The Affordable Care Act; 2014 and Beyond

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1 The Affordable Care Act; 2014 and Beyond Presented by: Lacey Robinson, ACA Certified Vice President & Senior Benefits Consultant Gregory & Appel December 10, 2013

2 Agenda 2014 ACA Mandates ACA Intention Coverage Expansion & Market Reforms Individual Mandate State Medicaid Expansion Marketplace Overview Marketplace Enrollment Process Employer s Role regarding Individual Mandate Employer Mandate Employer Mandate Reporting Requirements Taxes and Fees 2

3 Mandates Effective January 1, 2014 Changes in Plans should already be in place! No pre-existing condition limitations for any enrollee No restriction of adult children who have coverage through an employer Limits on cost-sharing and deductibles limited to HSA limits (2014) $6,350 for single coverage $12,700 for family coverage 90-day limit on waiting periods for coverage No annual dollar limits on Essential Health Benefits Guaranteed issue 30% incentive cap for wellness programs Coverage of routine patient costs for clinical trials of lifethreatening diseases (non-grandfathered plans only) 3

4 Intention of the ACA In the Simplest Terms Coverage Expansions and Market Reforms Coverage expanded through employer mandate, individual mandate, Medicaid, exchanges, temporary high risk pools, removal of preexisting condition limitations, credits, subsidies, insurance industry reform and more Health Care Quality and Payment Incentives Medicare Center for Innovation, programs focused on quality and delivery, coordination and outcomes, ACOs.. Cost Containment and Financing of Health Reform Increased thresholds for Medicare, reduction in payments to providers, increased taxes, enhanced compliance enforcement DOL audits 4

5 Coverage Expansions and Market Reforms The ACA aims to expand health coverage through a series of provisions that generally go into effect on January 1, 2014: Individual Mandate: Mandates all Americans, with some exceptions, to maintain a minimum level of health coverage or face a tax. Insurance Exchanges (Marketplace): Creates health insurance Exchanges and provides premium tax credits to assist eligible individuals with the purchase of coverage. Medicaid Expansion: allows states to expand Medicaid up to 138% of federal poverty level. Employer Mandate: Mandates employers with 50 or more full-time equivalents to offer coverage to full-time employees and their dependents or pay taxes if an employee obtain coverage through the Federally Facilitated Exchange and receives a premium tax credit. Source: Washington Council Ernst & Young 5

6 Employer and Individual Mandates Employer Mandate On July 2, 2013 the IRS delayed the Employer Mandate until January 1 st, 2015 Employers cannot be assessed a penalty for not providing health insurance to eligible individuals in 2014 Individual Mandate Most Americans must have health insurance effective 01/01/14 Open Enrollment in the public exchanges started on 10/01/13 and runs through March 31, 2014 Coverage will be effective January 1 st if enrolled by December 23 rd. 6

7 Individual Mandate - Overview The Individual Mandate is a provision of the federal health law that requires most U.S. Citizens and legal residents to have health insurance or pay a tax penalty. Coverage can be provided through an employer s plan, a public program such as Medicare or Medicaid, an individual policy purchased through the Marketplace or directly through a carrier. Guaranteed issue coverage will be available through the federally facilitated marketplace and many individuals will qualify for an premium tax credit. Tax penalty will apply to individuals without coverage.

8 Penalties For Individuals Without Coverage $ $ 2017 and beyond Annual indexed adjustments $ 2016: Greater of $695, or 2.5% of taxable income $ 2014: 2015: Greater of $325, or 2% of taxable income Greater of $95, or 1% of taxable income 8

9 Supreme Court Ruling Created a Gap The Affordable Care Act required all states to expand their Medicaid program to encompass people with household income up to 138 percent of the federal poverty level about $15,000 for a single person, about $31,000 for a family of four. The federal government offers to cover the bill entirely for the first three years and then gradually phase back to a 90 percent contribution. The Supreme Court changed that. In a 7-2 ruling last year, the court found that it was unconstitutional to require the states to expand Medicaid. -It had to be optional. As a result, and in some states, individuals and families that fall under 100% of the FPL do not qualify for a federal tax subsidy and are subject to their home state s restrictive Medicaid eligibility rules 9

