Enacted in March 2010 Makes significant ifi changes to health care system Implemented over several years

Transcription

1 Health Care Reform: Top Employer Questions October 2013 Nancy Johnson Tommy Morris Agency LLC

2 Introduction

3 Health Care Reform Affordable Care Act Enacted in March 2010 Makes significant ifi changes to health care system Implemented over several years Provisions that impact: Health care providers Government programs Health insurance issuers Employers/plan sponsors Individuals Most employers that offer health plans will be impacted in some way

4 How Health Care Reform Works The Law Definitions Special Rule More Special Rules Confusing Political Action Exception Special Rule Partial delay Sub-special Rule Additional Special Rule Confusing Media Coverage

5 Q: What is a grandfathered plan (and do I have one)?

6 Grandfathered Plans Definition Health plan or health insurance coverage that covered individuals on March 23, 2010 Determination made separately for each benefit package Requirements Do not significantly change costs or benefits Provide notice to participants i t and beneficiaries in plan materials Keep records of plan terms Status Depends on each plan New plans are not grandfathered Check with your broker or carrier Does not automatically expire

7 My Plan is Grandfathered. So What? Grandfathered plans are exempt from some health care reform rules Coverage of preventive health services Nondiscrimination rules for fully-insured plans Patient protections Quality of care reporting Expanded appeals process rules Small group premium rating restrictions Guaranteed issue and Health status renewal of coverage nondiscrimination Essential health benefits package coverage Clinical trial coverage requirements Cost-sharing limitations (OOP max and deductibles) Age 26 coverage limitations (temporary exemption)

8 Changes to Grandfathered Plans Permitted Changes Routine coverage changes Premium changes* Adding new employees or family members Changing insurance carriers Prohibited Changes Significantly reducing benefits Increasing coinsurance Significantly increasing copays or deductibles Adding annual limitit Significantly reducing employer contribution (by more than 5%)

9 Q: What is the Individual Mandate?

10 Individual Mandate Jan. 1, 2014: Individuals must enroll in coverage or pay a penalty Penalty amount: Greater of $ amount or a % of income 2014 = $95 or 1% 2015 = $325 or 2% 2016 = $695 or 2.5% Family penalty capped at 300% of the adult flat dollar penalty or bronze level premium 10

11 Q: What is an Exchange?

12 American Health Benefits Exchange Public health insurance exchange required by ACA Primarily online marketplace for purchasing health insurance (Qualified Health Plans) Run by state or federal government with consumer assistance from other entities For individuals and small employers For individuals and small employers (generally up to 50 employees)

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14 Qualified Health Plans Offered by an approved insurer Certified to meet Exchange requirements Offers essential health benefits Meets cost-sharing limitations Priced like plans outside the Exchange Apples to apples... Provides bronze, silver, gold or platinum coverage (or catastrophic plan for young individuals)

15 Q: Who can shop for coverage in an Exchange?

16 Exchange Eligibility Individuals Citizen or legal resident Not incarcerated Reside in state covered by Exchange Separate p from subsidy eligibility rules Most individuals can shop for Exchange coverage (even if eligible ibl for employer coverage)

17 Exchange Subsidies Provide assistance to low-income individuals: 100%-400% of federal poverty level Not eligible for government programs that provide coverage To help pay premiums or reduce cost-sharing Not available to individuals who are: Eligible for affordable, minimum-value employer coverage or Enrolled in an employer plan

18 Q: When is Exchange enrollment?

19 Exchange Enrollment Restrictions apply to timing of enrollment to prevent adverse selection Individuals Initial enrollment: Oct. 1, 2013-March 31, 2014 Selections must be made by Dec. 15 for Jan. 1 coverage Annual open enrollment: Oct. 15-Dec. 7 Special enrollment for qualifying events

20 Q: What information do I have to give my employees about the Exchange?

21 Notice to Employees of Coverage Options Current employees: by Oct. 1, 2013 New employees hired after Oct. 1: within 2 weeks of hire Employers subject to FLSA must inform all employees of Exchange information Include information on: Exchange and services Potential subsidy eligibility Impact on employer contribution Model notices available DOL: no legal penalties for failing to provide notice, but compliance encouraged Other consequences may apply (?)

