Intecare PPACA Webinar 11/20/12
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What Every Employer Needs to Know Now! A Comprehensive Guide to Healthcare Reform

What Every Employer Needs to Know Now! A Comprehensive Guide to Healthcare Reform

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  • Thank you for joining, we’ll wait a few minutes for all participants to log-on. Webinar begins at 30 seconds
  • Hello, we’ll go ahead and get started now. My name is Maggie Osburn and I am the EVP of Business Development & Marketing at Intercare. I want to thank everyone for taking the time to join today’s webinar.  I’d like to take this time to introduce our presenters for today:  We are joined by PPACA Subject Matter Expert Linda Keller, Executive Vice President of Consulting and Account Management at Intercare Insurance Solutions And by Shannon Taylor, Intercare’s Executive Vice President of Sales and Health & Performance division
  • As you know from the invite and agenda, the purpose of today’s webinar is to help you, as an employer, understand the reform requirements that are required now and now and how to prepare your company for the future changes that are on the horizon for 2014 including new taxes, fees and reduced Medicare reimbursements. Before we get started, I want to review a few housekeeping items and let you know how you can participate in today’s webinar.  You may submit questions or comments in writing during the presentation. We will be reviewing them as they come in and will have a Discussion, Question and Answer period after the presentation.  Please mute your phone and your computer so that background noises are not transmitted.
  • Current Law RemindersNew Taxes & Fees The Individual Mandate PPACA and the Exchanges Pay or Play Strategies
  • 1: How confident are you in your understanding of the provisions of the Affordable Care Act?  Very Confident Somewhat Confident Not Confident
  •  2: How many employees do you have at your company? Less than 5051-100101-250251+
  • Carriers must provide rebates if their MLR (percent of premium revenue spent on claims/medical care) is less than 85% (large groups) or 80% (small groups or individuals)Rebates are to be provided no later than August 1 following the end of the MLR reporting year (which is the calendar year)MLR based on carrier's overall business by state and group sizeRebates apportioned based on employer/employee contribution ratioEmployers may retain portion of rebate that is not a "plan asset" under ERISARebates that are plan assets must be used to benefit participantsReduce premiums, enhance benefitsRebate must be used within 3 months of receipt by employer or ERISA's trust rules apply
  • Non-grandfathered plans must provide preventive care without cost-sharing New rules came into effect August 2012
  • 1. Initially applied to services with an "A" or "B" rating from the United States Preventive Services Task Forceimmunization screenings and preventative care for infants, children & adolescentsadditional care for women2. Later expanded by HHS to include all FDA approved contraceptives, which include intrauterine devices"morning-after pill" newer forms of long-acting implantable hormonal contraceptives Effective for plan years starting August 1, 2012
  • SBCs must be distributed first open enrollment following September 23, 2012SBC cannot exceed 4 double-sided pages in length & must be "culturally and linguistically appropriate“The SBC requirement applies jointly to plans and carriersCarrier responsible for developing SBC for insured planEmployer responsible for developing SBC for self-funded planEmployer responsible for printing and distribution SBC may be included with other documents (e.g., summary plan description) as long as it is "prominently displayed" SBC is in addition to Summary Plan Description requirement
  • 1. Timing - Open Enrollment For participants who are enrolling or reenrolling at open enrollment (including late enrollees), the SBC must be provided before the 1st day of open enrollment beginning on or after September 23, 20122 For participants who enroll other than through open enrollment (including newly eligible employees and special enrollees), the SBC must be provided starting on the1st day of the plan year beginning on or after September 23, 2012 SBC must be provided at the following times:Upon request (ASAP, but no later than 7 days)Within 90 days of enrolling under a HIPAA special enrollmentWith open enrollment materials (or, if no materials are provided, by the date the participant is eligible to enroll)If the SBC cannot be timely provided because the plan terms have not been finalized, the SBC must be provided within 7 days of finalizing the plan terms
