PPACA A Year End Review

Transcription

1 PPACA A Year End Review November 20, 2014 Jim Hermann, Senior Vice President CEBT, Human Capital Practice Willis of Colorado 2000 South Colorado Boulevard, Tower II, Suite 900 Denver, CO (303) / (800)

2 Topics I. Intro II. III. IV Wrap-up Additional Reporting and Technical Compliance Matters Preparation for 2015 and Beyond PPACA A Year-End Review 1

3 Political wish list What, if any, changes are possible to PPACA? Full repeal unlikely. No veto-proof majority in Senate. Expect votes to make the record. Adjust/Repeal Cadillac Plan Excise Tax Adjust definition of FT employee 40 hours/week Repeal employer mandate Repeal medical device tax and more PPACA A Year-End Review 2

4 Potential threat Ironic twist? Tax exclusion for medical benefits always in Congressional sights. Republican preference for tax reductions may cause search for offset. PPACA A Year-End Review 3

5 The New Normal for Employer Sponsored Group Medical Plans PPACA A Year-End Review 4

6 Section One TIMELINE AND UPDATE

7 Health Care Reform Timeline Maximum 90 Day Wait Cost Sharing Limits (unless grandfathered) Mini-Med Annual Waivers Expire No Pre-Ex Regardless of Age All Children to Age 26 (even if grandfathered) Wellness Health Factor Incentives To 30%/50% PPACA A Year-End Review 6

8 Health Reform Timeline 2014 And Later Automatic Enrollment (200+) delayed* Employer Mandate (50+) delayed* PPACA Data Reports (50+) delayed* Insured, Non-Grandfathered Discrimination delayed* High Cost (Cadillac) Tax * See DOL Technical Release (delay automatic enrollment), IRS Notice (No penalty taxes in 2014, no data reporting for 2014), IRS Notice (delay non-discrimination tests indefinitely) PPACA A Year-End Review 7

9 Employer Mandate PAY OR PLAY THRESHOLD PHASE IN BASED ON EMPLOYER SIZE Employer Size 2015 Plan Year 2016 Plan Year full-time employees or full-time equivalents full-time employees or full-time equivalents* Does not apply Does not apply Does not apply Employer must offer coverage to 95% of full-time employees and dependents to age or more full-time employees or full-time equivalents Employer must offer coverage to 70% of full-time employees and dependents to age 26 Employer must offer coverage to 95% of full-time employees and dependents to age 26 PPACA A Year-End Review 8

10 Plan Mandates No pre-existing condition limitations OOP Maximums (in-network) for non-grandfathered plans $6350 individual/$12,700 family 2014 $6600 individual/13,200 family 2015 Does not apply to out of network services Small Plans (<100) deductibles limited to $2000/$4000 plus HSA, HRA & FSA lv. PCORI Fee V. Transitional Reinsurance fee VI. Wellness Incentives up to 30% (50% for not smoking) PPACA A Year-End Review 9

11 PPACA Litigation Update Availability of Federal Subsidies Hal big v. Burwell recently decided by DC Circuit Court of Appeals, held that language specifying subsidies would be available on Exchanges established by the state prohibits IRS from allowing subsidies to individuals that sign up on Federal Exchanges King v Burwell in 4 th Circuit Court of Appeals held the opposite Supreme Court is most likely to review cases where Circuit Courts arrive at conflicting opinions En Banc review is in process due to use of nuclear option If Halbig is upheld, individuals in states with a Federal Exchange would not have access to subsidies; if individuals do not receive a federal subsidy, no penalty is applied to employers for failing to offer affordable coverage Contraception Mandate Hobby Lobby decision by Supreme Court allowed closely-held corporations to receive the protections of the Religions Freedom Restoration Act Result of ruling is likely to be only limited accommodations to small number of employers PPACA A Year-End Review 10

