AFFORDABLE CARE ACT UPDATES

Transcription

1 AFFORDABLE CARE ACT UPDATES Angela Garner, MBA, CEBS, GBA, RPA, AHIC, LIC Executive Vice President Brown & Brown of Central Michigan (989)

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3 Updated SBC s and Glossaries-waiting on DOL to provide updated templates and glossary Shorten the SBC template to two-and-a-half doublesided pages Add a third cost example for a simple foot fracture treated in an emergency room Add definitions of new medical and health care reform terms to the glossary Require information about minimum essential coverage and minimum value to be included in the SBC rather than provided in a separate cover letter Allow but not require the inclusion of premium information Automatic enrollment into group health plans Nondiscrimination for fully insured groups Additional Cadillac Tax information

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5 Employers with 50+ full-time employees or full-time equivalents must offer medical coverage that is "affordable" and provides minimum value to fulltime employees and their children up to age 26 or face penalties. This chart shows how the employer mandate will be phased in based on employer size. Employer Size 1-49 full-time employees full-time employees* 100 or more full-time employees 2015 Plan Year Does not apply Does not apply Employer must offer coverage to 70% of fulltime employees and dependents to age 26** 2016 Plan Year and Beyond Does not apply Employer must offer coverage to 95% of fulltime employees and dependents to age 26** Employer must offer coverage to 95% of fulltime employees and dependents to age 26** * For 2015, these employers will need to certify that they are not reducing the size of their workforce to stay below 100 employees. ** Coverage for dependents must be available through the end of the month in which they reach age 26.

6 Fully funded Must complete Section 6056 reporting (Information Reporting by ALE) - Statement to employee - Filing to IRS Self-funded Must complete Section 6055 & Section 6056 on combined report - Statement to employee (Form 1095-C) - Filing to IRS (Form 1094-C) If 250 or more W-2s: must file electronically to IRS Special considerations need to be made if part of a Union or Multiemployer plan.

7 Information Reporting by Applicable Large Employers Required large (50 FT + FTEs) Requires a transmittal to IRS & a statement to each full-time employee Summary of full-time workforce, by employee, for each month of coverage this is information insurers do not have and cannot report

8 Deadlines Filed for calendar year (not plan year) First reports required in 2016 for 2015 calendar year Jan. 31 Employee Statements Feb. 28 IRS Statements Filed Paper if<250 employees Mar. 31 IRS Statements Filed Electronic if >250 employees

9 If changed plan year (groups ) in 2015 in order not to move to age based rating in the 2015 renewal and for any other reason, transitional relief isn t available. Affects measurement period transition relief and actual reporting requirements below While the employer responsibility provisions will generally apply starting in 2015, they will not apply until 2016 to employers with at least 50 but fewer than 100 full-time employees if the employer provides an appropriate certification described in the rules. Employers that are subject to the employer responsibility provisions in 2015 must offer coverage to at least 70 percent of full-time employees as one of the conditions for avoiding an assessable payment, rather than 95 percent which will begin in Source: Department of Labor

10 Coverage is "affordable" if employee contributions are less than 9.5% of: Employee's W-2 wages (reduced by any salary reductions under a 401(k) plan or cafeteria plan) Employee s monthly wages (hourly rate x 130 hours per month), OR Federal Poverty Level for a single individual Employer Opt out to be added to employee premium sharing

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12 Reason for Penalty Standard Penalty Maximum Penalty Forms filed or provided late, but within 30 days Forms filed or provided late, but by August 1 Forms filed or provided late, but after August 1, or not filed at all $50 per report (previously $30 per report) $100 per report (previously $60 per report) $250 per report (previously $100 per report) $500,000 (previously $250,000) $1,500,000 (previously $500,000) $3,000,000 (previously $1,500,000)

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14 FEES AND TAXES Applies to Effective Cost impact Who pays Comparative Effectiveness Research Fee Insured and self-funded medical plans Through 2019 Effective for plan years beginning on or after 10/2/11 First payment due for many plans 7/31/13 Annual fee begins at $1 per participant, including dependents Increases to $2 for plan years beginning on or after 10/2/2012 Increases to $2.08 for plan years ending on or after 10/1/2014 and before 10/1/2015 Amount for future years is indexed to national health expenditures $ ? IS tax-deductible Insured: Insurer pays; built into rates ASO: Employer calculates and pays Health Insurance Industry Fee Insured medical, dental and vision plans Reinsurance Fee Insured and self-funded medical plans Begins in % 2.5% of premium in % 4% of premium in future years Tax deductible for employers as part of premium Insurer pays; built into rates; partial load in 2013 $63 per member per year (PMPY) in 2014 ($52.50/$10.50, respectively) $44 PMPY in 2015 ($33.00/$11.00, respectively) $27 PMPY in 2016 ($21.60/$5.40, respectively) IS tax-deductible Insured: Insurer pays. ASO: Employer is responsible.

