HEALTH CARE REFORM UPDATE Hitting a Moving Target Fall 2015
AGENDA Basic Changes to PPACA Employer Mandate Transition Relief for Non Calendar Plans Counting Employees Variable Hour Community Rating
AGENDA 5 Hot Button Topics in the ACA Pending Litigation Reporting Requirements ERISA Section 510 Alternative Plan Offerings Skinny Plans Self/Level Funding Cadillac Tax
WHAT IS LAW TODAY The Marketplace Exchange Late 2013 / 2014 Individual Mandate Jan 1, 2014 $95 ($285 family) or 1% for 2014 $325 ($975 family) or 2% for 2015 $695 ($2,085 family) or 2.5% for 2016 Payable at tax time
How will they affect you? CHANGES TO THE PPACA
EMPLOYER MANDATE 2015 (Jan 1) for employers with 100 or more FT or FTE must provide ADEQUATE and AFFORDABLE coverage to at least 70% of FT employees or be subject to fines (95% by 2016) 2016 employers with 50 or more FT or FTE Full time: >=30 hours per week
TWO PENALTIES Strong Penalty: No coverage offered Weak Penalty: Coverage not adequate or affordable
EMPLOYER MANDATE OVER 100 EMPLOYEES Strong Penalty: No coverage offered 2015: $2000 per FT employee (minus the first 80) Ex: 200 FT 80 = 120*$2,000 = $240,000 2016: $2000 per FT employee (minus the first 30) Ex: 200 FT 30 = 170*$2,000 = $340,000
EMPLOYER MANDATE 50 99 EMPLOYEES Strong Penalty: No coverage offered 2015: No Fine 2016: $2000 per FT employee (minus the first 30) Ex: 75 FT 30 = 45*$2,000 = $90,000
EMPLOYER MANDATE Weak Penalty: Coverage not adequate or affordable $3000 per FT employee that goes to the marketplace and qualify for a subsidy Ex: 200 FT (20 get subsidy) 20*$3000 = $60,000 2015 for 100+ employees 2016 for 50 99 employees
NON CALENDAR YEAR PLANS If your plan is a non calendar year plan, then your fine is only for the months during that year that are under the new plan. In other words, if you have a plan year that ends Sept 30 of 2015, your penalty phase would start October 1, 2015.
VARIABLE HOUR EMPLOYEES If you have employees that are identified as variable hour (part time) and they may occasionally work over 30 hours per week, then you can use a look back period to determine if they are full time or not See me for clarification on counting your employees (I have a PPT that clears it up)
COMMUNITY RATING Beginning in 2014 all small group plans (2 50 ATNE*) that are ACA compliant are Community Rated (2015 for 51 99 ATNE) No health questions Age Zip Code Smoking Status BUT WAIT If you like your plan *Average Total Number of Employees
COMMUNITY RATING If you like your plan, you can keep your plan means that non ACA compliant plans are being renewed and are NOT subject to community rating This has been extended through Oct. 2016 This will (probably) end and all groups under 100 will be community rated
COMMUNITY RATING Healthy groups price goes up Healthy groups can avoid price increase with alternative plans (self/level funding) that still use traditional rating methods (health rating) More on this later
ACA in Action 5 HOT BUTTON TOPICS
ACA LITIGATION People are still fighting the ACA Some are trying to repeal or revise the law Some are trying to say that the penalties are not constitutional if the Marketplace is run by the Federal Government Wait and see Not likely Elections may have effect
ACA REPORTING IRS Sections 6055 and 6056 Tax Year 2015 (filed Jan 2016) The Affordable Care Act added section 6055 to the Internal Revenue Code, which provides that every provider of minimum essential coverage will report coverage information by filing an information return with the IRS and furnishing a statement to individuals.
