Health Care Reform Exchanges, Penalties and Employer Responsibility

Transcription

1 Health Care Reform Exchanges, Penalties and Employer Responsibility As of April 15, 2013

2 Table of Contents Exchanges Pages 3-4 Determining Large Employer Status Pages 5-6 Employer Penalty Pages 7-9 Coverage Requirements Pages Determining Full Time Eligibility Pages Non Calendar Year Plan Transition Rule Page 20 Cafeteria Plan Transition Rule Page 21 Notices and Reporting Page 22 Taxes and Fees Pages

3 Exchanges State-based competitive marketplaces to purchase health insurance and qualify for premium tax credits and cost-sharing reductions. Initial open enrollment will run October 1, 2013 through March 31, 2014 with coverage effective dates beginning January 1, 2014 To be eligible for the premium tax credit: a taxpayer must enroll in one or more qualified health plans through an Exchange must have household income for the year between 100% (138% in NY) and 400% of the Federal Poverty Line (FPL) for the taxpayer s family size may not be claimed as a tax dependent of another taxpayer must file a joint return, if married, and cannot be eligible for minimum essential coverage (including governmentsponsored programs and eligible employer-sponsored plans) 3

4 2013 Federal Poverty Guidelines 48 Contiguous States and DC Note: The 100% column shows the federal poverty level for each family size, and the percentage columns that follow represent income levels that are commonly used as guidelines for health programs. Household Size 100% 133% 150% 200% 300% 400% 1 $11,490 $15,282 $17,235 $22,980 $34,370 $45,960 2 $15,150 $20,628 $23,265 $31,020 $46,530 $62,040 3 $19,530 $25,975 $29,295 $39,060 $58,590 $78,120 4 $23,550 $31,322 $35,325 $47,100 $70,650 $94,200 5 $27,570 $36,668 $41,355 $55,140 $82,710 $110,280 6 $31,590 $42,015 $47,385 $63,180 $94,770 $126,360 7 $35,610 $47,361 $53,415 $71,220 $106,830 $142,440 8 $39,630 $52,708 $59,445 $79,260 $118,890 $158,520 For each additional person, $4,020 $5,347 $6,030 $8,040 $12,060 $16,080 add: 4

5 Determining Large Employer Status Applicable Large Employer employed an average of 50 FT (including FTE) employees on business days during preceding calendar year (transition rule allowing 6 month average in 2013 only) Full-time employee defined as 30+ hours per week Calculate the total number of full-time employees by adding together: Full-time employees (averaged 30 hours per week or 130 hours per month), plus Full-time equivalent employees (total of all hours for part-time employees for the month divided by 120 Example Company has 40 FT employees and 65 PT employees working 20 hours/week: 65 PT x 86 hours each per month = 5,590 / 120 = 46 FTEs 40 FT + 46 FTE = 86 Total FT employees 5

6 Determining Large Employer Status Controlled Group Rules For purposes of counting the number of FT and FTE employees to determine if applicable large employer, all employees of a controlled group or an affiliated service group are taken into account as a whole For purposes of determining liability for and amount of assessable penalty, each commonly owned/controlled employer within a corporate group is assessed and pays its own penalties separately (even if less than 50) 6

7 Employer Penalty Large Employer Penalty Trigger Applicable large employer may be subject to penalty if either of the following apply: Employer does NOT offer minimum essential coverage to at least 95% of its FT employees (and dependent children) and at least one FT employee receives premium tax credit through Exchange, -OR - Employer offers minimum essential coverage to at least 95% of its FT employees (and dependent children) and at least one FT employee receives premium tax credit through Exchange, because Employer coverage does not provide minimum value, or Employer coverage is considered unaffordable to the employee Applicable large employer will not be subject to penalty if offering minimum essential coverage providing minimum value (60%) that is affordable (9.5%) 7

8 Employer Penalty - NOT Offering Coverage Employer does not offer minimum essential coverage to at least 95% of full-time employees (and dependent children) AND At least one full-time employee receives a premium tax credit from the Exchange Annual penalty is: Equal to the number of full-time employees (minus 30) X $2,000 Example Company has 100 full-time employees = 70 x $2,000 = $140,000 8

