Healthcare Reform Update Considerations & Market Update November March 2013

Transcription

1 Healthcare Reform Update Considerations & Market Update November 2013 March 2013

2 Agenda Recent Events Update Exchanges Administrative & Legislative Actions Status of the Individual Mandate 2014 Impacts 2015 Employer Mandate Possible Future Reform Changes 2

3 Reform: Recent Events Exchanges continue to have technical issues Launched October 1 st, State Marketplaces & 34 Federally facilitated Marketplaces President promised issues fixed by November 30 th Head of CMS states 30-40% of system not yet built Back-office, account and payment systems to be built after 11/30 th date Minor security breaches reported at state and Federal levels 3

4 Reform: Current Events If you like your insurance you can keep it November 14 th Presidential Order Allowing canceled individuals to renew policies Guidance defers to states and to health insurance industry November 15 th Congressional Proposal (HB) Option to extending cancelled plans (39 Democrats voted in favor) President has threatened to Veto Nine states will not allow insurers to sell plans Indiana, Maryland, Massachusetts, Minnesota, New York, Rhode Island, Vermont, Washington, California Eight states will allow insurers to sell plans Florida, Missouri, Ohio, Alabama, Tennessee, North Carolina and South Carolina but will insurers sell them? 4

5 Reform: Current Events Status of the Individual Mandate? October Delayed 6 weeks Open enrollment runs from October 2013 March 31, 2014 Originally enrollment ran through February 15, 2014 November Extended 1/1 required enrollment deadline Individual enrollment deadline moved to December 23 from December 15 Despite enrollment issues, cancelled plans and numerous technical issues administration officials express confidence that exchange sites will be up and running. Therefore penalties associated with the individual mandate will be in-forced for

6 Reform: 2014 Impacts continued Health Insurance Industry Tax (HIT) $8 billion tax beginning in 2014 increasing to $14.8 billion Impacts fully-insured plans only 2% - 3% aggregate premium increase W-2 Reporting Employers issuing 250+ W-2 s 90-day maximum waiting period Guaranteed issue / no-pre-existing conditions 10 essential health benefits (EHB s) Out-of-Pocket Maximums All non-grandfathered plans subject to in-network out-of-pocket maximums indexed to QHDHP levels current levels: $6,250 single / $12,500 family Safe-harbor for separate Rx plans 6

7 Reform: 2014 PCORI Fees Patient-Centered Outcomes Research Institute (PCORI) Fee applies to policy years ending after 9/30/12 and before 10/1/19 $1.00 per member fee for first plan year ending after 9/30/12 $2.00 per member fee for second plan year ending after 9/30/13 Indexed to inflation in subsequent years through 2019 Who is required to pay? All health insurance plans fully-insured or self-funded (including retiree only) i. Fully-insured plans carrier pays ii. Self-insured plans employer pays & files form 720 When is it due? Must be paid by July 31,

8 Reform: 2014 PCORI Fees How is the fee amount reported and paid Reported and paid using IRS Form 720 Part II IRS No. 133 on page 2 of 7. 8

9 Reform: 2014 MLR Rebates Requirement on fully-insured markets 80% Medical Loss Ratio (MLR) target for small / individual market 85% Medical Loss Ratio (MLR) target for large group market Annual Calculation By state, by book of business and business entity Rebates due to policy holders by 7/31 Paid to policy holders must be allocated appropriately; Employer / employee shares Specific uses cash rebates, future premium reductions, benefit enhancements Rebates must be utilized within 90 days or a trust must be established 9

10 Reform: 2014 Reinsurance Fee Transitional Reinsurance Fee $25 billion tax on TPAs and insurers from Applies to: Major medical coverage (fully-insured and self-funded plans) Pre-65 retiree programs COBRA Does not apply to: Post 65 retiree benefits (where Medicare is primary) HIPAA excepted benefits Integrated HRA s, HSA s, FSA s, EAP s, Stop Loss, TRICARE, Coverage provided by Indian tribes to tribal members and their dependents. Year 1 - $63 per member per year or $5.25 pmpm States that operate their own TRF are allowed to collect a supplemental assessment beyond the $63 10

11 Reform: 2014 Reinsurance Fee Calculating the # of covered lives (1 of 3 methods) 1. Actual count total lives ( belly buttons ) covered each day of plan year divided by # of days in plan year 2. Snapshot total lives on one consistent date during each quarter divided by Method - # reported on 5500 form filed for the plan year Sum of participants covered at beginning and end of the plan year May only be used if Form 5500 for the plan year has actually been filed by the fees due date (7/31) Annual counts must be submitted to HHS by no later than November 15 th of benefit year 2014, 2015 & October 2013 HHS proposed exemption for certain selfinsured, self-administered plans. (SB1724) would bar exemptions GOP only support (HB3489) would repeal fee entirely - bi-partisan support 11

12 Reform: 2014 Impacts 2014 Individual Mandate Requirement for all U.S. citizens and legal residents to have qualifying coverage Those without coverage will have to pay a penalty the greater of $695 per year up to a maximum of three (3x) that amount or $2,085 per family or 2.5% of household income Penalties to be phased in as follows: Greater of $95 or 1.0% of taxable income Greater of $325 or 2.0% of taxable income Greater of $695 or 2.5% of taxable income After 2016 penalties will be increased annually by the cost-of-living adjustment 12

13 Reform: 2014 Impacts continued Market Compression Small Group Market Individual Market Limits on Age Rating 3 to 1 ratio maximum In 2015 small group defined nationally as Source: America s Health Insurance Plans (AHIP) 13

14 Reform: 2015 Employer Mandate Shared Responsibility Requirements a.k.a Employer Mandate or Pay or Play Excise tax added by the Affordable Care Act for employers failing to meet certain conditions regarding employer-sponsored health coverage offered to their employees Employers with 50+ full-time or FTE employees must: 1. Offer health coverage to all full-time employees and their dependents Full-time employee defined as an employee who is employed, on average, at least 30 hours of service per week (or 130 hours per month) 2. Offer minimum essential coverage that is both affordable and provides minimum value: A. Minimum Essential Coverage as determined by state benchmark plan B. Affordable employee portion of premiums for self-only coverage not to exceed 9.5% of the employee s household income Safe Harbor Available C. Minimum Value plan must cover at least 60 percent of total allowed costs 14

15 Reform: 2015 Employer Mandate Shared Responsibility: Penalties for Non-Compliance The following penalties are triggered when one of an employer s full-time employees receives a premium tax credit or cost-sharing reduction through an Exchange: A. If employer fails to offer minimum essential coverage to at least 95% of its eligible full-time employees and their dependents, then the employer will be subject to a penalty in the amount of $2,000 for each full-time employee (after 1st 30); B. If employer offers minimum essential coverage, but: 1. fails to satisfy the affordability and; 2. minimum value requirements, then the employer will be subject to a penalty in the amount of $3,000 for each full-time employee receiving exchange subsidy 15

16 Reform: Things to look for Continued change, modification, legal & regulatory action Possible common sense definition of FTE Changing the law from 30 hours to 40 hours Possible penalty increases Increases to individual mandate and employer mandate Enforcement of non-discrimination rules Continued repeal efforts Latest House effort introduced 11/22/13 SCOTUS ruling(s) on birth control mandate Church affiliated employers Non-church affiliated employers 16

17 Healthcare Reform Update: Q&A Chris Johnson Manager Consulting Services