New ACA Changes and · 2015. 9. 18. · Rating ChangesRating Changes •Demoggpraphic factors for...

ACA Changes and ACA Changes and ggYour CompanyYour Companyp yp y

Practical Information forPractical Information for Companies with 51-100

EmployeesEmployees

AgendaAgendaAgendaAgenda• BackgroundBackground• Benefit Changes

R ti Ch• Rating Changes• Individual and Employer Shared

Responsibility Requirements and Penalties• Employer Coverage - Information p y g

Reporting• Q & AQ & A

The small group insurance market isThe small group insurance market is expanding to 2 - 100 Full Time Equivalent Employees (FTEs) beginning 1/1/2016Employees (FTEs) beginning 1/1/2016.

Benefit ChangesBenefit ChangesBenefit ChangesBenefit Changes

Benefit ChangesBenefit ChangesBenefit ChangesBenefit ChangesImpacting Connecticut companies with 51-p g p100 FTEs beginning with their 2016 effective/renewal date:

• Guarantee Issue

• Metal TiersMetal Tiers

• Essential Health Benefits• Essential Health Benefits

Essential Health Essential Health BenefitsBenefits

A b l t ti t i• Ambulatory patient services• Emergency services• Hospitalizationp• Maternity and newborn care• Mental health and substance use disorder services

including behavioral health treatmentincluding behavioral health treatment• Prescription drugs• Rehabilitation and habilitation services and devices• Laboratory services• Preventive and wellness services and chronic disease

managementg• Pediatric services including oral and vision care

Benefit ChangesBenefit ChangesBenefit ChangesBenefit Changes• In the 2-100 FTE market all plans must meetIn the 2 100 FTE market all plans must meet

one of four specific actuarial values.

• Actuarial Value - (simplified) Given a standard population, AV is the percentage of total average costs for covered benefits that a plan is expected to pay.

• Minimum Value - An AV of 60%

Benefit ChangesBenefit ChangesBenefit ChangesBenefit Changes• Metal TiersMetal Tiers

– Bronze 60% AVSilver 70% AV– Silver 70% AV

– Gold 80% AVPlatin m 90% AV– Platinum 90% AV

*Acceptable variation +/- 2%

Benefit ChangesBenefit ChangesBenefit ChangesBenefit Changes

• Out-of-Pocket Maximum (MOOP)

2014 - $6,350 individual, $12,700 family$ $ f2015 - $6,600 individual, $13,200 family

2016 - $6,850 individual, $13,700 family

Benefit ChangesBenefit ChangesBenefit ChangesBenefit Changes• So what does all this mean for benefitSo what does all this mean for benefit

plans for employers with 51-100 FTEs?

Lots of changes...

Benefit ChangesBenefit ChangesBenefit ChangesBenefit Changes• MOOP and Qualified High DeductibleMOOP and Qualified High Deductible

Health Plans (HSA compatible plans)

• New interpretation beginning Jan. 2016

Qualified HDHPsQualified HDHPsQualified HDHPsQualified HDHPsOth Th

2016 Self Only(Individual)

Other Than Self Only(Individual) (Family)

Minimum $ $Minimum Deductible $1,300 $2,600

MaximumMaximum Deductible $6,550 $13,100

Qualified HDHPsQualified HDHPsQualified HDHPsQualified HDHPs• HHS, DOL, and Treasury clarification forHHS, DOL, and Treasury clarification for

Jan. 2016

• MOOP limit will apply to Qualified HDHPs (HSA compatible plans) as well(HSA compatible plans) as well

• No individual can exceed $6 850 even• No individual can exceed $6,850 even when enrolled in other than self only coveragecoverage

Qualified HDHPsQualified HDHPsQualified HDHPsQualified HDHPsIf your HSA compatible plan has an otherIf your HSA compatible plan has an other than self only deductible > $6,850 expect to see:to see:

Ch i d i i t ti lik l– Changes in administration, or more likely

Th i d i f b dd d d d ibl– The introduction of an embedded deductible

Rating ChangesRating ChangesRating ChangesRating Changes

Rating ChangesRating ChangesRating ChangesRating Changes• Demographic factors for small groupsg p g p

– CT Pre-ACA rates use: Gender, age, geography, f il ti SIC i h lth ifamily tier, SIC, group size, health experience

– Beginning Jan 2014 (2-50 employees) andBeginning Jan. 2014 (2 50 employees) and Jan. 2016 (2-100 FTEs) a group’s rates will be formulated using: age, geography, tobacco se (indi id al prod cts onl in CT)use (individual products only in CT)

All carriers will have the same age factors

Rating ChangesRating ChangesRating ChangesRating Changes• Understanding an employee rate whenUnderstanding an employee rate when

family members are coveredEach family member will have a rate based on– Each family member will have a rate based on their age.

– The rate of each family member will be addedThe rate of each family member will be added together to form the family rate.

– For children under age 21, if more than threeFor children under age 21, if more than three are enrolled in a family, only the three oldest will be included in the rate calculation.

Rating ChangesRating ChangesRating ChangesRating Changes• Understanding an employee rateUnderstanding an employee rate

continued...Employee and spouse (if applicable) are– Employee and spouse (if applicable) are always included in the calculation even if they are under 21.

• Census will now need to include• Census will now need to include dependent DOB

How do these ratingHow do these rating changes impact price?changes impact price?

…billing?g…contribution strategy?

Questions?Questions?Questions?Questions?

CBIA’s Healthcare Reform Resource Center

www.cbia.com/healthcarereform

ACA Changes and Your Company

Practical Information for Companies with 51-100 Employeeswith 51-100 Employees

September 17 2015September 17, 2015

www.shipmangoodwin.com

HARTFORD | STAMFORD | GREENWICH | NEW HAVEN | WASHINGTON, DC

© Shipman & Goodwin LLP 2015. All rights reserved.

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ACA’ 3 P d A hACA’s 3-Pronged Approach• Individual Mandate• Individual Mandate• Health Insurance Exchanges• Employer Coverage

Play or Pay (employer shared responsibility payment)

Information Reporting Requirements

© Shipman & Goodwin LLP 2015

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I di id l M d tIndividual Mandate• Individuals must have minimum essential

coverage, which could be any one of the following:g Government programs (i.e. Medicare,

Medicaid) Insurance available in the Exchanges “Eligible employer sponsored plans” g p y p p

(basically, any broad based coverage)


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Individual MandateIndividual Mandate• Individuals who do not have minimum essential

coverage will be subject to taxcoverage will be subject to tax.• There are minimal exceptions.• Tax will be greater of a or b below:Tax will be greater of a or b below:

Year a b

2014 $95 1% of household income over tax filing threshold

2015 $325 2% of above2015 $325 2% of above

2016 $695 2.5% of above


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Individual MandateIndividual Mandate• Premium credits and subsidies offered on a sliding

scale to individuals with household incomes between 100% and 400% of federal poverty level to help purchase coverage through Exchange or to reduce out-purchase coverage through Exchange, or to reduce outof-pocket costs.Generally for those whose employers don’t offer them insurance.Employees whose employers offer coverage may still be eligible if:

Employee’s portion of premium contribution under employer’s plan is 9.5% or more of the employee’s household income; or

Employer’s portion of coverage is less than 60% of the total cost of benefits provided under the plan.


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Health Insurance ExchangesHealth Insurance Exchanges• States to establish “American Health Benefit

Exchanges”- marketplaces for purchase of health insurance; federal government as fallbackfallbackExchanges give individuals information about

credits, and get from, and give to, employerscredits, and get from, and give to, employers information about their plans and employees seeking coverage at Exchanges


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E l CEmployer CoveragePlay or Payay o ay

• No requirement to offer coverage, but penalties (employer shared responsibilitypenalties (employer shared responsibility payments) will apply if not offered

• Applies to “applicable large employers”Applies to applicable large employersDefinition also important for information reporting


