2014 & Beyond: Are You Prepared? Presented by: Brad Pricer, JD, GBA & Annette Bechtold

Transcription

1 2014 & Beyond: Are You Prepared? Presented by: Brad Pricer, JD, GBA & Annette Bechtold

2 Session Overview Today, we ll cover: Sharing responsibilities under ACA Individual Responsibility Employer Responsibilities The Marketplace Question & Answer Bradley Pricer, JD, GBA Senior Manager Employee Benefits CUNA Mutual Group Annette Bechtold Senior Vice President Regulatory Affairs and Reform Initiatives Digital Benefits Advisors

3 Health Care Reform Patient Protection and Affordable Care Act of 2010 (PPACA) How Did We Get Here & Where Do We Go Now?

4 Where Do We Stand? SCOTUS Ruling 5-4 vote Chief Justice Roberts wrote majority opinion Rationale: No Commerce Clause or Necessary and Proper clause authority Authority to enact mandate comes from taxing power Individuals can choose to obtain coverage or pay higher taxes Dissent Would have overturned entire law Election Who was waiting? Businesses Government look for a flurry of proposed rules and clarifications

5 What Does All This Mean to Credit Unions? Time to Act Broker/consultant and/or carrier must confirm you are in compliance ACA changes already in effect will remain in effect ACA s provisions that are not currently in effect will continue to be implemented Continue to prepare and take stock of steps already taken

6 Act Now Why? DOL is beginning to audit ACA compliance New development, ramifications still not clear but concerning What has the DOL requested? Depends on status of plan Grandfathered plans: Records documenting the terms of the plan on March 23, 2010, and any additional documents to confirm the plan s grandfathered status; and The participant notice of grandfathered status included in materials that describe the benefits provided under the plan Non- grandfathered plans Documents related to preventive health services for each plan year beginning on or after 9/23/10; The plan s internal claims and appeals procedures; Contracts or agreements with independent review organizations or TPAs providing external review Notices regarding adverse benefit determinations and final external review determination notices; and Documents relating to the plan s emergency services benefit All plans A sample notice describing enrollment opportunities for children up to age 2 for plans with dependent coverage; A list of participants who have had their coverage rescinded and the reasons for the rescissions; Documents related to any lifetime limit that has been imposed under the plan since 9/23/10; and Documents related to any annual limit that has been imposed under the plan since 9/23/10

7 How Are Credit Unions Doing? 6% 17% 31% Prepared for 2013 & 2014 Requirements Prepared for 2013 Requirements Only Have Started Preparations 20% 11% 14% Will Begin Preparations After 2012 Not Prepared But Have a Timeline for Beginning Preparations CUNA, Credit Union Staff Survey for Human Resources Planning,

8 What Do I Need to Do? Requirements Already in Effect: Coverage for dependent children up to age 26 Removal of dollar maximums on essential benefits Maintenance of 100% Preventive Care coverage for those that lost Grandfathered status Maintenance of External Claims Review Process Maintenance of Summary of Benefits and Coverage communication packages Handling of options for Medicare Eligible retirees and dependents for prescription drugs Benefit changes for Flexible Spending Accounts Other provisions (pre-existing conditions, rescission, discrimination, etc.)

9 Requirements Going into Effect Annual limits W-2 reporting requirements beginning with 2012 tax year Women s preventive care services Medical loss ratio rebates Summary of benefits and coverage Comparative effectiveness research (CER) fees FSA $2,500 contribution limit Elimination of retiree drug subsidy deduction Additional Medicare tax withholding Health insurance exchanges notice of availability

10 Health Care Reform Patient Protection and Affordable Care Act of 2010 (PPACA) Sharing Responsibilities EMPLOYERS

11 Requirements and Obligations Group Size Applicability Funding Applicability Fully-insured Self-funded Applies to grandfathered plans? Yes No 1. Mandatory plan changes from Maximum waiting period of 90 calendar days 3. Expanded wellness incentives 4. Reporting to substantiate individual offerings