12 Section Two EMPLOYER SHARED RESPONSIBILITY OVERVIEW

13 Employer Shared Responsibility Play or Pay Detail To avoid all employer shared responsibility penalty taxes an applicable large employer (50 FTE, prior calendar year)* must offer: Minimum Essential Coverage Includes self-insured, preventive only Affordable Coverage 9.5% (2014) or 9.56% (2015) of household income Minimum Value Coverage 60% of Essential Health Benefits** To Substantially All Full-time Employees and Dependents 30 Hours Per Week or 130 Hours Per Month Dependents (through end of the month; excludes: step/foster child, spouse) PPACA A Year-End Review 12

14 Employer Shared Responsibility PLAY OR PAY Do you offer coverage to all Fulltime employees? YES Does the plan provide minimum value? (60%+ of total allowed costs) YES Is the coverage affordable? (<=9.5% of income) YES NO NO NO Cliff $2,000** / Full-time Employee (Minus First 30)* Drop-off $3,000** / Full-time Employee receiving tax credit* No penalty * Where at least one Full-time employee waives any/all employer-sponsored coverage offered, enrolls in public exchange option and receives taxpayer financial support. ** Adjusted for inflation in multiples of $10. Not yet announced for 2015

15 Employer Shared Responsibility Final Regulations Substantially All : 70% of All FTE for 2015 Minus First 80 FTEs 95% of All FTE for 2016 Minus First 30 FTEs for 2016 Planning reminders for 2015 & 2016 Shared Responsibility Requirement Waiting Period Requirement*: Shared Responsibility Offer Coverage No Later Than 1 st of the Month Following 3 Months Waiting Period Offer Coverage No Later Than 91 st day * Different penalties (shared responsibility, $ or $250/mo; waiting period $100/ee/day) AND different populations (shared responsibility = only Full-time employees, waiting period = any employee) PPACA A Year-End Review 14

16 Employer Shared Responsibility Transitions: Dependent Coverage Exception Final Regulations: Extends dependent transition rule to 2015 plan year: Applies only to dependents not offered coverage for 2013 and 2014 plan years or only offered less than minimum essential coverage Does not apply to dependents offered minimum essential coverage in either the 2013 or 2014 plan years where coverage was later dropped Must offer dependent coverage after 2015 plan year Excludes non-citizens unless live in contiguous country, excludes foster & step children *Under Employer Shared Responsibility Rules, the employer must extend dependent coverage through the end of the month. Note: This is different than the 2010 Dependent Coverage Rules. PPACA A Year-End Review 15

17 Employer Shared Responsibility Transitions Affordability Safe Harbors Clarified: W-2: Single tier employee contribution for lowest option offering minimum value cannot exceed 9.5% of current year Box 1 W-2 wages. If part-year eligible, regulations pro-rate multiply Box 1 W-2 wages times fraction (numerator = months coverage offered, denominator = months of employment (1 day = 1 month)) Determined at year end. Rate of pay: Monthly single tier contribution for lowest option offering minimum value cannot exceed 9.5% of hourly rate * 130 (rate as of 1 st day of coverage period); salaried employees, 9.5% of salary as of 1 st day of the coverage period. Federal Poverty Level: If FPL is $11,670 (2014), monthly single tier contribution for lowest minimum value plan cannot exceed $92.39, determined as of the 1 st day of the coverage period. Coverage period is generally the 1 st day of the plan year. PPACA A Year-End Review 16

18 Employer Shared Responsibility Full-Time Employee Safe Harbor Full-time employee defined: Employed on average of 30 hours of service per week or more (130 hours of service in any calendar month is considered to be 30 hours per week) An hour of service is each hour for which employee is paid, or entitled to payment, for performance of duties Paid leave hours for vacation, holiday, illness, incapacity (including disability), lay off, jury duty, military duty or leave of absence - no limit to the hours that may be credited for paid leave An hour of service hours of service worked outside United States An hour of service generally does not include periods of Workers Compensation, unemployment compensation or disability insurance benefits (including state disability) for hours that would have been worked by the employee PPACA A Year-End Review 17

19 Employer Mandate PART-TIME, VARIABLE HOUR & SEASONAL EMPLOYEES LOOK BACK Measurement period in which the employer measures an employee s hours of service ADMINISTRATIVE PERIOD Implementation of the lookback period observations, e.g., identification of fulltime workers and enrollment in the plan STABILITY PERIOD The coverage period for fulltime employees & the ineligibility period for parttime workers PPACA A Year-End Review 18

