is your business ready for 2014? the affordable care act awaits
Post on 25-Feb-2016
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Is your business ready for 2014?
The Affordable Care Act Awaits
Presented By: Joshua Weinstein, DIA, SVP, Employee Benefits Consultant
WELCOME!
Agenda
IntroductionsACA RecapCurrent ChangesWhat’s to ComeOur Role as Consultants
Q & A
Do you agree or disagree?
Lack of insurance is one of the most
significant barriers to healthcare access.
Main Affordable Care Act Goals
Access – through job or otherwise
Affordable – help is available
Quality – plans must be “good enough”
Get and Stay Well – new wellness benefits
Reduce Waste
Pay for Performance not Transactions
Where won’t we go today…Small business tax credits – hard to getMedicare stuff (Part D subsidies, donut holes, employer retiree benefit issues)
High risk pools – ACHIA going awayPros/Cons of grandfathered plans – fewer and fewer out there…
Wellness programsMLR rebates – how to processChanges to HSAs/FSAs/HRAsSimple cafeteria plansSBC rules – distribution, timing, formattingMedicaid expansion
What’s happened in 2010?2010
PPACA enacted on March 23, 2010Dollar-based lifetime limits were removed (Model Notice)Essential Benefits DefinedDollar-based annual limits are allowed until 2014 at which
point they are unlimitedPlan could be Grandfathered or Non-Grandfathered
(Model Notice)High Risk Pool Established (ACHIA Fed)www.healthcare.gov createdSmall Business Tax Credits were/are available for those
that qualify
What happened in 2010? (cont.)2010
Non-discrimination testing for NGF plans (105(h) rules)Adult children can be covered through age 26 (Model
Notice)No Pre-existing conditions on children under age 19Preventive Care Services as defined by USPSTF are
covered at 100%, no cost sharing for non-grandfathered plans
No rescissions of coverage (certain exceptions)Emergency services covered at in-network level
regardless of providerNew appeal process
What happened in 2011?
2011Minimum Loss Ratio for fully insured plans resulted in
some insurers issuing rebates Some Alaska individuals/groups received them in 2012 &
2013.Tax penalty for non-qualified HSA distributions increased
from 10% to 20%Reimbursement from FSA, HSA, HRA for OTC medicines
not allowed without prescriptionSmall employers could adopt Simple Cafeteria Plan
What happened in 2012?
2012Summary of Benefits & Coverage (SBC) must be
distributed for groups with renewals 10/1/2012 forwardW-2 reporting for employers filing 250 or more W-2’s in
calendar year (2013)Expansion of Women’s Health Preventive Services,
including no cost-sharing for contraceptives
What happened 2013?2013
PCORI Tax on fully insured and self-funded group health plans (HRA’s affected)
FSA medical - employee contributions are capped at $2,500 per year
Medicare payroll tax increases 0.9% for individual filers over $200K and joint filers over $250K Additional 3.8% Medicare contribution on certain unearned income
for high income individuals Itemization of unreimbursed medical expenses increases
from 7.5% of AGI to 10% of AGINotice of Exchange/Marketplace by 10/1/2013
What’s coming next
?
New Taxes & Fees The ACA contains over 20 new taxes that provide revenue to fund
other components of the bill – estimated at more than $2.6 trillion
over 10 years
Defining Markets
Insurance Marketplace(Non gov’t
plans)
Individual & Family
Coverage
Small Group
Coverage <50 lives
Large Group
Coverage >50 lives
Self-Funded >5 lives
2014 Market Reforms
Plans are guaranteed-issue
No pre-existing condition limitations for all ages
No annual or lifetime limits on essential benefits
Individual Mandate
Marketplace (Exchange)
Employers getting ready for “Pay or Play”
Individual & Family Coverage
Individual Mandate All citizens/legal residents must
have a qualified health plan or pay a tax penalty
May be without coverage for three months each year without a penalty
Some exemptions allowed: Religious Health care sharing ministry Illegal aliens Incarcerated individuals IHS beneficiaries Income exemption Hardship exemption US citizens residing outside the
US
Penalty payable for each month of noncompliance per uninsured 2014 - >$95 or 1% of annual
household income 2015 - >$325 or 2% of annual
household income 2016 & beyond - >$695 or
2.5% of annual household income
Flat dollar fees above: Per adult 50% for child 3X family cap (i.e. $2,085 in
2016)
Individual & Family Coverage Market for people without job-based coverage Alaska has chosen to have a Federally Facilitated Marketplace
