Health Care Reform Presentation


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This presentation highlights the changes required of small businesses to maintain compliance with Health Care Reform regulations. Cathy Harbison, director of operations for employee benefits at Neace Lukens, served as the expert speaker to explain upcoming changes for 2011 – 2014, and the implications for businesses with less than 50 employees.

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Health Care Reform Presentation

  1. 1. Small Employer Groups
  2. 2. Click the arrow toopen/close chatpanel Type in a question here and click Send
  3. 3. Director of Compliance for Neace Lukens EmployeeBenefits20+ years experience in the healthcare fieldExtensive clinical and management backgroundExperience with both public and private sector fundingRN degree from University of MiamiCertified Professional in Healthcare Quality
  4. 4. Small group definitionGrandfathered plansTimeline for compliance
  5. 5. From now until 2016, states can define the size ofsmall groups:◦ Small employer can be either 50 and under or 100 and underBeginning in 2016, the definitions in the federalreform law will apply:◦ Small employers are those who had, on average, 1-100 employees in the preceding calendar year and at least 1 employee on the first day of the plan◦ Definitions are not applied consistently throughout the law, as noted throughout this presentation
  6. 6. Existing Plans = Grandfathered Plans◦ A group health plan or health insurance coverage in which an individual was enrolled on the date of enactment of the health care reform legislation (March 23, 2010) Regulations provide guidance on changes that could take a plan out of “grandfathered” status
  7. 7. Health Insurance Changes – Prohibitions on:◦ Lifetime and annual limits◦ Pre-existing condition exclusions◦ Rescissions◦ Excessive waiting periodsRequired coverage of adult children up to age 26Summary of benefits and coverageReporting medical loss ratio
  8. 8. Qualifying small employers that provide health care coverageto employees are eligible for tax credit◦ Have fewer than 25 full-time equivalent (FTE) employees◦ Pay wages averaging less than $50,000 per employee per year◦ Has a “qualifying arrangement” (pays premiums for each employee in a uniform percentage that is at least 50 percent of the cost of coverage)◦ tax-exempt 501(c) organization also eligibleCredit based on premiums paid by employerClaimed on employer’s annual income tax return
  9. 9. Amount of credit◦ Up to 35 percent of health (includes dental & vision) premium costs paid in 2010 (25 percent for tax-exempt employers)◦ On Jan. 1, 2014, increases to 50 percent (35 percent for tax- exempt employers)Depends on employees and wages◦ The credit phases out gradually for: Employers with average wages between $25,000 and $50,000 and Employers with the equivalent of between 10 and 25 full-time workers
  11. 11. Employees taken into account◦ Employees who perform services for the employer during the tax year◦ Exceptions: Partners and certain owners (and family members) Seasonal workers
  12. 12. Employers not eligible◦ Government employers Federal State Local Indian tribal◦ Unless the employer is a tax-exempt 501(c) organization
  13. 13. Temporary federal program for insuring high-riskindividuals◦ $5 billion funding◦ Expires Jan. 1, 2014High-risk individuals = pre-existing conditions andno creditable coverage for 6 monthsCannot have employees drop coverage to join high-risk pool◦ Sanctions/reimbursement requirement will be imposed
  14. 14. (Plan Years Beginning on or after September 23, 2010)
  15. 15. Plans that cover dependent children must makecoverage available until child turns 26◦ Includes grandfathered plans, unless child has own employer coverage (before 2014)◦ Covers married and unmarried children◦ Children of covered adult children do not have to be coveredState mandates above this level continue to applyInsurers complying early to avoid coverage gaps
  16. 16. Definition of dependent restricted◦ Can only be defined by relationship◦ Other factors (financial dependence, residency, student status, employment, eligibility for other coverage) generally can’t be used as basis for denialQualified dependents must be:◦ Offered same coverage as similarly-situated individuals◦ Given the same rates for coverage◦ Provided with a 30-day special enrollment opportunity and notice
