Affordable Care Act Implications for Employers May 30, Beth Essey, Senior Vice President Employee Benefits Practice Leader

Transcription

1 Affordable Care Act Implications for Employers May 30, 2014 Beth Essey, Senior Vice President Employee Benefits Practice Leader 0

2 Good Afternoon! 1

3 Discussion Topics Where We ve Been Where We Are Now Where We re Going 2

4 Background of PPACA The Patient Protection and Affordable Care Act (PPACA), also referred to as Obamacare, was signed into law on March 23, Some of the major components of the federal statute are listed below: Individual Mandate Requires all US citizens and legal residents, with some very limited exceptions, to obtain a minimum level of health coverage or face modest penalties Employer Mandate Requires employers with 50 or more full-time equivalent (FTE) employees to offer affordable coverage to fulltime employees and their dependents, or be subject to penalties Insurance Exchanges Creates national and state-run health insurance exchanges, open to all citizens and provides tax credits to eligible individuals, based upon income level, to purchase coverage Coverage Changes Reduces or eliminates several restrictions for private insurance coverage Medicaid Expansion Increases Medicaid access to those up to 133% of federal poverty level 3

5 Where We ve Been 4

6 Implications on Various Entities Group Health Plan Sponsors Individual Consumers Health Care Providers Small Employers Medicare Beneficiaries Drug & Medical Device Manufacturers High Wage Earners Insurance Companies States Employees Reinsurers Large Employers 5

7 Insert Health Reform Timeline Timeline /23 PPACA signed into law 9/23 Non-grandfathered plan rules apply; Eligibility and plan design mandates begin: preventive service covered at 100%, children covered to age 26, no benefit maximums; restricted annual dollar limits; recission of coverage (retroactive terminations) are prohibited unless there is evidence of fraud; internal/external appeals process required; no pre-existing conditions for children under age /1 - OTC drugs no longer eligible in HSA, HRA & FSA plans; regulation of carrier loss ratios beings / employees must report value of health benefits on W2 forms (not included in income) 1/1 No pre-existing conditions for anyone 8/1 Women s preventive services covered at 100% (non-grandfathered plans) 9/23 Must provide summary of benefits coverage (SBC) with open enrollment materials 9/23 Must provide notice of GF plan; Provide notice of patient protections (Non-GF); Must provide SMM; /1 FSA contributions for medical expenses limited to $2,500 1/1 High wage earner tax 1/1 Medical Device Manufacturer s Fee 10/1 - Employers must notify employees about exchanges and exchanges initial open enrollment period to begin 6 1/1 PCORI fee of $1 pmpy for Employer Sponsored Health Plans

8 Where We ve Been 7

9 The Result So Far Broader Health Care Coverage Broader Coverage Base Coverage for Longer Periods of Time Greater Expense to Employers & Employees 8

10 Where We Are Now 9

11 Insert Health Reform Timeline Timeline /1 Individual Mandate all US citizens required to purchase qualified coverage - State Insurance Exchanges established - Guarantee issue and renewability mandated - Regulation of carrier rating practices begin - No annual dollar limits on essential health benefits - Coverage for employees working 30 hours or more begins - Must provide coverage for clinical trials (NG plans) - New hire wait cannot exceed 90 days - No more annual limits - Wellness incentives to 30% differential; tobacco to 50% differential - Transitional Reinsurance Fee of $63 pmpy for Employer Sponsored Health Plans - Insurer s Fee applies to fully-insured plans /1 Employer Mandate provisions begin including reporting for eligible employees over 30 hours Transitional Reinsurance Fee reduces TBD Annual health plan reporting to government required /1-40% excise tax imposed on excess benefit of high cost health plans. Also known as Cadillac Tax. 10

12 Employer Mandate Review Employer Mandate was unexpectedly delayed on July 2, 2013 until January 1, 2015 Employer Mandate Components: Large employers 50 or more full-time employees Employers who do not offer employer-sponsored coverage that meet the following criteria will pay fines/penalties: Affordability Affordable coverage is defined as a plan where employee costsharing for individual coverage does not exceed 9.5% of W-2 income Minimum Value Plans must provide benefit levels valued at a minimum actuarial value of 60% Offers minimum value of essential health benefits 10 categories of care 11

