Download - Health Care Reform - Under 50 Employees
Small Employer Breakout Group
BancorpSouth Insurance Services/Wright & Percy
Vice President, Client Compliance
Andy Impastato
Blue Cross Blue ShieldHealthcare Economist Exchange Coordinator
Mike Bertaut
Postlethwaite & Netterville, APAC
Associate Tax Director
Brandon Lagarde
Taylor PorterAttorney, Health
Care Practice Team
Cindy Amedee
February 26, 2013
Cindy M. Amedee
Legal OverviewLegal Overview
0101 Office: 225.381.0279Email: [email protected]
Office: 225.381.0279Email: [email protected]
Overview of the Law
• The Acto More than 1,000 pages
• The Supreme Court Ruling:o A close call but PPACA is constitutional
0202 Office: 225.381.0279Email: [email protected]
Office: 225.381.0279Email: [email protected]
Overview of the Law
• Far reaching impact
• More than 10,000 pages of rules and regulations
• Issued by numerous federal agencies
Office: 225.381.0279Email: [email protected]
Office: 225.381.0279Email: [email protected]
Overview of the Rules & Regs
• May effect employers
• 2013 deadlineso Mainly financial
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Office: 225.381.0279Email: [email protected]
Office: 225.381.0279Email: [email protected]
Overview of the Rules & Regs
• 2014 deadlineso Individual & employer coverage mandateo Health insurance exchangeso Medicaid expansion?
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Thank youThank youCindy Amedee
Attorney, Taylor PorterHealth Care Practice Team
[email protected]: 225.381.0279
February 26, 2013
Brandon Lagarde
Healthcare Reform UpdateHealthcare Reform Update
• Businesses organized in multiple forms considered as a single employer
• Controlled groupo Parent-subsidiaryo Brother-sistero Combination
• Affiliated Service Group
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Overview of Ruling: Legal Perspective
Office: 225-922-4600 [email protected]: 225-922-4600 [email protected]
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Small Employer Health Insurance Tax Credit
• Allows eligible small employers to claim a 35% credit (25% in the case of tax-exempt employers) for premiums paid toward health coverage for its employees in tax years beginning 2010 through 2013. These percents increase to 50% and 35%, respectively, in 2014.
• An eligible small employer is an employer that has no more than 25 full-time employees and the average annual compensation of these employees is not greater than $50,000.
• The credit is reduced by 6.6667% for each full-time employee in excess of 10 employees and by 4% for each $1,000 that average annual compensation paid to the employee exceeds $25,000.
• After 2013, employer must participate in an insurance exchange to be eligible for credit.
• Must pay at least 50% of premium for all employees and the percentage must be uniform among all employees Office: 225-922-4600
[email protected]: 225-922-4600 [email protected]
Small Employer Health Insurance Tax Credit
Office: 225-922-4600 [email protected]: 225-922-4600 [email protected]
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Average WageNumber of
FTEs$25,000 and less
$30,000 $35,000 $40,000 $45,000 $50,000
10 and fewer 35% 28% 21% 14% 7% 0%11 33% 26% 19% 12% 5% 0%12 30% 23% 16% 9% 2% 0%13 28% 21% 14% 7% 0% 0%14 26% 19% 12% 5% 0% 0%15 23% 16% 9% 2% 0% 0%16 21% 14% 7% 0% 0% 0%17 19% 12% 5% 0% 0% 0%18 16% 9% 2% 0% 0% 0%19 14% 7% 0% 0% 0% 0%20 12% 5% 0% 0% 0% 0%21 9% 2% 0% 0% 0% 0%22 7% 0% 0% 0% 0% 0%23 5% 0% 0% 0% 0% 0%24 2% 0% 0% 0% 0% 0%25 0% 0% 0% 0% 0% 0%
Expansion of Coverage – Individual Mandate
• Individual Mandateo With limited exceptions, ALL individuals must maintain “minimum
essential coverage” or pay a penalty. Government provided coverage Employer sponsored coverage Exchange coverage.
• Exemption from mandateo if required contribution to purchase insurance exceeds 8% of
household income.o Religious objectiono American Indianso Incarcerated Individualso Those with incomes below the tax filing threshold
Office: 225-922-4600 [email protected]: 225-922-4600 [email protected]
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Expansion of Coverage – Individual Mandate
• Penalty amount is the lesser of a flat dollar amount of percentage of income.o 2014: $95 or 1% of household incomeo 2015: $325 or 2% of household incomeo 2016 and later: $695 or 2.5% of household income
Office: 225-922-4600 [email protected]: 225-922-4600 [email protected]
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Expansion of Coverage – Individual Mandate
• Individual Mandateo Duty to purchase insurance is mitigated by premium
credits and cost-sharing subsidies available to individuals with income between 100%-400% of federal poverty limit.
o Premium assistance is not available if individual has access to employer provided coverage UNLESS: Too Skinny: Employer coverage provides less than
60% actuarial value. Too Expensive: Required contribution under
employer plan for self-only coverage exceeds 9.5% of household income.
