Affordable Care Act - Healthcare Reform Briefing for Careerminds
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Affordable Care Act - Healthcare Reform Briefing for Careerminds

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2014 and Beyond – What’s Next in Employer Sponsored Healthcare Plans ...

2014 and Beyond – What’s Next in Employer Sponsored Healthcare Plans

Next year will be a significant year for employer sponsored health care. With the onset of numerous benefit and eligibility mandates as well as the introduction of public medical exchanges, employers are taking a closer look of the healthcare benefits they traditionally offer employees in the US. Join us to learn about the changes in the health insurance market. We will discuss how these changes impact employer strategies and how employers will interact with the public exchanges. Beyond the employer impact we will address how the changing market will impact employees who are subject to the individual mandate beginning in 2014.

By the end of this webcast participants will be able to:

• Identify key changes HR and Benefits functions to know and do as a result of these changes
• Identify key changes required for 2014
• Discuss emerging healthcare cost trends
• Understand how employers will interact with the public exchanges
• Review emerging employer strategies including the interworkings of private exchanges

ABOUT THE PRESENTER:
Jennifer Calhoun Mohl is a Partner and senior consultant in Mercer’s Philadelphia health and benefits practice. She assists clients with various consulting assignments, including the design, administration, financing, and regulatory compliance of health and welfare benefit plans for both active and retiree populations. In addition, Jennifer serves as a relationship manager on client assignments that involve multiple Mercer offices and multiple lines of business.

In addition, Jennifer has assisted with the implementation and operations of benefit programs, including communications, outsourcing and call center support. Recently, she has served as the lead health and benefit strategist on client assignments involving multiple lines of business – with a particular focus on mergers and acquisitions.

Jennifer serves as one of Mercer’s National Health and Benefits spokeswomen. She has been quoted in various periodicals including, Managed Care Report, O&P Business News, The Philadelphia Inquirer, Philadelphia Business Journal, Money Magazine and has been featured on Money Matters Today on CN8.

Prior to joining Mercer in 1999, Jennifer began her consulting career with Towers Perrin in 1994. She was also a legislative intern in Washington for the New York State legislature with a particular focus on employment issues including the 1993 National Healthcare Initiative spearheaded by (at time first-lady), Hillary Clinton. Jennifer received a BS in Industrial and Labor Relations at the New York State School of Industrial and Labor Relations at Cornell University.

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Affordable Care Act - Healthcare Reform Briefing for Careerminds Affordable Care Act - Healthcare Reform Briefing for Careerminds Presentation Transcript