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16 Cadillac Tax Imposes 40% excise tax on the value of coverage exceeding $10,200 for individual coverage and $27,500 for family coverage ($11,800 and $30,950 for retirees aged and employees in high-risk jobs) to be indexed annually. Coverage subject to tax include the value of the total premium for employer-provided accident and health coverage, employer and employee contributions to health flexible savings account (FSA), and employer and employee salary reduction contributions to health savings account (HSA) and health reimbursement arrangements (HRA). 1 6

17 Below is an illustration of one Client's current PPO Plan cost, based on the current 2015 rates: XYZ Preliminary Cadillac Tax Analysis Count Tier 2015 PPO* Annualized Cadillac Threshold 141 EE Only $ $7, $10,200 78% 78 EE + Spouse $1, $16, EE + Children $1, $14, EE + Family $1, $23, $27,000 86% *Not including the costs of other included items. 1 7

18 Included: Medical Spending employee pre-tax, plus FSA reimbursements due to employer contributions HRA contributions HSA pre-tax contributions Executive physicals Onsite clinics (part of your group health plan solution) Unclear: Amount of pre-taxed benefits (dental, vision, cancer, accident, etc.). Every month look at cost of employee s coverage and how much it exceeds the threshold. Allocated 1/12 to each month over the threshold. 1 8

19 Excluded (proposed): Fully-insured dental and vison plans not included. Initial thinking, self-funded should be excluded. Long Term Care Specific Illness/Cancer Accident Plans EAPs Workers Compensation 1 9

20 Other Information: Expected to be adjusted, one-time adjustment to thresholds in 2018 (set in 2010). IRS is lobbying congress to change the law. Proposed regulations early next year. The IRS is concerned about the projection that 50% of employers will pay Cadillac Taxes by the year Most likely steps to reduce/eliminate tax liability: Reduce or eliminate MSA Flex amounts available to employees ($2,550). Eliminate pre-taxation of benefits (if needed after proposed regulations are released). Make plan change to reduce the COBRA rates. 2 0

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22 The EEOC clarifies that a wellness program is voluntary as long as an employer does not: 1. Require employees to participate. 2. Deny coverage under any group health plan for employees who do not participate. 3. Take any adverse employment action or retaliate against, interfere with, coerce, intimidate, or threaten employees who do not participate. 2 2

23 Further, an employer must provide employees with a notice indicating: 1. The medical information to be obtained (e.g., in a biometric screening or health risk assessment). 2. The recipients of the medical information. 3. The uses of the medical information. 4. The restrictions on its disclosure. 5. The methods employed to prevent improper disclosure. The EEOC also adds a requirement that the employee health/medical information collected through a wellness program may be provided to the employer-plan sponsor only in aggregate terms that does not disclose the identity of specific individuals. Any individually identifiable information collected as part of a wellness program is subject to the Health Insurance Portability and Accountability Act of

24 * Where a wellness program consists of a health risk assessment and/or biometric screening, EEOC requires the program design to promote health and prevent disease. Specifically, collecting medical information from a biometric screening or health risk assessment without providing employees follow-up information or advice, such as providing feedback about risk factors or using aggregate information to design a program or treat any specific conditions, would not be reasonably designed to promote health under the EEOC's proposed guidance. The ACA does not require this sort of follow-up information or advice. * The EEOC limits incentives to a maximum of 30 percent of the total cost of employee-only coverage, whether in the form of a reward or a penalty, financial or in-kind, and applies the 30 percent limit to both participationonly and health contingent programs. In comparison, the ACA rules permit the 30 percent reward to be based on the level of coverage actually elected by the employee (e.g., employee plus spouse, employee plus family, etc.), and the ACA has no limit on the incentive amount for participation-only programs. 2 4

25 * The EEOC does not permit the ACA's additional 20 percent incentive for wellness programs related to tobacco cessation. According to the EEOC, a smoking cessation program that merely asks employees whether or not they use tobacco (or whether or not they ceased using tobacco after completion of a program) and bases incentives on the affirmative or negative answer, is not an employee health plan that includes disabilityrelated inquiries or medical examination. By contrast, a biometric screening or other medical examination that tests for the presence of tobacco or nicotine is a medical examination, and the ADA's 30 percent financial incentive rules would apply to a wellness program that included such a screening. 2 5

26 * The EEOC requires wellness programs to provide reasonable accommodations for both participation-only and health contingent programs. The ACA requires reasonable accommodations only for health contingent programs. For example, absent undue hardship, an employer would have to provide a sign language interpreter to an employee who attends a nutrition class if the employee is deaf. In conclusion, while the recent EEOC guidance is subject to change when issued in final form, employers should carefully review their wellness programs to ensure compliance with both the ADA and the ACA rules. 2 6

27 QUESTIONS and THANK YOU Angela Garner, MBA, CEBS, GBA, RPA, AHIC, LIC Executive Vice President Brown & Brown of Central Michigan (989)