Health Care Reform at-a-glance

Transcription

1 Health Care Reform at-a-glance August 2015

2 Table of Contents Employer mandate...3 Individual mandate...3 Health plan provisions applying to both grandfathered and non-grandfathered employer plans...4 Health plan provisions applying only to non-grandfathered employer plans...5 Retiree health...6 Insurance market reform for individuals and small groups...7 Public marketplaces...8 Taxes and fees...8

3 Employer mandate Shared responsibility assessment for failing to offer coverage to at least 95%* of all full-time employees (FTE) and children if any FTE gets subsidy in marketplace $2,000 (indexed) times the number of FTEs (excludes first 30* FTEs). FTE defined as working 30 or more hours per week. Not required to offer coverage to part-time employees, retirees, or spouses but must offer to children. No minimum employer subsidy required. Under Code Section 6055, insurers and sponsors of selffunded plans must report to both IRS and individual that employee, retiree, and dependents had minimum essential coverage in preceding year. Forms 1094-B/1095-B and 1094-C/1095-C will be used for this purpose. Penalties first imposed in 2016 for failure to satisfy mandate in 2015 Analysis and determination of FTEs required. Complicated measurement rules administrative burden of determining FTE status. Adjust eligibility terms of plan. *95% threshold lowered to 70% and first 80 FTEs excluded for 2015 only. Shared responsibility assessment for full time employees who are not offered coverage or opt out of employer plan and get subsidy in marketplace $3,000 (indexed) for each FTE who enrolls in marketplace and receives low income subsidy if: (1) employee s contribution for single coverage under employer plan exceeds 9.5% of W-2 income, rate of pay, or the federal poverty level (FPL) for individuals, or (2) employer plan fails to provide minimum value, i.e., the actuarial value of plan is below 60%. See Public marketplaces below for more information on low income subsidy eligibility. Penalties first imposed in 2016 for failure to satisfy mandate in 2015 Employer not required to offer coverage that satisfies affordability or minimum value requirements, but risks assessment if coverage not offered. Analysis of coverage and plan costs required. Reporting of employersponsored coverage Under Code Section 6056, employers must report to both IRS and employees information regarding coverage offered to full-time employees and dependents. Forms 1094-C/1095-C will be used for this purpose. Reporting first required in 2016 for coverage provided in 2015 Administrative burden; extensive data collection and reporting requirements. Individual mandate Penalty for failure to have minimum essential coverage Greater of 1.0% of MAGI or $95/person in 2014, 2.0% or $325/ person in 2015, 2.5% or $695/person in 2016; indexed for individuals who fail to maintain minimum essential coverage. Family dollar amount capped at 300% of individual penalty. Penalties first imposed in 2015 for failure to satisfy mandate in 2014 Plan cost may increase if more employees enroll to avoid penalty. Reporting of minimum essential coverage Under Code Section 6055, insurers and sponsors of selffunded plans must report to both IRS and individual that employee, retiree, and dependents had minimum essential coverage in preceding year. Forms 1094-B/1095-B and 1094-C/1095-C will be used for this purpose. Reporting first required in 2016 for coverage provided in 2015 Administrative burden, including efforts to collect dependent tax ID numbers. 3