  17. 17. Apply to new and grandfathered plansNo lifetime limits on essential benefitsRestricted annual limits on essential benefits◦ Allowed for plan years beginning before Jan. 1, 2014Essential benefits generally include:◦ Ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse services, prescription drugs, rehab services, lab services, wellness and disease management, pediatric careSome regulations issued, waiting on others
  18. 18. No rescission of coverage◦ Applies to group and individual coverage◦ Applies to new and grandfathered plans◦ Exception for fraud or intentional material misrepresentation◦ Individual must be given prior notice of cancellation for permitted reasons (including nonpayment of premium or plan termination)No pre-existing condition exclusions or limitationsfor children under age 19◦ This prohibition will apply to everyone in 2014◦ Applies to new and grandfathered group plans
  19. 19. Apply to new plansLimits on preauthorization and cost-sharing◦ No cost-sharing for some preventive care (including well-child care) and immunizations◦ No preauthorization or increased cost-sharing for emergency services (in- vs. out-of-network)Patients can chose any available participatingprimary care provider (or pediatrician)◦ No preauthorization or referral for ob/gyn care
  20. 20. Apply to new fully-insured plansFully-insured plans must follow rules regardingnondiscrimination in favor of highly-compensatedemployees (HCE)◦ Cannot discriminate with respect to eligibility or benefitsHCE:◦ 5 highest paid officers, more than 10% shareholder, or highest paid 25% of all employees
  21. 21. Apply to Health FSAs, HRAs, HSAs and Archer MSAs Medicine or drugs only treated as qualified medical expense for tax exclusion if they are prescribed or are insulin◦ This means no reimbursement for OTC medicine or drugs without a prescription (except insulin) Applies to expenses incurred after Dec. 31, 2010
  22. 22. Grants for health education, screenings, andwellness programsAvailable only to eligible employers who implementthe programs after March 23, 2010◦ Employers with up to 100 employees
  23. 23. Employers must disclose aggregate cost ofemployer-sponsored health coverage on Forms W-2Optional for 2011 tax year; mandatory for lateryearsIncludes group health plan coverage, whether paidby employer or employee
  24. 24. Health FSA Limits: $2,500 per year◦ Currently no FSA limit, although many employers impose limit◦ Limit is $2,500 for 2013; indexed for CPI after that◦ Does not apply to dependent care FSAs
  25. 25. Jan. 1, 2014: individuals must enroll in coverage orpay a penaltyAmounts indexed for CPI after 2016
  26. 26. States will receive funding to establish healthinsurance exchangesIndividuals and small employers can purchasecoverage through an exchange (Qualified HealthPlans)◦ Qualified employees use vouchers to buy coverage through exchangeIndividuals can be eligible for tax credits
  27. 27. Large employers subject to “Pay or Play” ruleApplies to employers with 50 or more full-timeequivalent employees in prior calendar yearPenalties apply if:◦ Employer does not provide coverage and any FT employee gets subsidized coverage through exchange ($2000 Penalty)◦ OR◦ Employer does provide coverage and any FT employee still gets subsidized coverage through exchange ($3000 Penalty)
  28. 28. Employers will have to report certain informationto the government◦ Whether employer offers health coverage to full-time employees and dependents◦ Whether the plan imposes a waiting period◦ Lowest-cost option in each enrollment category◦ Employer’s share of cost of benefits◦ Names and number of employees receiving health coverage
  29. 29. No pre-existing condition exclusions or limitations◦ Applies to everyone and all plansWellness program changesLimits on out-of-pocket expenses and cost-sharingNo waiting periods over 90 daysCoverage of clinical trial participationGuaranteed issue and renewalCommunity Rating◦ Insurers can vary premium only on self-only or family enrollment, rating area, age and tobacco use
  30. 30. 40 percent excise tax on high-cost health plansBased on value of employer-provided healthcoverage over certain limits◦ $10,200 for single coverage◦ $27,500 for family coverageTo be paid by coverage providers◦ Fully insured plans = health insurer◦ HSA/Archer MSA = employer◦ Self-insured plans/FSAs = plan administratorMore guidance expected
  31. 31. Neace Lukens Compliance Information◦ www.neacelukens.comUS Department of Health & Human Services◦ Foundation◦ www.kaiserfoundation.orgSmall Business IRS tax credit FAQ◦ www.irs.govModel Notice Requirements◦
  32. 32. Rhonda GageNeace LukensManager, Small Business Unit800-860-9699