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Aon: A Health Care Reform Update
Aon: A Health Care Reform Update
Aon: A Health Care Reform Update
Aon: A Health Care Reform Update
Aon: A Health Care Reform Update
Aon: A Health Care Reform Update
Aon: A Health Care Reform Update
Aon: A Health Care Reform Update
Aon: A Health Care Reform Update
Aon: A Health Care Reform Update
Aon: A Health Care Reform Update
Aon: A Health Care Reform Update
Aon: A Health Care Reform Update
Aon: A Health Care Reform Update
Aon: A Health Care Reform Update
Aon: A Health Care Reform Update
Aon: A Health Care Reform Update
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Aon: A Health Care Reform Update

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With the recent delay in the employer coverage mandate until 2015, employers should continue to plan their compliance strategy and remain vigilant as regulations continue to change. Hosted by Aon’s …

With the recent delay in the employer coverage mandate until 2015, employers should continue to plan their compliance strategy and remain vigilant as regulations continue to change. Hosted by Aon’s health and benefits expert, Richard Kaufman, this webinar will update employers on the ongoing changes and provide reminders of what remains, deadlines and other helpful information in understanding the complexities of the mandate.

Presented by Richard S. Kaufman, Aon Consulting VP, Health and Benefits

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  • 1. Health Care Reform Update: The Road Ahead AlphaStaff August 29, 2013
  • 2. Consulting | Health and Benefits Proprietary & Confidential | 07/10/2013 2 2 Today’s Speaker Richard Kaufman – Vice President, Aon Hewitt Richard serves as a vice president of Aon Hewitt in the Miami office. In addition to his account management responsibilities, he also serves as a Compliance Officer for the local practice. Mr. Kaufman has 25 years of experience in employee benefits. Aon Hewitt is a global leader in health and benefits consulting. Aon helps its clients act on three fronts: manage their health care spend, maintain the integrity of their core offerings, and meet the needs of their varied employee population. Aon’s services include group life and health plan design, data driven health strategies, audits, absence management and productivity, consumer-driven health care, health care management, individual life and health, benefits administration, and executive benefits. Through its 37,000 professionals worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. .
  • 3. Consulting | Health and Benefits Proprietary & Confidential | 07/10/2013 3 Consulting | U.S. Health & Benefits Proprietary & Confidential | 12/2012 3 Two Rules of Health Care Reform  Rule #1: Deal With What You Know  Rule #2: Apply the Jello Theory
  • 4. Consulting | Health and Benefits Proprietary & Confidential | 07/10/2013 4 2011 Plan Year 2011 2012 2013 2014 2018 • Small Business Health Insurance Tax Credit (effective in 2010) • Lifetime dollar limits on Essential Health Benefits (EHB) prohibited* • Preexisting Condition Exclusions Prohibited for Individuals under 19* • Overly restrictive annual dollar limits on EHB prohibited* • Extension of Adult Child Coverage to Age 26* • Prohibition on Rescissions* • No Cost Sharing for Preventive Health Services** • Effective Appeals Process** • Patient protections** • Nondiscrimination requirements for insured plans** (DELAYED) • Expanded MEWA Oversight (DELAYED) • Automatic Enrollment (DELAYED) • Over-the-Counter Medicines Not Reimbursable Under Health FSA, HRA, or from HSA Absent a Prescription, Except Insulin • HSA Non-Medical Expense Tax Increase • Employer Distribution of Summary of Benefits and Coverage* • Comparative Effectiveness Fee • Employer Quality of Care Report** (DELAYED) • Medical Loss Ratio rebates (insured plans only)* • Employer Reporting of Health Coverage on Form W-2 (due January 31, 2013) • Insurer Rate Review and Disclosure • Notice to Inform Employees of Coverage Options in Exchange • Limit on Health Care FSA Contributions to $2,500 (Indexed) • Elimination of Deduction for Expenses Allocable to Retiree Drug Subsidy • Medicare Tax Increase on High Income Earners • Addition of Women’s Preventive Health Requirements to No Cost Sharing for Preventive Health Services ** • Individual Mandate to Purchase Insurance or Pay Penalty • State Insurance Exchanges • Employer Responsibility to Provide Affordable Minimum Essential Health Coverage*** (delayed) • Preexisting Conditions Exclusions Prohibited* • Annual Dollar Limits on EHB Prohibited* • Limit of 90-Day Waiting Period for Coverage* • Employer Reporting of Health Insurance Information to Government /Participants (delayed) • Increased Cap on Rewards for Wellness Program** • Cost-sharing Limits for All Group Health Plans (deductibles and OOP maximum)** • Transitional Reinsurance Contributions • Coverage of Clinical Trials** • Excise Tax on High-Cost Coverage *Denotes group/insurance market reforms applicable to all group health plans. **Denotes group/insurance market reforms not applicable to grandfathered health plans. *** This requirement applies to full time employees (e.g., 30 hours per week) and will require coverage that is affordable and satisfies a certain actuarial value to avoid the penalty. Guidance forthcoming. **** Where effective date determined by plan year, assumes plan year is calendar year. Affordable Care Act – Your Compliance Timeline****
  • 5. Consulting | Health and Benefits Proprietary & Confidential | 07/10/2013 5 Employer Checklist—Act on 2013 Provisions Now 2013 Provisions Administrative & Communication Actions Medicare taxes for high-income  Do calculations  Coordinate with payroll  Tell affected employees (optional) $2,500 FSA Limit  Communicate in off-cycle enrollments  Provide decision support  Update SPDs Women’s preventive health coverage  Communicate in off-cycle enrollments  Update SPDs Notifying employees about state exchanges  Communicate to all employees about exchanges (eligibility, services and contact information) Patient-Centered Outcomes Research Institute (PCORI) Trust Fund Fee  Based on average covered lives  $1 for 2013; $2 for 2014  Reporting and payment of fees on IRS Form 720
  • 6. Consulting | Health and Benefits Proprietary & Confidential | 07/10/2013 6 Start Preparing for 2014 Provisions 2014 Provisions Administrative & Communication Actions Employer mandate (Postponed until 2015) Free-rider penalties Premium tax credits Automatic enrollment (Delayed) Minimum essential benefits Fully-effective group market and insurance reforms Educating employees on how state exchanges will work Transitional Reinsurance Fee Health Insurance Industry Fee Increased wellness rewards cap 30% of cost of health coverage  Incorporate provisions into enrollment  Develop a communication strategy and tactics  Provide decision support  Create or update SBCs/ SPDs/ SMMs Guiding Principles  Focus on participant actions  Stay objective  Simplify messages  Provide guidance  Capitalize on the opportunity
  • 7. Consulting | Health and Benefits Proprietary & Confidential | 07/10/2013 7 Recent Delays  The Employer Mandate and associated reporting has been delayed until 2015. All other market reforms are still expected to be implemented on time. – What was postponed? • Employers required to offer a reasonable and affordable plan to full-time employees • Full-time employee definition of 30 hours a week • Need to establish measurement, administrative, and stability periods • Employer reporting – What has not been postponed? • All fees and taxes • Market reforms • Individual mandate • Public exchanges • Federal subsidies for public exchanges  Health Care Reform will require copayments and deductibles to be applied to out of pocket maximums – What was delayed? • If an employer uses a separate pharmacy administrator from the medical administrator, then this has been postponed until 2015. Otherwise, it takes effect in 2014.
  • 8. Consulting | Health and Benefits Proprietary & Confidential | 07/10/2013 8 2014—Employer Mandate (Postponed until 2015) – The Employer Mandate is also referred to as • The free rider penalty (historical terminology), shared responsibility payment, the assessable payment, and the employer responsibility payment – A Large Employer is one that employs 50 or more full-time employees (FTEs) • FTE generally means an individual, with respect to any month, who is employed on average at least 30 hours of service per week – The Employer Mandate requires a Large Employer to offer: • Minimum Essential Coverage that meets Minimum Actuarial Value requirements • Coverage that is “affordable” • Available to “substantially all” (i.e., 95% or more) FTEs  Employers must also offer coverage to dependent children up to age 26, however this coverage does not need to be affordable  The dependent definition does not include spouses
  • 9. Consulting | Health and Benefits Proprietary & Confidential | 07/10/2013 9 2014—Employer Mandate (Postponed until 2015)  $2,000 Tax Penalty – Applies when an employer fails to offer its FTEs the opportunity to enroll in Minimum Essential (health) Coverage (MEC) • If one full-time employee goes to an Exchange and qualifies for a subsidy, then the employer would be subject to a $2,000 penalty for each individual that was not offered coverage that met MEC guidelines • There is a waiver for the first 30 full-time employees. • The penalty is calculated on a monthly basis.  $3,000 Tax Penalty – Applies when an employer offers its FTEs the opportunity to enroll in MEC and the employee contribution for single coverage exceeds 9.5% of their income, thus being considered unaffordable • The penalty generally is $3,000 per year for each full-time individual who enrolls in an Exchange and qualifies for a subsidy • There is no 30 life waiver • Example of 9.5%: Employee earning $35,000/year; 9.5% of salary = $3,325 annually or $277 per month. This is the most that an employee can be asked to contribute for single coverage.
  • 10. Consulting | Health and Benefits Proprietary & Confidential | 07/10/2013 10 Consulting | U.S. Health & Benefits Proprietary & Confidential | 12/2012 10 What Keeps Employers Up At Night  Measurement period – Period of time over which employer tracks employee’s hours of service • Cannot be less than three months or more than twelve months in duration – Initial measurement period for new employees will be based on each employee’s start date – Standard measurement period for ongoing employees will be uniform period of time set by employer  Administrative period—optional (up to 90 days in duration) – Employer looks back at employee’s hours of service in measurement period • May be utilized for conducting calculation and open enrollment  Stability period – Period of time employer must offer coverage to FTE to avoid ACA penalties • Stability period can be between six months and one year but not less than Measurement Period – If employee is considered full-time in measurement period but falls to part-time in stability period, benefits must be offered through the end of the stability period
  • 11. Consulting | Health and Benefits Proprietary & Confidential | 07/10/2013 11 Consulting | U.S. Health & Benefits Proprietary & Confidential | 12/2012 11 What Keeps Employers Up At Night  Measurement period – Period of time over which employer tracks employee’s hours of service • Cannot be less than three months or more than twelve months in duration – Initial measurement period for new employees will be based on each employee’s start date – Standard measurement period for ongoing employees will be uniform period of time set by employer  Administrative period—optional (up to 90 days in duration) – Employer looks back at employee’s hours of service in measurement period • May be utilized for conducting calculation and open enrollment  Stability period – Period of time employer must offer coverage to FTE to avoid ACA penalties • Stability period can be between six months and one year but not less than Measurement Period – If employee is considered full-time in measurement period but falls to part-time in stability period, benefits must be offered through the end of the stability period
  • 12. Consulting | Health and Benefits Proprietary & Confidential | 07/10/2013 12 Defining Full-Time Employees—Ongoing 2013 Measurement Period (MP) 2013 Administrative Period (AP) 2014 Stability Period (SP) 3 – 12 months Up to 90 days At least 6 months but no shorter than MP  Determines coverage in stability period  Average hours worked  Buffer between MP and SP  Allows for measuring and enrolling full-timers  Eligibility period for employees averaging 30 hours or more during MP MP Considerations  Longer period reduces number of full-timers given high turnover  Shorter period provides more time to make workforce adjustments to mitigate cost SP Considerations  Shorter period reduces coverage commitment but creates administrative complexity  Longer period that aligns with calendar years is most practical administratively
  • 13. Consulting | Health and Benefits Proprietary & Confidential | 07/10/2013 13 Exchange Update  Coverage through the exchanges will begin in every state on January 1, 2014, with enrollment beginning October 1, 2013.  States can elect to: – build a fully state-based exchange, – enter into a state-federal partnership exchange, or – default into a federally-facilitated exchange.  The Affordable Care Act (ACA) directs the Secretary of Health and Human Services (HHS) to establish and operate a federally-facilitated exchange in any state that is not able or willing to establish a state-based exchange.  In a federally-facilitated exchange, HHS will perform all exchange functions. States entering into a state-federal partnership exchange may administer plan management functions, in-person consumer assistance functions, or both, and HHS will perform the remaining exchange functions. Federal exchanges may have more carriers than state exchanges.
  • 14. Consulting | Health and Benefits Proprietary & Confidential | 07/10/2013 14 Exchange Update (cont’d) • Exchange health plans options will vary from state to state and carriers will selectively participate state by state. • Aetna – 14 exchanges • CIGNA – 5 exchanges • Humana – 14 exchanges • United Healthcare – 10 – 25 exchanges • There will be four types of medical plans offered through an Exchange: • Bronze (60% actuarial value) • Silver (70% actuarial value) • Gold (80% actuarial value) • Platinum (90% actuarial value) • Catastrophic plan for those under 30 • Exchanges will first be made available to individuals and small employers of <50 employees. States will retain option to include large employers in 2017.
  • 15. Consulting | Health and Benefits Proprietary & Confidential | 07/10/2013 15 Public Exchange Status by State CA ORE WA NEV UTAH CO IDAHO WYO NM ARIZ ND SD NEB KS OK TX MINN IOWA MO Ark LA MS FLORIDA GA SC KY WIS MN IL IND OHIO PA W VA VA NCTN NY NJ MD DE CT VT NH MAINE MASSACHUSETTS MT ALASKA ALA HA Won’t Create Exchange Creating Exchange Partnership Exchange with Feds Democrat Governor Republican Governor WA NY VT MASSACHUSETTS 15
  • 16. Consulting | Health and Benefits Proprietary & Confidential | 07/10/2013 16 State Medicaid Expansion Possibilities  States can expand Medicaid entitlement to individuals with incomes up to 133% of Federal Poverty Level (FPL), covering up to 17 to 22 million new Medicaid beneficiaries  Less than half of states are expanding Medicaid in 2014  If a state sets up an exchange but does not expand Medicaid, individuals with incomes between 100% and 133% of FPL would be eligible for federal subsidies to purchase insurance in the exchange – Without Medicaid expansion, individuals below 100% of FPL but not currently eligible for Medicaid (approximately 11.5 million individuals*) would remain uninsured  Impact to employers would result from – Cost-shifting due to uninsured – Potentially higher Shared Responsibility Payments if do not offer minimum essential benefits or minimum affordable coverage to full-time employees between 100% and 133% of the FPL *Source: The Urban Institute
  • 17. Consulting | Health and Benefits Proprietary & Confidential | 07/10/2013 17 Half of States Are Expanding Medicaid in 2014 CA OR WA NV UT CO ID WY NM AZ ND SD NB KS OK TX MN IA MO AR LA MS FL GA SC KY WI MI IL IN OH PA WV VA NCTN NY NJ MD CT VT NH ME MA MO AK AL HI 8 States Won’t Expand Medicaid 14 States Will Expand Medicaid 16 States Undecided on Medicaid Expansion Democrat Governor Republican Governor 6 States Leaning toward expanding Medicaid 6 States Leaning toward Not Expanding Medicaid DE 17

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