(FFM) Marketplace = Exchange No denials. No pre-ex. No lifetime limits. No annual limits. Essential Health Benefits package Old to young rate ratio 3:1 (i.e. $600:$200) Plans must have qualifying Actuarial Value (AV)
Copper -50% (only for under age 30) Bronze – 60% Silver – 70% Gold – 80% Platinum – 90% (doubtfully…)
Individual & Family CoverageNo gender ratingTobacco rating allowed (up to 50%)Geographic rating allowed (AK is more than AL)
Caps on out-of-pocket maximums ($6,350 individual / $12,700 family)
Individual & Family CoverageAdvanced Premium Tax Credit (subsidy) available to
pay premiums for those who qualify: No access to job-based coverage that is “good” and
“affordable” Good means of “minimum value” Affordable means less than 9.5% of household income (MAGI)
for self-only coverage 100%-400% of Federal Poverty Level (FPL for AK is higher
than L48)Cost-sharing subsidies apply (deductible, copays, out-
of-pocket maximums for 100%-250% of FPL)Under 100% of FPL is Medicaid or….the “gap”, if AK
doesn’t expand Medicaid eligibility
Alaska 2013 FPL & Variable SubsidiesHousehold size 100% 2% -
Monthly 133% 3% 150% 4%
1 $14,350 $24 $19,086 $48 $21,525 $72 2 19,380 $32 25,775 $64 29,070 $97 3 24,410 $41 32,465 $81 36,615 $122 4 29,440 $49 39,155 $98 44,160 $147 5 34,470 $57 45,845 $115 51,705 $172 6 39,500 $66 52,535 $131 59,250 $198 7 44,530 $74 59,225 $148 66,795 $223 8 49,560 $83 65,915 $165 74,340 $248
Household size 200% 6.30% 300% 9.50% 400% 9.50%
1 $28,700 $151 $43,050 $341 $57,400 $454 2 38,760 $203 58,140 $460 77,520 $614 3 48,820 $256 73,230 $580 97,640 $773 4 58,880 $309 88,320 $699 117,760 $932 5 68,940 $362 103,410 $819 137,880 $1,092 6 79,000 $415 118,500 $938 158,000 $1,251 7 89,060 $468 133,590 $1,058 178,120 $1,410 8 99,120 $520 148,680 $1,177 198,240 $1,569
Subsidy Examples:#1
Family of four.
Two 35yo adults and two children. All non-tobacco.
$44,160 household income.
150% of FPL for AK.
4% of income limit for second “cheapest” silver plan =
$147/mo.
Subsidy can be applied to any plan, though.
Bronze plan = $0/mo.
Subsidy Examples:#2
Family of two.
58yo and 50yo adult. Both non-tobacco.
$58,140 household income.
300% of FPL for AK.
9.5% of income limit for second “cheapest” silver plan =
$460/mo.
Subsidy can be applied to any plan, though.
Bronze plan = $227/mo.
Pros and Cons of the FFM Pros
Individuals
It is the only marketplace to apply and receive the immediate
tax credits/subsidies if you qualify based on status and
income.
Cons
If you don’t qualify for the tax credit or subsidy, there is no
benefit to using the FFM. You may have additional options
outside of the FFM, but plans sold both on and off of the FFM
must have the same rate.
Employer Sponsored Coverage
First Step: Are you Small or Large?
Counting employees for the ACA is fun and important. In general, small employers have less than 50 full-time “equivalents”. While the markets are different, some rules are applicable to all
employers offering coverage: No waiting periods exceeding 90 days. 30 hours per week is full-time. Part-timers don’t need to be offered coverage. Variable hour employees can be “measured” for 12 months to
determine if they average 30 hours/week and coverage needs to be offered for the subsequent “stability period”. (More on that later…)
Bona fide seasonal employees don’t need to be offered coverage. If they work too much or too long, an offer may need to be made. Guidance is forthcoming…
Calculating FTEs
FTE = Full Time Equivalent
Full time is defined as average of 30+ hours/week
Seasonal workers exempt (≤120 days per year)
Part-time workers included for eligibility but not fine calculation.
Total full-time employees+
(total aggregate hours by part-timers)
120
Example: Skipper’s Fish Shop
7 part time X 20 hrs X 4 wks = 5605 part time X 10 hrs X 4 wks = 200560 + 200 = 760 hrs/month by non FTs760 ÷ 120 = 6.3 FTE
45 Full time employees (30-40 hrs/wk)
7 Part time employees working 20 hours per week
5 Part time employees working 10 hours a week
45 Full time + 6.3 FTE = 51.3 Full TimeSo Skippers DOES fall under this law
So, You’re a Small Employer: Grandfathered? – You can keep your coverage. Sometimes… Non-Grandfathered – Here’s what’s coming:
Community Rating model (Some groups will get decreases, but most will get increases.)
Much like individual markets No claims rating No health forms (Don’t jump up and down just yet.) 3:1 age bands (like individual markets) No gender rating No industry rating Tobacco rate-ups of up to 50% Metallic plans (Bronze, Silver, Gold, and maybe Platinum) Essential Health Benefits Deductible and out-of-pocket maximums
So, You’re a Small Employer: What about the Small Business Health Options Plan (SHOP)?
