ACA Implications for Bargaining

Transcription

1 ACA Implications for Bargaining 1

2 Agenda The Context in which We Bargain Benefits Large Employer Coverage After Reform Small Employer Coverage After Reform Retiree Coverage and the ACA Individual Coverage Conclusion 2

3 Union Workers Struggle Against Tide to Preserve Good Benefits Private Sector Workers With and Without Employer-Sponsored Health Coverage, by Union Status Percent of Workforce in Unions Percent of Union Workers with Health Coverage Percent of Workforce with Union-Negotiated Health Coverage 7% 93% 85% 46% 6% 43% Percent of Workforce Not in Unions Percent of Non- Union Workers without Health Coverage Percent of Workforce without Health Coverage 3

4 Unions Maintain Compensation Edge...But Lead on Benefits Grows, While Lead on Wages Declines $8.00 Union Difference in Costs Per Hour Worked $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 Wage Difference Benefit Difference 4 $

5 Affordable Care Act Changes the Playing Field for Coverage 5 Sources of Coverage Unchanged Employer Sponsored Plan Medicare Medicaid/SCHIP Individual Insurance Market ACA Changes Rules for Coverage New requirements, fees Large: Pay or Play penalty Small: Incentives, Exchange Free preventive care Donut hole phase out Expanded to 133% poverty States can opt out Mandate Health insurance exchanges Subsidies

6 Large Employer Coverage After Reform 6

7 If Large Employer Pays (Does Not Provide Coverage) Large Employer = more than 50 FTE employees Employers not offering coverage charged penalty of $2,000/ full time employee. Full-time is defined as 30 hours per week. Penalty excludes the first 30 employees. At least one employee must purchase coverage through the Exchange AND receive a subsidy. 7

8 If a Large Employer Plays (Provides Coverage)... Plan must be affordable and of minimum value. 1. Affordable = premium for individual coverage no greater than 9.5% of household income. 2. Minimum Value = Plan bears 60% of total health care costs on average. 8

9 If Large Employer Plays but Coverage is Inadequate... If plan does not meet the Affordable OR Minimum Value standard... AND at least one employee purchases Exchange coverage AND receives a subsidy... Employer will be charged $3,000 per full time employee receiving subsidized coverage. Full-time is defined as 30 hours per week. 9

10 Challenge: Shift to Part-Time Work Some employers threaten to cut hours to less than 30 to avoid penalties. 344 public employers and 81 private employers in 50 states have threatened or implemented reduced hours. However, no hard evidence that part-time work is increasing at the expense of full-time work. Some employers are doing the opposite: Disney announced it would offer full-time status to workers with 30+ hours in order to comply. 10

11 Strategies: Shift to Part-Time Work Strategy: Define full- and part-time work in CBA. ACA does not require specific definitions thresholds only relate to employer penalties. Talking Points: Recruitment and retention of highly qualified public employees. Must hire additional employees to recoup lost hours incur recruitment, training costs. Workplace management, scheduling issues. 11 Public relations concerns.

12 Challenge: Dependent Glitch Affordability based on individual coverage only. Dependents must be covered to age 26. But no limit on employee contributions for family coverage. Spousal coverage not mandated at all. Spouses can be dropped altogether. Spousal surcharge can be assessed to stay on the plan. Spouses tend to be higher cost. 12

13 Strategies: Dependent Glitch ACA affordability standard based on individual coverage only, but is assessed against total household income. Talking Points: Dependents on exchanges ineligible for subsidies. Potentially huge financial burden on families. Employee morale issues when separating family members into different health plans. Recruitment and retention issues. 13

14 All Plans: Challenge: Additional Costs Due to Added Benefits Must cover dependent children to age 26. No lifetime limits on benefits. No annual limits on benefits. Non-Grandfathered Plans: 14 Limits on out of pocket maximums: $6,350 single / $12,700 family. No copays/deductibles for preventive care.

15 15 Challenge: Additional Costs Due to New Fees Outcomes Research Fee: Funds research on evidence-based medicine : $2 per participant : $2 pp X health care inflation. Transitional Reinsurance Fee: Funds reinsurance for individual market insurers. $63/pp in 2014; $44 in 2015; Lower in Self-insured, self-administered plans (some large Taft-Hartleys) exempt in 2015 and 2016.

16 Strategy: Understand Costs, Possible Offsets Check that employers are accurately representing fees, increases. Analyze additional costs due to compliance. Require negotiations / offer input over any changes due to ACA compliance. If cost-shifting occurs, look to offsets: Health spending account contributions. Other compensation: wages, retirement benefits, other benefits (dental, vision, time off). 16

17 Challenge: Employers May Face Excise Tax in Tax on high cost health plans starting in 2018: Plans over $10,200 single / $27,500 family. Early retirees: $11,850 single / $30,950 family. Amounts increase annually by CPI. All contributions count employer and employee. Employer contributions to health accounts included. Dental, vision, and out-of-pocket costs excluded. Tax is 40% of cost of plan above the threshold, and is not tax deductible.

18 CWA Plans Will Hit Excise Tax $24,000 $22,000 $20,000 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 New Jersey Verizon United (AFA) AT&T TSEU Tax Threshold 18 Based on 2014 COBRA rates for single coverage. Assumed health care cost increase of 5% annually. Verizon is MA Anthem MEP/PPO. United is Traditional Medical PPO. TSEU is UT Group Benefit Plan. AT&T is PPO plan. NJ is Direct 15 Plan.