12 Requirements and Obligations Group Size Applicability Funding Applicability Fully-insured Self-funded Applies to grandfathered plans? Yes No 1. Nondiscrimination rules a. Existing rules and penalties for selffunded i. If plan favors the highly compensated, difference is taxable to the highly compensated b. New expansion to fully-insured i. Penalties suspended pending further guidance 2. Expansion of preventive care with no costsharing

13 Requirements and Obligations Group Size Applicability Funding Applicability Fully-insured Self-funded Applies to grandfathered plans? Yes No 1. Employer Sharing must offer coverage to full-time employees and their dependents a. Variable hour and seasonal employees b. Affordability rules 2. Minimum Value a. Plan s share of the total allowed costs of benefits provided under the plan b. Must be at least 60% 3. Reporting to justify mandate compliance

14 Applicable Large Employer Review of Prior Rules All employees, including seasonal, are counted to determine status An employee is an individual who is an employee under common law standard Employer Sharing Responsibility REG Proposed Amendment (CMS-9958-P) 1/2/13 Leased employees are not crossreferenced under IRC 4980H A sole proprietor or 2% S-corp. shareholder is typically not an employee All full-time and full-time equivalent employees are counted

15 Applicable Large Employer Who is an applicable large employer? 50 or more fulltime equivalents UNLESS Less than 50 full-time equivalents SMALL BUSINESS Seasonal exception applies: 50 or more employees for no more than 4 calendar months IRS/HHS Notices , , , DOL , IRS 4980H

16 Employer Employer Definitions Entity that is the employer of an employee under the common-law test. Entities Counted as One Employer All entities treated as a single employer under 414(b), (c), (m), or (o) are treated as a single employer for purposes of 4980H. IRS (b) - all corporations of a controlled group of corporations 414(c) - trades or businesses under common control 414(m) - all employees of an affiliated service group 414(o) Discretionary regulations to prevent the avoidance of any employee benefit requirement IRS 4980H, IRS 414(b), (c), (m), or (o)

17 Employees Included in Calculations Employee Definitions All full-time employees with, on average, 30 hours or more of service per week; (130 hours if using a monthly standard) Part-time, variable, or seasonal employees Hours for services performed outside the U.S. for which an individual receives U.S. source income Employer Sharing Responsibility REG Proposed Amendment (CMS-9958-P) 1/2/13

18 Employer Sharing Responsibility Coverage Determination Full-Time Status of On-going* Variable and Seasonal Employees Standard Measurement Period (SMP) A look back period of 3-12 consecutive calendar months Administrative Period Applicable Stability Period (SMP = Full-time) At least 6 consecutive calendar months Cannot be shorter duration than SMP Begins after SMP and any applicable administrative period Applicable Stability Period (SMP Full-time) Cannot be longer duration than SMP Begins after SMP and any applicable administrative period Cannot reduce or lengthen SMP or stability period Can be up to 90 days Needs to overlap prior stability period IRS Notice * On-going = employee who has been employed by employer for at least one complete standard measurement period

19 Employer Sharing Responsibility Coverage Determination Full-Time Status of Newly Hired Variable Hour and Seasonal Employees Initial Measurement Period (IMP) A look back period of 3-12 consecutive calendar months Administrative Period Cannot exceed 90 calendar days Administrative period can be limited further when applying combined duration rule* Applicable Stability Period (IMP = Full-time) Must be the same length as the stability period for on-going employees At least 6 consecutive calendar months Cannot be shorter duration than IMP Begins after IMP and any applicable administrative period. Applicable Stability Period (IMP Full-time) Cannot be more than 1 month longer than the IMP Must not exceed the remainder of the SMP plus any associated administrative period in which the IMP period ends. IRS Notice *IMP and administrative period cannot extend beyond, at most, 13 months and a fraction of a month from the employee s start date

