Mc Corvie - Healthcare Reform: How to Get Here from There

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Mc Corvie - Healthcare Reform: How to Get Here from There

  1. 1. Health Care Reform How to Get from Here to There
  2. 2. Major Plan Design Changes For plans years beginning after  September 23, 2010 (2011 Calendar Year Plans)
  3. 3. Advance Notice of Benefit Changes 2011 • 60‐day notice required • Includes changes in covered benefits, co‐ pays, deductibles, coinsurance • Applies to both insured and self‐insured  plans • Penalty for non‐compliance up to $1000 a  day per incidence
  4. 4. Pre‐Existing Limitations October 2010 • No pre‐ex limitations on dependents < age 19 2011 • Cannot rescind group coverage except for case  of fraud or misrepresentation – Advance notice required 2014 • No pre‐ex limits for adults either • Applies to grandfathered plans too
  5. 5. Annual/Lifetime Maximums 2011 • No group health plan may impose a maximum lifetime  value dollar limit on “essential benefits” • Only “restricted” annual limits – Plan years beginning: 9/23/10 ‐ 9/22/11 $750,000 9/23/11 – 9/22/12 $1.25 million 9/23/13 – 1/1/14 $2 million 2014 • No annual limits
  6. 6. Coverage for Adult Dependents 2011 • Must allow dependent coverage till age 26 – Even if married – Even if they do not meet tax definition of dependent • Penalty for non‐compliance $100 a day per incident
  7. 7. Other Plan Design Changes 2011 • Emergency Services – Must be covered without pre‐authorization – Must be covered in or out‐of‐network • OB/GYN may be designated as PCP • Preventive Care must be fully covered  – No cost sharing
  8. 8. Consumer Driven Plan Changes • January 2011 – OTC meds no longer qualified expenses • FSA, HRA, HSA – Can get doctor’s order – OTC supplies still eligible – Switchover will vary by merchant (IIAS) – Penalty for non-qualified use of HSA funds increased from 10% to 20% • January 2013 – FSA plan year contributions capped at $2500
  9. 9. Wellness Incentives 2011 • $200 billion in grants available over 5 years for  employers who • Have fewer than 100 employers who work more than 25 hours a  week and did not have a workplace wellness program as of  3/23/2010 • Employers may create up to 20% incentive for completion of  wellness program – Programs must meet minimum criteria established by  HHS. 2014 • Incentives of 30% (or up to 50% with HHS approval)
  10. 10. W–2 Reporting 2011 • Beginning in 2011 tax year, employers must report  value of health benefits on employees W‐2. – Report aggregate cost of employer sponsored coverage  including both employer and employee contributions  (COBRA rate) – Informational only. Not counted as income
  11. 11. Small Employer Tax Credits 2010 – 2013 • Up to 35% tax credit for employer contribution – Small businesses with 25 or fewer EEs and avg. wages of  $50,000 or less (full credit for 10 EE s and less) – Who pay at least 50% of health insurance costs 2014 • Increase to 50% for businesses who buy through  Exchange (for up to two years.) • CBO estimates 12% of small business will qualify
  12. 12. 2014 When Things Really Get Serious
  13. 13. Small Group Redefined Beginning 2014 • Defined as 1 – 100 – States can delay 51‐100 until January 2016 • Below 50 exempt from many provisions
  14. 14. Rate Compression • 3:1 ratio  • Rating only on age, geographic location,  coverage tier and tobacco use – 1.5 to 1 • Applies to small group market inside and  outside of the Exchange • 2014 – Risk adjustment inside and outside  Exchange
  15. 15. Minimum Benefit Package • 90 day max waiting period • Covers comprehensive set of services • 60% of the actuarial value of covered  benefits • OOP limited to HSA levels $5,950 and  $11,900 • Applies to individual and small group market – Except grandfathered plans