Office: 225-922-4600 [email protected]: 225-922-4600 [email protected]
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Expansion of Coverage – Individual Mandate
Office: 225-922-4600 [email protected]: 225-922-4600 [email protected]
Poor Middle Income Upper Income
Federal Assistance
Medicaid Subsidies None
Premiums limits 2% of income 3% to 9.5% No limit
Cost sharing limit
94% 70 – 93% No limit
Eligibility < 133% FPL 133 – 400% FPL > 400 FPL
Family of 1 < 14.4 14.4 – 43.3 > 43.3
Family of 2 < 19.4 19.4 – 58.3 > 58.3
Family of 3 < 24.4 24.4 – 73.2 > 73.2
Family of 4 < 23.9 23.9 – 88.2 > 88.2
Family of 5 < 34.3 34.3 – 103.2 >103.2
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Expansion of Medicare Taxes (2013)
• Employee portion of Medicare tax increased by 0.9%• Applies to wages or self-employment income in excess of $200,000 ($250,000 in
the case of a joint return, $125,000 in the case of a married taxpayer filing separately).
• The additional Medicare tax increases the employee portion to 2.35% or a total Medicare rate of 3.8%.
• Employer has the obligation to withhold the additional tax on wages (without regard to spouse’s wages) if its employee earns more than $200,000; Employee is liable to the extent not withheld by employer.
• Self-employed are not allowed a deduction for ½ of the additional 0.9% tax.
Office: 225-922-4600 [email protected]: 225-922-4600 [email protected]
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Expansion of Medicare Taxes (2013)
• Individuals, estates and trusts required to pay 3.8% tax on net investment income such as interest, dividends, annuities, royalties, rents, capital gains and income from passive activities.
• Applies to the income in excess of $250,000 for joint returns, $125,000 for married filing separate and $200,000 for all others
Office: 225-922-4600 [email protected]: 225-922-4600 [email protected]
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February 26, 2013
Andy Impastato
Healthcare Reform UpdateHealthcare Reform Update
• Grandfathered Plans
• Carve Out Plans
• Exchange Notice
• Essential Health Benefits
• Questions & Answers
0101
Agenda
• Impermissible changeso Elimination of benefitso Any increase in percentage cost-sharingo Increase in fixed-amount cost-sharing
15% above medical inflation is allowedo Decrease in employer contribution
Five percentage pointso Certain changes to annual limits
• Disclosure requirements
• Recordkeeping requirements
Grandfathered (GF) Plans
0202
• Nondiscrimination in favor of highly compensated individuals (HCI)o Applies to all self-insured planso Applies only to non-GF fully insured plans
Delayed effective date*o Definition of HCIo Eligibility testo Benefits testo Penalties for noncompliance
• Other laws
Carve Out Plans
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• Applies to employers subject to the FLSA• Delayed effective date
o Originally effective for March 1, 2013
• Content requirementso Existence, services and contact information of Exchangeo Eligibility of premium tax credit or cost-sharing reductiono Consequences of dropping employer coverage
• Model Notice?
Exchange Notice
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• Applies to non-GF, small group plans
• Effective for plan years beginning in 2014
• Requirementso Provide essential health benefitso Limit cost-sharingo Provide either bronze, silver, gold or platinum coverage (or
catastrophic plan for individuals)
Essential Health Benefits
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• Essential health benefitso Categories
Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health and substance abuse Prescription drugs Rehabilitative and habilitative services and devices Laboratory services Preventive and wellness services Pediatric services (includes oral and vision care)
Essential Health Benefits
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• Cost-sharing limitso Out-of pocket limits
Estimated to be $6,250 / $12,500 Includes deductibles, co-payments and coinsurance
• Deductible limits Will be $2,000 / $4,000 May be increased by maximum reimbursement available to participant
under FSA
Essential Health Benefits
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• Coverage (metallic) levelso Levels based on actuarial valueso Standard datao Actuarial value calculator tool
• Benchmark plano Designated by individual Stateso Based on largest products sold in State or by HHS in the
absence of State action
Essential Health Benefits
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Thank youThank youAndy Impastato
Vice President, Client Compliance
Office: (225) 336-3238
February 26, 2013
Mike Bertaut
Time to Implement!Moving Forward with ReformTime to Implement!Moving Forward with Reform
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All information in this presentation INCLUDING THE OPINIONS OF THE PRESENTER are solely for illustrative purposes. The information is based on certain assumptions, interpretations, and calculations that are not necessarily accurate with regard to provisions of PPACA, HCERA, HIPAA, COBRA, ERISA, and other rules, regulations, guidance and all other documents issued by relevant state and federal agencies with regard to these laws and any other relevant laws. The information provided should not be considered as legal, financial, accounting, planning, or tax advice. You should consult your attorneys, accountants, and other employees or experts of this type of this type of advice based on their own interpretations, calculations, and determinations of applicable laws, rules, regulations, guidance, and any other documents and information that they determine may be relevant. The authors make no guarantees or other representations as to the accuracy or completeness of the data in this presentation.