20 Assessments H(a), (b) Penalties Associated With Non-Compliance Employers may be assessed fees for any month they: 1. Fail to offer employer-sponsored minimum essential coverage to FTEs and their dependents a. AND at least one person enrolls for coverage, from the Exchange, and receives a subsidy b. Assessment = 1/12 of $2,000, or $ per month, for each FTE, less the first 30 employees 2. Offer employer-sponsored minimum essential coverage to FTEs and their dependents but the employee contribution is deemed unaffordable a. AND 1 or more employees enroll for coverage, from the Exchange, and receive a subsidy b. Assessment = the lesser of: i. 1/12 of $3,000, or $250 per month, for FTE receiving a subsidy OR ii. 1/12 of $2,000, or $ per month, for each FTE, less the first 30 employees Employer Sharing Responsibility REG Proposed Amendment (CMS-9958-P) 1/2/13

21 Compliance with 4980H(a), (b) Assessment penalties can be avoided if the employer offers minimum essential coverage under an employer-sponsored plan to its full-time employees and their dependents. Definition of dependent: An employee s child under age 26 does not include spouse Employers will not face a tax penalty if not offering coverage to spouses, who will be able to seek a federal premium tax credit to purchase health insurance in an Exchange if other minimum essential coverage is not available. Offer of coverage in case of non-payment: Employer will not be deemed as not offering coverage if employee fails to pay their portion of the premium this regulation adopts the COBRA 30-day grace period rule Offer of coverage: Employer will satisfy requirement as having offered if they offer to 95% of their employees Assessment payments: These are not tax deductible Employer Sharing Responsibility REG Proposed Amendment (CMS-9958-P) 1/2/13

22 Compliance with 4980H(a), (b) Affordability Safe Harbors applies only for purposes of whether the employer satisfies the 9.5% affordability test 1. Form W2 safe harbor wages to be reported in Box 1 of Form W2 Must offer its full-time employees (and their dependents) AND Employee contribution toward self-only premium for not exceed 9.5% of the employee s Form W2 wages for that calendar year. 2. Rate of pay safe harbor Take the hourly rate of pay for each hourly employee and multiply by 130 hours/month Use this monthly amount to compare to premium contributions 3. Federal poverty line safe harbor Employer can use FPL for a single to set premium contribution, i.e. set employee contribution for selfonly coverage of the lowest cost plan to 9.5%. Can use the most recently published FPL guidelines as of the first day of the plan year. Employer Sharing Responsibility REG Proposed Amendment (CMS-9958-P) 1/2/13

23 Transition Relief No assessments will be made in 2014, if an employer has a fiscal plan year as of 12/27/12 and an employee is offered affordable, minimum value coverage AND also satisfies 2 additional tests Transition relief will allow employers, with fiscal plan years beginning in 2013, to update their plan documents The right for an employee to revoke or change elections once during the plan year without regard to a change in status An employee who did not make the salary reduction election would be permitted to make a prospective election on or after the first day of the 2013 plan year without regard to a change in status Can use any six consecutive months to determine of applicable large employer Employer Sharing Responsibility REG Proposed Amendment (CMS-9958-P) 1/2/13

24 Health Care Reform Patient Protection and Affordable Care Act of 2010 (PPACA) Sharing Responsibilities THE MARKETPLACE

25 State Marketplace Activity WA MT ND NH VT ME OR ID SD MN WI NY MA WY MI CA NV AZ UT NM CO NE KS OK IA MO AR IL IN TN KY OH WV SC PA VA NC CT NJ DE MD DC RI AK HI TX LA MS AL GA FL Operational Exchanges (2) State Exchange Established (15+DC) Federally -Facilitated Exchange (26) State Partnership Exchange (7) Information from: CIAB - March 29, 2013