Delayed for picking multiple plans to offer your employees at once. Only reason to apply here is to get small business tax credit. Good
luck. Fortunately, many existing carriers will remain in the market. Offering an HSA, HRA, or FSA? You can continue provided the rules
are followed. Compliance is important. The DOL is stepping up audit frequency
and intensity. Health benefits continue to provide a significant value proposition in
recruiting, retaining, and rewarding employees. Dropping coverage may or may not make sense. Seek professional counsel to walk through the process.
Large Group Coverage In many ways business as usual regarding rate-setting process.
Rate reforms do not apply, so claims impact renewals.
No 3:1 age bands.
Gender rating allowed
EHB not required, but plan must be of “minimum value”.
Out-of-pocket maximums still apply
Employer Responsibility(Pay or Play) Employers with 50 or more FTEs must offer affordable and
qualified coverage or pay up.
Not offering? - $2,000 per full time employee (first 30 are
free) Example: if 53 employees, you pay for 23 ($46,000)
If offering coverage, and at least one employee receives a
subsidy in the FFM, employer pays $3,000 per full time
employee receiving tax credit.
Penalty capped at the lesser of the above calculations.
Employer Responsibility(Pay or Play) Penalties are calculated monthly ($2,000/12=$167) but paid
annually.
Enforcement delayed until 2015
If less than 50 FTEs, no tax penalty is payable but all other
rules apply
Employer>50 FTE
Employer offers coverageTax credit obtained by at least 1 employee due to
price of coverageAnnual penalty of $3000 per FTE who receives tax credit
Tax Credit NOT obtained by any full time employees
Employee accepts planNo Penalty
Employee rejects planEmployee buys individual plan
No Penalty
Employee forgoes insurance, pays penaltyNo Penalty
Employer doesn’t offer coverageTax Credit obtained by at least one FT employee
Annual penalty of $2000 per FTE
No tax credits obtained by FT employeesNo Penalty
<50 FTENo Penalty
In Summary:
Safe Harbors for Applicable Employers – 30 hour rule Safe harbor rules are available if you want to examine your
employee population to determine more precisely who should be
deemed full time under the proposed regulations.
You do not have to use these safe harbors but they are available.
The basic concept of the safe harbor is to utilize both a look back
or measurement period and a look forward or stability period.
Utilization of the safe harbor may be a good idea for your ongoing
employees if you are uncertain on average how many hours per
week your non-exempt employees actually work.
Auto-EnrollmentEmployers with 200+ employeesAuto-enroll all new employees in employer planWaiting period 90 days or less okayEmployees may opt out if other coverage
NOTE: Effective date is unclear – may be sooner or later…or never.
Self-Funded Plans Expected growth area for group health plans Available to groups with at least 5 employees Escape some (but not all) taxation versus fully insured plans Allows greater customization of plan design State mandates are optional. Use of stop-loss coverage to insure large claims and manage
financial exposure. Offers potential for savings with known “maximum costs”. Not subject to new rating rules of small group markets
Cadillac Tax 2018 All group plans, including self-funded Paid by insurer or TPA, but passed on to employer 40% excise tax on plans with value exceeding:
$10,200 for individual coverage $27,500 for family coverage Higher thresholds for retirees over 55 & high risk professions
Tax indexed annually for inflation (CPI)
Not very popular provision and most likely will be modified
Who is NBG? Full service agency providing
insurance solutions for both individuals and businesses
Alaskan owned and operated Alaskan-based businesses
with 2-1,000 employees In business for over 35 years Affiliate of Northrim Bank
since 2005
Customer Service Wide variety of products
and services On-site consultations and
education meetings Transparency regarding all
fees and costs Creative Fully licensed firm and staff
For a more details visit our website: northrimbenefits.com
What about Alaskans without Job-Based Coverage?
Historically, individual markets have been “tricky” due to
denials of coverage and a challenging underwriting process.
The challenges change in 2014.
While coverage is guaranteed, main hurdles to overcome are:
Getting education about the ACA
Figuring out subsidy eligibility (i.e. “Can I get financial help?”)
Working with new Marketplace
Sorting through multiple plans (Bronzes, Silvers, Golds…)
Going through the cumbersome application process
NBG saw a huge opportunity…
We can help individual markets, but how do we
go about it?
Build a new division of NBG!
Say a Welcome to:
Enroll Alaska is a division of NBG Focused on individual health coverage for ALL uninsured
and underinsured Alaskans.
Goals• Enroll the 66,000 uninsured Alaskans without
access to other coverage.• Identify those who qualifying for help paying for
premiums• For example, a family of 4 making $44,000 will
pay no more than $147/month for a “silver” plan and $0 for a “bronze” plan with a higher deductible.
How are we getting it done?
Teaming with Health Care Facilities• Enroll Alaska will have presence in most
major hospitals and clinics. State-wide
Marketing/Education/Advertising Campaign• Massive media campaign to launch
August 19th and run until March 31st. Support from Northrim Bank
• Presence in the branches with educational material and teller communications to individuals.
Thank you for your time.
What’s on your mind?
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