Health Care Reform at-a-Glance - Xerox€¦ · Health Care Reform at-a-Glance August 2015 . 2 Table...

Health Care Reform at-a-Glance August 2015

2

Table of Contents

Employer mandate ................................................................................................................................................................................................................................................................. 3

Individual mandate ................................................................................................................................................................................................................................................................ 3

Health plan provisions applying to both grandfathered and non-grandfathered employer plans .................................................................................................... 4

Health plan provisions applying only to non-grandfathered employer plans ............................................................................................................................................ 7

Retiree health ........................................................................................................................................................................................................................................................................... 8

Insurance market reform for individuals and small groups .............................................................................................................................................................................. 10

Public marketplaces ........................................................................................................................................................................................................................................................... 11

Taxes and fees ...................................................................................................................................................................................................................................................................... 11

3

Provision Effective date Considerations for large employers

Employer mandate

Shared responsibility

assessment for

failing to offer

coverage to at least

95%* of all full-time

employees (FTE)

and children if any

FTE gets subsidy in

marketplace

• $2,000 (indexed) times the number of FTEs (excludes first 30* FTEs).

• FTE defined as working 30 or more hours per week.

• Not required to offer coverage to part-time employees, retirees, or spouses

but must offer to children.

• No minimum employer subsidy required.

Penalties first

imposed in 2016 for

failure to satisfy

mandate in 2015

• Analysis and determination of FTEs

required.

• Complicated “measurement” rules ─

administrative burden of determining

FTE status.

• Adjust eligibility terms of plan.

• *95% threshold lowered to 70% and

first 80 FTEs excluded for 2015 only.

Shared responsibility

assessment for full-

time employees who

are not offered

coverage or opt out

of employer plan and

get subsidy in

marketplace

• $3,000 (indexed) for each FTE who enrolls in marketplace and receives low

income subsidy if: (1) employee’s contribution for single coverage under

employer plan exceeds 9.5% of W-2 income, rate of pay, or the federal

poverty level (FPL) for individuals, or (2) employer plan fails to provide

“minimum value,” i.e., the actuarial value of plan is below 60%.

• See Public marketplaces below for more information on low income subsidy

eligibility.

• Employer not required to offer

coverage that satisfies affordability or

minimum value requirements, but risks

assessment if coverage not offered.

• Analysis of coverage and plan costs

required.

Reporting of

employer-sponsored

coverage

• Under Code Section 6056, employers must report to both IRS and

employees information regarding coverage offered to full-time employees

and dependents. Forms 1094-C/1095-C will be used for this purpose.

Reporting first

required in 2016 for

coverage provided in

2015

• Administrative burden; extensive data

collection and reporting requirements.

Individual mandate

Penalty for failure to

have minimum

essential coverage

• Greater of 1.0% of MAGI or $95/person in 2014, 2.0% or $325/person in

2015, 2.5% or $695/person in 2016; indexed for individuals who fail to

maintain minimum essential coverage.

• Family dollar amount capped at 300% of individual penalty.

Penalties first

imposed in 2015 for

failure to satisfy

mandate in 2014

• Plan cost may increase if more

employees enroll to avoid penalty.

4


Reporting of

minimum essential

coverage

• Under Code Section 6055, insurers and sponsors of self-funded plans must

report to both IRS and individual that employee, retiree, and dependents had

minimum essential coverage in preceding year. Forms 1094-B/1095-B and

1094-C/1095-C will be used for this purpose.

Reporting first



2015

• Administrative burden, including efforts

to collect dependent tax ID numbers.

Health plan provisions applying to both grandfathered and non-grandfathered employer plans

Annual and lifetime

dollar limits

• No lifetime or annual dollar limits on essential health benefits (EHB).

• Not applicable to most FSAs, HSAs, and integrated HRAs.

• Self-funded and large group plans must use “authorized” definition of

“essential health benefit” (state “benchmark plan”) beginning in 2014.

Lifetime limits

prohibited for plan

years beginning

on/after September

23, 2010; Annual

limits restricted for

plan years beginning

on/after September

23, 2010 and

prohibited for plan

years beginning on/

after January 1, 2014

• Analysis of state benchmark plans

required.

• To maintain dollar limits on benefits,

self-funded plan must select

appropriate benchmark plan.

Extension of child

coverage to age 26

• Up to age 26 for medical coverage regardless of marital or student status,

residence, or support. Excludes stand-alone dental and vision coverage.

• Cannot charge more than for other similarly situated individuals.

