Health Care WHAT TO EXPECT AND HOW TO PREPARE

Transcription

1 Health Care WHAT TO EXPECT AND HOW TO PREPARE

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5 Health Care Reform Did Congress cure our system s ailments? Katie Hays, Executive Director

6 The Patient Protection and Affordable Care of 2010 (H.R. 3590) Signed into law (P.L ) on Mar. 22, 2010 Extends health insurance coverage to about 32 million currently uninsured. Subsidies provides subsidies for up to 400% of FPL Medicaid Expansion Up to 133%FPL (14,000 ind./29,000 family) Individual Mandate Starting 2014, with penalty of $695 ind./$2,915 family Employer Mandate (Free rider) Penalty for lack of affordable coverage if 50 or more employees Creates State Insurance Exchanges Available in 2014, state marketplace for insurance Insurance Reforms - Phased in Small Employer Credits Up to 50% of employer s contributions (up to 5 yrs.) Minimum Benefits Package All health plans offered through exchanges to provide the essential benefits

7 Cost $$$... According to the Congressional Budget Office (CBO) Cost = $938 billion/10 years $569 billion in new taxes and tax increases $528 billion total cuts to Medicare Creates up to16,500 new jobs for the IRS Billions more in spending authorized, but not appropriated.

8 Pay Fors = $569 billion/10 years 10% excise tax on tanning services $2.7 billion/10 (2010) Modification of tax treatment in certain health organizations $400 million/10 (2010) Codify economic substance doctrine $4.5 billion/10 (2010) Repeal of black liquor credit $23.6 billion/10 (2011) Conforming definitions for medical expenses $5.0 billion/10 (2011) Additional tax on distributions from HSA s and MSA s other expenses $1.4 billion/10 (2011) Excise tax on manufacturers and importers of drugs $27.0 billion/10 (2011) Corporate reporting requirements (1099 issue) $17.1 billion/10 (2012) Limit flexible spending in cafeteria plans to $2,500 $13 billion/10 (2013) Excise tax on medical device manufacturers $20 billion/10 (2013) Medicare tax on HI earners $210.2 billion/10 (2013) Eliminate Part D subsidy deduction $4.5 billion/10 (2013) Limitations on executive compensation $600 million/10 (2013) 10% medical expense deduction $15.2 billion/10 (2013) Excise tax on insurance providers $60.1 billion/10 (2014) Free Rider penalties $52 billion/10 (2014) Individual Mandate penalties $17 billion/10 (2014) 40% excise tax on Cadillac plans $32 billion/10 (2018) Effects on coverage provisions in revenue $46 billion/10 (Misc.) Other changes in revenue $14.3 billion/10 (Misc.)

9 Cadillac Tax % Excise Tax on health coverage in excess of $10,200 (indiv) and $27,500 (family). Threshold increased for certain high-risk professions to $11,800 (indiv) and $30,950 (family). Indexed to CPI +1% for the first 2 years, but then to CPI. Concern is when the essential health benefits cost over that amount so every plan is taxed. Raises $32B over 10 years (in 2010). So that is just 2 years of taxing. The cost will be much greater in the second 10 years.

10 Immediate changes Insurance Reforms 6 months after enactment Prohibits lifetime limits and rescissions (waivers) Dependents covered until 26 th birthday No preexisting conditions for under 19 yrs. old First dollar coverage for preventative care Grandfathered plans W2 Reporting Law requires employers to list the value of their health plan on employee s W-2 s. IRS delayed by one year so starting in 2013 you will list the value of 2012 plans.

11 Small business tax credit Available to small companies and tax exempt organizations ( ). 2 Phases. PHASE 1 ( ): Employers with less than 25 full-time employees w/ avg. wage of $50,000 or less, and company pays min. of 50% of premiums are eligible for tax credit up to 35% of premiums. Maximum credit if you have 10 or less full-time employees w/ avg. wage of $25,000. Credit claimed on business tax return, not employment tax return. PHASE 2 ( ): Same criteria above; but only available to employers purchasing insurance through the exchange. Credit increases up to 50% of premiums; but only good for 2 years.

12 Significant changes in 2014 Individual mandate Expansion to Medicaid, Subsidies, Exchanges Free-Rider employer mandate Waiting periods limited to 90 days Guaranteed issue; no pre-existing conditions Modified Community Rating premium variation allowed ONLY for age (3:1), tobacco (1.5:1), family, geography.

13 Employer Free Rider Mandate Employers with <50 Full-Time Equivalents (FTE) are exempt from offering. Employers with 50 or more FTE, who do not offer, no fines levied if all employees incomes are over 400% of FPL (88 K/family of 4). For employers with 50 or more FTE who don t offer, if any employee receives tax credit through exchange, fine is equal to $2,000 times the # of employees minus 30. These penalties are also incurred if the employer is not offering a Qualified health plan. If an employer with 50 or more FTE does offer health insurance, but it is not affordable (employee s share is more than 9.5% of income), and the employee goes into exchange (and gets tax credit), the penalty is $3,000.

