The Projected Impact of the Affordable Care Act (ACA) on Transit Contractors

Transcription

1 1 The Projected Impact of the Affordable Care Act (ACA) on Transit Contractors October 17, 2013 Vicki Wells Vice President, Human Resources MV Transportation

2 2 Brief overview of the Affordable Care Act s (ACA) requirement for employers Impact of the ACA to MV if we made no changes Some of the changes large employers are making to health care benefits to mitigate some of the impact Cost drivers of the ACA New administrative and fee requirements under the ACA

3 ACA requirements for large employers (50 or more full-time employees) Coverage of adult children to age 26 Removal of lifetime & annual coverage limits No-cost coverage of preventive services Non-discrimination rules which previously applied only to selfinsured plans now apply to all med plans Removal of pre-existing condition limitations Penalty to employers on a per-ee basis who do not offer coverage at all Penalty to employers who do not offer coverage on an affordable (per EE who receives subsidy)

4 History Over the past decade, MV has seen health insurance premiums increase by more than 200%. Factors: Transit is the unhealthiest industry Average employee age older than the at-large workforce (46 years for MV vs. 42 years for workforce at large) We would be faced with an additional increase in the tens of millions costs if we stay the course with our plans as-is (combination of traditional HMO and PPO plan offerings). MV is maintaining the health plans for our bargaining units in place with the current plan design; with those we re seeing a significant premium increase for While the fines associated with the employer mandate have been postponed until 2015, the individual mandate is still in place. MV thought it would be unfair to not provide our employees with an affordable option.

5 How are employers mitigating costs? Given all of the factors increasing employer costs, many employers are employing a combination of tactics to mitigate some of the l cost increases: - Wellness plans/incentives Smaller provider networks Evidence-based plan designs Moving to a high deductible plan as the primary plan offering, coupled with a Health Savings Account. According to the Kaiser Family Foundation, 20% of US employers who have moved to offering a high deductible plan as their primary plan in 2014.

6 Communications is key 6 To roll out our plan for 2014, and to make certain we communicated how the Affordable Care Act works, MV undertook a substantial communications campaign: Started in July with a letter from our CEO and an all hands conference call with our division management Continued in August with webinars offered to all nonbargained employees Weekly updates in September and October out to employees highlighting sections of the upcoming open enrollment materials

7 Cost drivers of the ACA Some of the major cost drivers under the ACA are related to the uncertainty in the insurance industry about the ACA plan provision requirements: The prohibition against applying limitations on insurance coverage for pre-existing conditions. The requirement of 100% preventive care coverage. The ability for adult children to stay on their parents employer health insurance plans until age 26. The elimination of plan maximums. The individual mandate (an assumption of higher participation levels for employers, but is somewhat of an unknown for insurers.)

8 Administrative cost factors Shorter waiting periods under federal ACA, no longer than 90 days after start of full-time employment; under California law, no longer than 60 days. This leads to a greater number of employees being eligible at any given time for coverage. Increase in administrative burden: Decrease in number of hours employees considered full time to 30 (industry standard is 35) and greater requirements around tracking and reporting eligibility. Additional notifications required under the ACA. Multiple new per participant or per employee fees. Additional reporting on W-2s required.

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