  • $2,500 Health FSA LimitEffective for plan years beginning in 2013Limits annual employee contributions to $2,500Indexed to the CPI starting in 2014Does not limit employer contributionsTo Do:Communication to begin in 2012 (2nd half)Plan amendments recommended by start of 2013 plan yearHowever, despite the cafeteria plan rule that amendments must apply prospectively, an amendment adopted by December 31, 2014 may apply retroactively if the plan complied with the $2,500 limit starting with plan years beginning in 2013
  • Additional 0.9% FICA and SECA tax on wages over $200,000 ($250,000 if filing jointly)Employer will be expected to withhold on wages over $200,000Begin discussing with payroll vendor in 2012
  • Effective 1st day of plan year on or after January 1, 201490 days means 90 days within the first day they are eligibleIf employees can elect within 90 days but fail to elect within 90 days it is not a violationEmployer may use a reasonable period to determine eligibility if period is not designed to avoid the 90 day period, individual becomes eligible within 90 days of being assessed eligible or, if earlier, within 13 months of start date (plus the days to the first day of the next calendar month if the employee’s start date is the middle of the month)What does this mean to you?Additional employer recordkeeping and cost requirements
  • Notice of Availability of Health Insurance ExchangeEffective March 23, 2013, employers must provide notice of:the existence of the health insurance exchange;the potential eligibility for federal assistance if the employer's health plan is "unaffordable"; And the possibility that the employer may not contribute to the cost of coverage purchased through an Exchange
  • Comparative Effectiveness Research FeeAnnual fee on insured & self-insured plans beginning on/after 10/2/11HRA/FSA nuances, etc.Annual fee of $1, then $2 indexed, per participant until 2019First payable July 2013 Sunset after 2019 Health Insurance Industry FeeAnnual fee on all insured plans beginning 2014Includes Dental/Vision Excludes ASOEstimated costs: 2 – 2.5% of premium in 2014Increasing to 3 – 4% in future yearsReinsurance AssessmentAnnual fee on insured & self-insured plans, 2014 – 2016Excludes Dental/VisionEstimated costs: 2014 - $60 - $90 PMPY2015 - $40 - $60 PMPY2016 - $25 - $35 PMPY
  • Individuals not lawfully present in the United Stateswho are incarceratedresiding outside of the United Stateswhose contribution for self-only coverage exceeds 8% of HHIwhose HHI is less than the federal income tax filing thresholddetermined by HHS to have suffered a hardshipin a health care sharing ministryMembers of Indian tribesBona fide residents of any possession of the United StatesNo penalty imposed on those without coverage for less than three monthsOnly one three-month period allowed in a year
  • Aflat dollar amount assessed on each taxpayer and any dependents.The annual flat dollar amount is phased in—$95 in 2014, $325 in 2015, and $695 in 2016 and beyond (adjusted for inflation)Reduced by one-half for children under 18, andFor families, capped at 300% of the annual flat dollar amountPenalty cannot exceed national average for bronze exchange plans
  • 1. All states to establish an Exchange by January 1, 2014The American Health Benefit ExchangeSmall Business Health Options Program (SHOP) Exchange for individuals and small businesses2. Types of Exchanges:State ExchangePartnership ExchangeFederally Facilitated Exchange
  • 16 States have declared State-based exchanges:CA, CO, CT, DC, HI, KY, MA, MD, MS, NM, NV, NY, OR, RI, VT, WV 6 Planning for Partnership Exchange:AR, IL, MI, OH,, NC, DE11 Undecided: AL, FL, IA, ID, IN, MT, OK, PA, TN, VA, WV15 States Defaulting to Federal Exchange : AK, AL, GA, KS, LA, ME, MO, NE, ND, NH, SC, SD, TX, WI, WY50% of Uninsured Live in 6 States: CA,IL, NY, FL, GA, TX
  • 1. Qualified Health Plans:Certified as qualified by an Exchange;Provides the essential health benefits package; andOffered by a licensed insurer that agrees to offer at least one “silver” and one “gold” level plan in the Exchange2. Essential Health Benefits:Defined by a Benchmark Plan selected by each State;Benchmark would serve as reference plan to determine if employers plan meets minimum requirements
  • “Essential Health Benefits” (EHB) to include: Ambulatory patient services;Emergency services;Hospitalization;Maternity and newborn care;Mental health and substance use disorder services, including behavioral health treatment;Prescription drugs;Rehabilitative and habilitative services and devices;Laboratory services;Preventive and wellness services and chronic disease management; andPediatric services, including oral and vision care.