Plan years beginning

on/after September

23, 2010

• Plan costs may increase if more

dependents are covered.

Income tax exclusion

for child coverage to

age 26

• Exclusion through end of calendar year in which child reaches age 26.

• Includes dental, vision, health FSA, and HRA (different rule for HSA).

March 30, 2010 • Simplifies payroll administration.

• Plan may terminate coverage when the

child turns 26, prior to the end of the

tax year.

Pre-existing condition

exclusion

• No pre-existing condition exclusions for enrollees. Plan years beginning

on/after January 1,

2014

• Limited impact on large employer

plans.

• Will reduce job lock.

5


Waiting periods • Waiting periods over 90 days prohibited.

• A one-month orientation period that begins on the employee’s start date is

permitted (before the waiting period).


on/after January 1,

2014

• Most cost implications for organizations

with high turnover.

Treatment of OTC

drugs as medical

expense

• Health FSAs, HRAs, and HSAs prohibited from reimbursing cost of OTC

drugs (other than insulin) unless prescribed by a physician.

January 1, 2011

• OTC medical items (other than

medicines and drugs) still eligible for

reimbursement.

• Administrative costs may increase.

Health FSA cap • Salary reductions capped at $2,500; indexed. In 2014, indexed cap

remained $2,500 and is $2,550 for 2015.


on/after January 1,

2013

• Cafeteria plan document must be

amended by December 31, 2014, but

plan compliance required starting

January 1, 2013.

• Carryover amount of up to $500

permitted if health FSA does not have a

grace period.

HIPAA wellness

incentives

• No discrimination regarding eligibility or coverage on the basis of a health

status-related factor. Incentives increased to 30% (and additional 20% - up

to 50% - for tobacco use) of cost of coverage.


on/after January 1,

2014

• Incentives (other than tobacco use)

may affect affordability and minimum

value determinations for purpose of

employer penalty.

• Employers must review programs to

ensure compliance.

• Increased costs.

Automatic enrollment • Auto-enrollment required for employee with option to opt out of coverage.

• Not enforced until regulations are issued.

After regulations are

issued. No effective

date in the law.

• May result in increased costs due to

higher enrollment and more complex

administration.

6


Marketplace notice • Notice to employees concerning availability of health insurance marketplace.

• Model notices include one for employers that offer coverage to some or all

employees and one for employers that do not offer coverage.

October 1, 2013 • Must be provided to all employees

regardless of benefit eligibility.

• Provided to new employees within 14

days of start date.

• Statutory requirement, but no penalty if

notice is not provided.

Summary of benefits

and coverage (SBC)

• Brief summary of benefits with a prescribed format, content, language, and

timing must be provided to new enrollees and at open enrollment.

Open enrollment

periods beginning

on/after September

23, 2012

• “Good faith” compliance; departments’

approach is to assist plan sponsors

with compliance rather than impose

penalties.

• Greater coordination among vendors

required.

Reporting plan value

on Form W-2

• Total value of medical coverage on an employee-specific basis reported on

Form W-2 issued in January for preceding calendar year.

• Some exemptions, such as coverage provided under certain church or

multiemployer plans.

Reporting first



2012

• Informational only; value of coverage

not subject to tax.

Medical loss ratio

(MLR) reporting and

rebates

• Insurers to submit MLR reports to HHS and issue rebates to employers with

insured plans in large group market (more than 50 employees) where loss

ratio (ratio of claims to premium) is less than 85%. For contributory plans,

employer must share rebate with enrollees.

• Rebates payable by August 1. Starting with 2014 reporting year, reporting

due date is July 31, and rebates are payable by September 30.

January 1, 2011 • Applies only to insured plans.

• Plans must apply portion of rebate

attributable to employee contributions

appropriately.

• Determination of rebates under ERISA

may be required

7


Health plan provisions applying only to non-grandfathered employer plans

Preventive care • Preventive care services must be covered at 100% when provided in-

network.


on/after September

23, 2010

• Increased coverage may cause plan

costs to change.

• Plan sponsor may delegate IRO

contracting to claims administrator. Insured plan

nondiscrimination

• Insured plans prohibited from discriminating in favor of highly compensated.

Enforcement delayed until guidance released.

OB/GYN,

pediatrician,

ER services

• Preauthorization or referral requirements prohibited.

Appeals process • Mandatory internal and external claims and appeals process.

• Self-funded plans must contract with at least three independent review

organizations (IROs).