22 Delivering the Notice May be provided by firstclass mail Must be provided in writing In a manner calculated to be understood by the average employee May be provided electronically (if DOL requirements are met)

23 Q: What fees do we have to pay under health care reform?

24 Patient-Centered Outcomes Research Institute (PCORI) Fees Fee to fund research on informed health decisions Paid by issuers and self-funded plan sponsors Special rules for multiple self-funded plans (including HRAs) Paying the fee Using Form 720 by July 31 each year Beginning with plan years ending on or after Oct. 1, 2012 Ending with the 2018 plan year 2012 plan year 2013 plan year 2014 and beyond $1 x average number of covered lives $2 x average number of covered lives Increase based on National Health Expenditures

25 Reinsurance Fees Fee to fund reinsurance program to stabilize individual insurance market Program to operate Paid by health insurance issuers and self-funded plan sponsors (with some exceptions) Fees based on annual national contribution rate 2014: $5.25/month ($63/year) x average number of covered lives Nov. 15 Submit enrollment count to HHS Dec. 15 (or 30 days) HHS notifies issuer/sponsor of amount due 30 days Payment due

26 Health Insurance Providers Fee Annual fee on health insurance providers Effective in 2014 Due Sept. 30 each year Allocated according to market share: $8B in $14.3B in 2018 (based on premium growth in later years) Applies to: Does not apply to: Covered Entities Including health insurance issuers and HMOs Companies with $25M or less in net premiums Self-insured employers Government and non-profit entities VEBAs

27 Q: Do I have to offer health coverage to my employees?

28 Employer Shared Responsibility Rules (Pay or Play) Small Employers (fewer than 50 FT/FTE employees) No requirement to offer coverage Can get tax credits for providing coverage Large Employers (50+ FT/FTE employees) Must offer coverage to FT employees and dependents d to avoid penalties Coverage must be affordable and provide minimum value Penalties delayed until 2015 Employer penalties triggered if any full-time employee p y p gg y p y receives subsidized coverage in an Exchange

29 Potential Penalties Penalty A Employer did not offer coverage to substantially all FT employees and dependents (children) $2,000 x (all FT employees 30) Penalty B Employer offered coverage to substantially all FT employees/dependents But not all employees, OR coverage is not affordable or does not provide minimum value $3,000 x each employee who gets subsidized coverage (capped at Penalty A amount)

30 Avoiding Penalties Offer coverage to FT employees and dependents that: Is affordable Provides minimum value Employee s contribution for selfonly coverage does not exceed 9.5% of income Safe harbors for what income and premium amount to use Plan covers at least 60% of costs on average MV calculator or design-based checklists

31 Penalty Potential Not a large Large employer: 50 or more full-time equivalent employees employer: Less than 50 full-time Does not offer coverage Offers Coverage equivalent employees Scenario A No full-time Scenario B 1 or more full-time Scenario C No full-time Scenario D employee receives credit for exchange coverage employees receive credit for exchange coverage No penalty No penalty Number of full-time employees minus 30 multiplied by $2,000 employee receives credit for exchange coverage No penalty 1 or more full-time employees receive credit for exchange coverage Lesser of: Number of full-time employees minus 30, multiplied by $2,000 Number of full-time employees who receive credits for exchange coverage, multiplied by $3,000 (Penalty is $0 if employer has 30 or fewer full-time employees because penalty is based on the lesser of the two calculations) 31

32 Q: Who is a full-time employee?

33 Full-time vs. Full-time Equivalent Full-time employees Counted for large employer determination Must be offered coverage (along with dependents) to avoid penalties Full-time equivalent employees Counted as a fraction for large employer determination Do not have to be offered coverage Seasonal employees Special rules apply for large employer determination Special rules apply for offering coverage (along with variable hour employees)

34 Full-Time Employee With respect to a calendar month An employee who is employed on average at least 30 hours of service per week 130 hours of service in a calendar month = the monthly equivalent of 30 hours of service/week

35 Full-Time Equivalent Employees Add hours of service in a month for PT employees (up to 120 hours/person) Divide id total t hours Result: Number of by 120 FTEs for the month

36 Offering Coverage to FT Employees New employees expected to work full-time Reasonably expected at start date to work full-time (not seasonal) Offer coverage by end of first 3 full calendar months of employment Ongoing (current) employees New variable hour employees New seasonal employees Optional IRS safe harbor method to determine if they average full-time hours over a period of time and must be offered coverage Look-back measurement method

37 Safe Harbor for Variable Hour/Seasonal Employees Measurement Period Counting hours of service (3-12 months) Administrative Period Time for enrollment/disenrollment (Up to 90 days) Stability Period Coverage provided (or not) length depends on type of employee and whether FT or not

38 Look-Back Measurement Method 2013 Nov. 1 Dec 31 Measurement Period 2014 Jan 1 Nov. 1 Dec 31 Measurement Period cont. Admin Period 2015 Jan 1 Dec 31 Stability Period