  • Prior to 2016, small employers are 100 or less but states may limit to 50 employees or less Prior to 2017, only small employers (100 employees or fewer) can participateStarting in 2017 and thereafter, states may allow all employersInitial open enrollment period: October 1, 2013 through March 31, 2014. For benefit years in 2015 or later, the annual open enrollment period will be from October 15 to December 7 Special enrollment provisions will be included
  • The Metals—Exchanges to Offer Four Levels of Coverage:Bronze (60%)Silver (70%)Gold (80%)Platinum (90%)And: a catastrophic plan for individuals under 30Guaranteed Issue, no Pre-existing conditionsPremiums will be regulatedPremiums will be geographically basedVery likely to attract currently uninsured or underinsured
  • Will healthcare reform law require all businesses, more than 50 employees, to provide health insurance?   No, the law does not do thisYes, the law will do thisDon’t know
  • Medicaid Expansion Requirements:States must cover all individuals under age 65 with income below 133% of the poverty line"Essential benefits" must be provided to all Medicaid recipientsMedicaid decision may increase exposure to penalty under "pay-or-play" mandateIn states that do not expand Medicaid eligibility, broader range of employees may be eligible for a federal premium subsidy for Exchange coverage For example, an employee at 120% FPL may be subsidy-eligible in a state that does not expand its Medicaid eligibility if the employer fails to provide coverage that meets certain quality and affordability standard
  • Federal Poverty Level 200%Family Size 4Maximum Premium from Chart $2,778Actual cost of Insurance Plan $5,000(d) minus (c) is tax credit $2,222
  • Evaluate your company culture and align incentives accordinglyDon’t just focus on 2014 – think beyondRamp up your communication plan – there’s a lot more to come!
  • Given what you know or have heard about PPACA/Health Care Reform how likely are you to terminate your medical plan in or after 2014?Not likelySomewhat likelyVery likelyundecided
  • There is a Perfect Storm of cost accelerators on the horizon which will drive significant pricing pressure in the marketplace
  • As a result, we are focused on solutions in 3 core areas with our clients:Optimized PPACA and benefits strategyIntegrated Health & Performance programActive promotion of consumer accountability
  • The calm before the stormPPACA effective (March 23, 2010)MLR compliance creates soft marketMedical utilization trends slow due to poor economyKaiser Family Foundation predicts health care costs per enrollee will increase +26% from 2013–2014
  • 2014 – The Perfect StormDeclining population healthObesity epidemic, chronic disease, little employee accountabilityEmployer requirementsBenefit mandates, coverage mandates, automatic enrollmentNew Industry Taxes & FeesReinsurance fee- carriers predicting $40 PEPM loadPharmaceutical feeMedical device tax All passed on to employer plansCost ShiftingProvider cost shifting$716 billion in Medicare cutsMillions more covered under MedicaidAdverse selection & employer penalties
  • What is the estimated household income distribution of your employee population?How many employees may qualify for Medicaid or significant premium subsidies in the state or federal exchange?How many employees will elect to enroll in Medicaid or purchase an individual policy in the exchange using a premium subsidy?Will the number of employees and dependents covered change significantly beginning in 2014?What is the actuarial value of your benefit plans in relation to the plans offered in the health insurance exchanges?How does modifying required employee contributions or benefit designs change estimated future plan costs? How will employer penalties, affordability requirements, individual mandate penalties, and premium tax credit percentages change over time?Will any plans be subject to the excise tax on high cost health plans beginning in 2018?What steps can employers take to minimize the financial impact of healthcare reform?How will your plans be impacted if your state(s) do not carry out the Medicaid expansion?Are there other non-financial considerations related to your health plans that make them a valuable employee retention tool?
  • Develop a Multi-Year Benefit StrategyImprove Population HealthCreate Better Healthcare Consumers
  • Develop a Multi-Year Benefit StrategyDevelop a benefits strategy that complies with regulations, minimizes adverse cost impacts by phasing in the right solutions over time and delivers the best return on your investment
  • Improve Population HealthImplement an integrated health & performance program to mitigate health risks, lower utilization and improve employee health and productivity
  • Create Better Healthcare ConsumersCreate a consumer accountability strategy to increase employee ownership of health expenditure decisions and develop a culture of awareness, appreciation and employee engagement
  • After this presentation we will be emailing you a copy of The Perfect Strom Survival GuideThe Perfect Storm Survival Guidemaps out three strategies for:• Optimizing PPACA’s employer requirements• Integrating wellness strategies to reduce cost• Transforming employees into conscious healthcareconsumersDelaying preparation leaves little time to react whichcan prove costly. It’s time for a strategic plan.