10 State Medicaid Expansion

11 Medicaid Expansion for Indiana? In Indiana, lawmakers have supported expanding coverage using the Healthy Indiana Plan (HIP). The Pence administration won a one-year extension of Indiana s state-run alternative to Medicaid this past summer from the Center for Medicare and Medicaid Services (CMS). As a result, The Kaiser Family Foundation reported that 28 percent (182,000) of the state s uninsured residents fall in a gap between Medicaid coverage and qualifying for subsidized insurance through the federal exchange. But negotiations with the federal government for an expansion of the plan have been pushed back. 11

12 2014 Health Insurance Marketplace is Established 12

13 SHOP Marketplace The Small Business Health Options Program (SHOP) is a marketplace for small businesses and their employees Opens in 2014 alongside individual marketplace Applications are allegedly going to be ready by November, New Online Enrollment delayed until November 2014! Can be different insurers and plans in the SHOP Access to tax credits for eligible employers are only available through the SHOP Marketplace NOTE: Milliman estimated 50,000 Hoosiers enrolled through the SHOP by 2017 Compared with 650,000 on the individual marketplace 13

14 State Exchanges 14

15 Indiana: Who will be offering plans? Indiana s marketplace will be run by the federal government (not the state) and is divided into 17 Regions On Individual Exchange Products Available MD Wise All Except 14 Coordinated Care 2,3 and 4 PHP 1-8, 10 and 11 Anthem All Regions

16 Choices on Indiana s Marketplace Company Region Individual Marketplace MDWise Coordinated Care (Centene-MHS) Mostly statewide Northern Indiana Bronze, Silver, Gold Bronze, Silver, Gold SHOP Marketplace n/a n/a Physicians Health Plan of Northern Indiana Northern and Central Indiana Bronze, Silver, Gold, Catastrophic Bronze, Silver, Gold Anthem Insurance Companies, Inc. Statewide Bronze, Silver, Gold, Catastrophic Bronze, Silver, Gold, Platinum 16

17 Plan Levels of Coverage Levels of Coverage Plan Pays on Average Enrollees Pay on Average* (In addition to the monthly plan premium) Bronze 60% 40% Silver 70% 30% Gold 80% 20% Platinum 90% 10% *Based on the aggregate cost under the plan when benefits are provided to a standard population. This may not be the same for every (or any specific) enrolled person. 17

18 Catastrophic Plans Who is eligible? Young adults under 30 years of age Those who obtain a hardship waiver from the Marketplace What is catastrophic coverage? Plans with high deductibles and lower premiums Includes coverage of 3 primary care visits and preventive services with no out-of-pocket costs Protects consumers from high out-of-pocket costs NOTE: Purchasers will not be eligible for subsidies 18

19 Types of Individual Marketplace Plans

20 Marketplace Plan Costs?

21 Example BCBS Pricing Rates 31 y/o (non smoker) Individual without Subsidy Blue Cross Blue Shield Bronze Silver Gold $245 $307 $415

22 Why are costs increasing? 22

23 Eligibility for Premium Tax Credits Who is eligible for a premium tax credit on the public marketplace? Individuals that are not eligible for Medicaid, Medicare or an affordable employer-sponsored plan that meets minimum value Individuals whose income falls between 100% and 400% of the FPL Under the full Medicaid expansion anticipated by the ACA, all individuals would be eligible up to 138% of FPL Eligibility is determined using a household s modified adjusted gross income (MAGI) Household Size 100% 200% 300% 400% 1 $11,490 $22,980 $34,470 $45,960 2 $15,510 $31,020 $46,530 $62,040 3 $19,530 $39,060 $58,590 $78,120 4 $23,550 $47,100 $70,650 $94,200 23

24 Average Premium Subsidy 24

25 KFF Subsidy Calculator The Kaiser Family Foundation has a Subsidy Calculator tool available online at: 25

26 Health Insurance Marketplace

27 Marketplace Enrollment Process Open Enrollment period is from October 1 st, 2013 through March 31 st, 2014 If one misses the open enrollment period, that individual must wait until the next open enrollment period and pay a tax penalty An individual can enroll during a special enrollment period if there is a qualifying event Eligibility Live in the United States and be a resident of a state where he/she will apply for coverage and enroll in a Qualified Health Plan (QHP) Be a United States citizen or national (or lawfully present non-citizen) Not be incarcerated, other than incarceration pending the disposition of charges No Wrong Door Policy People seeking coverage only need to complete one application in order to learn whether they and their family members may enroll in Children's Health Insurance Program (CHIP) or Medicaid, or if they qualify for advance payments of the premium tax credit and cost-sharing reductions. Single Streamlined Application By mail; Online; In-Person; Via Call Center Online Registration available through

