Healthcare Reform CEEP Presentation

Transcription

1 Healthcare Reform CEEP Presentation Laurie Kazilionis Sr. Vice President Garth Howe Director Integrated Benefits Account Management & Sales February, 2014 / Atlanta

2 Do Americans Understand the Affordable Care Act (ACA)? 2

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5 Medical Trust s approach to healthcare reform Educate and inform Research and analyze Monitor developments and take action 5

6 Healthcare Exchanges New exchanges generating a lot of questions Do the exchanges offer better coverage? Are the exchanges more affordable? Four main drivers of differences Exchange structure Plan design options and health insurer participation Provider choice and breadth of access Premium rate levels 6

7 Consumer experience will vary by State Marketplace State-Based Exchange Three Types of Exchanges under ACA Federal Exchange Partnership Exchange 16 states and D.C. 27 states 7 states 7

8 Comparing the DHP plans with Exchanges Plan Design: Prevailing Medical Trust plan designs provide for most protective levels of coverage Provider Access: Medical Trust plans provide broad access to hospitals and physicians Premium Rates: Early indications showing competitive DHP rates for similar plan designs and levels of provider network access 8

9 On Average, MT Plans Offer Broader Coverage Bronze 60% Silver 70% Gold 80% Platinum 90% Marketplace Norm Prevailing MT Plans 9

10 Prevailing MT plans are Platinum and Gold Level Silver Plans Cigna HDHP Empire BCBS HDHP (excludes any contributions made to Health Savings Account) Gold Plans Cigna POS (OAP) Empire PPO 75/50 Empire PPO 80/60 Empire EPO 80 Kaiser Low Option EPO UHC Choice 80 UHC Choice Plus 80/60 Platinum Plans Aetna Choice POS II Aetna National HMO Aetna Select EPO Cigna EPO (OAPIN) Empire EPO 100 Empire EPO 90 Empire High Option PPO Empire PPO 90/70 Kaiser High Option EPO Kaiser Mid Option EPO UHC Choice UHC Choice Plus 10

11 Platinum plans are popular across majority of Dioceses (as percent of total enrollment) WA OR NV CA ID AZ UT MT WY CO NM ND SD NE KS OK MN WI IA IL MO AR MS VT NY MI PA OH IN WV VA KY NC TN SC AL GA ME NH MA RI CT NJ DE MD DC AK HI TX LA FL Plan Type Platinum (30 states and DC) Gold (12 states) Silver (8 states) 11

12 Medical Trust rates are generally competitive Rates fall within the range of available rates in most markets Lower cost plans are available in most markets if willing to trade off provider access and name brand carriers 12

13 2010: Key provisions Small Business Tax Credit : Available to small church employers : Only available to those using a Marketplace Visit for more information 13

14 2011: Key Provisions Form W-2 reporting (delayed implementation) Coverage of adult children Over-the-counter drugs are not eligible for reimbursement unless prescribed in FSAs, HRAs, and HSAs Restrictions on lifetime and annual limits Zero cost preventive care services 14

15 2011: Additional Key Provisions No pre-existing exclusions for dependents under age 19 Restrictions on retroactive rescission of coverage Revised claims procedures Increase in excise tax on ineligible distributions from HSAs 15

16 Tax Implications of Health Coverage For Adult Children Healthcare benefits for children are tax-free up to age 26 Medical Trust provides coverage through age 30 Benefits may be taxable for children ages Report value as imputed income on Form W-2

17 2012: Key Provisions Summary of Benefits and Coverage Report and pay Patient-Centered Outcomes Research Institute Fee (2012 through 2019) $2 per member ( ) Medical Trust files forms and pays fee Note: If you sponsor separate medical plans or HRAs, you may be required to file a Form 720 and pay this fee 17

18 2013: Key Provisions $2,500 limit on Employee Pre-Tax Health FSA Contributions Additional Medicare Payroll Tax on High Earners.9% Medicare tax on high income earners Employers must begin withholding when wages exceed $200,000 Employers are not required to match the additional.9% Health Insurance Marketplace Notifications 18