  • Happy Thanksgiving!

Intecare PPACA Webinar 11/20/12 Presentation Transcript

  • 1. PPACA: What Every Employer Needs to Know Now. A Comprehensive Guide to Healthcare Reform November 20, 2012© 2012 Proskauer. All Rights Reserved.
  • 2. Today’s Presenters LINDA KELLER EVP, Consulting & Account Management Intercare Insurance Solutions SHANNON TAYLOR EVP, Sales, Health & Performance Intercare Insurance SolutionsIntercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com pg. 2
  • 3. PPACA: What Every Employer Needs to Know Now!A Comprehensive Guide to Healthcare ReformIntercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com pg. 3
  • 4. Agenda  Current Law Reminders  New Taxes & Fees  The Individual Mandate  PPACA and the Exchanges  Pay or Play  Strategies © 2012 Proskauer. All Rights Reserved.Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com 4
  • 5. Poll How confident are you in your understanding of the provisions of the Affordable Care Act?Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com pg. 5
  • 6. Current Law Reminders
  • 7. Questions #2How many employees at your company?
  • 8. Medical Loss Ratio RebatesMLR = % of premium revenue spent Claims/Medical Care Rebate < 85% (large groups) Rebate <80% (small groups or individuals) © 2012 Proskauer. All Rights Reserved. Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
  • 9. NOW! August 2012 Preventive Care RulesIntercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
  • 10. Initially Immunization Screenings & preventative care for infants, children & adolescents Additional care for womenLater expanded by HHS to includeall FDA approved contraceptives Intrauterine devices ―Morning-after pill" Newer forms of long-acting implantable hormonal contraceptives
  • 11. Summary of Benefits and Coverage Distributed first open enrollment following September 23, 2012 Not exceed 4 double-sided pages ―Culturally and linguistically appropriate― © 2012 Proskauer. All Rights Reserved.Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
  • 12. Timing - Summary of Benefits and Coverage Open Enrollment – Before the 1st day on/after September 23, 2013 For participant who enroll other than open enrolment – 1st day of plan year on/after September 23, 2013 SBC must be provided at the following times:  Upon request - no later than 7 days  Within 90 days of enrolling under a HIPAA special enrollment  With open enrollment materials If the SBC cannot be timely provided because the plan terms have not been finalized, the SBC must be provided within 7 days of finalizing the plan terms © 2012 Proskauer. All Rights Reserved. Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
  • 13. 2012 Forms Small Employer ExceptionW-2 Reporting of Health Costs Entire cost of the coverage Determined under rules similar to COBRA premiums
  • 14. $2,500 Health FSA Limit Effective for plan years beginning in 2013  Limits annual employee contributions to $2,500  Indexed to the CPI starting in 2014  Does not limit employer contributions
  • 15. Medicare Payroll Tax Increase  0.9% FICA & SECA tax on wages over $200,000  Employer withhold on wages over $200,000Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com pg. 15
  • 16. 90 Day Requirement Plan year on or after January 1, 2014 90 days within the 1st day they are eligible If employees can elect within 90 days but fail to elect within 90 days it is not a violation © 2012 Proskauer. All Rights Reserved. 16 Private & Confidential • TX Insurance Lic #18311 • intercaresolutions.com
  • 17. Mandates Still Requiring Guidance
  • 18. Effective March 23, 2013
  • 19. Non Discrimination Rules Prohibits discrimination in favor of ―highly compensated employees‖ with respect to eligibility & benefits Fully-insured plans after release (already apply to self-insured) Penalty: up to $500,000 Under ACA © 2012 Proskauer. All Rights Reserved. Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
  • 20. Employer Auto Enroll  Employers must automatically enroll all full time eligible employees in the default medical plan  Must provide adequate notice to employees and opportunity to opt out © 2012 Proskauer. All Rights Reserved.Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