20 Employer Shared Responsibility Lookback Method Ongoing Employees Ongoing employee: an employee who has been employed for a complete standard measurement period. Standard measurement period Employer chooses period of 3 to 12 months, need not be calendar months. May adjust based on payroll periods: Start the 1 st pay period after 1 st day of initial measurement period, end with pay period that includes the last day of the initial measurement period, or Start with pay period including 1 st day of the initial measurement period, end with the pay period that ends immediately before the last day of the initial measurement period. Standard stability period: Immediately following coverage period (in)eligibility: If average 30+ hours, greater of length of standard measurement period or six months, If NOT average 30 hours, length of standard measurement period Standard administrative period: Period immediately following the standard measurement period and immediately prior to standard stability period; maximum length of up to 90 days PPACA A Year-End Review 19

21 Look-Back Measurement Method 12 month, calendar year measurement period First Standard Measurement Period 10/15/14-10/14/15 First Administrative Period 10/15/15-12/31/15 First Stability Period 1/1/16-12/31/16 Assumes calendar year benefit year, plan year, employers should always review with counsel before implementation Second Standard Measurement Period 10/15/15-10/14/16 Second Administrative Period 10/15/16-12/31/16 Second Stability Period 1/1/17-12/31/17 PPACA A Year-End Review 20

22 Employer Shared Responsibility Measuring New Variable Hour Employees New variable/seasonal employees Variable Hour Employee: work hours are variable and uncertain, as of the start date, based on all facts and circumstances, the employer does not reasonably expect the individual to average of 30 or more hours/week during the Initial Measurement Period. NOTE: Variable Hour factors: Final regulations: Factors to consider include, but are not limited to: Replacing a Full-time employee Same or comparable positions have varied above and below an average of 30 hours of service per week during recent measurement periods Whether the job was advertised or otherwise documented (for example, through a contract or job description), as requiring hours of service that would average 30 or more hours of service per week or less than 30 hours of service per week May not take into account the likelihood that the employee may terminate employment. PPACA A Year-End Review 21

23 Employer Shared Responsibility Measuring New Variable Hour Employees New variable/seasonal employees Start Date: 1 st date on which the employee is credited an hour of service Initial Measurement Period: At least 3 months but not more than 12 months (need not be calendar months) - start with the Start Date (or later, but not later than the 1 st of the following month or the 1 st of the following pay period) Initial Stability Period: If average 30 hrs/wk, same as measurement period, but minimum of six months, If NOT average 30 hrs/wk, same length as measurement period Stability period length must be the same for new and ongoing employees? Initial Administrative Period: Up to 90 days following initial measurement period, but combined initial measurement and administrative period cannot exceed 1 st of the month following thirteen full calendar months of service (last day of the 1 st calendar month beginning on or after the employee s first anniversary date) PPACA A Year-End Review 22

24 Look-Back Measurement Method 12 month initial measurement period May 10 new hire 2015 Hired 5/10/15 Measurement Period 5/10/15 5/9/16 Administrative Period 5/10/2016 6/30/2016 First Stability Period 7/1/2016 6/30/ Standard Measurement Period 10/15/15-10/14/16 Standard Measurement Period 10/15/16 10/14/17 PPACA A Year-End Review 23

25 Employer Shared Responsibility Applying Different Periods Variation of Period Length Measurement, stability and administrative periods must generally be uniform lengths for all employees, but may vary between the following categories: CBA vs. non-cba Hourly vs. Salaried Different CBAs Different States Different Employer Members Note: Specific limits apply to transferred individuals (best of both worlds) Changing Measurement & Stability Periods Can prospectively change measurement and related stability periods cannot change periods that have already begun. Regulations do not specifically confirm ability to prospectively change initial measurement and initial stability period. PPACA A Year-End Review 24