  • Healthcare Reform Briefing: What HR Should Know Sponsored by
  • Discussion Topics • What is happening in 2014? • Employer interaction with public exchange • Employer strategies for 2014 and beyond • Emerging healthcare costs • Closing thoughts © 2013 Mercer This is for informational purposes only, and is not intended to be used as legal advice.
  • Who is here today? My main focus within HR is… Choose all that apply.  Benefits and/or compensation strategy and planning  Recruiting and/or outplacement, I never touch the benefits  HRIS and administration, I have to make sure benefits run smoothly  All of the above  None of the above, I came for the free shirt Please Respond © 2013 Mercer This is for informational purposes only, and is not intended to be used as legal advice. December 8, 2013 December 8, 2013 2
  • What is happening in 2014 © 2013 Mercer This is for informational purposes only, and is not intended to be used as legal advice.
  • 2014 is a significant year … Consequences of Affordable Care Act (ACA) Design & Marketplace Changes No lifetime dollar limits/ pre-exiting condition limits Higher plan enrollment Dependents to age 26 30-hour eligibility Restricted annual dollar limits Individual Mandate No waiting period over 90 days Auto enrollment (delayed) Medicaid Expansion Out of Pocket Maximum Wellness Incentives Exchanges © 2013 Mercer This is for informational purposes only, and is not intended to be used as legal advice. Fees Comparative effectiveness research (PCORI) Fees on insurers Manufacturer’s fees Temporary reinsurance programs Employer mandate and shared responsibility Minimum plan value and contribution requirements (delayed)
  • Employer Mandate and Shared Responsibility High Level Requirements… Offer cover to “full-time employees” – “Minimum essential coverage” – Coverage offer to 95% of FT employees and dependent children considered offer to “substantially all” – FTE is any employee who works on average 30 or more hours per week – Must offer to FTEs and their dependent children under age 26 (but not required to offer to spouses or domestic partners) “affordable” health care coverage – An employee’s required contribution for self-only coverage cannot exceed 9.5% of the employee’s household income with a “minimum value” – The actuarial value of the plan must be at least 60% - The calculation of the anticipated percentage of the cost of the “essential health benefits” covered by a plan or, face potential tax “penalties” © 2013 Mercer This is for informational purposes only, and is not intended to be used as legal advice.
  • New in 2014: Individual Mandate Pay penalty All individuals must have health coverage © 2013 Mercer This is for informational purposes only, and is not intended to be used as legal advice. OR 2014 Greater of $95 (single) | $285 cap (family) or 1% of household income By 2016 Greater of $695 (single) | $2,085 cap (family) or 2.5% of household income 6
  • Public Programs in 2014 Medicaid, Medicaid Public Exchanges and Subsidies Medicaid Expansion Public Exchanges Expanded to anyone below 138% federal poverty line Insurance plan options available on exchanges that are operated by states or federal government (or a state/federal partnership) Not all states have agreed to expand coverage • In these states, federal subsidies may be available for certain people to buy coverage • Those ineligible for Medicaid or federal subsidies may have no option for subsidized coverage other than employer plan (if available) • Exchanges will conduct open enrollment: Oct 1, 2013 to Mar 31, 2014 • If household income is between 100%/138% and 400% of federal poverty level (FPL) – and individual does not have access to affordable employer coverage that provides minimum value– federal government will provide subsidies to buy insurance on exchanges © 2013 Mercer This is for informational purposes only, and is not intended to be used as legal advice. Subsidies Single individual % of FPL** Family of four Annual household income Household income >400% of FPL not eligible for subsidy through marketplace 400% $45,960 $94,200 300% $34,470 $70,650 200% $22,980 $47,100 150% $17,235 $35,325 138% $15,856 $32,499 100% $11,490 $23,550 * Not all States have agreed to expand Medicaid to 138% of FPL ** Based on 2013 FPL 7
  • © 2013 Mercer This is for informational purposes only, and is not intended to be used as legal advice. • PCORI. • Temporary Reinsurance Fee. • Health Insurer Fee. Communications • Maximum 90 day waiting period. • No limits on preexisting conditions or essential health benefits. • Limits on out-ofpocket maximums; counting copayments against OOP max. • Expansion of Wellness incentives. • Coverage for clinical trial related services. Taxes and Fees Plan Design Requirements Employer Requirements in 2014 • SBCs. • W-2 reporting of health care costs. • Exchange Notice. 8
  • Interacting with the public exchange © 2013 Mercer This is for informational purposes only, and is not intended to be used as legal advice.
  • Healthcare.gov © 2013 Mercer This is for informational purposes only, and is not intended to be used as legal advice. 10
  • What percent of large employers (with over 500 ees) are going to terminate medical coverage in the next three years?  1%  10%  20%  40% © 2013 Mercer This is for informational purposes only, and is not intended to be used as legal advice. December 8, 2013 December 8, 2013 11
