21st annual legal & accounting institute: healthcare reform
Post on 27-Nov-2014
246 Views
Preview:
DESCRIPTION
TRANSCRIPT
HEALTHCARE REFORM
Employer Shared Responsibility
“Play or Pay”December 6, 2013
These materials are intended to stimulate thought and discussion and to provide the reader with useful ideas and guidance in the areas of healthcare reform. The materials do not constitute, and should not be treated as, legal advice. Although we have made every effort to ensure the accuracy of these materials, neither the authors nor Cox Smith Matthews Incorporated assumes any responsibility for any individual’s reliance on the written information presented during this presentation. Laws and regulations are subject to change at any time.
This PowerPoint presentation is an educational tool that is general in nature and for purposes of illustration only. The materials in this presentation are not exhaustive, do not constitute legal advice and should not be considered a substitute for consulting with legal counsel. Cox Smith has no obligation to update the information contained in this presentation.
CIRCULAR 230 DISCLOSURE: Pursuant to Department of Treasury Circular 230, this presentation is not intended or written to be used, and may not be used by the recipient, for the purposes of avoiding any federal tax penalty which may be asserted.
2
“Marketplace” supposed to look like Travelocity Individuals and small businesses (< 50 employees) can
get health coverage Subsidies available for individuals under 4x FPL and
some small businesses Exchanges offer Qualified Health Plans (“QHP”) Texas Federally Facilitated Exchange (“FFE”)
3
PPACA – WHAT IS A HEALTHCARE EXCHANGE?
Individual Mandate Employer Mandate Medical Loss Ratios Penalties Lawsuits: Healthcare Discrimination
4
PPACA – WHY GET INSURANCE?
Amend Cafeteria Plan for $2,500 FSA limit PCORI fees due for some plans (July) Exchange Notice (October 1) Exchange Open Enrollment (Fall) Some plans to begin 12-month measurement period
5
2013 PPACA TIMELINE
Annual limits prohibited Cost-sharing limitations 90-day waiting period Exchanges PCE prohibition Reinsurance fees Individual mandate Nondiscrimination for Healthcare Providers HIPAA electronic operating rules. For 2014, the health
care electronic funds transfers (EFT) and remittance advice operating rules are scheduled for employers to be in compliance by 1/1/14
6
2014 PPACA TIMELINE
Reporting of health insurance coverage (Code §§ 6055 & 6056)
Pay or Play
7
2015 PPACA TIMELINE
Cost-sharing limitations. For all non-grandfathered group health plans, out of pocket maximums for in-network benefits are limited to the out-of-pocket expense limits for self-only and family coverage for HSA-compatible high-deductible health plans (HDHPs) for taxable years beginning in 2014. For 2014, the HDHP maximum out-of-pocket expense limit (that is, the sum of the plan’s annual deductible and other annual out-of-pocket expenses (other than premiums) that the insured is required to pay, such as co-payments and co- insurance for an HDHP) cannot exceed $6,350 for self-only coverage and $12,700 for family coverage.
8
2014 PPACA TIMELINE – FOCUS ON COST SHARING LIMITATIONS
2014 only can have separate OOP max for pharmacy benefit
For individual and small group market insured plans only, deductible is limited to $2,000 for self only and $4,000 for family
9
2014 PPACA TIMELINE – FOCUS ON COST SHARING LIMITATIONS
Last month, the IRS unexpectedly delayed the Employer Shared Responsibility penalties and reporting requirements until 2015.
Prompted by concerns about the reporting requirements, but this necessarily also delayed the penalties, because reporting was critical to administration of penalties.
Reprieve, not a Pardon! Delay is only temporary May need to track hours as early as October 2013
10
2015 PPACA – FOCUS ON “PLAY” OR “PAY”
NOTHING ELSE WAS DELAYED! No other changes to PPACA implementation timeline.
11
2015 PPACA – FOCUS ON “PLAY” OR “PAY”
Who is an ALE? Controlled group rules Employer must offer “minimum essential coverage”
through an “eligible employer-sponsored plan”
12
2015 PPACA – FOCUS ON “PLAY” OR “PAY”
2015 PPACA – FOCUS ON EMPLOYER PENALTIES
Penalties provided for in Code §§ 4980H(a) and (b)
Penalty is triggered, in general, if FT employee is certified as enrolled for Exchange subsidy for a month Subsection (a) penalty (or “no coverage” penalty)
applies if employer Failed to offer substantially all FT employees (and
dependents) opportunity to enroll in EESP for a month
Monthly Penalty = $2,000 X # of FT employees minus 30 ÷ 12
13
Subsection (b) (or “inadequate coverage”) penalty applies if employer Offered substantially all FT employees (and
dependents) opportunity to enroll in EESP for a month But coverage is not affordable or fails to provide
Minimum Value (“MV”) Monthly Penalty = lesser of
$2,000 X # of FT employees minus 30 ÷ 12 OR $3,000 X # of FT employees with subsidy ÷ 12
14
2015 PPACA – FOCUS ON EMPLOYER PENALTIES
95% of FT employees and dependents to avoid sledgehammer
Minimum value – 60% actuarial value Affordability – 9.5% of W-2 income Transition rule? Tracking FT employees Employer response to rule
15
2015 PPACA – OTHER “PLAY” OR “PAY” ISSUES
OTHER LAWS YOU SHOULD PAY ATTENTION TO IN 2013-2014
HIPAA – Compliance with new final omnibus regulations required by September 23, 2013
DOMA – Big changes coming for same-sex benefits. Waiting for guidance
Texas Medical Privacy - Relaxed training requirements for those who are subject to the law.