26 Eligibility Mandates To Avoid Penalties EMPLOYEE CLASSIFICATIONS POST-PPACA Fulltime Eligibility following satisfaction of waiting/orientation period Part-time Eligibility following close of initial measurement period (if 30+) Variable Hour Eligibility following close of initial measurement period (if 30+) Seasonal Eligibility following 180 days of service (if 30+ during first 180 days) PPACA A Year-End Review 25

27 Employer Mandate FINAL REGULATIONS ON WAITING PERIODS Health coverage eligibility conditions based solely on the lapse of a time period are permissible for no more than 90 days Period before late or special enrollment is not waiting period If Plan conditions eligibility on FT/specific hours of service and employer reasonably believes the EE will not be FT, Plan can use a measurement period that: does not exceed 12 months begins on any date between start date and first day of first calendar month following start date and coverage is effective no later than 13 months from start date, plus time remaining until first day of next calendar month PPACA A Year-End Review 26

28 Employer Mandate PROPOSED RULEMAKING ON THE FEDERAL ORIENTATION PERIOD New reasonable and bona fide employment-based orientation period" in addition to 90-day waiting period May delay waiting period until orientation period is complete First calendar month following hire, minus one calendar day Orientation period must end on/before end of next calendar month PPACA A Year-End Review 27

29 Section Three EMPLOYER REPORTING

30 IRS Reporting for Shared Responsibility Penalty Internal Revenue Code Sections 6055 and 6066 require reporting to IRS from employers related to Shared Responsibility Penalty requirements of PPACA Draft Forms have been released Forms 1094 & 1095 will be filed with individuals PPACA A Year-End Review 29

31 IRC 6055 & IRC 6056 Similar I. Individual statements by 1/31 II. Electronic filing if > 250 III. IV. Calendar year reporting, regardless of plan year 3/31 (electronic, else 2/28), IRS transmittal form If MEC only (Form 1094-B & 1095-B), if ESR only or MEC & ESR (Form 1094-C & 1095-C) Can combine MEC & ESR reports if self-insured PPACA A Year-End Review 30

32 Health Plan Identifier HPID November 5, 2014 due date for large plans ($5 million or more in receipts) November 5, 2015 for other plans October 31, 2014 Never mind! We ll get back to you. PPACA A Year-End Review 31

33 Section Four TRANSITIONAL REINSURANCE PROGRAM

34 Transitional Reinsurance Fee Overview PPACA Section 1341 established a transitional reinsurance program. Stated purpose to stabilize premiums in the individual market inside and outside the Marketplaces. Collects contributions from contributing entities to fund reinsurance payments to issuers of non-grandfathered reinsurance-eligible individual market plans for the 2014, 2015 and 2016 benefit years. Impact on employers is for self-funded plans. Insured plans will depend on insurers to comply. PPACA A Year-End Review 33

35 Transitional Reinsurance Fee Who Contributes Contributing Entities: Health insurance issuers Certain self-insured group health plans offering major medical coverage that is part of a commercial book of business Exceptions: - Medicare, Medicaid, CHIP or state high-risk pools - Coverage that is not issued on a form filed and approved by a state insurance department (expatriate coverage may fall within this category) - Coverage only for a specified disease or illness and hospital indemnity or other fixed indemnity insurance - Stand-alone dental or vision plans - Liability insurance, including general liability and automobile - Workers compensation - Credit-only insurance - Long-term care - Health flexible spending accounts (FSAs) that meet the definition of an excepted benefit Major Medical Coverage : A catastrophic plan An individual or a small group market plan subject to the actuarial value requirements Health coverage for a broad range of services and treatments provided in various settings that provides minimum value - Employee assistance programs, disease management or wellness program as long as the program does not provide for major medical coverage - Stop-loss coverage - Health savings accounts (HSAs) (although reinsurance contributions are required for the high deductible health plan) - Health reimbursement arrangements (HRAs) integrated with a group health plan (although reinsurance contributions are required for the group health plan) - Tribal coverage offered to tribal members, their spouses and dependents, in their capacity as tribal members PPACA A Year-End Review 34