  • New in 2014: Public Exchange (aka Public Marketplace) • Created by ACA. • Structured marketplace to sell and purchase health insurance operated by states or federal government (or a state/federal partnership). • Government subsidized medical coverage for low income individuals and families. • Exchanges will conduct open enrollment: Oct 1, 2013 to Mar 31, 2014. Percent of Population by Current Health Insurance Source* Medicare/Gov't Medicaid/CHIP Will benefit from government programs – Expanded Medicaid and Public Exchanges in 2014 Uninsured Individual Employer 0 5 10 15 20 25 30 35 40 45 50 *Source: U.S. Census, 2011 • Almost all large employers say they will continue to provide health care benefits in 2014 and beyond. © 2013 Mercer This is for informational purposes only, and is not intended to be used as legal advice. 12
  • What do the public exchanges do? Manage Plan Activities Determine eligibility, enroll individuals Assist consumers Provide financial management Ensure plan accountability © 2013 Mercer This is for informational purposes only, and is not intended to be used as legal advice. December 8, 2013 13
  • 2014: Products offered in Exchanges Public Exchange products will differ from group plans Plan options in public exchange are named after metals Public exchanges Features Plan value ER | Group Bronze Silver Gold Platinum Catastrophic age <30 Plan design1 60% 70% 80% 90% HSA rules >60% • Silver – second-lowest cost plan – is baseline for calculating government subsidy • Government subsidy and member contribution requirement calculated based on income, vary by level between Medicaid eligibility and 400% FPL • Once subsidy determined for silver plan, can use for gold plan (pay more) or bronze plan (pay less) Public exchange products may differ by State…. 1.Some provisions apply differently for grandfathered and non-grandfathered plans © 2013 Mercer This is for informational purposes only, and is not intended to be used as legal advice. 14
  • Public Exchanges Status of State Exchanges (as of March 2013) Declared state exchange 22 Planning partnership exchange 7 Default to federal exchange 27 Sources: Kaiser Family Foundation (states); HHS, HealthCare.gov (territories) © 2013 Mercer This is for informational purposes only, and is not intended to be used as legal advice. 15
  • Employers and Public Exchanges How Will It Work When Employees Apply For Subsidies? 1 Individual applies to Exchange 2 Provides & attests to certain info including: • income and family size • lowest cost employer plan option that meets minimum value (employee only cost) 4 Employer Appeal Exchange verification 3 • Notice to individual of eligibility determination after verification complete • Notice to employer if individual determined eligible for exchange subsidies after verification complete Verifies income and other info Verification process for employer coverage (statistical sample only) Individual can enroll during verification process 5 • Employer requests appeal within 90 days of notice described in step 3 • Exchange tells employee of appeal request • Written appeal decision w/in 90 days of receipt of appeal request © 2013 Mercer This is for informational purposes only, and is not intended to be used as legal advice. IRS reporting & reconciliation After close of calendar year, IRS has at least three sources of info to confirm subsidies were provided correctly: • Employer reporting • Exchange reporting • Individual tax filing Exchange Eligibility Notice 6 IRS Employer Shared Resp process IRS has said, after employee tax returns for coverage year are due: • IRS will contact employer about possible liability • Employer response • IRS notice & demand for payment 16
  • What percent of your organization’s employees are going to be eligible for the subsidy on the public exchange? Choose all that apply.  Few will be eligible  10%  20%  40%  All employees are eligible Please Respond © 2013 Mercer This is for informational purposes only, and is not intended to be used as legal advice. December 8, 2013 December 8, 2013 17
  • What household income is needed to receive subsidized government insurance? Single individual Income segments under health reform % of FPL** No government subsidy Family of four Annual household income Household income >400% of FPL not eligible for subsidy through marketplace 400% $34,470 $70,650 200% $22,980 $47,100 150% $17,235 $35,325 138% Medicaid eligible* $94,200 300% May be eligible for subsidy $45,960 $15,856 $32,499 100% $11,490 $23,550 * Not all States have agreed to expand Medicaid to 138% of FPL ** Based on 2013 FPL © 2013 Mercer This is for informational purposes only, and is not intended to be used as legal advice. 18
  • Employer Strategies – 2014 and Beyond © 2013 Mercer This is for informational purposes only and is not intended to be used as legal advice.
  • The Good News: employers expect to hold per-employee health benefit cost growth to 4.8% in 2014 But the increase in per-employee cost does not reflect rising enrollment Workers' earnings Annual change in total health benefit cost per employee Overall inflation 20.0% 18.0% 17.1% 16.0% 14.7% 14.0% 12.0% 12.1% 11.2% 10.0% 8.0% 10.1% 10.1% 8.1% 8.0% 7.3% 6.1% 6.0% 7.5% 6.9% 6.1% 6.1% 6.1% 6.3% 6.1% 5.5% 4.1% 5.0%* 4.8%* 4.0% 2.0% 2.1% 2.5% 0.2% 0.0% -1.1% -2.0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 *Projected Source: Mercer’s National Survey of Employer-Sponsored Health Plans; Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April) 1990-2013; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April) 1990-2013. © 2013 Mercer This is for informational purposes only, and is not intended to be used as legal advice.