9 Employer Penalty - Offering Coverage Employer offers minimum essential coverage to at least 95% of full-time employees AND At least one full-time employee receives a premium tax credit from the Exchange (because coverage is unaffordable or does not provide minimum value) Annual penalty is the lesser of: $3,000 for each full-time employee who receives a premium tax credit, or Number full-time employees (minus 30) x $2,000 Example - Company has 500 full-time employees, where 40 receive premium tax credit through the Exchange 40 x $3,000 = $120, = 470 x $2,000 = $940,000 Penalty = $120,000 9

10 Coverage Requirements Minimum Value Employer Coverage The plan s share of total allowed costs of benefits provided under the plan is at least 60% of those costs (i.e. 60% actuarial value) Methods to determine value: Minimum Value Calculator Design-Based Safe Harbor Checklists (no need for calculations or actuary) Actuarial Certification 10

11 Coverage Requirements Affordable Employer Coverage Employer sponsored coverage is considered affordable if: the employees contribution for self-only coverage of the lowest cost plan providing minimum value does not exceed 9.5% of the employee s W-2 wages for the current year, or the employees monthly contribution for self-only coverage of the lowest cost plan providing minimum value does not exceed 9.5% of the employees computed monthly wages, or Salaried employees use monthly salary Hourly employees determine monthly wage amount by multiply employee s hourly rate of pay by 130 hours per month the employees monthly contribution for self-only coverage of the lowest cost plan providing minimum value does not exceed 9.5% of the FPL for a single individual ($90.96/month based on 2013 FPL of $11,490/year) 11

12 Coverage Requirements Affordable Employer Coverage Example: Employer makes 70% contribution towards single premium for HDHP with $2,000 single deductible Total premium cost is $ per month Employee contribution is $95.25 per month All salaries above $12,031 would meet the 9.5% affordability test 12

13 Determining Full Time Eligibility Hours of Service 30 hours of service per week = 130 hours of service per calendar month Includes: each hour for which an employee is paid, or entitled to payment, for the performance of duties for the employer: and Each hour for which and employee is paid, or entitled to payment by the employer on account of a period of time during which no duties are performed due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence 13

14 Determining Full Time Eligibility New Full-Time Employee Any employee who as of the date of hire, is reasonably expected to be employed on average at least 30 hours per week and who is not a seasonal or variable hour employee Full-time employees in this category must be offered coverage that becomes effective within 90 days of hire. 14

15 Determining Full Time Eligibility Ongoing (current) Variable Hour Employee current employee who has been employed for at least one complete Standard Measurement Period Standard Measurement Period 3-12 consecutive calendar months Period used to count/measure hours of service Stability Period Minimum 6 calendar months not shorter than measurement period Period employee considered PT or FT based on outcome of measurement period Administrative Period Up to 90 days Period after measurement and before stability period Used to determine status, communicate and enroll 15

16 Measurement Period for Ongoing Variable Hour Employee Standard Measurement Period 10/3/ /2/2013 Standard Stability Period 1/1/ /31/2014 Administrative Period 10/3/ /31/ Month Standard Measurement Period 90 Day Administrative Period 12 Month Standard Stability Period If employee averages full time status during Standard Measurement Period, must be treated as full time and offered coverage for entire Standard Stability Period, regardless of hours worked during Standard Stability Period If employee averages part time status during Standard Measurement Period, can treat employee as part time for entire Standard Stability Period, regardless of hours worked and will not incur a penalty if coverage is not offered Standard Measurement Periods run consecutively each year 16

17 Determining Full Time Eligibility New Variable Hour/Seasonal Employee When hired, cannot reasonably be determined if employee will average at least 30 hours per week (including per diem, occasional, on call) Through at least 2014 employers permitted to use reasonable good faith interpretation of the term seasonal" (does not include employees of educational organization) Initial Measurement Period No penalty assessed during initial measurement period Must re-test during first standard measurement period Stability Period Administrative Period When combined with the initial measurement period, cannot extend past last day of 13 th month after hire date 17

18 Measurement Period for New Variable Hour Employee Administrative Period 6/1/2014 6/30/2014 1/1/2013 1/1/2014 1/1/2015 1/1/2016 Initial Measurement Period 6/1/2013 5/31/2014 Initial Stability Period 7/1/2014 6/30/2015 Hire date May 10, month Initial Measurement Period beginning first of month following date of hire (June 1, 2013) Administrative Period plus Initial Measurement Period cannot extend beyond the end of the 13 th month after date of hire 12 month Initial Stability Period If new hire averages full time status during Initial Measurement Period, must be treated as full time and offered coverage for entire Initial Stability Period, regardless of hours worked during Initial Stability Period If new hire averages part time status during Initial Measurement Period, not required to offer coverage for the Initial Stability Period 18

