Healthcare Reform - Vision for 2014

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Facts and myths about the Health Reform in 2014.

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Healthcare Reform - Vision for 2014

  1. 1. Click to edit Master title style Healthcare Reform Vision For 2014 By: Joseph E. Ellis, Sr, Senior Vice President CBIZ Benefits & Insurance Services 610-862-2242 jellis@cbiz.com
  2. 2. Click to edit Master title style Agenda 1. 2. 3. 4. 5. 6. Introduction Facts and Myths About Healthcare Reform Financial Impact Guidance for HR/Financial Professionals Totally Random Thoughts Questions
  3. 3. Click to edit Master title style 1. Introduction
  4. 4. Healthcare Click to edit Master title style
  5. 5. Click to edit Master title style 2a. Facts about Healthcare Reform
  6. 6. Current Environment is Complex Click to edit Master title style Government Carriers Employers Affordable Care Act Providers Consumers 6
  7. 7. Click to To Know title style Terms edit Master            Essential Health Benefits Minimum Value Coverage Affordable Coverage Summary of Benefits and Coverage Full Time Employee Individual Mandate Employer Mandate Private Exchange Marketplace Subsidies Pay or Play 7
  8. 8. Click to edit Master title style What’s Happening in 2014?  No Annual Limits  Pre-Existing condition limitations eliminated  New Employee waiting periods limited to 90 days  Medical Underwriting eliminated/Guaranteed issue  Adjusted Community Rating for Small Groups  Additional Taxes and Fees Implemented  Medicaid Coverage Expansion  Individual Mandate  Public Marketplace (State or Federal)  Premium Subsidies  SHOP  Private Exchange Options  Preparing for Employer Mandate in 2015 8
  9. 9. Medical edit Master title style Click toUnderwriting Eliminated/Guaranteed Issue 2013 Rating based on: 2014 Adjusted Community Rating:  Age  Geography  Health Status  Gender  Wide Rate Bands  Pre-Existing Conditions  Age  Geography  Tobacco use  Family size  3:1 Rate Band
  10. 10. Additional Fees and Items Impacting Click to edit Master title style Premium / 2014 Renewal  Annual Fee – Fee for health insurance companies to fund health insurance Marketplace subsidies. Estimated 2%-3% of fully insured premiums.  Premium Stabilization Fund / Transitional Reinsurance Fee – Fee for insurers to stabilize individual market for a 3 year period. Estimated $5.25 per covered LIFE per month ($63 per year).  Patient-Centered Outcome Research Fee – Fee to fund research that compares different medical treatments. $2 per member (includes dependents) per year. 10
  11. 11. Click to edit Master title style The Individual Mandate Beginning 1/1/14, all individuals residing in US required to maintain minimum essential health coverage for themselves and their dependents.  Options for coverage depends on household income as % of FPL Federal Poverty Level Option Under 133% Minimum essential coverage through Medicaid, if a state so elects Between 134%-400% Premium assistance or cost sharing possibilities via Marketplace 11
  12. 12. The Marketplace Click to edit Master title style
  13. 13. SHOP – Delayed To 2015 Click to edit Master title style
  14. 14. Private edit Master Click toExchanges title style • Offered by Insurance Carriers or Large Broker/Consultants • Single Carrier vs. Multi-Carrier • Typically 8+ Plans offered • Creates Architecture for Defined Contribution by Employer • Employees Choose Best-Fit Plan • Annual increases in Contribution based on budget, not Carrier Increases • Ultimate in Cost Control • CBIZ Will Offer For 2015
  15. 15. Click to edit Master title style 2b. Myths About Healthcare Reform
  16. 16. Click to edit Master title style Myths • Walgreens Dropped Their Healthcare Plan and Sent All Employees To the “Exchange”. • Go To The Marketplace and Compare Your Employer Plans To The Marketplace Plans. • Enrollment Process is Easy. • Ask A Fact/Myth Question, Please!
  17. 17. Click to edit Master title style 3. Financial Impact
  18. 18. How do these changes title style of coverage? Click to edit Master impact cost Actuarial Value Patient-Centered Outcomes Research Fee ($2 PMPY) Adjusted Community Rating (small group only) Annual Insurer Fee (Approx. 2.5% of Premium) Essential Health Benefits Premium Transitional Reinsurance Fee (Approx. $5.25 per covered life) Guaranteed Issue Ban on PreExisting Condition Limitations Elimination of Annual and Lifetime Limits 18
  19. 19. How to Employers Affected? ClickAreedit Master title style  “Small Group” – Employers with fewer than 50 full time employees or equivalents.  “Large Group” – Employers with at least 50 full time employees or equivalents. 19
  20. 20. Small Group Impact Click to edit Master title style  Plan Design Limitations:  Limited to “Metallic” coverage levels defined by actuarial value (i.e. Bronze at 60%, Silver at 70%, Gold at 80%, Platinum at 90%)  Pricing Impact:  Rates can no longer vary by gender, industry, or health status  Age factor limited to 3:1 ratio  Tobacco factor can apply but limited to 1.5:1 ratio  Pricing will include new taxes and fees 20
  21. 21. MEC to edit Master title style Click – For Small Groups  Must provide “Minimum Essential Coverage” (MEC):  10 required coverage categories Hospitalization Ambulatory Services Emergency Services Laboratory Services Maternity & Newborn Care Mental Health & Substance Abuse Prescription Drug Rehabilitative Services & Devices Preventive & Wellness Services and Chronic Disease Management Pediatric Services (including oral and vision care) *Definition of “Small Group” will be defined at the State level; in most cases will be 2-50 eligible employees (including in Missouri) but could be up to 100 eligible employees in some States. 21