16
COVERAGE MANDATE: EXAMPLES FOR “NO COVERAGE” PENALTY
Cox Co. has 1,000 FT employees and does not offer an EESP to any FT employees 1 FT employee enrolls in subsidized coverage for year Annual Penalty = $2,000 X (1,000 − 30) = $1,940,000 Note: Result would be same even if Cox Co. offered
EESP to 94.99% of FT employees (and children up to age 26)
17
COVERAGE MANDATE: EXAMPLES FOR “NO COVERAGE” PENALTY
Smith Co., with 20 FT and 60 half-time (0.5) FTEs, does not offer an EESP to substantially all FT employees Treated as having 50 FT employees and, thus, subject
to rules 1 FT employee enrolls in subsidized coverage for year Annual Penalty = $2,000 X (20 − 30) = 0 Smith Co. owes no penalty because only true FT
employees are counted (FTEs only count for ALE status)
18
COVERAGE MANDATE: EXAMPLES FOR “NO COVERAGE” PENALTY
Matthews Co. has 1,000 FT employees, offers affordable plan with minimum value (“A/MV”) to ALL FT employees but NO dependent coverage Question: Whether penalty could apply under either
subsection (a) or (b) since it would appear that no FT employee would be eligible for Exchange subsidy (due to A/MV offer)
19
COVERAGE MANDATE: EXAMPLES FOR “NO COVERAGE” PENALTY
Same as previous slide except Matthews Co. offers A/MV plan to substantially all FT employees but NO dependent coverage Annual Penalty = $2,000 X (1,000 − 30) = $1,940,000 Can be triggered by one of the 4.99% of FT
employees who goes onto the Exchange and receives a subsidy
Matthews Co. can then be penalized because no offer of coverage to dependents
20
COVERAGE MANDATE: EXAMPLES FOR “INADEQUATE COVERAGE” PENALTY
Sutin Co. has 1,000 FT employees and offers EESP to substantially all (including children up to age 26) If 200 FT employees enroll in subsidized coverage for
year Annual Penalty = $600,000
Lesser of $2,000 X (1,000 − 30) = $1,940,000 (Example #1) OR
$3,000 X 200 = $ 600,000
21
COVERAGE MANDATE: EXAMPLES FOR “INADEQUATE COVERAGE” PENALTY
If 647 (or more) enroll in subsidized coverage for year Annual Penalty = $1,940,000 (same as Example #1)
Lesser of $2,000 X (1,000 − 30) = $1,940,000 (Example #1) OR
$3,000 X 647 = $1,941,000
22
COVERAGE MANDATE: EXAMPLES FOR “INADEQUATE COVERAGE” PENALTY
Smith Co., with 20 FT and 60 half-time (0.5) FTEs, offers EESP to substantially all FT employees One FT employee goes onto Exchange and receives
a subsidy “Inadequate coverage” penalty = $3,000 X 1
But can never be more than “no coverage penalty,” which is $2,000 X (20 − 30) = 0
Penalty is still 0 under “lesser of” formula
23
COVERAGE MANDATE: HOW TO COMPLETELY AVOID A PENALTY
No penalty possible with offer of an affordable plan that provides MV to all FT employees (and children up to age 26) FT employees offered this kind of plan are not eligible
for subsidized Exchange coverage and, therefore, cannot trigger a penalty for the employer
When a plan provides MV and when a plan is considered affordable discussed in next slides
24
COX SMITH MATTHEWS INCORPORATED EMPLOYEE BENEFITS ATTORNEYS:
Mary M. Potter William M. FisherL. Katherine Noll Jillian L. GordonErin H. Jansen
Joshua A. Sutin112 E. Pecan Street, Suite 1800
San Antonio, Texas 78205(210) 554-5500 tel(210) 226-8395 faxwww.coxsmith.com
© 2013 Cox Smith Matthews Incorporated
This PowerPoint presentation is an educational tool that is general in nature and for purposes of illustration only. The materials in this presentation are not exhaustive, do not constitute legal advice and should not be considered a substitute for consulting with legal counsel. Cox Smith Matthews Incorporated has no obligation to update the information contained in this presentation.
25
top related