36 TRANSITIONAL REINSURANCE FEE Deadlines HHS will offer contributing entities the option to pay: (1) the entire 2014 benefit year contribution in one payment no later than January 15, 2015 reflecting $63.00 per covered life; or (2) in two separate payments for the 2014 benefit year, with the first remittance due by January 15, 2015 reflecting $52.50 per covered life, and the second remittance due by November 15, 2015 reflecting $10.50 per covered life. For 2015 and 2016 (the change does not apply to the 2014 benefit year), self-insured group health plans that do not use a third party administrator (TPA) for claims payment, claims adjudication or enrollment would not be treated as contributing entities and would be exempt from making reinsurance contributions. PPACA A Year-End Review 35

37 Transitional Reinsurance Fee Covered Lives Methods for calculating the average number of lives for a self-insured group: The Actual Count Formula: Total Lives Covered Each Day of First 9 Months of Calendar Year Total Number of Days in First 9 Months Calendar Year The Snapshot Formula: Total EE-Only Lives Covered + (2.35 x EE-Other Covered) On Select Day of 1 st, 2 nd, or 3 rd Month of the 1 st, 2 nd, and 3 rd Quarter Total Days Counted The Form 5500 Formula: Formula: Self-Only Coverage: (Beginning of Year 5500 Participant Count + End of Year 5500 Participant Count) 2 Self and Other Coverage: Beginning of Year 5500 Participant Count + End of Year 5500 Participant Count *A plan sponsor must use the same method for the duration of a calendar year; however, a different method may be used from one calendar year to the next. PPACA A Year-End Review 36

38 Transitional Reinsurance Fee How to Contribute Must register on Pay.gov. Using Pay.gov, access the ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form to enter the annual enrollment count. The ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form will auto-calculate the annual contribution amount to be remitted based on the annual enrollment count. The contributing entity will then schedule payment for the calculated reinsurance contributions on the payment page. PPACA A Year-End Review 37

39 Section Five PLAN CERTIFICATION OVERVIEW

40 Certification Overview BACKGROUND What Is Plan Certification? Mandate that each HIPAA covered entity file two one-time certifications with HHS. What Is The Purpose Of Plan Certification? Attest that the plan is in compliance with certain standard transactions and operating rules. Why Do You Need To Complete Plan Certification? Mandated under the Patient Protection and Affordable Care Act (PPACA) PPACA A Year-End Review 39

41 Certification Need to Know WHO, WHEN, AND WHAT IF? Who Controlling Health Plan Group Health Plan Self-Insured Insured Health Insurers & HMOs Subhealth Plan When Large Plan 1 st Certification: December 31, nd Certification: December 31, 2015* Small Plan 1 st :Complete By: December 31, nd Certification: December 31, 2015* What If No Plan Certification $1 per covered life for every day the CHP failed to comply with certification. Maximum of $20 per covered life. * Awaiting Proposed Regulations PPACA A Year-End Review 40

42 Certification Process WHO? The obligation for these certifications technically rests with the health plan. Insured Look to Insurance Carrier for Compliance with Certification Requirements Self-Insured Look to TPA for Help with Certification Requirements Compliance *The plan should verify that its insurers or third party administrators, as applicable, are complying with the standard transaction criteria. PPACA A Year-End Review 41

43 Certification Process STANDARD TRANSACTIONS Under the HHS proposed regulations, a CHP must obtain the first certification from an outside third party, the Council for Affordable Quality Healthcare Committee on Operating Rules for Information Exchange (CAQH CORE), stating that the plan is electronically conducting the following standard transactions in a proper manner. 1 st Certification (Proposed Regulations Issued) Eligibility Claims Status Electronic Funds Transfer & Remittance Advice 2 nd Certification (Awaiting Regulatory Guidance) Claims & Encounter Information Enrollment & Disenrollment Premium Payments Claims Attachment Authorization & Referrals PPACA A Year-End Review 42