19 Health Insurance Marketplace Notifications Employers required to provide notice of the availability of coverage by October 1, 2013 Employers subject to the Fair Labor Standards Act All employees full-time, part-time, with or without coverage Must provide notice within 14 days of hire No penalty for non-compliance The Department of Labor created Model Notices CPG created resources to assist in completing the Notices Go to Administrator s page on 19

20 Additional ACA provisions will impact Medical Trust New Fees Health Exchanges Tax Credits Cadillac Tax 20

21 2014 Provisions Limits on Out-of-Pocket Costs $6,350 for individuals $12,700 for families Ancillary benefits that are separately administered may provide a separate out-of-pocket maximum Maximum waiting period of 90 days Employers participating in Medical Trust plans are not permitted to have waiting periods Must cover certain clinical trials No pre-existing conditions regardless of age Wellness incentives Employers may offer up to a 30% premium reduction (up to 50% for tobacco cessation programs) Programs may not discriminate based on health factors 21

22 Elimination of annual limits - Impact on HRAs Employers cannot offer stand-alone HRAs The HRA must be integrated with another health plan to impose a limit 22

23 Individual Responsibility Provision Each individual must: Have basic health insurance (minimum essential coverage) Qualify for an exemption, or Make shared responsibility payment when filing tax return Shared responsibility payment is equal to the greater of: Year Individual $ Penalty Individual % Penalty 2014 $95 1% of household income 2015 $325 2% 2016 (and thereafter) $ % 23

24 Individual Responsibility Provision Penalty will be assessed for dependents, but reduced by 50% for individuals under age 18 Minimum Essential Coverage reporting requirement effective for 2015 calendar year Exemptions exist 24

25 Employer Shared Responsibility Provision On 2/10/14, the Treasury Department and the IRS issued final regulations Fewer than 50 full-time equivalent employees not subject to penalty More than 100 employees offer coverage to 70% of full-time equivalent employees in 2015; 95% in 2016 and beyond full-time equivalent employees file report on coverage in 2015; offer coverage in

26 Transitional Reinsurance Fee ( ) $20 Billion to fund reinsurance pool plus $5 Billion to reimburse government for the Early Retiree Reinsurance Program (EERP) payments Estimated annual costs to the Medical Trust: 2014: $1,300, : $900, : $600,000 26

27 The Cadillac Tax % excise tax paid on the Excess Amount of coverage Excess Amount defined as the annual cost for coverage in excess of established thresholds amounts: $10,200 for single coverage $27,500 for family coverage Threshold amounts will be adjusted for certain factors Indexed at CPI+1% for 2019 & 2020; at CPI for High risk profession Age and gender 27

28 How might the Cadillac tax impact the DHP rates? 1 Band 5, 3-tier rates. Annual healthcare cost trend assumption of 7%, CPI of 3%, 10% adjustment for high average age 28

29 How might the Cadillac tax impact the DHP rates? The Medical Trust could be subject to significant excise taxes with potential impact on DHP healthcare costs: $2.7 million in 2018 (1.2% of total annual contributions) $14.8 million in 2023 (4.8% of total annual contributions) Note: Assumes threshold amounts are increased by 10% due to higher average age 29

30 Premium Tax Credits Household Income 100% - 400% of FPL 1 No Access to Affordable Healthcare Qualify for PTCs Affordable defined as: Coverage does not exceed 9.5% of household income (excluding housing) for self-only Minimum Value (MV): when benefit provisions cover at least 60% of the plan costs (all MT plans meet MV requirement) Must enroll in a plan offered through Marketplace 1 Federal Poverty Level 30

31 Premium Tax Credits: Annual Federal Poverty Level Federal Poverty Guidelines for the 48 Contiguous States and the District of Columbia 2014 Projected 1 Family Size Poverty Guideline 133% of FPL 200% of FPL 300% of FPL 400% of FPL 1 $11,820 $15,720 $23,640 $35,460 $47,280 2 $15,900 $21,150 $31,800 $47,700 $63,600 3 $19,980 $26,570 $39,960 $59,940 $79,920 4 $24,060 $32,000 $48,120 $72,180 $96,240 5 $28,140 $37,430 $56,280 $84,420 $112,560 6 $32,220 $42,850 $64,440 $96,660 $128,880 Clergy housing allowance excluded for purposes of determining eligibility for PTCs figures based on applying 2013 percentage increases (over 2012) to the 2013 Federal Poverty Guidelines 31