  22. 22. Large to edit Master title style Until 2015 Click Group Impact – Delayed Full Time - Hired to work 30+ hours per week Part Time - Hired to work <30 hours per week Seasonal – Hired for less than 120 days Variable – Hours unknown at time of hire 22
  23. 23. Click to edit Master title style Large Group Impact (continued) Shared Responsibility: Calculating the Penalty    Minimal essential coverage not offered to at least 95% of full time employees and at least one employee goes to Marketplace and receives premium tax credit – $2,000 per year per FTE (less first 30) Coverage not minimum value (60% actuarial value) or not affordable (i.e., employee’s premium exceeds 9.5% of household income) and at least one employee goes to Marketplace and receives premium tax credit – Lesser of • $3,000 per year for each FTE using Marketplace and qualifying for premium credit, or • $2,000 per year per FTE (less first 30) Penalties are indexed on the cost of health care Transitional Relief for Non-Calendar Year Plans: if, for example, plan year runs July 1 to June 30, the plan will not risk being subject to penalties until 1st day of the plan year beginning 2015 (i.e. July 1 in this example) 23
  24. 24. Large Group Impact (continued) Click to edit Master title style Who Must Be Offered Coverage?  Employers must offer minimum essential coverage (MEC) to at least 95% of its full time employees – If MEC offered to 95% of full time employees, then “no coverage” penalty would not be triggered  Full time Employee is defined as averaging at least 30 hours per week. An employee working 130 hours of service per calendar month is deemed to meet this requirement of 30 hours of service per week. Note: Insured group health plans must comply with the nondiscrimination rules (IRC 105 (h)) currently applicable to self-funded plans. Plans cannot discriminate in favor of highly compensated individuals as to the eligibility and benefits. This provision is not applicable to grandfathered plans. The IRS has delayed the effective date of this provision – no penalties imposed until after implementing regulations are issued. 24
  25. 25. Large Group Impact (continued) Click towith Variable Hourstitle style Employees edit Master  "Look-back/stability safe harbor method" 3 to 12 consecutive calendar months -- the "measurement period“.  If the employee averaged at least 30 hours/week during measurement period, the employee is treated as a full time employee during a subsequent "stability period" so long as he or she remains an employee (regardless of actual hours worked).  For an employee determined not to be a full time employee during the measurement period, the employer may treat the employee as not a full time employee during the stability period, but the stability period cannot exceed the measurement period.  New variable hour employees must be tracked separately. 25
  26. 26. Click to edit Master title style 4. Guidance for HR/Financial Professionals
  27. 27. Higher Risk – Employer Characteristics Click to edit Master title style • High percentage of potentially full time, low pay workforce • Provide no medical benefits to a large employee base working 30 + hours per week • Have a significant number of “temporary” or “seasonal” workers • Cost of health benefits to employees is “very high” • Manage enrollment using “long” waiting periods (more than 90 days before employee is eligible) 27
  28. 28. Variables Click to edit Master title style • Some Variables to Consider Adjusting for Employer Shared Responsibility – Migration Assumptions: To the Marketplace or the Employer’s Plan – Employer Contributions (Example: Raise Employee Contributions and Lower Dependent Contributions, etc.) – Plan Value (Lower “value” of Plan). Must exceed actuarial value of 60%. – Medical Trend – Pay Increases – Family Size 28
  29. 29. Healthto edit Master title style Assessment Click Care Reform Organizational Key Questions - Population How many full time equivalent employees do you have? Is your company part of a “controlled group”? Do you currently offer any differing benefits by class of employees? Do you currently offer any differing contributions by class of employees? Do you have any classes of employees that are currently not eligible for benefits? Do you have any employees that work variable hours? Do you employ seasonal employees? 29
  30. 30. Health Care Master title style Click to editReform Organizational Assessment Key Questions - Population Are you able to track the number of hours worked for the currently non-eligible population? Do you have any employees who are currently not eligible for a health care plan that average more than 130 hours of service per calendar month over the past three months, six months, twelve months? What is the monthly cost to the employee for single coverage for your lowest premium plan option? What is the lowest monthly salary/hourly wage for your employee population (for those averaging 30+ hours a week)? Of the current plan offerings available to each group, which plan options meet the 60% actuarial value requirement? What is your current waiting period for new employees for each group? 30
  31. 31. Click to edit Master title style 5. Totally Random Thoughts
  32. 32. Click to edit Master title style Totally Random Thoughts • • • • • Should I Drop Health Coverage? Does My Approach to Benchmarking Change Now? How Far Can I Go In Cutting My Health Plan Be Careful Of 3 Tier Plans (e.g.. IBC Proactive) Where Is Wellness/ Health Risk Management in this World • What are the Connections Between Employee Health Risks and Workers Comp Claims? • We Gave “Notices” to Employees About the Marketplace. What More Should We Tell Them?
  33. 33. Click to edit Master title style 5. Questions?
  34. 34. Click to edit Master title style Joseph E. Ellis, Sr, Senior Vice President CBIZ Benefits & Insurance Services 610-862-2242 jellis@cbiz.com

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