  • 21. Taxes & Fees
  • 22. New Taxes & Fees with Employer Impact Comparative Health Insurance Reinsurance Effectiveness Research Fee Industry Fee Assessment Annual fee on insured & Annual fee on all Who self-insured plans insured plans beginning Annual fee on insured & self-insured plans, 2014 beginning on/after 2014 What 10/2/11 – 2016 Includes Dental/Vision When HRA/FSA nuances, etc. Excludes ASO Excludes Dental/Vision Annual fee of $1, then $2 indexed, per Estimated costs: Estimated costs: participant until 2019 2 – 2.5% of premium in 2014How Much 2014 - $60 - $90 PMPY First payable July 2015 - $40 - $60 PMPY 2013 Increasing to 3 – 4% 2016 - $25 - $35 PMPY Sunset after 2019 in future years Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
  • 23. The Individual Mandate Beginning 2014
  • 24. Individual MandateIndividuals must maintain health insurance Those who do not maintain minimum essential coverage, and who are not exempt from the mandate, will be required to pay a penalty for noncompliance © 2012 Proskauer. All Rights Reserved. 24
  • 25. Individual Mandate – Exceptions: Not lawfully present in the U.S Incarcerated Residing outside of the U.S HHI is less than the federal income tax filing threshold Determined by HHS to have suffered a hardship Health care sharing ministry Members of Indian tribes Bona fide residents of any possession of the U.SNo penalty imposed without coverage for > 3 months - Only one 3-month period allowed in a year Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com pg. 25
  • 26. Individual Mandate Penalty The penalty for noncompliance is the greater of either: A. percentage of the amount by which HHI exceeds the personal exemption amount ($5,950 in 2012, doubled for joint filers) plus the standard deduction amount ($3,800 in 2012), • Percentage is 1% in 2014, 2% in 2015, and 2.5% thereafter, or 26
  • 27. Individual Mandate Penalty B. A flat dollar amount assessed on each taxpayer and any dependents. • The annual flat dollar amount is phased in—$95 in 2014, $325 in 2015, and $695 in 2016 and beyond (adjusted for inflation) • Reduced by one-half for children under 18, and • For families, capped at 300% of the annual flat dollar amountPenalty cannot exceed national average for bronze exchange plans 27
  • 28. Sample Calculation of Individual Penalty Personal exemption is $5,950 in 2012 (doubled for joint filers) The standard deduction amount is $3,800 in 2012Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com pg. 28
  • 29. PPACA and the Exchanges
  • 30. PPACA & ExchangesAll states to establish an Exchange by January1, 2014 • The American Health Benefit Exchange • Small Business Health Options Program (SHOP) Exchange for individuals and small businessesTypes of Exchanges: • State Exchange • Partnership Exchange • Federally Facilitated Exchange © 2012 Proskauer. All Rights Reserved. 30
  • 31. Will The State Be Ready? Source: Kaiser Family Foundation; Accurate as of 11/16/2012 31
  • 32. PPACA & ExchangesQualified Health Plans: • Certified as qualified by an Exchange; • Provides the essential health benefits package; and • Offered by a licensed insurer that agrees to offer at least one ―silver‖ and one ―gold‖ level plan in the ExchangeEssential Health Benefits:  Defined by a Benchmark Plan selected by each State;  Benchmark would serve as reference plan to determine if employers plan meets minimum requirements © 2012 Proskauer. All Rights Reserved. 32
  • 33. Essential Health Benefits 33
  • 34. PPACA & Exchanges Prior to 2016, small employers are 100 or less but states may limit to 50 employees or less Prior to 2017, only small employers (100 employees or fewer) can participate Starting in 2017 and thereafter, states may allow all employers Initial open enrollment period: October 1, 2013 through March 31, 2014. For benefit years in 2015 or later, the annual open enrollment period will be from October 15 to December 7 Special enrollment provisions will be included © 2012 Proskauer. All Rights Reserved. 34
  • 35. The MetalsExchanges to Offer Four Levels of Coverage: © 2012 Proskauer. All Rights Reserved. 35
  • 36. Pay or Play?