32 Less than 5% of Medical Trust participants estimated to qualify for PTCs* Total DHP Age 65 and Over Household Income > 400% FPL Household Income 300% - 400% FPL Access to Affordable Coverage Eligible for Meaningful PTC Household Income 100% - 300% 13, % 2, % % % 8, % *Based on 2013 CPG and Medical Trust clergy and lay employee census data, available employee contribution levels and ESI Tapestry household income database; analysis and results validated by external source 32

33 Premium Tax Credits (PTCs) Levels of Subsidies Income Level (in terms of FPL) Maximum % of Household Income to Pay Premiums for Healthcare Coverage Up to 132% 2% % 3-4% % 4-6.3% % 6.3% % % 8.05% - 9.5% % 9.5% Three types of subsidies available to those that qualify Premium credits (2.0% to 9.5% of income) Increase in benefit plan value (from 70% up to 94%) Limits on out-of-pocket expenses (ranging from $1,983 to $7,973) 33

34 Additional complexities with PTCs Loss of employer contributions towards healthcare coverage Loss of pre-tax treatment on employee contributions Additional cost Gold/Platinum coverage Silver coverage costing more than 2 nd lowest priced Silver Plan in the market Non-discrimination rules Changes in household income 34

35 Will Employer Behavior Change? What options will employers have to access the premium tax credits? Option 1 - Stop offering coverage to all employees Option 2 - Increase required contribution so that low paid employees purchase insurance on Marketplace 35

36 Will Employer Behavior Change? Option 1 Stop offering health coverage to all employees Will result in noncompliance with canonical law (DHP) Employees purchase health coverage through Marketplace with after-tax dollars Significant cost to employees not eligible for PTC If more than 50 full-time employees, may be subject to pay or play penalty 36

37 Will Employer Behavior Change? Option 2 Increase employee contribution so low-paid employees become eligible for PTC on the Marketplace Employer will not have access to household income (only Form W-2 income) Note: Non-discrimination rules may limit the employers ability to offer more generous contribution to higher paid employees To be considered Employee A makes $98,000 and Employee B makes $48,000; both with a family of four Employee A would not be eligible for subsidy on Marketplace, but Employee B would be eligible for significant PTC 37

38 Church Health Plan Act of 2013 (S. 1164) Would allow eligible clergy and lay employees to: Continue to receive benefits of the DHP Cost containment Higher levels of benefits and services Gain access to premium tax credits Would allow small churches to continue to file for Small Business Tax Credit through 2016 Status: Introduced in Senate Outreach to Senators to support bill 38

39 Church Health Plan Act of 2013 Why ask for relief? For parity between for-profit health insurers and church plans Will church employees receive special tax benefits? No. Similar to employees who purchase insurance on the Marketplace, an employee who receives a premium tax credit, will be taxed on all contributions made to the Medical Trust Plan. 39

40 Premium Tax Credit Recap Limited percentage of Medical Trust participants expected to qualify Unlikely that employer behavior will change stop offering healthcare coverage? materially decrease current cost sharing levels? 40

41 Premium Tax Credit Recap Additional points of consideration Loss of pre-tax treatment on contributions Loss of employer contributions Available plan designs, provider networks, level of premium rates and PTCs in each market Nondiscrimination rules Changes in household income during the year 41

42 Ongoing Communication Outreach to the Church Monthly administrator s Bishop meetings Provincial synod meetings Executive Council NNECA, CEEP, CODE, NACBA, NAES, SAES, etc. Please give us your feedback 42

43 QUESTIONS? 43

44 Important Notice The Church Pension Fund and its affiliates do not provide, and none of the information in this presentation should be viewed as financial, investment, tax, legal or other advice. Your personal decisions should be based on the recommendations of your own professional advisors. This presentation is provided for informational purposes only. Please consult the official plan document for additional details of coverage. In the event of a conflict between the information contained in this presentation and the official plan documents, the official plan documents will govern. The Church Pension Fund and its affiliates retain the right to amend, terminate or modify the terms of any benefit plans described in this presentation, consistent with applicable law. 44