28 Rocky Start for the Public Marketplace

29 National October 2013 Enrollment Numbers 106,185 Americans signed up for a plan on the public health insurance marketplace Nearly 79,400 (75%) people selected a plan through a state-based exchange Under 27,000 enrolled through the federally run healthcare.gov site that is handling enrollment for 36 states 975,500 have created an account on the site but have yet to select a plan 396,261 have been determined eligible for Medicaid or the Children s Health Insurance Program (CHIP)

30 Indiana s October 13 Enrollment Numbers Source: Interactive Enrollment Map as of

31 Role of the Employer: Individual Mandate Provide information required by law Ex: Marketplace Notices Report applicable employee and employer data to the IRS Educate employees At Open Enrollment On-going? Help non-benefits eligible employees enroll in the marketplace? Most organizations are not

32 Emerging Trend Health Advocacy Services More and more employers are engaging the services of outsourced Health Advocacy providers These organizations can help your employees in a number of ways including: Helping employees understand their benefits, help resolving billing issues, answer questions regarding Medicare, etc. Helping employees with Public Marketplace questions is going to be a new service offering

33 One Year Transition Period for Employer Mandate Reporting Requirements On July 2, 2013, breaking news provided transition relief for insurers and large employers with respect to health coverage offered to their full-time employees This transition relief will provide additional time in an effort to simplify the reporting requirements established by IRS Sections 6055 and 6056 Although the reporting requirements have been delayed, insurers and employers are encouraged to voluntarily comply for 2014 It is important to note that no penalties will be applied for failure to comply with information reporting in

34 What is the Employer Shared Responsibility Mandate? Effective January 1, 2015, the Affordable Care Act (ACA) will impose a penalty on large employers that d0 not offer minimum essential coverage to substantially all full-time employees and dependents. Large employers that do offer coverage may still be liable for a penalty if the coverage is unaffordable or does not provide minimum value. The ACA s employer penalty is referred to as the Pay or Play. 34

35 What is the Employer Shared Responsibility Mandate? In Indiana a large employer is one with at least 50 fulltime equivalent employees A full-time employee is defined as working at least 30 hours of service per week The IRS has published a safe-harbor test for employers to determine if coverage is affordable Although this test is based on employee earnings only, the marketplace will use household income to determine if a subsidy is available The employer coverage must provide at least a 60% actuarial benefit value 35

36 What are the Penalties? If coverage is not made available to at least 95% of all fulltime employees, the penalty is $2,000 per employee (less the first 30) per year If the coverage is unaffordable and/or does not provide minimum essential value, the penalty is $3,000 for each employee who enters the marketplace and qualifies for a subsidy. The penalty is determined when the employee enters the marketplace and qualifies for a subsidy. If employer coverage is offered and that coverage is affordable and provides minimum value, no subsidy will be available through the marketplace. The penalties have been delayed until January 1, 2015! 36

37 Information Reporting Requirements for Employers Alternative reporting methods are under consideration by the Treasury Department. Source: Washington Council Ernst & Young 37

38 Upcoming Health Care Reform Fees Patient-Centered Outcomes Research Trust Fund Fee (PCORI) This fee funds research on the effectiveness, risks and benefits of medical treatments through the Patient- Centered Outcomes Research Institute. The annual fee is $1 for each covered life for plans ending before October 1, 2013, and $2 annually for each covered life on plans through October, Plan sponsors were required to submit IRS form 720 with the appropriate payment by July 31,

39 Upcoming Health Care Reform Fees ACA Transitional Reinsurance Fee This fee will support the transitional reinsurance program that aims to stabilize premiums for coverage in the individual market and lower the effects of adverse selection in the exchanges. Both fully insured and self-funded plans will be required to pay $63 per covered life annual fee on all those enrolled in the health plan. This fee will be reduced in 2015 and 2016, though the amounts have yet to be released. Per covered life counts are due to HHS by 11/15/14. 39

40 Upcoming Health Care Reform Fees Cadillac Tax Coming in 2018: Employer sponsored health coverage that is considered high cost will be subject to an excise tax. The tax is equal to 40% of the excess benefit. The excess benefit is the amount of annual coverage that costs more than $10,200 for single coverage and more than $27,500 for family coverage. 40

41 Questions? Lacey Robinson A NAHU Certified PPACA Professional Gregory & Appel lrobinson@gregoryappel.com 41