14 Employer Mandate

15 Exchanges States will set up independent state-based exchanges to facilitate the purchase of health insurance. The subsidies will be administered through exchanges. Employers up to 50 employees can purchase insurance through the exchanges. The market should exist inside and outside of the exchange. The federal government will set up a fallback if states do not act by Encourage your state to develop a market-based exchange and to encourage greater competition. Choice and Competition Coalition -

16 Regulatory update Filed 28 comments on different provisions including: MLR Grandfathering Mini-meds (over 1,300 waivers have now been granted) Rate review Minimum benefit plan requirements/essential health benefits Exchanges Agencies over stepping authority 159 agencies will be created Using interim final regs., not regular order

17 Repeal effort Rasmussen tracker - Disapproval remains at 54% while approval is at 40% House passed H.R. 2, fully repealing on Jan. 19 Vote (3 Democrats voted for repeal) Also passed H. Res. 9 instructing 4 committees to find solutions to 13 areas (beginning of replacing) Hearings have begun in relevant committees. Sent to Senate - Reid held a vote on it Feb. 2 failed Rasmussen Health Care Tracker As of 8/15/11

18 Individual mandate Legal challenge 26 states have now joined law suit VA & FL judges found unconstitutional Appeals panel heard 5/10/11 (VA-7 th district) 8/12/11 - GA-11 th circuit ruled individual mandate unconstitutional Likely to go all the way to Supreme Court (as soon as Oct session but likely spring 2012) Severability clause? Legislative effort May be effort to repeal or modify Interest from Republicans / Moderate Dems signaling concern Obama never called for individual mandate (only children)

19 Potential long term effects Individuals may forego coverage and pay the penalty. Spouse and dependent coverage may be scaled back. COBRA enrollment should decline significantly. High-deductible health plans may become more prevalent. Grandfathered plans will be nearly extinct by Significant additional funds will be needed if spending is not scaled back. Employers begin to re-assess their role as plan sponsors.

20 Impact on employer plans According to a survey released yesterday by McKinsey & Company: 30 percent of employers will definitely or probably stop offering coverage after Employers who are more aware PPACA s provisions are more likely to consider dropping coverage upward of 60 percent will pursue some alternative to their existing plans. At least 30 percent of employers would gain economically from dropping coverage even if they completely compensated employees for the change through other benefit offerings or higher salaries. Strategies that may be employed by firms to deal with the mandate: Replace full-time workers with more part-time workers to avoid triggering the employer mandate. Restructure companies into two parts: one comprising management and corporate employees who would receive employer-sponsored coverage, and the other with lower-wage employees who would not.

21 Current legislation we re working on Repealing the Job Killing Health Care Act and Resolution with Instructions for Committee Proceedings (H.R. 2/H.Res. 9) 1099 Repeal (H.R. 4) American Job Employment Act - To repeal the employer mandate (S.20 - Hatch/H.R Boustany, Tiberi, Barrow) FSA/OTC legislation (S Sen. Hutchison /H.R Paulsen) Repeal CLASS Act (S. 720 Thune/H.R Boustany) Medical Liability Reform (H.R. 5 - Gingrey)

22 Chamber resources Vote For Business Health Care Toolkit Primer: Critical Employer Issues in the Patient Protection and Affordable Care Act _issues_ppaca.htm Health Reform Impacts

23 Franchisee-Specific Issues & Questions Question: Can each of my stores be considered separately so that I can maintain <50 employees? IRS Code 414: Common Control Test Common Control Test: if two or more stores have the same five or fewer owners, collectively owning at least 80% of the shares or interest, those stores shall be considered a single employer. Question: Can I get a waiver like McDonalds did? No waiver from 2014 employer mandate Temporary waiver for LIMITS on limited benefit (mini-med) plans for 1 year for P/T, temporary workers Still must comply in 2014

24 How to Calculate FTE s Question: What is FTE and How Do I Calculate It? Full-Time Equivalent Employees Includes both full and part-time 2 part-time employees working 15 hours each = 1 FTE Based on a 30 hour work week Formula: # of full-time employees (>30 hrs per week) + Hours worked by all part-time employees (per mth)/120 hours # of full-time equivalents (FTE s) Note: Employers must only provide COVERAGE for their ACTUAL full-time employees

25 Question: How much will this cost me? Unknown yet regulations coming soon Law: minimum essential coverage with at least 60% actuarial rate (covers 60% of costs) Question: What happens if I don t comply? $2,000 per employee per year for NO coverage AND ANY employee gets a tax credit through the exchange $3,000 per employee per year for: Coverage that is not affordable (i.e. >9.5% of income) AND employee gets credit through the exchange KEY: THE FIRST 30 FULL-TIME EMPLOYEES ARE EXEMPT from penalties

26 Penalties Dates to Remember 2010: Small business tax credit in effect (0-25 employees) 3/23/12: Must provide employees with summary of benefits (based on standards developed by HHS) for all plans 2013: Large employers (>250 W-2 s) must report cost of coverage on 2012 W-2 s 1/1/14: Minimum essential coverage must be offered by employers Window: Employers must provide new employees health care within 90 days of hiring

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