BCBSLA expressly disclaims any liability for information obtained from use of this presentation by any BCBSLA employee or by any other person. No warranty of any kind is given with regard to the contents of the presentation.
Disclaimer
Office: 225-297-2719 [email protected]
Office: 225-297-2719 [email protected]
0202
Grandfathered Status
• Benchmarked for all groups on 3/23/2010
• Requires benefit offer stay essentially the same going forwardo Must not change coverage or co-insurance shares, very small
adjustments to cost sharing and premium shares to employee allowed.
• Allows Group to forego several new types of mandatory coverage, avoid new costs, and bypass compliance with some expensive new regulations
• Grandfathered pools of groups, in general, have lower healthcare costs and premiums
Office: 225-297-2719 [email protected]
Office: 225-297-2719 [email protected]
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Benefits of Grandfathering
• No added cost for new first dollar Women’s coverage.
• No added cost for new first dollar USPTF schedule B testing and immunizations.
• Continued rating segregation from non-grandfathered groups and new richer plans.
• No higher ER reimbursements required.
• In most cases group can keep existing benefit combinations when new rules take effect in 2014.
• No requirements to cover experimental treatments.
***Does not protect from the ALE requirements***
Office: 225-297-2719 [email protected]
Office: 225-297-2719 [email protected]
0404
New Product Requirements for 2014 and Beyond
• All individual and small group (2-50) products MUST meet Actuarial standard Tests and cover all essential health benefits.
• Deductibles over $2,000 generally prohibited
• Max out of pocket costs limited to H.S.A. levels.
• All essential health benefits must be covered.
• GF groups can keep existing plans, otherwise:
• Actuarial Value Standards:o Bronze = 58-62%o Silver = 68-72%o Gold = 78-82%o Platinum = 88-92%
Groupcare PPO is minimum coverage.
70% of existing products will go away.
Office: 225-297-2719 [email protected]
Office: 225-297-2719 [email protected]
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Rate Compression Looms
• PPACA puts very strict rules on the Underwriting of Individual and Small Group Products
• Since current SGUR in Louisiana allow for 50% spread of rates above and below the mean (new selling rate) in the 2-35(50) pool, taking away rating based on medical claims and only allowing a 3:1 age spread will severely compress rates in this pool
• We have identified thousands of groups who will be required to absorb rate increases in excess of 40%.
• Act requires all QHP’s to be underwritten based on three criteria ONLY:o Age Banded no more than 3:1o Geographic Allowance 1.5:1o Tobacco Use 1.5:1o (Family status will affect rates per household)
Office: 225-297-2719 [email protected]
Office: 225-297-2719 [email protected]
• PPACA requires insurance carriers and fully insured groups to make “contributions” to support subsidies on the Exchange.
• All carriers with fully insured premiums are assessed as part of the “Bucket Tax” on health insurance carriers (technically a “fee”)
• Note that the effect of this new “fee” is enhanced in rates because it is not a deductible business expense.
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The Carrier Tax
TAX ($B)
BCBSLA ($M)
BASE RATE TAX
INCREASE
2014 $8.0 $36.3 2.5%
2015 $11.3 $51.2 3.5%
2016 $11.3 $55.8 3.5%
2017 $13.9 $68.6 4.3%
2018 $14.3 $71.7 4.5%
2019$14.3+
Premium Inflation
Plus Premium Inflation
Plus Premium Inflation
Office: 225-297-2719 [email protected]
Office: 225-297-2719 [email protected]
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Could you be an ALE?FULL TIME PT HOURS /120 FTE TOTAL FTE AVERAGE
Jan 2013 22 3300 27.5 49.5
Feb 2013 23 2800 23.3 46.3
Mar 2013 23 3250 27.1 50.1
Apr 2013 23 3450 28.8 51.8
May 2013 24 3105 25.9 49.9
June 2013 22 3271 27.3 49.3
July 2013 23 3655 30.5 53.5
Aug 2013 24 3705 30.9 54.9
Sept 2013 25 3000 25.0 50.0
Oct 2013 26 3800 31.7 57.7
Nov 2013 27 3950 32.9 59.9
Dec 2013 30 4250 35.4 65.4 53
Office: 225-297-2719 [email protected]
Office: 225-297-2719 [email protected]
Thank youThank youMichael R. Bertaut
Healthcare Economist
LINKED-IN Recommendations WELCOME!!!
Office: 225-297-2719Cell: 225-573-2092
BancorpSouth Insurance Services/Wright & Percy
Vice President, Client Compliance
Andy Impastato
Small Employer Breakout Group
Blue Cross Blue ShieldHealthcare Economist Exchange Coordinator
Mike Bertaut
Taylor PorterAttorney, Health
Care Practice Team
Cindy Amedee
Postlethwaite & Netterville, APAC
Associate Tax Director
Brandon Lagarde