4 Health plan provisions applying to both grandfathered and non-grandfathered employer plans Annual and lifetime dollar limits No lifetime or annual dollar limits on essential health benefits (EHB). o Not applicable to most FSAs, HSAs, and integrated HRAs. Self-funded and large group plans must use authorized definition of essential health benefit (state benchmark plan ) beginning in Lifetime limits prohibited for plan years beginning on/after September 23, 2010; Annual limits restricted for plan years beginning on/after September 23, 2010 and prohibited for plan years beginning on/ after January 1, 2014 Plan cost may increase if more employees enroll to avoid penalty. Extension of child coverage to age 26 Up to age 26 for medical coverage regardless of marital or student status, residence, or support. Excludes stand-alone dental and vision coverage. Cannot charge more than for other similarly situated individuals. Plan costs may increase if more dependents are covered. Income tax exclusion for child coverage to age 26 Exclusion through end of calendar year in which child reaches age 26. Includes dental, vision, health FSA, and HRA (different rule for HSA). March 30, 2010 Simplifies payroll administration. Plan may terminate coverage when the child turns 26, prior to the end of the tax year. Pre-existing condition exclusion No pre-existing condition exclusions for enrollees. Limited impact on large employer plans. Will reduce job lock. Waiting periods Waiting periods over 90 days prohibited. A one-month orientation period that begins on the employee s start date is permitted (before the waiting period). Most cost implications for organizations with high turnover. Treatment of OTC drugs as medical expense Health FSAs, HRAs, and HSAs prohibited from reimbursing cost of OTC drugs (other than insulin) unless prescribed by a physician. January 1, 2011 OTC medical items (other than medicines and drugs) still eligible for reimbursement. Administrative costs may increase. Health FSA cap Salary reductions capped at $2,500; indexed. In 2014, indexed cap remained $2,500 and is $2,550 for after January 1, 2013 Cafeteria plan document must be amended by December 31, 2014, but plan compliance required starting January 1, Carryover amount of up to $500 permitted if health FSA does not have a grace period. HIPAA wellness incentives No discrimination regarding eligibility or coverage on the basis of a health status-related factor. Incentives increased to 30% (and additional 20% - up to 50% - for tobacco use) of cost of coverage. Incentives (other than tobacco use) may affect affordability and minimum value determinations for purpose of employer penalty. Employers must review programs to ensure compliance. Increased costs. Automatic enrollment Auto-enrollment required for employee with option to opt out of coverage. Not enforced until regulations are issued. After regulations are issued. No effective date in the law. May result in increased costs due to higher enrollment and more complex administration. 4

5 Health plan provisions applying to both grandfathered and non-grandfathered employer plans, continued Marketplace Notice Notice to employees concerning availability of health insurance marketplace. Model notices include one for employers that offer coverage to some or all employees and one for employers that do not offer coverage. October 1, 2013 Must be provided to all employees regardless of benefit eligibility. Provided to new employees within 14 days of start date. Statutory requirement, but no penalty if notice is not provided. Summary of benefits and coverage (SBC) Brief summary of benefits with a prescribed format, content, language, and timing must be provided to new enrollees and at open enrollment. Open enrollment periods beginning on/after September 23, 2012 Good faith compliance; departments approach is to assist plan sponsors with compliance rather than impose penalties. Greater coordination among vendors required. Reporting plan value on Form W-2 Total value of medical coverage on an employee-specific basis reported on Form W-2 issued in January for preceding calendar year. Some exemptions, such as coverage provided under certain church or multiemployer plans. Reporting first required in 2013 for coverage provided in 2012 Informational only; value of coverage not subject to tax. Medical loss ratio (MLR) reporting and rebates Insurers to submit MLR reports to HHS and issue rebates to employers with insured plans in large group market (more than 50 employees) where loss ratio (ratio of claims to premium) is less than 85%. For contributory plans, employer must share rebate with enrollees. Rebates payable by August 1. Starting with 2014 reporting year, reporting due date is July 31, and rebates are payable by September 30. January 1, 2011 Applies only to insured plans. Plans must apply portion of rebate attributable to employee contributions appropriately. Determination of rebates under ERISA may be required Health plan provisions applying only to non-grandfathered employer plans Preventive care Preventive care services must be covered at 100% when provided in network. Increased coverage may cause plan costs to change. Plan sponsor may delegate IRO contracting to claims administrator. Insured plan nondiscrimination Insured plans prohibited from discriminating in favor of highly compensated. Enforcement delayed until guidance released. Increased coverage may cause plan costs to change. Plan sponsor may delegate IRO contracting to claims administrator. OB/GYN, pediatrician, ER services Preauthorization or referral requirements prohibited. Increased coverage may cause plan costs to change. Plan sponsor may delegate IRO contracting to claims administrator. Appeals process Mandatory internal and external claims and appeals process. Self-funded plans must contract with at least three independent review organizations (IROs). Increased coverage may cause plan costs to change. Plan sponsor may delegate IRO contracting to claims administrator. 5