19 New Variable Hour Transition to Ongoing Variable Hour Standard Measurement Period 10/3/ /2/2014 Standard Stability Period 1/1/ /31/2015 Initial Measurement Period 6/1/13 5/31/14 Initial Stability Period 7/1/14 6/30/15 Administrative Period 10/3/ /31/2014 Hire Date May 10, 2013 New hire must be tested separately during the first Standard Measurement Period beginning after date of hire, in addition to Initial Measurement Period Initial Stability Period and Standard Stability Period overlap If new hire averages full time status during Standard Measurement Period, must be treated as full time and offered coverage for entire Standard Stability Period, even if new hire didn t average full time during Initial Measurement Period If new hire averages part time status during Standard Measurement Period, can treat employee as part time for the portion of the Standard Stability Period remaining after the Initial Stability Period ends 19

20 Non Calendar Year Plan Transition Rule An employer that has a non-calendar year plan which was in place on/before December 27, 2012 will not pay a penalty for any of the employees that are either enrolled in such plan, or were eligible for such plan, so long as those employees are offered affordable/minimum value coverage as of the first day of the 2014 plan year Penalties will also not apply for other employees (who were not eligible for such plan as of December 27, 2012) if at least 1/4 of all employees were covered under a fiscal year plan as of 12/27/12 or at least 1/3 of all employees were offered coverage during the most recent open enrollment period before 12/27/12. 20

21 Cafeteria Plan Transition Rule Transition rule allows non-calendar year cafeteria plan to permit employees to change salary reduction elections for accident and health coverage during the plan year that begins in 2013 in order to: Revoke or change his or her election for accident and health coverage once during that plan year, or Make a prospective salary reduction for accident and health coverage on or after the first day of the 2013 plan year Written cafeteria plan document must be amended by December 31,2014 effective retroactively 21

22 Notices and Reporting Notices Summary of Benefits and Coverage (SBC) Notice of Patient Protections Statement of Grandfathered Plan, if applicable Exchange Notice Model notice/guidance expected late summer/fall Reporting Reporting of Health Insurance Coverage On or before 1/31 beginning with coverage provided in 2014 (i.e. first due 1/31/15) 22

23 Taxes and Fees Comparative Effectiveness Research Fees Plan Years ending after October 1, 2012 through 2019 $1 per covered life per year, payable annually ($2 in 2014) Indexed to national health expenditure until 2019 when expires Insured plans paid by the carrier/self-insured plans paid by the plan sponsor HRA and certain FSA paid by plan sponsor if not integrated with other self-insured plan (count only one life per participant) Paid annually by July 31 via IRS form 720 (quarterly federal excise tax return) 23

24 Taxes and Fees Transitional Reinsurance Program To help stabilize premiums for coverage in individual market $12 Billion for 2014, $8 Billion for 2015, $5 Billion for 2016 Final Regulations $63 per covered life per year, paid annually in January, based on enrollment data submitted to HHS by November 15 Insured plans paid by the carrier/self-insured plans paid by the plan/employer - TPA can be used to remit contributions HSAs, FSAs, HRA integrated with other health coverage, and selfinsured plans limited to Rx benefits excluded 24

25 Taxes and Fees Annual Fee on Health Insurers Begins in 2014 Self-Funded Plans are exempt $8 billion 2014, $11.3 billion 2015, $13.9 billion 2017, $14.3 billion 2018 Indexed based on premium growth in future Each carriers fee will be determined based on their percentage of total premium paid nationally 25

26 Taxes and Fees Excise Tax on High-Cost Health Plans (Cadillac Tax) 2018 An excise tax will be charged on high cost plans Single: $10,200 / Family: $27,500 40% Tax on premium that exceeds thresholds above Includes medical, prescription, HRA, FSA and HSA Example: Single Plan Annual Premium in 2018 is $12,000 ($12,000 - $10,200 = $1,800 x.40 = $720) Calculated and reported by employer Prorated amount paid by coverage provider (fully insured) and employer/plan administrator (self insured) 26

27 Thank You.