44 Certification Process 1 st CERTIFICATION WHERE AND HOW? Phase III CORE Seal Certification HIPAA Credential Certification Three Phase External Third Party Testing through CAQH CORE External Third Party Testing through CAQH CORE When a plan successfully completes a phase of testing and submits the appropriate documentation to CAQH CORE, the plan receives a CORE Seal for that phase. CAQH CORE is currently developing the criteria for the HIPAA Credential certification. The First Certification attestation submitted to HHS also must include information on the number of covered lives under the CHP Major Medical Policies as of the date the plan files the required documentation with HHS. A Major Medical Policy is defined as an insurance policy that covers accident and sickness and provides outpatient, hospital, medical and surgical expense coverage. It is unclear whether the definition includes a dental, vision, long-term care or EAP insurance policy. Nor is it clear whether a self-insured plan is required to submit covered lives information, although from the language used by HHS in the proposed regulations it appears that this requirement does not apply to self-insured plans. PPACA A Year-End Review 43

45 Certification Process WHAT WE DON T KNOW YET NLRG Continues To Monitor Any Changes What are the testing criteria, processes and procedures for the Second Certification? Will the deadline for the Second Certification be delayed? What are the final testing criteria and procedures for the Phase III CORE Seal certification? What are the testing criteria and procedures for the HIPAA Credential certification? Does the covered lives submission apply to self-insured plans? Are self-insured plans subject to penalties for failure to comply with the certification requirements? PPACA A Year-End Review 44

46 Section Six PREPARATION FOR 2015 AND BEYOND

47 Cumulative Increases: PPACA A Year-End Review 46

48 Cadillac Tax: Potentially Impact Average Plans Cost Projection Year Family of Four 2013 $ 22, $ 23, $ 25, $ 27, $ 28, $ 31,043 AVG COST, FAMILY OF FOUR, Milliman Medical Index: average annual increase ( ) = 7.1%; 2018 Threshold for Family Coverage: $27,500 PPACA A Year-End Review 47

49 Enrollment in high-deductible plans has tripled since 2009 PPACA A Year-End Review 48

50 Most employers are considering or already offer a highdeductible plan as the only option for employees PPACA A Year-End Review 49

51 Private Exchanges Private marketplaces for insurance and other products Offer a consumer-friendly way to purchase health insurance and other benefits assisted by interactive technology WHAT IS A PRIVATE INSURANCE EXCHANGE? Come in many different models and sizes and offer an array of choices in regards to benefits and costs Generally sponsored by employers who wish to replace the traditional manner in which they offer benefits PPACA A Year-End Review 50

52 The Exchange Spectrum + Employer Involvement - Private Exchanges Traditional ER Sponsored Group Plans Single carrier Exchanges- Group Plans Multi carrier Exchanges- Group Plans Multi carrier Exchanges - Individual Plans Public Exchanges Operational today Operational today Operational today Operational today Operational in 2014 High employer engagement Less employee choice Group based model Single or limited multi-carrier models Employer subsidies with DB approach 3 rd party or insurer host Insured or self insured Employer subsidizes through DC Employer determined plan offering but less involved Single carrier per LOC per employer group 3 rd party host Employer subsidies possible (DC) Insured or self insured Less employer involvement in plan offerings Insurers compete for individuals Post enrollment risk adjustment may be required Employer subsidies possible Various attributes / types which differ by third party host capabilities Insured individual products Significant focus on retiree population Governmental subsidies included Various attributes / types which differ by state model Employer has no control Insured individual products PPACA A Year-End Review 51

53 Health Care Reform Strategic Response For 2014 confirm compliance Who are newly eligible (new full-time definition, 90 day maximum waiting period)? Who are currently eligible but not enrolled (employee/spouse/child, enhanced audit) Who are PT with (potential) access to taxpayer subsidized exchange coverage Have the strategic discussions Status quo? Will 2014 and 2015 carry over into 2016? Coverage strategy or vision full & part time employees Define PPACA compliance success agree on measures, metrics Defined Contribution/High Deductible Plan? Private Exchange options? Communicate with employees They discount value of existing coverage Reset expectations as compared to myths about health care reform For most employees, so far, health reform appears FREE! Reset your and employee expectations about stability Change is going to be the norm for at least several years PPACA A Year-End Review 52