  • 37. Poll Will healthcare reform lawrequire all businesses, more than 50 employees, to provide health insurance?Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com pg. 37
  • 38. Employer ―Pay-or-Play‖ Mandate In 2014, the pay-or-play mandate requires employers of 50 FTE (Full Time Equivalents) or more to offer quality, affordable health insurance coverage to full time employees (those working on average at least 30 hours per week) and their families Failure to offer such coverage potentially subjects the employer to a tax penalty for a given month if a full time employee receives a federal premium tax credit or cost-sharing reduction and is enrolled in coverage through a health insurance exchange © 2012 Proskauer. All Rights Reserved. 38
  • 39. When is an Employer Subject to Pay-or-Play? FTE employees are determined by taking the sum of the employer’s full time employees (using a 30 hour per week standard) and the number determined by dividing the hours of service of employees who are not full time employees by 120 Employer employs 40 full time employees and 20 part-time employees who each work 60 hours per month.  50 FTE: 40+(20×60÷120)=50 Employer employees 35 full time employees and 20 part-time employees who each work 96 hours per month  51 FTE: 35+(20×96÷120)=51 © 2012 Proskauer. All Rights Reserved.Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com 39
  • 40. Determining Full Time Employee Status For Purpose of the Pay or Play TaxProposed ―Look-back/stability period safe harbor‖ method The employer selects a 3-12 month ―measurement‖ period to determine which employees averaged at least 30 hours per week Look-Back Nov 2012 MayMay 20132012 © 2012 Proskauer. All Rights Reserved. 40
  • 41. What are the Pay-or-Play Penalties? Employers who “opt out” of providing benefits  Employers who do not provide quality health coverage to all full time employees (and their dependents) are penalized  If at least 1 full time employee is eligible for, or receives, a tax credit and enrolls in exchange coverage, the employer is subject to an annual penalty of $2,000 × all full time employees (except for the first 30) applies  Penalty is assessed monthly (i.e., $167.67 per full time employee per month) © 2012 Proskauer. All Rights Reserved.Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com 41
  • 42. What are the Pay-or-Play Penalties? Example 1: No full time employee receives a tax credit  No penalty assessed Example 2: One or more full time employees receive a tax credit  The annual penalty is calculated by taking the number of full time employees minus 30, multiplied by $2,000  If there are 50 full time employees, the penalty would not vary if only one employee or all 50 employees received the credit; the employer’s annual penalty would be (50-30) × $2,000, or $40,000 © 2012 Proskauer. All Rights Reserved.Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com 42
  • 43. What are the Pay-or-Play Penalties? Employers who provide “unaffordable” coverage  Coverage is affordable only if the premium for single coverage under the employer’s lowest cost plan with at least a 60% ―actuarial value‖ does not exceed 9.5% of individual W-2 wages  Annual penalty is the lesser of $3,000 for each full time employee who receives a tax credit and enrolls in exchange coverage, or $2,000 multiplied by all full time employees (subtracting first 30)  Penalty is assessed monthly (i.e., $250 per subsidy-receiving full time employee per month) © 2012 Proskauer. All Rights Reserved.Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com 43
  • 44. What are the Pay-or-Play Penalties? Example 1: No full time employee receives a tax credit • No penalty assessed Example 2: One or more full time employees receive a tax credit For an employer with 50 full time employees, annual penalty is lesser of: • the number of full time employees minus 30, multiplied by $2,000, or • the number of full time employees who receive tax credits multiplied by $3,000 Assuming 10 full time employees received tax credits, the potential annual penalty on the employer would be $30,000 However, if the employer had 30 full time employees who received tax credits, then the potential annual penalty on the employer would be capped at $40,000 (20 employees $2,000) rather than $90,000 as calculated (30 employees $3,000) © 2012 Proskauer. All Rights Reserved.Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com 44
  • 45. Affordability Affordable (Income exceeds 400% of FPL) No Penalty to EmployerHousehold Income as a % of FPL 400% Potential Penalty to Employer (Income is 100-400% of FPL and employee contributes more than 9.5% of W-2 wages 133% (100-138%*) State Medicaid Expansion 100% Medicaid (At or below 100% of Federal Poverty Level) No Penalty to Employer 0% 9.5% and above Contribution as a % of Household Income*Medicaid expansion by State and interpretation Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com pg. 45
  • 46. Impact of Medicaid Decision on Employers Medicaid Expansion Requirements  States must cover all individuals under age 65 with income below 133% of the poverty line  "Essential benefits" must be provided to all Medicaid recipients © 2012 Proskauer. All Rights Reserved.Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
  • 47. Impact of Medicaid Decision on Employers © 2012 Proskauer. All Rights Reserved.Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
  • 48. Premium Credit Eligibility Must be a part of a tax filing unit Must be enrolled in a public exchange Cannot be eligible for Medicare, Medicaid, CHIP, coverage related to military service, an employer-sponsored group health plan, a grandfathered plan, and other coverage recognized by HHS Employer doesnt have minimal essential coverageIntercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com 48