19 19 Strategies: Control Cost Through Plan Design Elements Plan design elements can lower total costs: Ex: Incentivize generic drugs, urgent care over ER visit Value-based designs for chronic condition management Cost-effective provider network Wellness Programs: Rewards for employees who meet health status goals Improved health status can reduce total plan costs Employers may suggest high-deductible health plan (HDHP) to reduce costs This represents a cost-shift to employees

20 20 Take Away: Large Employer Coverage Negotiated plans are impacted by reforms. Pay or play mandate Increased costs due to benefits, fees, excise tax Possible reactions: cost-shifting, increase PT hours; higher costs for families; HDHPs Union has alternatives: If HC is bargained, ensure all changes negotiated. Plan design, wellness can lower costs for all. Request impact analysis to determine effects of changes on all employees.

21 Small Employer Coverage After Health Reform 21

22 Small Employer Incentives: Tax Credit Currently available to employers with: Fewer than 25 total employees Average wages less than $50,000 Employer pays 50% of plan costs. Tax credit refunds of up to 50% of costs (35% for nonprofits). Must purchase coverage through SHOP. Available through 2016, maximum 2 plan years. 22

23 Small Employer Incentives: SHOP Exchange Small Employers Health Options Program (SHOP): Insurance marketplace where small employers can purchase coverage for their workforce. Available to employers with 50 or fewer employees. In 2016, for employers with up to 100 employees. In 2014, employers on federal SHOP exchanges must pick one plan for entire workforce. In future years, employees in all states can choose their their own plan from all those offered in the SHOP exchange. 23

24 24 Retiree Coverage

25 Challenge: Keeping Retiree Health Care Cost is high and continues to escalate Fewer private employers offer retiree coverage 66% of large employers offered in 1988; 28% today More challenging to justify for public sector Proposed new accounting standards add to the challenge: Will put retiree medical on states books; increase the reported liability for many plans Political justification to dump/decrease this liability 25 Yet the ACA offers new opportunities...

26 Strategy: Pre-Medicare Retirees ACA exchanges offer better options than the individual market in the past: Can no longer be denied coverage Can only be charged up to 3x what a young person is charged Cannot be charged more due to health status Subsidies may be available 26 Note: Employer contribution to health account to purchase coverage will block early retirees from Federal subsidies on ACA exchanges.

27 Strategies: Medicare Retirees ACA improvements to Medicare include: Free preventive care Closing of Part D drug donut hole by Some employers shifting to private exchanges: AT&T, Century Link, some public employers Contribute fixed amount to health account, retirees use to shop for plan on exchange. These plans could be cheaper than traditional employer sponsored retiree coverage Not the same as ACA exchanges...

28 Individual Coverage and Exchanges 28

29 Key ACA Insurance Market Reforms Guaranteed issue can t deny coverage due to a pre-existing condition Community rating can t charge more based on health or gender Limited age rating charge only 3x more due to age No annual or lifetime limits Must provide 10 Essential Health Benefits Plans must spend 80% of premiums on health care 29

30 What are Health Insurance Exchanges? Marketplace for apples-to-apples plan shopping. Provide customer assistance and information on eligibility, enrollment in plans. Online, by telephone, or in-person. Certify qualified health plans. Assign ratings and enforce compliance with new regulations. Determine eligibility for subsidies. 30

31 Eligibility for an Exchange Subsidy To be eligible for a subsidy on the exchange, a person must: 1. Not have an offer of workplace coverage. OR: 1. AND: Have an offer of workplace coverage, but the plan does not meet the ACA standard of affordable or minimum value Have household income that is below 400% of the federal poverty level.

32 Household Income and Exchange Subsidies Federal Poverty Level Individual Premium Subsidies 2013 FPL, Individual / Family Maximum % Income Paid in Premiums Max $$ per Year Paid for Silver Plan 100% $11,490 / $23, % $230 / $ % $15,282 / $31, % $458 / $ % $17,235 / $35, % $689 / $1, % $22,980 / $47, % $1,448 / $2, % $28,725 / $58, % $2,312 / $4, % $34,470 / $70, % $3,275 / $6, % $45,960 / $94, % $4,366 / $8, Cost sharing subsidies available at 133% - 250% FPL. Caps maximum out of pocket costs at 6% - 27% of income.

33 33 Take Away: Exchanges Offer New Coverage Options No subsidies for many with workplace plans, but could be especially beneficial for... Low-wage workers with unaffordable plan Part-time employees Employers not mandated to cover part-timers Likely eligible for exchange subsidies Retirees Fewer and fewer employers provide coverage Exchange coverage will be cheaper Likely eligible for exchange subsidies

34 34 Conclusion

35 Conclusions The ACA presents opportunities and challenges. Employer plan challenges: Employers face additional costs, excise tax Penalty thresholds are quite low Dependent glitch is a problem Exchange opportunities: Individual market is vastly improved Certain subsets of employees likely to benefit ACA efforts to improve health (expanded coverage, wellness programs) may help control costs for all 35

36 For More Information... For more information: 36