  • Issues That Are Top of Mind for Employers as They Look Beyond 2014  Continued cost increase due to Affordable Care Act.  Educating employees about their choices and supporting informed decisions.  Handling employee questions about the public exchange.  Administrative issues (tracking employee hours, look-back period).  Staying on top of all the Affordable Care Act requirements.  Anticipation of the excise tax in 2018. Source: Mercer Survey, HCR Road to Implementation, June 2013 © 2013 Mercer This is for informational purposes only and is not intended to be used as legal advice. 21
  • Employers React to Affordable Care Act in 2014 & Make the News… UPS drops coverage for working spouses and estimates covering children to age 26 will cost $60M Darden and Sears joined a fully insured private exchange and Darden stopped offering full time qualifying hours to many employees Starbucks announced that it will not be cutting benefits for spouses/partners or reducing hours for workers so that they do not qualify for benefits Delta Airlines faces an increase of $100M in medical costs in 2014 between normal trend and ACA requirements (appears to be at least 38% of the increase) Xerox is increasing their working spouse surcharge to $1,500 annually in 2014 Walmart has been focusing on hiring temporary employees to manage healthcare costs under ACA The Hamilton School District in Trenton, NJ will be limiting substitute teachers to 4 days per week to avoid 30 hour per week threshold Clothing retailer Forever 21 (27,000 employees total) announced reclassification of non-management positions from FT to PT effective Sept. 1, 2013 based on a reduction of hours to a maximum 29.5 hours per week © 2013 Mercer This is for informational purposes only, and is not intended to be used as legal advice. 22
  • Is your organization thinking or considering any of the following to manage costs? Choose all that apply.  Status quo – perhaps tweak the current approach and monitor  Introducing High Deductible Health Plans (HDHPs)  Adding a 60% plan or “low” option  Focusing on health management or wellness incentives  Other changes such as adjusting eligibility for spouses, etc. Please Respond © 2013 Mercer This is for informational purposes only and is not intended to be used as legal advice. December 8, 2013 December 8, 2013 23
  • Employers’ responses are all over the board! 51% 24% Make all employees eligible for the FTE plan 27% Change workforce strategy so fewer Add a employees work lower-cost 30+ hours/week plan for newly 13% eligible Where contributions hourly are “unaffordable” employees add a less expensive plan © 2013 Mercer This is for informational purposes only and is not intended to be used as legal advice. 17% Offer the FTE plan to some, but not all, newly eligible employees December 8, 2013 31% Add a lowcost plan as the default for autoenrollment 24
  • Public Vs. Private Exchanges What is the Difference? PUBLIC PRIVATE Closed Open Standalone dental Medical, prescription Government sponsored Insured only Dental, vision, life, voluntary, plus more Employer, broker, TPA, association Single or multiple carrier Insured or self-funded Actives, retirees Individuals © 2013 Mercer This is for informational purposes only and is not intended to be used as legal advice. December 8, 2013 Group plans 25
  • Private Exchanges In a Picture Benefits admin Vendors & carriers EXCHANGE Medical Dental Ancillary $ Eligibility & enrollment Consolidated billing Additional features Consumer experience $ Employer contribution Consumer enrollment portal Decision tools &/or call center Multiple payment models Full product suite with choice of plans Health © 2013 Mercer This is for informational purposes only and is not intended to be used as legal advice. Life, accident & disability Voluntary 26
  • Growing Interest in Private Health Care Exchanges Percent of employers that would consider offering a private exchange Advantages for Employers and Employees 56% Employer advantages  Cost control.  Choice for employees.  Streamlined management and administration. 18% Employee advantages  Cost-efficient, convenient buying.  Comprehensive coverage. 2011 2012  Personalized portfolios. December 8, 2013 27
  • Closing thoughts © 2013 Mercer This is for informational purposes only and is not intended to be used as legal advice.
  • Closing Thoughts… • Short term – Employers focused on cost management and ACA compliance – Expanded eligibility, minimum plan design, and affordable contributions in 2015. – Excise tax in 2018. • Still some unknowns about the ACA – Auto-enrollment. – Reporting and disclosure. – Could there be more delays? • Longer term – things will change! – New products/approaches. – Funding changes. – Delivery system transformations. © 2013 Mercer This is for informational purposes only and is not intended to be used as legal advice. 29
  • Thank You Jennifer.Calhoun.Mohl@mercer.com David.Matey@mercer.com Services provided by Mercer Health & Benefits LLC. MERCER
  • Mercer is not engaged in the practice of law and this presentation, which may include commenting on legal issues or regulations, does not constitute and is not a substitute for legal advice. Accordingly, Mercer recommends that employers secure the advice of competent legal counsel with respect to any legal matters related to this report or otherwise. The information contained in this document and in any attachments is not intended by Mercer to be used, and it cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code or imposed by any legislative body on the taxpayer or plan sponsor. MERCER