39 Employee Categories Employee Used to determine large Employer subject to Category employer status? penalty if a premium credit is received? Full-Time Part-Time Seasonal Counted as one employee, based on a 30+ hour work week Prorated (calculated by taking the hours worked by part-time employees in a month divided by 120) Not counted, for those working less than 120 days in a year Yes No Yes, for the month in which a seasonal worker is full- time (subject to measurement/stability period) 39

40 Q: Can my plan still have a waiting period?

41 Waiting Period Limits Waiting periods limited to 90 days beginning with 2014 plan year Strict 90 day limit 1st of the month following not permitted DOL recommendation: use shorter period for 1 st of the month enrollment Other eligibility conditions permitted Can t use to avoid 90-day limit Limits on cumulative hours of service requirement (1200 hours/one time only) Variable hour employees Measure hours for up to 12 months to determine FT status Offer coverage by end of 13 th month

42 Other Random Issues

43 Form W-2 Reporting Employers must report aggregate cost of group health plan coverage on each employee s W-2 IRS guidance on which plans are covered Not excepted benefits Some coverage optional Small employer exemption Employer s that filed fewer than 250 W-2 Forms for prior year No aggregation rules apply 43

44 W-2 Reporting cont d d. Report coverage under employer-sponsored group health plans Does not include excepted benefits/plans that don t provide health coverage Aggregate cost must be reported Include both employer- and employee- paid portions Determined under rules similar for determining applicable premium under COBRA Not required for: Employees who terminate during the year and request a W-2 before the end of the year Employees who would not otherwise receive a W-2 44

45 Summary of Benefits and Coverage Simple, concise explanation of benefits and costs 4 double-sided pages, 12 point or larger font Can provide in paper or electronic form Template available Does not apply to excepted benefits Providing the SBC Issuers provide to health plans/employers Issuers or employers provide to enrollees Health plans to enrollees: 1st open enrollment period or 1st plan year that begins on or after Sept. 23, 2012 Special rules specify when SBC must be provided Good faith standard applies for first year 45

46 60-Day Notice Rule Effective once SBC rule is effective for a plan Material modifications not in connection with renewal must be described d in a summary of material modifications (SMM) or an updated SBC Must be provided at least 60 days BEFORE modification becomes effective Material modification: Enhancement of covered benefits or services Material reduction in covered benefits or services More stringent requirements for receipt of benefits 46

47 Preventive Care for Women New guidelines for preventive care for women effective for PY on or after Aug. 1, 2012 Must provide coverage for women s preventive health services without any cost-sharing Applies to non-gf plans No deductible, copayment or coinsurance 47

48 Covered Health Services for Women Well-women visits Gestational diabetes screening HPV DNA testing Sexually transmitted infection counseling HIV screening and counseling Breastfeeding support, supplies and counseling Domestic violence screening and counseling Contraceptives and contraceptive counseling 48

49 Health FSA Limits Prior limits No limit on salary reductions Many employers impose limit Beginning in 2013, limit is $2500/year Limit is indexed for CPI for later years Applies to plan years beginning on or after 1/1/13 This is a change from initial effective date Does not apply to dependent care FSAs 49

50 Pre-existing existing Condition Exclusion Exclusion of benefits related to a condition present before enrollment Currently permitted with restrictions Health care reform changes PCEs currently yprohibited for children under age 19 In 2014, prohibited for everyone Applies to GF and non-gf group health plans 50

51 Limits on Out-of-Pocket Expenses and Cost Sharing Non-GF group health plans subject to limits on costsharing and out-of-pocket costs Out-of-pocket expenses may not exceed HDHP limits (all size groups) 2014: $6,350/$12,700 Deductibles may not exceed $2,000 (single coverage) or $4,000 (family coverage) (small groups) - Modified Limits indexed for inflation 51

52 Employer Annual Reporting Employers will have to report certain information about health coverage to the government and individuals Applies to: Applicable large employers generally, employers with at least 50 full-time equivalent employees Applies to coverage offered after Jan. 1, 2014 First returns to be filed in

53 Information Required on Annual Report Employer identifying information Whether employer offers health coverage to FT employees and dependents Number of FT employees for each month Length of any waiting period Monthly premium for lowest-cost option in each enrollment category Employer s share of cost of benefits Names and contact info of employees and months covered by employer s health plan 53

54 Questions? Nancy Johnson Tommy Morris Agency LLC

55 Tommy Morris Agency LLC Established in 1956 Specialize in Group Health Plans and Employee Benefits Fully-insured Plans Self-funded funded Plans Clients Throughout Texas We strive to give the best possible service. 55

56 Thank you! This presentation is current as of the date presented and is for informational purposes only. It is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Please contact legal counsel for legal advice on specific situations. This presentation may not be duplicated or redistributed without permission Zywave, Inc. All rights reserved.