  • 49. Sample Calculation of Credita) Federal Poverty Level 200%b) Family Size 4c) Maximum Premium $2,778d) Actual cost of Insurance Plan $5,000e) (d) minus (c) is tax credit $2,222Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com pg. 49
  • 50. What Comes Now? Evaluate your company culture and align incentives accordingly Don’t just focus on 2014 – think beyond Ramp up your communication plan – there’s a lot more to come!Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
  • 51. Poll How likely are you to terminate your medical plan in or after 2014? pg. 51
  • 52. StrategiesShannon Taylor, EVP of Sales, Health & Performance
  • 53. pg. 53
  • 54. Financial Impacts of PPACA As a result, we are focused on solutions in 3 core areas with our clients: 1. Optimized PPACA and benefits strategy 2. Integrated Health & Performance program 3. Active promotion of consumer accountability Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com pg. 54
  • 55. Elements of the Perfect Storm $20,000 The Calm Before the Storm • PPACA effective $15,000 • MLR compliancePlan Cost Per Enrollee* Kaiser Family • Medical Foundation predicts utilization health care costs per trends slow enrollee will increase $10,000 +26% from 2013–2014 $5,000 2011 2012 2013 2014 2015 2016 2017 2018The chart is for informational purposes only and is intended as an aid in understanding and analyzing impacts of the changing aspects of current health careregulations and requirements. *Employer Cost per Enrollee for a PPO Plan (2011–2018) Source: Kaiser Family Foundation (premium data) Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
  • 56. Elements of the Perfect Storm $20,000 $15,000Plan Cost Per Enrollee* The Perfect Storm - 2014 • Declining Population Health $10,000 • Employer Requirements • New Industry Taxes & Fees • Cost Shifting $5,000 2011 2012 2013 2014 2015 2016 2017 2018The chart is for informational purposes only and is intended as an aid in understanding and analyzing impacts of the changing aspects of current health careregulations and requirements. *Employer Cost per Enrollee for a PPO Plan (2011–2018) Source: Kaiser Family Foundation (premium data) Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com
  • 57. Key Questions to Answer - PPACA 1. What is the estimated household income distribution of your employee population? 2. How many employees may qualify for Medicaid or significant premium subsidies in the state or federal exchange? 3. How many employees will elect to enroll in Medicaid or purchase an individual policy in the exchange using a premium subsidy? 4. Will the number of employees and dependents covered change significantly beginning in 2014? 5. What is the actuarial value of your benefit plans in relation to the plans offered in the health insurance exchanges? 6. How does modifying required employee contributions or benefit designs change estimated future plan costs? 7. How will employer penalties, affordability requirements, individual mandate penalties, and premium tax credit percentages change over time? 8. Will any plans be subject to the excise tax on high cost health plans beginning in 2018? 9. What steps can employers take to minimize the financial impact of healthcare reform? 10.How will your plans be impacted if your state(s) do not carry out the Medicaid expansion? 11.Are there other non-financial considerations related to your health plans that make them a valuable employee retention tool?Intercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com pg. 57
  • 58. Navigating The Perfect Storm Create Better Healthcare Consumers Improve Population HealthDevelop a Multi-YearBenefit StrategyIntercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com pg. 58
  • 59. Develop a Multi-Year Benefit Strategy Develop a benefits strategy that complies with regulations, minimizes adverse cost impacts by phasing in the right solutions over time and delivers the best return on your investmentIntercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com pg. 59
  • 60. Improve Population Health Implement an integrated health & performance program to mitigate health risks, lower utilization and improve employee health and productivityIntercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com pg. 60
  • 61. Create Better Healthcare Consumers Create a consumer accountability strategy to increase employee ownership of health expenditure decisions and develop a culture of awareness, appreciation and employee engagementIntercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com pg. 61
  • 62. The Perfect Storm Survival GuideIntercare Insurance Solutions • Private & Confidential • CA Insurance Lic #0D80830 • intercaresolutions.com pg. 62
  • 63. Q&AThe information provided in this slide presentation is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does itnecessarily reflect the opinions of the firm, our lawyers or our clients. No client-lawyer relationship between you and the firm is or may be created by your access to or use of this presentation or anyinformation contained on them. Rather, the content is intended as a general overview of the subject matter covered. Proskauer Rose LLP (Proskauer) is not obligated to provide updates on theinformation presented herein. Those viewing this presentation are encouraged to seek direct counsel on legal questions. © Proskauer Rose LLP. All Rights Reserved. © 2012 Proskauer. All Rights Reserved.