Women’s preventive

services

• Additional preventive services for women covered at 100%. Plan years beginning

on/after August 1,

2012

• Increased costs due to removal of cost-

sharing and requirement to cover items

not generally covered before.

8


Clinical trials • Must cover routine patient costs in connection with participation in approved

trials.


on/after January 1,

2014

• Some increased claims costs.

Out-of-pocket (OOP)

limits

• In-network OOP maximum for EHB $6,600/$13,200 for 2015 and

$6,850/$13,700 for 2016 (indexed annually).

• Plan’s maximum OOP limit can be divided among different coverage

categories or benefits so long as the combined amounts don’t exceed the

annual OOP limit.

• Must apply an embedded self-only OOP maximum to each individual

enrolled in family coverage if the plan’s family OOP maximum exceeds the

ACA’s OOP limit for self-only coverage (also applies to deductible).

• Emphasis on EHB and benchmark

plan.

• OOP maximum must take into account

deductibles, coinsurance, and

copayments.

• Requires coordination with “carve-out”

vendors.

• TPAs and insurers may have system or

technical limitations.

Provider

nondiscrimination

• No discrimination against provider acting within the scope of license. • May vary rates based on quality or

performance measures; good faith

compliance until regulations issued.

Plan quality of care

reporting

• Group health plans and health insurance issuers required to submit an

annual report to HHS addressing plan or coverage benefits and provider

reimbursement structures regarding the cost and quality of care.

After guidance issued • Guidance yet to be issued.

Retiree health

Reinsurance

program for early

retirees (age 55-64)

and dependents

• A temporary program – employers accepted into the program receive

reinsurance reimbursement for medical claims for retirees.

• $5B to subsidize 80% of costs between $15K and $90K (indexed).

• Terminates December 31, 2013 or when funds exhausted, if earlier.

June 1, 2010 • Funds exhausted in 2012; plan

sponsors must use ERRP funds

promptly, but no later than

December 31, 2014.

9


Phase-out of donut

hole

• $250 rebate in 2010 for beneficiaries who reach donut hole.

• Phases out donut hole by 2020 in combination with brand drug discount.

2010 • EGWP employer-sponsored plan can

provide equivalent benefits at

significant savings.

Brand drug coverage

in

Medicare Part D

donut hole

• Drug manufacturers required to discount brand drugs in donut hole by 50%. 2011

Loss of deduction for

expenses related to

RDS payments

• Deduction of expenses for which RDS payment received eliminated in 2013. 2013 • EGWP plans more attractive.

10


Insurance market reform for individuals and small groups

Minimum benefit

package

• Bronze, Silver, Gold and Platinum with actuarial values of 60% to 90%.

• Catastrophic plan for individuals under age 30, individuals exempt from

individual mandate because affordable coverage is not available, or

individuals who satisfy hardship exemptions.

• Plans must cover EHB.

2014 • Marketplace plans could become

available to large employers in 2017.

Guaranteed issue

and renewability

• Health insurance issuers offering coverage in individual or group markets

must accept every employer and individual in the state that applies for such

coverage and must renew coverage at the option of the plan sponsor.

• More robust individual market for

former employees and retirees.

OOP limits • In-network maximum for EHB $6,600/$13,200 for 2015 and $6,850/$13,700

for 2016 (indexed annually).

• Plan’s maximum OOP limit can be divided among different coverage

categories of benefits so long as the combined amounts don’t exceed the

annual OOP limit.

• Must apply an embedded self-only OOP maximum to each individual

enrolled in family coverage if the plan’s family OOP maximum exceeds the

ACA’s OOP limit for self-only coverage (also applies to deductible).

• Applies to individual and small group

plans offered both in and out of

marketplace.

• OOP maximum must take into account

deductibles, coinsurance and

copayments.

Fair health insurance

premiums

• Health insurance issuers may vary the premium rate charged to non-

grandfathered individual or small group from the rate established for that

particular plan based only on the following factors: family size (individual or

family), geography (rating area), age (within a ratio of 3:1 for adults), and

tobacco use (within a ratio of 1.5:1).

• Reduces the need for COBRA and

employer-sponsored early retiree

coverage.

Medical loss ratios -

minimum standards

for insured plans

• Insurers to submit MLR reports to HHS and issue rebates to employers with

insured plans in the individual and small group market where loss ratio (ratio

of claims to premium) is less than 80%. For contributory plans employer

must share rebate with enrollees.

• Rebates payable by August 1. Starting with 2014 reporting year, rebates are

payable by September 30.

