Health Care Reform Preparedness 103: The Post-Election Direction

HEALTH CARE REFORM PREPAREDNESS 103: The Post-Election Direction

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Agenda

• Quick recap of past 2 sessions

• Tips and strategies from the latest guidance and everything we’ve learned since the election

• Preview of what’s coming in the next three sessions

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Recap of Previous Sessions Changes through 2013

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2010 – 2011 • Small employer tax credit rolled out

• Employers can declare their plans grandfathered

• No lifetime maximum on benefits

• Kids covered up to age 26

• Preventative care provided with no cost sharing

• No over-the-counter drugs under HSA/health FSA

2012 • Must report value of health coverage on W2

• New SBC format for easier plan comparisons

• Expanded preventative care including free contraceptives

2013 • Health FSA now limited to $2,500

• New PCORI fee of $1 per employee per year ($2 next 6 yrs)

• New Medicare taxes on those earning over $200,000

Recap of Previous Sessions Changes in 2014 & Beyond

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Market

Changes

• All policies must be guaranteed issue with no exclusions for

pre-existing health conditions

• All group policies for 2-50 EE’s will be community rated

• New individual and small group exchanges will be available

• New fees on insurance companies will be added to premiums

Pay or Play

Mandate • NO MANDATE ON EMPLOYERS WITH LESS THAN 50 EE’S

• Larger employers must provide coverage or pay penalties

• If no coverage, penalty is $2,000 per EE except first 30

• If coverage not “affordable,” pay $3,000 for each EE w/subsidy

Coverage

Changes • Waiting periods can’t exceed 90 days

• Cost sharing limits: $2,000/$4,000 deductible for small

employers, out of pocket max is limited to HSA limits for all

• Cadillac tax in 2018 on premiums that exceed $850/mo single

The Post-Election Direction

• Multiple court challenges to ACA ended in Supreme Court Ruling June 2012: – Law is constitutional under Congress’ authority to

impose a tax (individual mandate)

– Feds may not, however, require states to agree to Medicaid expansion

• November Election solidified

the ACA’s future, for now

• Future scenarios: – 2014 mid-term elections

– 2016 presidential election

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Top 10 New Topics Under ACA

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• Perhaps not quite as exciting as…


#10: Limited Medical waivers expire 12/31/13

• These plans were mostly used by

large companies

• Plans typically have a very low limited max and thus don’t meet the new requirements

• Insurers and large employers received temporary waivers, which expire the end of this year

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# 9: New Transition rules for expatriate plans

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• Plans will be deemed compliant until 2016 if in compliance with pre-HCR rules, such as: • Mental Health Parity • ERISA Claims

Procedures • HIPAA non-

discrimination


#8: Newly Released Preventative Care FAQs

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No Cost Sharing Allowed: • Polyp removal during

colonoscopy • Genetic testing for breast cancer • Breastfeeding equipment and

support • Preventive OTC meds with Rx • Out-of-net preventative services

IF no in-net doc who can provide a certain service

• Annual HIV testing for women


#7: 90 Day Waiting Period Clarified

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• Many plans feature a “first of the month” provision for ease of payroll deductions.

• 90 Calendar days is TRUE max

• Could only use FOM if following 60 days of less

• See exception later for Variable Hour employees


# 6: Yes, Aggregation Rules Apply!

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Controlled groups and affiliated service groups will be added together to determine whether they have 50 employees for the purposes of the Pay-or-Play penalty


#5: Safe Harbor Definition of Seasonal Worker for Employer Shared Responsibility

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• IF an employer’s workforce exceeds 50 full-time employees for 120 days or fewer during a calendar year, • AND the employees in excess of that 50 who were employed

during that period of no more than 120 days were seasonal employees

• Then, the employer would not be an applicable large employer.

• For this purpose, “seasonal worker” means a worker who performs labor or services on a seasonal basis, as defined by the Secretary of Labor, including (but not limited to) workers covered by 29 CFR 500.20(s)(1) and retail workers employed exclusively during holiday seasons.

Source: Towers Watson HCR Bulletin September 2012.


#4 Variable Hour Employee Safe Harbor

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12/31/2015

Covg Starts End of 12 Mo

1/1/2015

Stability Period

Administrative Period

12/1/2013

Start Date

11/30/2014

End of 12 Mo

Measurement Period


#3: Is it More Expensive to Pay Penalties or Buy Coverage?

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Salary Number of Average

Category Employees Salary ER Cost Penalties ER Cost Penalties ER Cost Penalties ER Cost Penalties

< $10K 2 $8,800 $9,600 $0 $0 $6,000 $0 $6,000 $0 $4,000

$10 - $20K 69 $15,700 $331,200 $0 $265,000 $0 $0 $207,000 $0 $138,000

$20 - $30K 35 $24,700 $168,000 $0 $134,400 $0 $100,800 $0 $0 $70,000

$30 - $40K 19 $35,600 $91,200 $0 $73,000 $0 $54,700 $0 $0 $38,000

$40 - $50K 17 $45,400 $81,600 $0 $65,300 $0 $49,000 $0 $0 $0

$50K + 13 $89,500 $62,400 $0 $49,900 $0 $37,400 $0 $0 $0

Total 155 $29,500 $744,000 $0 $587,600 $6,000 $241,900 $213,000 $0 $250,000

After Tax Impact of Costs 65% 100% 65% 100% 65% 100% 65% 100%

Total Costs

0% ER Contrib

$250,000

Modeling Penalties vs. ER Contributions on $400 Premium

100% ER Contrib

$483,600

80% ER Contrib

$387,940

60% ER Contrib

$370,235


#2:Community Rating: BIG for SMALL Groups

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2013 2014

Oldest Members

Youngest Members 6 to 1

3 to 1


#1: Small Group $2,000 Deductible Limit

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• Starting with next anniversary in 2014, small employers must have a deductible of no more than $2,000, indexed for inflation

• Starting with next anniversary in 2014, small employers must have a deductible of no more than $2,000, indexed for inflation

• Are higher deductibles possible?


Whew!

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Preview of Upcoming Sessions

HCR104:

The State of the

Exchange

• How will the new on-line marketplaces work?

• What are the advantages and disadvantages to using them?

• What should we expect as the October enrollment start

approaches?

HCR105:

Making Healthcare

More Affordable

• Regardless of the ACA, healthcare trends have been high for

decades and costs are unsustainable

• What can an employer do about it?

• Learn strategies specific to small, mid-sized, and large employers

HCR106 :

Where Do We Go

From Here?

• What do we know so far about the Exchange plans?

• What are the latest regulations that affect planning for 2014?

• Given everything we know now, how should employers proceed?

Future Seminars We hope to continue this series throughout the year. Please join us

for the latest information you need to know!

Thank You!

Questions?

Kristen Russell (303) 369-3200 kristen@fallriver

benefits.com

Eden Ripingill (303) 306-2561 Eden.M.Ripingill

@kp.org

Health Care Reform Preparedness 103: The Post-Election Direction

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Transcript of Health Care Reform Preparedness 103: The Post-Election Direction