2015-02-03 Self-Insurance Under the ACA

Thrive. Grow. Achieve.

Self-Insurance Under the ACA

Matthew Roberts – Senior Account Executive February 3, 2015

AGENDA

Overview

Stop Loss Insurance

ACA Impact on Self-Insured Plans

Advantages and Disadvantages

ACA Update

Self-Insurance Under the ACA 2

ABOUT THE PRESENTER

3

Matthew Roberts, Senior Account Executive

Worked throughout the country – Chicago, Upstate NY and Albuquerque.

Educates companies on Health Care Reform and other compliance obligations.

Empowers organizations to find knowledge-based solutions to problems ingrained in their employee benefits programs by maximizing human potential.

Improves the overall health of an organization through strategic planning and reducing both direct and indirect costs.


FULLY-INSURED VS. SELF-INSURED

4

Fully-Insured Plan

Insurance Company

State Regulation

Premium

Self-Insured Plan

Employer

Federal Regulation

Unbundled Fees

Risk

Governance

Funding


SELF-INSURANCE

Employer assumes all or a portion of this risk

3 Components

Administration Claims Stop loss

Individual Aggregate

5

Costs

Stop Loss

Administration

Claims


WHO SELF FUNDS? ALL FIRMS

6

61%

61%

60%

60%

59%

57%

55%

55%

0% 20% 40% 60% 80% 100%

2014

2013

2012

2011

2010

2009

2008

2007

% of covered workers in partially or completely self-funded plans

The Kaiser Family Foundation and Health Research & Educational Trust Employer Health Benefits 2014 Annual Survey.


WHO SELF FUNDS? SMALLER FIRMS

7

15%

16%

15%

13%

16%

15%

12%

12%

0% 20% 40% 60% 80% 100%

2014

2013

2012

2011

2010

2009

2008

2007

% of covered workers in partially or completely self-funded plans – 3 – 199 workers

The Kaiser Family Foundation and Health Research & Educational Trust Employer Health Benefits 2014 Annual Survey.


TYPES OF SELF-INSURANCE

8

Complete Partial

HRAs Level Funding


TERMINOLOGY

Administration - claims adjudication, billing, eligibility, customer service, plan document maintenance, network access, etc.

Expected claims – actuarial calculation based on past claims experience, demographics and risk profile (known ongoing claims).

Stop loss insurance – reduces the risk associated with large individual claims or high claims from the entire plan.

Maximum claims liability – worst case scenario – most employer will pay out in a plan year.

9 Self-Insurance Under the ACA

10

Stop Loss Insurance


STOP LOSS – WHY?

Limits risk/exposure

Reduces claims fluctuation

Peace of mind


TYPES OF STOP LOSS

Specific/Individual – driven by underwriting guidelines

oPaid Contract – covers all claims paid during the policy year, regardless of incurred date

oRolling Contract – limits coverage to a defined number of paid and incurred months each year

Aggregate – usually 10% - 25% above expected claims; determines maximum claims liability


12/12 PAID CONTRACT

13

Jan 2015 Jan 2016

12 months Paid Claims



12/12 INCURRED CONTRACT

14

Jan 2015 Jan 2016

12 months Incurred Claims




15

Jan 2015 Jan 2016 Apr 2016





16

Jan 2015 Jan 2016 Apr 2016



Jul 2016


17

ACA Impact on Self-Insured Plans


ACA REFORMS THAT APPLY

Dependent coverage for children to age 26

Preventive health services without cost-sharing

No rescissions of coverage

No lifetime or annual dollar limits on essential health benefits

No waiting periods exceeding 90 days

No pre-existing condition exclusions

No discrimination against participants who participate in clinical trials


ACA REFORMS THAT APPLY

Distribution of Summaries of Benefits and Coverage (SBCs)

Patient-Centered Outcomes Research Institute (PCORI) fee

Reinsurance fees

Cost-sharing limits ($6600/$13,200 out-of-pocket maximums for 2015)


ACA REFORMS THAT DO NOT APPLY

Essential health benefits package

Medical loss ratio rules

Review of premium increases

Health insurance industry fee

Insurance market reforms

o Guaranteed issue and renewability

o Insurance premium restrictions


DC STOP LOSS BILL – B20-0797

City council passed legislation that would ban stop loss in the small group market (2-50).

Would set an individual attachment point at $40K and an aggregate attachment point at 120% for larger groups.

This new law would not impact any 2015 renewals, however, if signed by the mayor would take effect sometime in 2015.

The Insurance Department (DISB) Commissioner McPherson and Exchange Director Kofman were most prominent in support of this bill.

Advocacy efforts around the negative impacts of this law on employers are ongoing with the new Mayor and administration.


ADVANTAGES/ DISADVANTAGES

22

Advantages Disadvantages

Flexibility in plan design – not bound by state mandates and carrier filings

Increased risk

Transparency – renewal workup Additional reporting requirements

Reduced state taxes – 2%

Reduced federal taxes – approximately 3%

Reporting – data is king

Improved cash flow – pay as you go; run-in

Increased competition


GRANDFATHERED PLANS

If you have one, determine whether it will maintain status for next plan year

If your plan will lose its status, confirm required patient rights and benefits are in order

If keeping its status, continue to provide Notice of Grandfathered Status


COST-SHARING LIMITS

For 2015 plan years, out-of-pocket maximum limits for non-HSA plans:

Employee only - $6600

Family - $13,200

For 2015 plan years, out-of-pocket maximum limits for HSA plans:

Employee only - $6450

Family - $12,900


REINSURANCE FEES

For 2014, $5.25 per member per month (PMPM) or $63 annually

For 2015, $3.67 PMPM or $44 annually

If fully-insured, these fees are built into your premium rates.


EMPLOYER PENALTY RULES

Applies only to Applicable Large Employers (ALEs)

Fifty (50) or more full-time employees (including full-time equivalents) on business days during the preceding calendar year

Special rule allows employers to select a period of at least 6 calendar months in 2014 to determine 2015 ALE status


MEDIUM SIZED ALES

May have an additional year to comply with shared responsibility rules

Cannot change plan year after February 9, 2014 Must employee at least 50 FTEs but fewer than 100 FTEs

in 2014 May not reduce its workforce or overall hours of service to

satisfy the previous condition May not eliminate or materially reduce health coverage

Must certify on Form 1094-C when performing IRS Code Section 6056 reporting


TRANSITION RELIEF FOR NON-CALENDAR YEAR PLANS

Maintained non-calendar year plan as of December 27, 2012

Significant % (all employees)

Had at least 1/4 of its total employees covered; or Offered coverage to 1/3 of total employees

Significant % (full-time employees)

Had at least 1/3 of its full-time employees covered; or Offered coverage to 1/2 of full-time employees


HEALTH PLAN COVERAGE

Full-Time Employees – 30 hours per week

Monthly measurement method Look-back measurement method

Affordability of Coverage – 9.56%

W-2 wages Rate of pay Federal poverty level

Minimum Value – 60% actuarial value


REPORTING OF COVERAGE

Section 6056

Large ALEs Medium-sized ALEs

Section 6055

Health insurance issuers Sponsors of self-insured health plans

Due in 2016

Filed with IRS by 2/28 or 3/31 (electronically) Written statements to employees by 1/31


32

Questions?


THANK YOU!

Matthew Roberts – Senior Account Executive [email protected] 240-403-2574 Jeyalene Baron – Sr. Account Manager/Broker [email protected] 240-403-2556

33

mailto:[email protected]

mailto:[email protected]

2015-02-03 Self-Insurance Under the ACA

Documents

Transcript of 2015-02-03 Self-Insurance Under the ACA