January 1, 2011

• More robust individual market is

especially valuable to former

employees, particularly early retirees.

11


Small employer

subsidies

• Tax credits of up to 50% available to certain small employers (up to 25

employees) that offer health insurance coverage to their employees through

the SHOP marketplace.

• Credit may be claimed only for two consecutive years.

2010 • Only available if employer’s FTEs

average annual wages are no more

than $50,800 (for 2014) and employer

pays at least 50% of self-only cost.

Public marketplaces

Marketplaces • State- or federally-run marketplaces available for individuals and small

employers

(defined as at least 2 employees and up to 100 employees, but most states

have defined as under 51 employees).

• In 2016, must be available to small employers (up to 100 employees).

• In 2017, states can make available to large employers (over 100

employees).

2014 • Availability of subsidies and community

rating may reduce need for pre-65

retiree programs.

Low-income

subsidies for

coverage in the

marketplace

• Subsidies available to individuals between 138% and 400% of FPL in states

that have adopted the ACA’s Medicaid expansion.

• Employees eligible for employer coverage may receive subsidies only if

employer coverage fails to provide minimum value or if employee

contributions for self-only coverage exceed 9.5% of household modified

adjusted gross income. Retirees eligible for subsidies as long as not enrolled

in employer coverage regardless of minimum value or affordability.

• Consider availability of subsidies in

designing strategy for 2014 and

beyond.

Taxes and fees

HSA nonqualified

withdrawals

• Penalty tax increased from 10% to 20%. January 1, 2011 • Communicate to employees.

Pharmacy

manufacturer tax

• Annual fee on manufacturers of branded prescription drugs based on market

share.

2011 • Cost likely will be shifted to employers.

12


Comparative

effectiveness

research (PCORI)

fee

• Fee on insured and self-funded plans to fund clinical effectiveness research.

• For plan years ending on or after October 1, 2013 through September 30,

2014, fee is $2/covered life/year; for plan years ending on or after October 1,

2014 through December 31, 2014, fee is $2.08/covered life/year (indexed

thereafter).

• Payment due by July 31 of following year.

Plan years ending

after September 30,

2012 and before

October 1, 2019

• Affects cost of providing group health

plan coverage.

• Determine which prescribed counting

method results in lowest number of

covered lives.

Itemized medical

deduction

• Itemized medical deduction threshold increased from 7.5% to 10%. 2013 • Individual income tax provisions that

could increase pressure for employers

to offer tax-advantaged benefits.

• Additional Medicare tax increases

administrative burden for employers.

Medicare hospital

insurance tax

• Tax rate increased from 1.45% to 2.35% for income in excess of $200K

(single or head of household) /$250K (joint filers).

• 3.8% unearned income tax on net investment income in excess of $200K

(single or head of household)/$250K (joint filers).

• Employer required to collect tax only for employees earning $200K or more

from employer.

Medical device

excise tax

• 2.3% excise tax on the manufacturer or importer for the sale of certain

medical devices.

• Cost will likely be passed on to health

plans.

Health insurance

providers fee

• Annual fee on entities that provide health insurance (self-insured employers

specifically excluded).

2014 • In addition to medical, fee also applies

to insured dental, vision, EGWP, and

MAPD plans.

• Estimated 2014 increase in premiums

of 1.7% to 3.0%.

Transitional

reinsurance fee

• Fee paid by insurers and self-funded plans (major medical coverage) from

2014 to 2016 to help fund transitional reinsurance program (designed to

provide temporary funding to insurers that incur high claims costs for

enrollees).

• For 2014, contribution rate is $63 per covered life per year ($5.25 per

month); for 2015, $44 per covered life; for 2016, $27/covered life.

• Affects cost of providing health plan

coverage.

13


"Cadillac plan" excise

tax

• 40% tax on value of coverage above $10,200/individual and $27,500/family

(Indexed at CPI-U+1% for 2019, CPI-U only after 2019). $11,850/$30,950

for pre-Medicare retirees.

• Adjusted for high risk industries, age, and gender.

• Excludes insured dental and vision. For multiemployer plans, all coverage is

considered family coverage.

2018 • Affects cost of providing health plan

coverage.

• May result in the limitation of health

FSAs and executive programs and

reduction in total health benefit

package.

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Health Care Reform at-a-Glance - Xerox€¦ · Health Care Reform at-a-Glance August 2015 . 2 Table...

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Transcript of Health Care Reform at-a-Glance - Xerox€¦ · Health Care Reform at-a-Glance August 2015 . 2 Table...