an individual s personal situation Benefit counselors available telephonically and via chat Private Exchanges/Marketplaces Agency/Brokerage Solutions Systems Carriers AON Hewitt enavigate Benefit Focus Cielo Start Anthem (Bloom) Highmark (Array) Mercer Marketplace Synergies Select BSwift Benefit Solver United with Liazon Medica Buck RightOpt NFP Marketplace Plan Source Insurexsolutions Aetna (Benefit Focus) BCBS MA (Liazon) Towers One Exchange Emerson Reed Liazon Bright Choices Connected Health BCBS AZ Harvard Pilgrim with Liazon Willis Advantage KTBS Online Connecture Workable Solutions (Alegeus) Independence Blue BCBS KA Kapnick Insurance Health Partners America Hcentive Array Health BCBS VT (Digital) Medica Empyrean BeneFit Marketplace MVP Healthcare CIGNA (Digital) 38 19

20 Defined Contribution Health Plans Theory of gradual shift to defined contribution health plans Shifting risk of incurring high health care costs from employers to workers Similar to previous shift for retirement plans Today, market is predominately defined benefit plans Employers determine a set of health insurance benefits Move to defined contribution where Employers pay a fixed amount Employees use money to buy or help pay for insurance they choose themselves Is Defined Benefit a Long Term Solution? Most employers pay a percentage of health insurance premiums. According to Kaiser Family Foundation, the average employer pays: 82% of the single health insurance premium 72% of the family health insurance premium So under a defined benefit contribution system The employer is paying 72%-82% of a number that is increasing 2-3 faster than profits. This is not a long term solution. Defined Contribution converts the employer s contribution from a % to a set $ amount. - Provide the employee with a $ amount equivalent to the current cost. - Let them choose their own level of benefits 20

21 Defined Contribution Why Now? Defined Contribution is not a new idea. Many large employers have offered defined contribution or cafeteria plans for years. Small to mid-size businesses did not have the ability to utilize this approach. So what has changed? National Health Reform is driving the health insurance carriers to combine the following: health plan choice mandated by law enrollment technology which already exists This is an exchange or marketplace decision support systems to simplify the complex Overview of Defined Contribution Approach 21

22 Q & A 22