Health Care Reform and Franchising: What It Really Means and How to Comply. January 24, 2013

Transcription

1 Health Care Reform and Franchising: What It Really Means and How to Comply January 24, 2013 Presented by: Governor James Blanchard, Partner, Government Affairs, DLA Piper Erik Wulff, Partner, Franchise and Distribution, DLA Piper Anne Pachciarek, Partner, Employee Benefits and Executive Compensation, DLA Piper Nicole Carelli, Associate, Government Affairs, DLA Piper, *This presentation is offered for informational purposes only, and the content should not be construed as legal advice on any matter.

2 Presenters Governor James J. Blanchard Partner Government Affairs DLA Piper T: Erik W. Wulff Partner Franchise and Distribution DLA Piper T: Anne Pachciarek Partner Employee Benefits and Executive Compensation DLA Piper T: Nicole Carelli Associate Government Affairs DLA Piper T:

3 introduction What we will cover today Policy overview of Affordable Care Act what happened? Employer mandate and penalties what you need to know Implementing the ACA in the franchise industry what you need to do Legislative and regulatory outlook what s next 3

4 why the ACA? 4

5 why the ACA? Source: OECD Data (2009) 5

6 three tranches of reform 6

7 regulation and coverage ( ) January July 2010 Small business tax credits available Early Retiree Reinsurance Program (ERRP) effective Enrollment opened in Federal Pre-Existing Condition Insurance Plan (PCIP) Key Provisions Regulation and Coverage ( ) Plan years beginning on or after September 23, 2010 Coverage of young adults up to age 26 No pre-existing condition exclusions for children up to age 19 No rescissions Coverage of ER visits, choice of doctor, OB-GYN coverage No lifetime limits, restricted annual limits on essential health benefits Insurance plans appeals process Preventive services (women s preventive services 2012) 7

8 regulation and coverage ( ) September 1, 2011 August 1, 2012 Rate review Medical Loss Ratio (MLR) rebates for 2011 paid Plan years beginning on or after September 23, 2012 Summary of benefits and coverage 8

9 expansion of coverage (2014) Drafters goal Medicaid Exchanges Employer, individual insurance 0 133% FPL 133% - 400% FPL 400% FPL+ Enhanced state match for newly eligibles Premium and cost-sharing subsidies Employer, individual mandate Guaranteed issue/ ban on preexisting conditions exclusion Impact of Supreme Court decision Medicaid 0? FPL? Exchanges Employer, individual insurance 133% - 400% FPL 400% FPL+ 9

10 expansion of coverage (2014) Health insurance exchanges Source: Kaiser Family Foundation, as of January 4,

11 expansion of coverage (2014) Individual mandate Must have minimum essential coverage Phased in beginning in 2014 Includes employer-sponsored plans; plans in the individual market; Medicare; Medicaid; VA health care; TRICARE When fully effective in 2016, will be the greater of $695 per uninsured adult ($ per child) or 2.5% of household income Limited exemptions Religious, incarcerated, low income, residents of territories Employer mandate 11

12 expansion of coverage (2014) Consumer protections/market reforms Guaranteed issue No pre-existing condition exclusions Rating restrictions No annual limits Essential health benefits Employer auto-enrollment (200+ FTEs) Other Allow expansion of wellness program incentives 12

13 employer mandate and penalties Effective in 2014 and after Employer mandate requires large employers to offer affordable coverage to full-time employees (and their dependents) A large employer (50 or more full-time equivalent employees) is subject to penalty if at least one full-time employee receives a premium tax credit for exchange coverage and the employer: Fails to offer coverage to substantially all full-time employees (and their dependents) (the no coverage penalty ) or Coverage is unaffordable (employee contribution must be less than 9.5% of household income) or does not provide minimum value (the inadequate coverage penalty ) Penalty amounts No coverage penalty: $2,000 per year, per full-time employee in excess of 30 full-time employees Inadequate coverage penalty: $3,000 per year, per full-time employee for whom coverage is unaffordable and who receives a tax credit to purchase coverage through a government health exchange 13

14 steps for employers to take Steps for employers Determine whether your business is subject to mandate and penalties Determine how many full-time employees you have Review your insurance offerings and figure out whether you will incur a penalty Determine the amount of the penalty Decide whether to pay or play 14

15 which employers are subject to the mandate? Is your business subject to the mandate? How to make the calculation of whether you have 50 full-time equivalent employees Total number of Full-Time Employees Plus Total Hours Worked By Equals Part-Time Employees Total Number of Full-Time Equivalent Employees 120 Aggregating affiliated entities Special rules for seasonal employees 15

16 who must be offered coverage? Who must be offered coverage? determining full-time employees Penalty amount turns on who is considered a full-time employee How to make the calculation of full-time employee Hours of service rules Determining full-time status-optional safe harbor Look-back measurement period Administrative period Stability period Transition relief for

17 what coverage must be offered? What coverage must be offered to avoid a penalty? Substantial compliance rule Dependents and spouses Affordability Safe harbors W-2 wages Rate of pay Federal poverty line 17

18 practical implications Implications for employers Decide whether to pay or play consider culture, competition, employee relations, costs Options: Consider state exchange coverage, if available Play, but manage costs and design Cost-sharing, networks, wellness Account-based plan designs Corporate exchanges Exit completely and pay penalty Getting ready to play 18

19 implementation of ACA in franchise industry Franchisor, as brand owner, has overriding concern about system-wide brand standards Will efforts to minimize financial effects of ACA compliance adversely affect brand standards? Franchisor leadership within the system Franchisors own actions What should be communicated How should communications occur Potential liability/means to minimize liability 19

20 public policy outlook Regulatory guidance far from final, and some policy decisions yet to be made, but key policies set in statute, and making significant changes will be an uphill battle Sprint to 2014 Potential for delays Expect growing pains 20

21 Presenters Governor James J. Blanchard Partner Government Affairs DLA Piper T: Erik W. Wulff Partner Franchise and Distribution DLA Piper T: Anne Pachciarek Partner Employee Benefits and Executive Compensation DLA Piper T: Nicole Carelli Associate Government Affairs DLA Piper T: