Dan Exceen - Acsa superintendent jan  31 2014  final presentation
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Dan Exceen - Acsa superintendent jan  31 2014  final presentation Dan Exceen - Acsa superintendent jan 31 2014 final presentation Presentation Transcript

  • AFFORDABLE CARE ACT 2014 District Roadmap Association of California School Administrators Superintendents Symposium January 31, 2014
  • Agenda I. ACA Check-In II. What Districts Need to Do A. Timetable of ACA Provisions (Play or Pay) B. Actuarial Value Assessment C. Affordability Report D. Variable Hour Tracking Assessment E. Cadillac Tax Projection F. ACA Compliance Audit III. ACA Taxes and Fees Calculator IV. ACA Strategies and Cost Control Ideas Burnham Benefits 2
  • ACA Check-In To get a feel of where each of you are on the path to implementing Affordable Care Act requirements, please briefly share: 1. What do you consider your comfort/proficiency level as it relates to leading your district through the ACA mandates? Beginning, Intermediate or Advanced? 2. Is your district rate structure tiered or composite? If composite, are you familiar with tiered rates and how they work? 3. Do you feel your district is strategically engaged in regard to ACA? Burnham Benefits 3
  • Timetable of Key ACA Provisions 2010 and PY > 9/23/10 Next Steps • No more lifetime limits on essential health benefits (“EHB”) • Only restricted annual limits on EHB • No more pre-existing condition exclusions for those < age 19 • Coverage of adult children to age 26 • No rescissions • No cost sharing and coverage for certain in-network preventive health services • New consumer and patient protections • Early retiree reimbursement program • New claims and appeals rules • Small business health care tax credit • Whistleblower protections • Nondiscrimination testing for fully insured plans (delayed) Burnham Benefits 2011 • OTC drugs not reimbursable from FSAs, HRAs, or HSAs without prescription (except insulin) • Excise tax increase for HSAs • CLASS Act (repealed) • Medicare Part D discounts for certain drugs in the donut hole 2012 2013 • Deliver Summary of Benefits and Coverage (“SBC”) beginning 1st open enrollment on or after 9/23/12 • W-2 Reporting (for 2012 PY) • Medical Loss Ratio rebates (fully insured plans) first due for 2011 PY • No cost sharing for women’s preventive health coverage (generally applies to PYs beginning on or after 8/1/12) • Comparative effectiveness fee due 7/31/13 for plans with PY ending 10/1/1212/31/12 • Notice to inform employees of exchange coverage options 2014 • Individual mandate • Medicaid expansion • State exchanges • 90-day waiting period max • Increased max on wellness program credits • New cost sharing and OOP limits for group health plans • No pre-existing condition exclusions • Health Care FSA contributions limited to $2,500, as indexed • Guaranteed Issue/ Renewability • Deduction for expenses allocable to retiree drug subsidy eliminated • Clinical trial coverage requirements • Medicare tax on individuals making > $200k • Coverage of adult children to age 26- no exceptions • No annual dollar limitations on EHBs • Transitional reinsurance fees 2015-2018 • Employer (“play or pay”) mandate • New employer reporting requirements (2016 for 2015 PY) • Large groups (>100 employees) potentially permitted to enroll in exchange for group coverage (2017) • Excise tax on the high cost coverage (“Cadillac Tax”) (2018) • Health insurer fee (fully insured plans) • Auto enrollment (delayed) 4
  • Pay Overview: Potential Penalties OPTION 1 Pay: Eliminate coverage and let employees find their own insurance coverage • Annual penalty of $2,000 x all full-time employees • Penalty Enforcement Effective Date Delayed to January 1, 2015 • Applies to all full-time employees, not just benefit eligible • Annual penalty does not apply to first 30 full-time employees • Penalties are non-deductible • Full-time = all employees working 30 or more hours per week on average Burnham Benefits 5
  • Play Overview: Potential Penalties OPTION 2 Play: Continue to provide coverage • Possibility of Annual penalty of $3,000 per full-time employee receiving premium subsidy assistance granted by ACA • Penalty Enforcement Effective Date Delayed to January 1, 2015 • Penalty ONLY applies if lowest cost plan is deemed unaffordable (9.5% rule) or doesn’t provide minimum value (60%/bronze level) • Penalty ONLY applies IF: • Employee is deemed to have unaffordable plan (9.5% rule) • Employee’s plan option doesn’t meet criteria for 60%/bronze level plan • Employee applies for and actually receives federal subsidy • Full-time = all employees working 30 or more hours per week on average Burnham Benefits 6
  • PPACA – Federal Poverty Level Impact Employer Sponsored Plan Employee Premium Contribution as a Percent of Household Income Employee Premium as Percentage of Pay 0.0% - 9.5% 9.5% + Federal Poverty Level (FPL) 401% 139% - 400% 0% - 138% Not Eligible for Premium Subsidy Not Eligible for Premium Subsidy Eligible for PremiumSubsidy Eligible for Premium Subsidy Medicaid Eligible No Employer Penalties for Medicaid-Enrolled Employees Please note, Medicaid Eligible are not eligible for premium subsidy Burnham Benefits 7
  • Individual Decision Tree – 2014 Stay on employer plan Go to exchange No health insurance Pay annual EE portion of exchange premium (assumed to be between $1,200 - $1,700) Pay annual penalty of $95 or 1% of household income in 2014 (increases thereafter) Pay Tenthly EE portion of Kaiser - $100.00 HMO - $600.00 PPO - $1,900.00 Burnham Benefits 8
  • Next Steps for My District • Conduct ACA financial modeling by end of 1st quarter 2014 • Share report with union groups and other District partners • Determine “Affordability” plan protection • Most plans offered by Carriers, JPA’s and Trust will exceed 60% minimum value (Bronze) Burnham Benefits 9
  • What Districts Need To Do Actuarial Value Test The ACA requires employers to offer plans that meet a Minimum Actuarial Value (MAV) of 60%. • All offered plans must meet the MAV of 60% • Actuarial Value Calculator provided by Department of Health and Human Services (HHS) @ www.hhs.gov SAMPLE TEST RESULT: PASS (All plans meet MAV) PLAN 100-A, $20 OV, $0 Deductible 100-D, $10 OV, $300 Deductible $2,500 HSA Burnham Benefits ACTUARIAL VALUE 99.4% 95.6% 60.7% TEST RESULT PASS PASS PASS 10
  • What Districts Need To Do Affordability Test An employee's affordability of the District's plan is based on the lowest cost plan option that also meets the MAV of 60%. • Safe harbor method for determining affordability is 9.5% of an employee’s W-2 wages • Measured against Employee Only contribution portion of the lowest cost single rate (offered to all employees) • Potential for federal subsidies • Federal Poverty Level (FPL) ranges Burnham Benefits 11
  • Affordability Test Affordability Test • HMO Employee Annual Cost: $258.77 • W-2 Salary Threshold (9.5% rule): $258.77 / 0.095= $2,723.89 • Hourly Rate/30 Hours = $1.75 • Hourly Rate/40 Hours = $1.31 Burnham Benefits 12
  • What Districts Need To Do Affordability Test Penalty Enforcement Delayed to January 1, 2015 Annual penalty of $3,000 per Full-Time employee (30+ hours) receiving federal subsidy: Penalty ONLY applies if: 1. 2. 3. Employee’s plan option doesn’t meet the criteria for a bronze level plan (60% MAV) and / or Employee is deemed to have unaffordable coverage (9.5% rule) and Employee applies for and actually receives federal subsidy Burnham Benefits 13
  • Safe Harbor Provisions – Special Employee Groups Seasonal/Short Term/Hourly Employees • Treat as variable hour employees Teachers • • General rule: treat traditional school breaks as paid leaves Unpaid leaves of more than 4 consecutive weeks (other than FMLA/USERRA/jury duty leaves) • Use averaging method so that employee who works full-time during the active portions of the academic year is treated as FT for full measurement period OR credit employee with average weekly rate • Max 501 hours during calendar year Adjunct faculty, Bus Driver, Coaches, Stipend employees • • • Burnham Benefits Use reasonable method consistent with the purposes of ACA W-2 vs. 1099 Employees Take into account classroom preparation time (adjunct faculty, substitute teachers) 14
  • What Districts Need To Do Variable Hour Employees Measurement Period (MP) Administrative Period (AP) Stability Period (SP) 3–12 months Up to 90 days (60 days in CA) Same Length MP 1. Take inventory of your variable hour employee groups to assess potential exposure based on current employee population (e.g., use 2012 or 2013 year as a guide). Provide to Burnham for assessment. 2. Identify employment classification for new hires – is new hire reasonably expected to work full-time (FT) or is he or she a variable hour or seasonal employee? 3. Design plan eligibility rules to ensure compliance with the look-back and stability period requirements; full-time employee definition 4. Measure and track hours worked Burnham Benefits 15
  • What Districts Need To Do MP = Measurement Period AP = Administrative Period SP = Stability Period Variable Hour Employees 12 Month Option 2013 2014 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul 2016 2015 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Initial MP (12 mos.) AP (2 mos.) Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Initial SP (12 mos.) 2nd MP (12 mos.) AP (2 mos.) 2nd SP (12 mos.) 3rd MP (12 mos.) AP (2 mos.) 6 Month Option 2014 Feb Mar Apr May Jun Jul 2016 2015 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Initial MP (6 mos.) AP (2 mos.) Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul 2017 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Initial SP (6 mos.) 2nd MP (6 mos.) AP (2 mos.) 2nd SP (6 mos.) 3rd MP (6 mos.) AP (2 mos.) 3rd SP (6 mos.) 4th MP (6 mos.) AP (2 mos.) 4th SP (6 mos.) 5th MP (6 mos.) Burnham Benefits AP (2 mos.) 5th SP (6 mos.) 16
  • What Districts Need To Do Variable Hour Employees Hours per Week Annualized Hours (potential full impact) Number of Employees 40 or more hours per week 2,080 1,052 30 - 39.99 hours per week 1,560 - 2,079.5 652 24 - 29.99 hours per week 1,248 - 1,559.5 326 20 - 23.99 hours per week 1,040 - 1,247.5 120 19.99 hours per week and below 1,039.5 543 Average/Total: 1,554.4 - 1,594.6 2,693 • How will hours be monitored? • What is the best way to ensure all applicable employees have benefits access? • What is the potential premium impact? • Who are the employees who fit into the 24-29.99 range? Burnham Benefits 17
  • What Districts Need To Do Cadillac Tax Test Beginning January 1, 2018, “Cadillac” plans will be subject to a 40% excise tax on the amount of premium that exceeds an annual limit. • Employer and employee contributions are included • For 2018, the limits are $10,200 for individuals and $27,500 for families (indexed) • Stand alone dental and vision benefits are excluded, but employer contributions to HSAs and Archer MSAs are included, and health FSAs and HRAs are included • Who pays? • The insurer, if fully insured • The employer, for HSAs and Archer MSAs • The person that administers the plan, if self-funded Burnham Benefits 18
  • Sample Cadillac Tax Analysis: (Super Composite Rate) 2013 PPO 2014 PPO 2015 PPO 2016 PPO 2017 PPO 2018 PPO Actual EE Annual Premium $17,670.24 $19,172.21 $20,955.23 $22,945.97 $25,125.84 $27,512.79 Excise Tax Threshold EE Only $6,551.00 $7,107.84 $7,768.87 $8,506.91 $9,315.07 $10,200.00 ($11,119.24) ($12,064.37) ($13,186.36) ($14,439.06) ($15,810.77) ($17,312.79) NO NO NO NO NO NO $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Excise Tax Threshold EE+SP $17,662.02 $19,163.29 $20,945.48 $22,935.30 $25,114.16 $27,500.00 Difference from Actual $17,662.02 $19,163.29 $20,945.48 $22,935.30 $25,114.16 $27,500.00 N/A N/A N/A N/A N/A N/A $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Excise Tax Threshold EE+CH(REN) $17,662.02 $19,163.29 $20,945.48 $22,935.30 $25,114.16 $27,500.00 Difference from Actual $17,662.02 $19,163.29 $20,945.48 $22,935.30 $25,114.16 $27,500.00 N/A N/A N/A N/A N/A N/A $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Excise Tax Threshold Family $17,662.02 $19,163.29 $20,945.48 $22,935.30 $25,114.16 $27,500.00 Difference from Actual $17,662.02 $19,163.29 $20,945.48 $22,935.30 $25,114.16 $27,500.00 N/A N/A N/A N/A N/A N/A Gross Annual Premium Difference from Actual Pass (YES/NO) Actual EE+SP Annual Premium Pass (YES/NO) Actual EE+CH(REN) Annual Premium Pass (YES/NO) Actual Family Annual Premium Pass (YES/NO) - Year-over-year changes in premium are based upon the 10 year cost projection performed by Milliman. The changes include 8.5% for 2014, 9.3% for 2015, 9.5% for 2016, 9.5% for 2017, and 9.5% for 2018. Tier Burnham Benefits Subs 40% of Difference Tax EE Only EE+SP EE+CH(REN) FAMILY 364 0 0 0 ($6,925.12) $0.00 $0.00 $0.00 ($2,520,742.89) $0.00 $0.00 $0.00 ($2,520,742.89) 19
  • Sample Cadillac Tax Analysis: (4 Tier Rates) 2013 PPO 2014 PPO 2015 PPO 2016 PPO 2017 PPO 2018 PPO Actual EE Annual Premium $7,074.24 $7,675.55 $8,389.38 $9,186.37 $10,059.07 $11,014.68 Excise Tax Threshold EE Only $6,551.00 $7,107.84 $7,768.87 $8,506.91 $9,315.07 $10,200.00 Difference from Actual ($523.24) ($567.71) ($620.51) ($679.46) ($744.00) ($814.68) NO NO NO NO NO NO Actual EE+SP Annual Premium $14,148.48 $15,351.10 $16,778.75 $18,372.73 $20,118.14 $22,029.37 Excise Tax Threshold EE+SP $17,662.02 $19,163.29 $20,945.48 $22,935.30 $25,114.16 $27,500.00 Difference from Actual $3,513.54 $3,812.19 $4,166.73 $4,562.57 $4,996.01 $5,470.63 YES YES YES YES YES YES Actual EE+CH(REN) Annual Premium $12,733.63 $13,815.99 $15,100.88 $16,535.46 $18,106.33 $19,826.43 Excise Tax Threshold EE+CH(REN) $17,662.02 $19,163.29 $20,945.48 $22,935.30 $25,114.16 $27,500.00 Difference from Actual $4,928.39 $5,347.30 $5,844.60 $6,399.84 $7,007.83 $7,673.57 YES YES YES YES YES YES Actual Family Annual Premium $21,222.72 $23,026.65 $25,168.13 $27,559.10 $30,177.22 $33,044.05 Excise Tax Threshold Family $17,662.02 $19,163.29 $20,945.48 $22,935.30 $25,114.16 $27,500.00 Difference from Actual ($3,560.70) ($3,863.36) ($4,222.65) ($4,623.80) ($5,063.06) ($5,544.05) NO NO NO NO NO NO Gross Annual Premium Pass (YES/NO) Pass (YES/NO) Pass (YES/NO) Pass (YES/NO) - Year-over-year changes in premium are based upon the 10 year cost projection performed by Milliman. The changes include 8.5% for 2014, 9.3% for 2015, 9.5% for 2016, 9.5% for 2017, and 9.5% for 2018. Tier Burnham Benefits Subs 40% of Difference Tax EE Only EE+SP EE+CH(REN) FAMILY 85 32 19 72 ($325.87) $0.00 $0.00 ($2,217.62) ($27,699.26) $0.00 $0.00 ($159,668.71) ($187,367.97) 20