6 Health plan provisions applying only to non-grandfathered employer plans, continued Women s preventive services Additional preventive services for women covered at 100%. after August 1, 2012 Increased costs due to removal of cost sharing and requirement to cover items not generally covered before. Clinical trials Must cover routine patient costs in connection with participation in approved trials. Some increased claims costs. Out-of-pocket (OOP) limits In-network OOP maximum for EHB $6,600/$13,200 for 2015 and $6,850/$13,700 for 2016 (indexed annually). Plan s maximum OOP limit can be divided among different coverage categories or benefits so long as the combined amounts don t exceed the annual OOP limit. Must apply an embedded self-only OOP maximum to each individual enrolled in family coverage if the plan s family OOP maximum exceeds the ACA s OOP limit for self-only coverage (also applies to deductible). Emphasis on EHB and benchmark plan. OOP maximum must take into account deductibles, coinsurance, and copayments. Requires coordination with carveout vendors. TPAs and insurers may have system or technical limitations. Provider nondiscrimination No discrimination against provider acting within the scope of license. May vary rates based on quality or performance measures; good faith compliance until regulations issued. Plan quality of care reporting After guidance issued Guidance yet to be issued. Retiree health Reinsurance program for early retirees (age 55-64) and dependents A temporary program employers accepted into the program receive reinsurance reimbursement for medical claims for retirees. $5B to subsidize 80% of costs between $15K and $90K (indexed). Terminates December 31, 2013 or when funds exhausted, if earlier. June 1, 2010 Funds exhausted in 2012; plan sponsors must use ERRP funds promptly, but no later than December 31, Phase-out of donut hole $250 rebate in 2010 for beneficiaries who reach donut hole. Phases out donut hole by 2020 in combination with brand drug discount EGWP employer-sponsored plan can provide equivalent benefits at significant savings. Brand drug coverage in Medicare Part D donut hole Drug manufacturers required to discount brand drugs in donut hole by 50% 2011 EGWP employer-sponsored plan can provide equivalent benefits at significant savings. Loss of deduction for expenses related to RDS payments Deduction of expenses for which RDS payment received eliminated in EGWP plans more attractive. 6

7 Insurance market reform for individuals and small groups Minimum benefit package Bronze, Silver, Gold and Platinum with actuarial values of 60% to 90%. Catastrophic plan for individuals under age 30, individuals exempt from individual mandate because affordable coverage is not available, or individuals who satisfy hardship exemptions. Plans must cover EHB Marketplace plans could become available to large employers in Guaranteed issue and renewability Health insurance issuers offering coverage in individual or group markets must accept every employer and individual in the state that applies for such coverage and must renew coverage at the option of the plan sponsor More robust individual market for former employees and retirees. OOP limits In-network maximum for EHB $6,600/$13,200 for 2015 and $6,850/$13,700 for 2016 (indexed annually). Plan s maximum OOP limit can be divided among different coverage categories of benefits so long as the combined amounts don t exceed the annual OOP limit. Must apply an embedded self-only OOP maximum to each individual enrolled in family coverage if the plan s family OOP maximum exceeds the ACA s OOP limit for self-only coverage (also applies to deductible) Applies to individual and small group plans offered both in and out of marketplace. OOP maximum must take into account deductibles, coinsurance and copayments. Fair health insurance premiums Health insurance issuers may vary the premium rate charged to non grandfathered individual or small group from the rate established for that particular plan based only on the following factors: family size (individual or family), geography (rating area), age (within a ratio of 3:1 for adults), and tobacco use (within a ratio of 1.5:1) Reduces the need for COBRA and employer-sponsored early retiree coverage. Medical loss ratios - minimum standards for insured plans Insurers to submit MLR reports to HHS and issue rebates to employers with insured plans in the individual and small group market where loss ratio (ratio of claims to premium) is less than 80%. For contributory plans employer must share rebate with enrollees. Rebates payable by August 1. Starting with 2014 reporting year, rebates are payable by September 30. January 1, 2011 More robust individual market is especially valuable to former employees, particularly early retirees. Small employer subsidies Tax credits of up to 50% available to certain small employers (up to 25 employees) that offer health insurance coverage to their employees through the SHOP marketplace. Credit may be claimed only for two consecutive years Only available if employer s FTEs average annual wages are no more than $50,800 (for 2014) and employer pays at least 50% of selfonly cost. 7