ACA REPORTING Purpose: to let IRS and employees know what their coverage status is from employersponsored plans. To help IRS audit individuals who have access to a plan but still receive a subsidy on the exchange
ACA REPORTING Form 1095 A: Sent by IRS to anyone getting coverage through the marketplace Form 1095 B: Sent by carriers (or self insured plans) to the IRS Form 1095 C: Sent by Employers to the IRS Tells IRS which employees had coverage offered to them throughout the year
ACA REPORTING Forms 1094 C and 1095 C (Draft) For Applicable Large Employers (ALEs) 50+ employees (FT+FTE) http://www.irs.gov/pub/irs dft/f1094c dft.pdf One per employer filed with IRS http://www.irs.gov/pub/irs dft/f1095c dft.pdf One per employee filed with IRS and copy given to covered individual
ACA REPORTING Information needed for 1094 C and 1095 C Company Info Plan Info / Plan Cost for Employee Month by month member eligibility counts Names of Covered Individuals *Dependents too DOB or SSN of Covered Individuals Must be filed by Jan 31, 2016
ACA REPORTING Where will you get this information? Insurance Carriers Payroll Systems In House Recordkeeping Filing Assistance Software providers Benefit Professionals Accounting Professionals
ACA REPORTING Time to start talking to specialist and accountant to make sure that these measures are being followed in 2015 Even though reporting is due in Jan / Feb 2016, the information needs to be gathered in 2015
ACA REPORTING NOTE to employers with 50 99 employees Even though the mandate has been pushed back to 2016 for you, the requirement for reporting has not been pushed back Employers with less than 50 FTE are not required to report
ACA REPORTING Fines for non compliance $50 per return not to exceed $250,000 per calendar year
OTHER REPORTING Form 5500 In general, group must have 100 employees to be required to file this form Pension and Welfare Benefit Plans Must be filed each year on the last day of the 7th month after the plan year ends
ERISA SECTION 510 This section of the ERISA law is to keep employers from interfering with their employees right to benefits ISSUE: lowering employees hours (so you don t have to offer them insurance) and then being sued by that employee Talk to an attorney for more information
MEC / MVP Plans Self and Level Funded Plans ALTERNATIVE PLANS
MINIMUM ESSENTIAL COVERAGE (MEC) PLANS Employer sponsored coverage, including selfinsured plans, COBRA coverage and retiree coverage There is no requirement (currently) for MEC plans to be comprehensive for the employer to avoid the Strong Penalty Many Carriers now offering MEC plans
MINIMUM ESSENTIAL COVERAGE (MEC) PLANS Skinny plan or Mini Med plan Coverage for preventive services, but no major medical coverage No hospitalization coverage (or just a copay) No drug coverage Not really insurance Cheap ($100 per month) Avoids $2000 per employee penalty
MINIMUM ESSENTIAL COVERAGE (MEC) PLANS Skinny plan or Mini Med plan Coverage for preventive services, but no major medical coverage No hospitalization coverage (or just a copay) No drug coverage Not really insurance Cheap ($100 per month) Avoids $2000 per employee penalty
MINIMUM ESSENTIAL COVERAGE (MEC) PLANS HHS may re define Minimum Essential Coverage to force the inclusion of hospitalization Health Plans without Hospital Benefits Appear Doomed Omaha World Herald, Oct. 20, 2014 expect the administration to disallow such coverage by the end of the year. Kaiser Health News
SELF / LEVEL FUNDING Scenario: 25 employees healthy Rates are $400 per employee per month COMMUNITY RATING Rates jump to $650 per month for same plan Options Cut plan benefits Avoid community rating
SELF / LEVEL FUNDING Allows small groups to stay health rated Uses a TPA (third party administrator) to manage claims Group creates claims fund to cover health costs Group buys stop loss insurance to protect against excessive claims
SELF / LEVEL FUNDING If group has a good health year, there can be money left over in the claims fund Group gets money back or credits toward next year If group has bad year, rates may go up, but group can always go back to Community Rated major medical carriers
SELF / LEVEL FUNDING Rates can be 20% cheaper than community rated Major networks can be included Many major carriers are creating level funded plans Level funded you pay the same each month into the pool predictable Avoids ACA taxes
CADILLAC TAX Starts in 2018 Beginning in 2018, a 40 percent excise tax will be imposed on the value of health insurance benefits exceeding a certain threshold. The estimated thresholds are $10,200 for individual coverage and $27,500 for family coverage (these numbers will adjust for medical inflation)
CADILLAC TAX Translation: If you provide GREAT health insurance and the EMPLOYER PAYS for more than $10,200 (ind) or $27,500 (fam) in value, the government wants to tax 40% of the excess value Why? Raise funds for ACA Why? These benefits are not subject to payroll tax. (Benefits as Raises)
CHANGE The Only Thing That Is Constant Is Change Heraclitus (~500 bc)
TIPS Have a trusted advisor on the ACA Let them do the work for you Get to know your employees (families) Marital Status Number of Kids Does the Spouse work? Insurance Plan? Look into reporting software Payroll, Benefits, HR, Time/Attendance
WHO WE ARE Strategic Employee Benefits Services (SEBS) of Illinois, Champaign IL All major healthcare providers represented BCBS, Health Alliance, Aetna, Humana, United, Coventry Licensed with several level funded carriers Independent Tony Jared Major Networks Experts in Health Care Reform PPACA Certified (only 1/2 of 1% of all brokers) Licensed to work in the exchange Growing Leaders in the Industry Amanda Courtney Teri
WHAT WE DO Client Centric Service Plan Design / Renewals Enrollment Assistance Client Advocacy Wellness Initiatives ACA Experts Tony Jared We take work off your desk Same cost to employer, with expert service Amanda Courtney Teri SEBS of IL (888) 250 5502 Tony Johnston (217) 493 1015 Email: anthony.s.johnston@nm.com