  • District: Financial Modeling Results Play or Pay Financial Model: • The following Play or Pay model is an example. • The District passes the minimum actuarial value test for all plans (The minimum accepted actuarial value is 60% for all plans). • Kaiser – 91.4% • HMO – 89.9% • PPO – 86.8% Cadillac Tax: • All 3 plans have at least one tier that exceeds a Cadillac Tax threshold ($10,200-EE, $27,500-any family tier). • Total potential Cadillac Tax liability in 2018 - $637,115.83 • Kaiser - $0.00 • HMO - $0.00 • PPO - $637,115.83 Burnham Benefits 21
  • District ACA Taxes and Fees Calculator October 1, 2013 October 1, 2014 Total Subscribers Total Members (2.55 ACS based upon census) 2012 Data Monthly Premium Annual Premium 2013 Annual ACA Taxes and Fees PCORI Fee Insurer Fee (UHC only) Transitional Reinsurance Fee Average Monthly Taxes and Fees 2,862 7,298 $3,668,800.04 $44,025,600.48 $1.00 0.25% $3.94 2013 Renewal Monthly Premium Annual Premium $7,298.00 $119,769.94 $344,830.50 $39,324.87 $3,980,648.04 $47,767,776.52 Proposed Increase Over Current 2013 Proposed Premium minus ACA Taxes and Fees Monthly Premium without Taxes and Fees Annual Premium without Taxes and Fees 8.50% $3,941,323.17 $47,295,878.08 Value of Taxes and Fees Proposed Increase without fees 0.99% 7.51% Total Subscribers Total Members (2.55 ACS based upon census) 2013 Data Monthly Premium Annual Premium 2014 Annual ACA Taxes and Fees PCORI Fee Insurer Fee (UHC only) Transitional Reinsurance Fee Average Monthly Taxes and Fees $3,980,648.04 $47,767,776.52 $2.00 0.33% $5.25 2014 Renewal Monthly Premium Annual Premium Proposed Increase Over Current 2013 Proposed Premium minus ACA Taxes and Fees Monthly Premium without Taxes and Fees Annual Premium without Taxes and Fees Value of Taxes and Fees Proposed Increase without fees 2,862 7,298 $14,596.00 $174,544.72 $459,774.00 $54,076.23 $4,350,848.31 $52,210,179.74 9.30% $4,296,772.08 $51,561,265.01 1.24% 8.06% * Projections based on analysis of study by Oliver Wyman & AHIP 2012 Burnham Benefits 22
  • ACA Cost Control Strategies • Evaluate 2, 3, or 4 tier rate structures • Gather District demographic information to make educated decisions on tiered rates • Review medical plans offered and if “Bronze” plan is needed • Meet or form benefits committee to include union groups • Explore ACA new Wellness options/regulations Burnham Benefits 23
  • 2014 Creative Cost Savings Options • • • • Offer bronze level plan in benefits portfolio Narrow HMO network option Participating HMO contract Explore self-funded medical inside or outside JPA or Trust • Tie District cap to participation in Wellness • Incentives to reduce spouse enrollment on plan • Go to market; explore options Burnham Benefits 24
  • What Districts Need To Do Next Steps • Conduct ACA financial modeling & Assess need for variable hour tracking (1) Actuarial Value Assessment, (2) Affordability Report, (3) Cadillac Tax Projection, (4) ACA Compliance Audit, (5) Variable Hour Tracking • Work with consultant, broker, JPA or trust • Educate & Communicate effectively with all district partners • Develop a long term strategy through 2018 • Explore all medical benefit options, consider unbundling, tiered rates, lower cost plan options • Evaluate the financial implications associated with moving from a composite rate to a tiered structure Burnham Benefits 25
  • Questions Dan Exceen Sr. Vice President 949.252.4586 exceen@burnhambenefits.com Burnham Benefits