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• Determining “Applicable Large Employer” StatusEmployer Statusemployers with at least 50 full-time

(including full time equivalent) employees(including full-time equivalent) employees on average (transition rule in 2015)seasonal worker exceptionseasonal worker exception


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• Must offer coverage to at least 95% of full-time employees and their dependents (or all but 5 ifemployees and their dependents (or all but 5 if that is less than 95%) (substitute 70% in 2015)Look-back safe harbor for determining whether g

variable hour employees are full-time employeesNo penalty for not offering coverage to employees for

first 3 months of employmentfirst 3 months of employmentNo penalty for not covering part-timers


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• If employer offers no coverage and at least one employee receives assistance (credits or p y (subsidies):Must pay penalty of $2,000 annually for each full-time

( f )employee (excluding first 30)Example: Employer with 100 full time employees,

one of whom is eligible for premium assistance mustone of whom is eligible for premium assistance, must pay $2,000 times 70.


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• If employer offers coverage and employee enrolls in Exchange and receives assistance, employer must pay penalty if: Coverage not affordable (costs more than 9.5% of income) or Plan’s share of cost of benefits is less than 60% (“minimum Plan s share of cost of benefits is less than 60% ( minimum

value”).

• Annual penalty is lesser of: $3,000 for each full-time $employee receiving assistance or $2,000 for each full-

time employee, excluding first 30.


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Employer CoverageEmployer CoverageInformation Reporting Requirements

• Form W-2 Employers who provide health coverage must report the aggregate p y p g p gg g

cost of employer-sponsored health coverage Reporting requirement only and will not make the cost of coverage

taxable to employeesp y Reporting mandatory for those employers who filed 250 or more

Form W-2s in previous year Reporting currently optional for those employers who filed fewer than Reporting currently optional for those employers who filed fewer than

250 Form W-2s in in previous year


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• Forms 1094-B and 1095-BP f fPurpose of forms Allow individual to establish and IRS to verify that

individual was enrolled in minimum essential coverageindividual was enrolled in minimum essential coverage 1094-B to IRS 1095-B to individuals


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• Forms 1094-B and 1095-BWho Must Provide Them?Who Must Provide Them?

Self-Insured Plan Sponsors and Insurance Providers HRA reporting issue

When Must They Be Provided? 1095-B to individuals by 2/1/16 1094-B to IRS by 2/29/16 if filed electronically 3/31/161094 B to IRS by 2/29/16, if filed electronically 3/31/16 Extension of time can be sought by using Form 8809


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• Forms 1094-C and 1095-CPurpose of Formsp Provide information on offer of employer coverage 1094-C to IRS

Helps IRS determine if employer owes employer shared responsibility payment

1095-C to employees Allows employees to determine whether they can claim

premium tax credit


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• Who Must Provide Them? All applicable large employers Even if applicable large employer is not liable for employer shared

responsibility payment for 2015, it must still file forms in 2016 for 2015. For applicable large employers sponsoring self-insured plans, combined

reporting on 1095 Creporting on 1095-C.

• When Must They Be Provided? 1095-C to individuals by 2/1/16y 1094-C to IRS by 2/29/16, 3/31/16 if electronic Use Form 8809 to request extension of time


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• If you are an: Applicable Large Employer with Fully Insured Applicable Large Employer with Fully Insured

Coverage• 1094-B and 1095-B filed by Insurer (but note y (

supplemental coverage issue)• 1094-C and 1095-C filed by Employer


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• If you are an: Applicable Large Employer With Self-Insured Applicable Large Employer With Self-Insured

Coverage 1094-C and 1095-C Filed by Employery p y


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• If you are a:Non-Applicable Large Employer with FullyNon-Applicable Large Employer with Fully

Insured Coverage 1094-B and 1095-B filed by Insurery


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• If you are a:Non-Applicable Large Employer with Self-Non-Applicable Large Employer with Self-

Insured Coverage 1094-B and 1095-B filed by Employery p y


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For More InformationFor More Information

www.shipmangoodwin.com/employeebenefitsblog


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