  16. 16. Health Insurance Exchange Choice Portal
  17. 17. Subsidy Payment & Reconciliation Carrier A Carrier B Carrier C Carrier D S P E Individual Exchange The Exchange Reporting Preferred Model (Carriers could bill and collect.) S E (S) Determine Subsidy I Eligibility/Amount P (E) Plan Selection, Enrollment ( I) Premium Invoice (P) Non-Subsidy Premium Payment
  18. 18. Carrier A Carrier B Carrier C Carrier D Carrier E E E E E P E P P P P ti on The on cilia Exchange r Rec Carrie (P) Group Premium Payment (E) Plan Selection, Enrollment E I P ( I) Premium Invoice Tax Credit Mechanism Employer
  19. 19. Precious Metal Plans • All plans must meet HSA OOP limits • Bronze – covers 60% of benefit costs • Silver – 70% • Gold – 80% • Platinum – 90% • Catastrophic Plan for Young Invincibles – Up to age 30  – Or exempted from mandates • Carriers only have to offer silver and gold
  20. 20. Two Levels of Subsidy Subsidize Premium through Tax Credits • Contributions for silver plan limited to: 133 – 150% of FPL: 3 to 4% of income 150 – 200% of FPL:  4 to 6.3% of income 200 – 250% of FPL:  6.3 to 8.05% of income 250 – 400% of FPL:  8.05 to 9.5% of income 300 – 400% of FPL:  9.5% of income • Adjusted annually
  21. 21. Two Levels of Subsidy Reduce Out‐of‐Pocket Maximums  • Out of pocket cost reductions – 100‐200% – one‐third of the HSA limits – 200‐300% ‐ one‐half of the HSA limits – 300‐400% ‐ two‐thirds of the HSA limits • 2010 HSA OOP Limits – $5,950 individuals, $11,900 families
  22. 22. Employer Penalty – No Plan • Effective January 2014 • 50 or more EEs • If you do not offer “minimum essential  coverage” AND • At least one full‐time employee receives  subsidy through the Exchange – $2000 penalty per employee – Excluding first 30 EEs
  23. 23. Real Cost of Dropping Coverage Number of Employees 10,000 Less 30 exempted 9,970 Premium $ 8,863 EE Contribution (25%) $ 2,216 Employer Contribution (75%) $ 6,647 Penalty (non-deductible) ($2000 per EE less 30 Ees) $ 1,994 Loss of Deduction $ 798 Net Cost $ 2,792 Employee Compensation Increase (90% of employer contribution) $ 3,324 Tax Gross Up (30%) $ 997 Total Comp Expense $ 4,321 Total Employer Cost $ 7,112
  24. 24. Free Rider Penalty Effective 2014 • 50 or more EEs • Even if you offer coverage, subject to penalty if: • Coverage is unaffordable because EE must contribute  more than 9.5% of household income • Or if plan covers less than 60% of covered health expenses • And one or more full‐time EEs receives a subsidy. • Lesser of: • Penalty of $250 per month ($3,000) annually per subsidized EE – $2.000 multiplied by all full‐time employees, less 30 EEs
  25. 25. Free Choice Voucher • Applies to employees within 400% of the  FPL – If their contribution cost is between 8% and 9.8  of their income – And they want to buy coverage through the  Exchange • Employer must provide EE with a voucher  equal to employer contribution to buy  insurance through Exchange • No penalty to employer who offers voucher
  26. 26. Bridge to Reform Checklist • Develop wellness program. Apply for grant. • Employee education – Online tools • Couple high‐deductible with tax‐advantaged  plans • Consider automation tools, outsourcing • Pay attention. Things will change.
  27. 27. Creative Design Mix Wellness Education Leave Incentives Management $3050 deductible Fixed POP Plan HSA-qualified insurance plan Cost $1850 HRA for Employees Variable $3050 (Buy down deductible to $1200) Cost 1040 Deduction HSA FSA for Employees for Owners (Covers 1st $1200) Voluntary Dependent Care - $5000
  28. 28. Timeline & Checklist
  29. 29. Questions?

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