13 Employer Mandate Review Fines/Penalties Pay or Play Pay: Employers not offering coverage to full-time employees (and their dependents) Subject to penalty up to $2,000 for each full-time employee (minus the first 30) if at least one full-time employee receives income-based assistance to buy coverage on insurance exchange Play: Employers offering coverage to full-time employees (and their dependents) that is not affordable or does not meet minimum value Pay the lesser of the $2,000 penalty for each full-time employee (minus the first 30) OR $3,000 for each full-time employee eligible for income-based assistance 12

14 Employer Mandate Review Eligibility Provision Employers (with 50 or more employees) obligation to provide health coverage to full time employees Full time employee - working 30 or more hours/week Special consideration for Higher Education Adjunct Faculty & Student Employees IRC Section 4980H added by ACA must use a reasonable method for crediting hours of service that is consistent with the purpose of section 4980H Nothing specific on adjuncts In February 2014, IRS provided more definitive guidance on reasonable method for calculating adjunct hours 2.25 hours of service per week for each hour of teaching/classroom time PLUS, 1 hour of service per week for each additional hour outside the classroom performing required duties (office hours, faculty meetings, etc.) Example: Teaching 12 credits, 2 required office hours, 1 hour faculty meeting = 27 (2.25 X 12) = 30 hours 13

15 Employer Mandate Review Potential future IRS guidance but safe calculation method through 2015 Institutions can offer more hours than outlined method Can also use other methods such as 75% of full-time faculty Student Employees Service performed by students in positions subsidized through the federal work study program or similar program, do not counts as hours of service for S4980H All other hours of service for which a student employee is paid are required to be counted On call hours by RA s are required to use a reasonable method of calculation No direction on graduate research and teaching assistantships exemption Internships and externships would not count as hours to the extent the student does not receive payment for those hours. Some paid interns or externs may qualify for exemption as seasonal employees. 14

16 2014 Key Provisions Individual mandate: all US citizens required to have qualified medical coverage or pay tax Tax penalty of $95 in 2014; increasing to $695 in 2016, or a maximum of 2.5% of income Some employers with a high percentage of employees waiving coverage could see increases in headcount State Insurance Exchanges begin Individuals able to obtain medical insurance through state exchanges as of 1/1/14 Exchanges run by individual states or facilitated by the federal government if states do not choose to set up their own. Coverage guaranteed issue for individuals (no denials of coverage for health conditions) Individuals are eligible for a premium tax credit/subsidy if income is less than 400% of the FPL and they do not receive qualified coverage options from their employer or the government 15

17 Public Exchanges 16

18 Public Exchange Plans in 2014 Plans offered are based on metal levels: Platinum, Gold, Silver and Bronze - Platinum has 90% actuarial value (AV) - Gold has 80% AV - Silver has 70% AV (Federal Premium Assistance level) - Bronze offers 60% AV 17

19 Example of Platinum Coverage 91% AV Traditional PPO Plan, Network Benefits - $250 single deductible / $500 family deductible 80% coinsurance paid by plan, 20% paid by member Office Visits $10 RX $5 / $15 / $25 $2,000 Out-of-pocket cap single $4,000 Out-of-pocket cap family 18

20 Example of Gold Coverage 82% AV Traditional PPO Plan, Network Benefits - $750 single deductible / $1,500 family deductible 80% coinsurance paid by plan, 20% paid by member Office Visits $30 RX $10 / $30 / $60 $2,000 Out-of-pocket cap single $4,000 Out-of-pocket cap family 19

21 Example of Silver Coverage 70% AV Qualified High Deductible Plan, Network benefits - $1,500 single deductible / $3,000 family deductible 80% coinsurance paid by plan, 20% paid by member $4,500 Out-of-pocket cap single $9,000 Out-of-pocket cap family 20

22 Example of Bronze Coverage 58% AV Qualified High Deductible Plan, Network benefits - $4,000 single deductible / $8,000 family deductible 80% coinsurance paid by plan, 20% paid by member $2,000 Out-of-pocket cap single $4,000 Out-of-pocket cap family 21