26 Medicaid Expansion Moving Eligibility from 100% FPL to 133% FPL WA MT ND NH VT ME OR ID SD MN WI NY MA WY MI CA AK NV AZ UT CO NM NE KS TX OK IA MO AR LA IL MS IN TN AL KY OH GA WV SC FL PA VA NC CT NJ DE DC MD RI Participating (24) + DC Leaning toward participating (4) Undecided (5) HI Leaning toward not participating (3) Not Participating (14) Information from: CIAB March 27, 2013

27 Requirements & Obligations Group Size Applicability Funding Applicability Fully-insured Self-funded Applies to grandfathered plans? Yes No FOCUS: 1. Market reforms a. Community rating b. Rating bands 2. Plan Designs a. Essential health benefits b. Actuarial value and metal tier plans c. Cost-sharing caps

28 Definition Applies to: Individual plans Small employer group plans Offered in and out of the Exchange Plan requirements: Specific categories of benefits Certain cost-sharing standards Provide certain levels of coverage Essential Health Benefits Items and Services Must include: 1. Ambulatory patient services 2. Emergency services 3. Hospitalization 4. Maternity and newborn care 5. Mental health and substance use disorder 6. Prescription drugs 7. Rehabilitative and habilitative services 8. Laboratory 9. Preventive and wellness 10.Pediatric services Applicability Effective Date: First plan year, for individual and small group market, starting on or after January 1, 2014 Plan types that won t meet the criteria: Mini-meds Specified disease or illness Accident only coverage Other types of excepted benefits HHS Pre-rule bulletin 12/16/11 and PPACA; Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation 11/26/12 proposed rule

29 Rating Rules & Methodologies 1. Issuers = individual member ratings Employers = individual or composite rating 2. Age rating limited to 3:1 3. Tobacco rating limited to 1.5:1 4. Family size individual v family a. Maximum of 3 oldest family members under age 21 b. No cap for family members over age Geographic region a. States or CMS can establish one or more rating areas b. Maximum rating areas cannot exceed the number of MSAs plus one c. One rating area for state, county-based or 3-digit zip codes, or metropolitan statistical areas (MSAs) and non-msas 6. Re-underwriting is prohibited Apportioned to each family member Applies to nongrandfathered health insurers (not selffunded) Will apply to nongrandfathered large group if state permits coverage to be offered through an Exchange in /26/12 HHS proposed rule; Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation

30 Wellness Incentives Types of wellness programs 1. Participatory a. No required standard related to a health factor OR b. No reward offered 2. Health-contingent* a. Requires individuals to satisfy standard related to a health factor AND b. Offers a reward *Consumer-protection conditions: a. Total reward does not exceed 20% of the total cost of coverage b. Reasonably designed to promote health or prevent disease c. Gives eligible individuals an opportunity to qualify at least once per year d. Reward available to all similarly situated individuals e. Plan materials must highlight reasonable alternative standard Departments joint final regulations issued 12/13/06-71FR75014

31 Wellness Incentives ACA Reflects the 2006 regulations Extends nondiscrimination provisions to individual market Proposed Rules Applicability: Grandfathered and non-grandfathered plans Plan years on or after January 1, 2014 Extension to individual market Increase in incentives: 30% maximum program reward 50% maximum tobacco prevention or reduction reward Affordable Care Act HHS Proposed Rule 11/26/12

32 Preparing for Safe Harbor Full-time Employee Premium Subsidies Minimum Essential Coverage Nondiscrimination Annual Limits Employer Mandate Stability Period Risk Retention Fees Wellness PCORI Fees Essential Benefits 32 Reporting Medical Loss Ratios Initial Measurement Period Actuarial Values Cadillac Plans Auto Enrollment Exchange Operation

33 Group Size Applicability Funding Applicability Fully-insured Self-funded Applies to grandfathered plans? Yes No Requirements and Obligations FOCUS: 1. National premium tax a. Assessed to carriers i. Will be passed down to consumers b. Additional/separate tax c. Not part of medical loss ratio not included in premium d. Increases annually no end date e. Projected to be $ per family in 2014 and escalating to $1,200 by 2018