8 Public marketplaces Marketplaces State- or federally-run marketplaces available for individuals and small employers (defined as at least 2 employees and up to 100 employees, but most states have defined as under 51 employees). In 2016, must be available to small employers (up to 100 employees). In 2017, states can make available to large employers (over 100 employees) Availability of subsidies and community rating may reduce need for pre-65 retiree programs. Low-income subsidies for coverage in the marketplace Subsidies available to individuals between 138% and 400% of FPL in states that have adopted the ACA s Medicaid expansion. Employees eligible for employer coverage may receive subsidies only if employer coverage fails to provide minimum value or if employee contributions for self-only coverage exceed 9.5% of household modified adjusted gross income. Retirees eligible for subsidies as long as not enrolled in employer coverage regardless of minimum value or affordability Consider availability of subsidies in designing strategy for 2014 and beyond. Taxes and fees HSA nonqualified withdrawals Penalty tax increased from 10% to 20%. January 1, 2011 Communicate to employees. Pharmacy manufacturer tax Annual fee on manufacturers of branded prescription drugs based on market share Cost likely will be shifted to employers. Comparative effectiveness research (PCORI) fee Fee on insured and self-funded plans to fund clinical effectiveness research. For plan years ending on or after October 1, 2013 through September 30, 2014, fee is $2/covered life/year; for plan years ending on or after October 1, 2014 through December 31, 2014, fee is $2.08/covered life/year (indexed thereafter). Payment due by July 31 of following year. Plan years ending after September 30, 2012 and before October 1, 2019 Affects cost of providing group health plan coverage. Determine which prescribed counting method results in lowest number of covered lives. Itemized medical deduction Itemized medical deduction threshold increased from 7.5% to 10% Individual income tax provisions that could increase pressure for employers to offer tax-advantaged benefits. Additional Medicare tax increases administrative burden for employers. Medicare hospital insurance tax Tax rate increased from 1.45% to 2.35% for income in excess of $200K (single or head of household) /$250K (joint filers). 3.8% unearned income tax on net investment income in excess of $200K (single or head of household)/$250k (joint filers). Employer required to collect tax only for employees earning $200K or more from employer Individual income tax provisions that could increase pressure for employers to offer tax-advantaged benefits. Additional Medicare tax increases administrative burden for employers. 8

9 Taxes and fees, continued Medical device excise tax 2.3% excise tax on the manufacturer or importer for the sale of certain medical devices Cost will likely be passed on to health plans. Health insurance providers fee Annual fee on entities that provide health insurance (self-insured employers specifically excluded) In addition to medical, fee also applies to insured dental, vision, EGWP, and MAPD plans. Estimated 2014 increase in premiums of 1.7% to 3.0%. Transitional reinsurance fee Fee paid by insurers and self-funded plans (major medical coverage) from 2014 to 2016 to help fund transitional reinsurance program (designed to provide temporary funding to insurers that incur high claims costs for enrollees). For 2014, contribution rate is $63 per covered life per year ($5.25 per month); for 2015, $44 per covered life; for 2016, $27/ covered life Affects cost of providing health plan coverage. Cadillac plan excise tax 40% tax on value of coverage above $10,200/individual and $27,500/family (Indexed at CPI-U+1% for 2019, CPI-U only after 2019). $11,850/$30,950 for pre-medicare retirees. Adjusted for high risk industries, age, and gender. Excludes insured dental and vision. For multiemployer plans, all coverage is considered family coverage Affects cost of providing health plan coverage. May result in the limitation of health FSAs and executive programs and reduction in total health benefit package Conduent Business Services, LLC. All rights reserved. Conduent and Conduent Design are trademarks of Conduent Business Services, LLC in the United States and/or other countries. BR16286C