23 Exchange Premiums Estimated Retail Cost Family Coverage, Member Age 47, non-smoker, PA, Gold $1,397 Platinum $1,585 Single Coverage, Member Age 52, non-smoker, PA, Gold $643 Platinum $718 22

24 Public Exchange Results Marketplace Eligibility Determinations and Plan Selection Number of Eligible Persons who have Selected a Plan through the SBMs and FFM: 8 million Number of Persons who have had a Medicaid/CHIP Determination or Assessment through the Marketplaces: 6.7 million (does not include individuals applying through State Medicaid/CHIP agencies.) Marketplace Plan Selection by Gender 46 percent of the persons who have selected a Marketplace plan are male 54 percent of the persons who have selected a Marketplace plan are female Marketplace Plan Selection by Age 28 percent of the persons who have selected a Marketplace plan are between the ages of 18 and percent of the persons who have selected a Marketplace plan are between the ages of 0 and 34 Marketplace Plan Selection by Metal Level 20 percent of the persons who have selected a Marketplace plan have selected a Bronze plan 65 percent of the persons who have selected a Marketplace plan have selected a Silver plan 23

25 Public Exchange Results Marketplace Plan Selection by Metal Level 20 percent of the persons who have selected a Marketplace plan have selected a Bronze plan 65 percent of the persons who have selected a Marketplace plan have selected a Silver plan 9 percent of the persons who have selected a Marketplace plan have selected a Gold plan 5 percent of the persons who have selected a Marketplace plan have selected a Platinum plan 2 percent of the persons who have selected a Marketplace plan have selected a Catastrophic plan Marketplace Plan Selection by Financial Assistance Status 85 percent of the persons who have selected a Marketplace plan have selected a Marketplace Plan with Financial Assistance Marketplace Plan Selection by Financial Assistance Status and Metal Level 76 percent of the persons who have selected a Marketplace plan with Financial Assistance through the FFM have selected a Silver plan 95 percent of the persons selecting a Silver plan will be receiving Federal financial assistance in paying their premiums 25 percent of the persons who have selected a Marketplace plan without Financial Assistance through the FFM have selected a Silver plan 33 percent of the persons who have selected a Marketplace plan without Financial Assistance 24 through the FFM have selected a Bronze plan

26 Where We Are Today 25

27 Where Are We Going? 26

28 The Future of ACA Public Opinion of the Performance of the President and the Direction of the Country President has a 41% approval rating 63.1% of Americans think the country is on the wrong track Source: The Washington Post/ABC New Poll April 24 27, 2014 Public Sentiment Regarding the Health Care Reform Law Opinion of Law 41% Support; 52% Oppose Future of the Law 58% Can t Go Back/Work to Improve; 35% Go Back/Repeal Trust to Handle Health Care 43% Democrat; 35% 27

29 The Future of ACA 2014 Elections Will Impact Ongoing ACA Implementation Efforts and Future Health Care Reform Debates Republicans need to pick up 6 seats in the Senate to win the majority Democrats are defending 21 seats, including 6 in states that Mitt Romney won 7 key states to watch: Alaska, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, Michigan Of the 36 Gubernatorial Races this year, 22 are held by GOP versus 14 which are held by democrats 6 Governorships are too close to call: Arkansas, Florida, Illinois, Maine, Michigan, Pennsylvania While Health care remains a key political issue, there is a lot of distraction at the state and federal level 28

30 The Future of ACA Key Health Care Dynamics that Await State Policy-Makers Exchange Decisions: State, Federal, Partnerships Medicaid Expansion Dual Eligible Dynamics Continued Cost Shifting Challenges from the Federal Government Further Health Care Dynamics Impacting Health Care Costs, Access, and Quality Challenges 29

31 The Future of ACA As Reform Implementation Settles In, the Next Phase of the ACA Process is Beginning: Despite the ACA, 31 million Americans will be uninsured in 2024 As 11,000 baby boomers reach retirement each day, the Medicare program has sustainability challenges Between Public and Private Exchanges, the employer based system is evolving Delays and challenges to the ACA will continue to add uncertainty The $100 billion ACA health insurance tax will increase premiums and result in up to 286,000 jobs lost by 2023, and cost states approximately $14 billion over the next 10 years The role and responsibility of the consumer will garner more attention and debate 30

32 Where Are We Going? 31