34 Health Care Reform Patient Protection and Affordable Care Act of 2010 (PPACA) Potential Opportunities?

35 Health Care Reform: State Exchanges Exchange - An organized marketplace to help qualifying individuals and employer groups (initially small employers) buy health insurance in a way that permits easy comparison of available plan options based on price, benefits and quality. - Must be established by January 1, 2014 Purpose - To facilitate the purchase of qualified health plans (QHPs) - To provide small employers a Small Business Health Options Program (SHOP Exchange)

36 Qualifies Health Plans (Continued) Four Coverage Level Requirements for Essential Benefits Package Bronze: designed to provide benefits actuarially equivalent to 60% of full value; Silver: designed to provide benefits actuarially equivalent to 70% of full value; Gold: designed to provide benefits actuarially equivalent to 80% of full value; and Platinum: designed to provide benefits actuarially equivalent to 90% of full value.

37 Small Business Health Options Program (SHOP) Each state that chooses to operates an exchange must also establish insurance options for small business through a SHOP States that choose to operate an Exchange may merge the SHOP with the individual market Exchange. The SHOP will allow employers to choose the level of coverage they will offer and offer the employees choices of all QHPs within that level of coverage. SHOP exchanges can also allow employers to select a single plan to offer its employees, like is typically done today.

38 Private Exchanges Most states are likely to have bare bones exchange approach due to late start, especially initially Employers of choice will want to differentiate and simplify the process for their employees Credit Unions will be looking for a simplified/customized process

39 Defined Contribution Health Plans Theory of gradual shift to defined contribution health plans Shifting risk of incurring high health-care costs from employers to workers Similar to previous shift for retirement plans Today, market is predominately defined-benefit plans Employers determine a set of health-insurance benefits Move to defined-contribution where Employers pay a fixed amount Employees use money to buy or help pay for insurance they choose themselves

40 Shift in Funding Strategies. Aon Hewitt, Corporate Health Care Exchange Survey, The Time is Now, Rethinking Health Care Coverage, 2012.

41 Do you have the answer? Should my Credit Union offer Coverage in light of Health Care Reform? Have to consider Play or Pay What will be offered through each state s Exchange? What will I need to do to remain competitive?

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43 Why do you offer health insurance as part of your current benefits package? a. Protection for employee and family b. Attract and retain talent c. Obligation d. Personal need e. Tax advantages f. Employee expectation Strategic Inventory Why do your employees participate in your health insurance program? a. Lower cost b. Tax advantages c. Protection for family d. Transfer of responsibility

44 What if? If you eliminate health insurance as part of your benefits package, would you replace it? With other benefits? With salary? What would employee reaction be if you eliminated this benefit? How might productivity be affected? Will all your employees obtain health insurance coverage on their own? What would you do personally for your own benefits?

45 Health Care Reform Play or Pay Calculators Numerous Play or Pay calculators available Example If you use them, make sure you are looking beyond the dollars and cents provided as out-put

46 Example: Play or Pay Calculators

47 Example: Play or Pay Calculators

48 Example: Play or Pay Calculators If you d like a version of a calculator ommunity/health_care_reform/543/health_ca re_reform/ Disclaimer: This calculator is intended to provide estimates of possible penalties under current information available regarding the health care reform requirements. Results are dependent on entry of accurate plan and employee data and may change based on guidance issued by various regulatory agencies. Nothing in this calculator should be considered legal or tax advice Zywave, Inc. All rights reserved.

49 Summary HCR not likely to change substantially in the near future in wake of SCOTUS ruling and Presidential election Danger in waiting too long to ensure compliance DOL Audits Lack of time to create strategy Potential opportunities for credit unions thru HCR Private Exchanges making shift to defined contribution funding easier Public Exchanges Possibility of dropping coverage if needed Employer of Choice strategies

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