How Does Obamacare Impact Your Business Planning?
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How Does Obamacare Impact Your Business Planning?

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The Supreme Court has upheld the PPACA and its implementation is full steam ahead. Now is the time to begin preparing for the impact on your business and your employees. Many have forgotten the ...

The Supreme Court has upheld the PPACA and its implementation is full steam ahead. Now is the time to begin preparing for the impact on your business and your employees. Many have forgotten the complexity, decisions, and regulatory requirements of this legislation. As we all know, the devil is in the details.

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  • Are slides 24 and 25 necessary after adding slides 26 thru 28?
  • I retyped the last page of the “Requirements to Buy Coverage” instead of pasting the last section…I think it looks better. I also think we need to add a citation to the study this information came from…BBH

How Does Obamacare Impact Your Business Planning? Presentation Transcript

  • 1. How Does Obamacare Impact Your Business Planning? July 17, 2012
  • 2. Agenda Today’s SpeakersImpact of Reform on Employers, Employees, Insurers and Government Kimberly Hollis, REBC Employee Benefit Consultant, Tilson Break How Reform Impacts Employer Provided Healthcare Brent Tilson President, Tilson
  • 3. Today Our goal today is to review the requirements and provide you tools for planning your future budgets and business strategies. Due to the size and scope of this new law we have not addressed all areas and complexities. Disclaimer: This should be used for informational purposes only. Please seek professional guidance from your attorneys and CPAs.
  • 4. Part 1 Compliance
  • 5. Part 1• Historical Update• Upcoming Requirements• Exchanges• Employee Counts
  • 6. Changes since March 23, 2010• CLASS Act will not be implemented• Cuts to Medicare Payments to Physicians delayed• Increase in 1099 requirements repealed• Free Choice Vouchers repealed• Enforcement of non-discrimination rules delayed• Auto enrollment for companies with more than 200 employees delayed until after 2014 pending release of regulations
  • 7. Implemented since March 23, 2010• Guaranteed coverage for uninsured with pre-existing conditions (after 6 months)• Prohibition against lifetime limits and rescissions• Patient Protections (appeals, emergency services)• Guaranteed issue under age 19• Dependent coverage to age 26• Preventive care coverage required• MLR (80% for individual and small group/85% for large group)• Salary caps for carrier executives
  • 8. Supreme Court Ruling• Upheld constitutionality of PPACA and Individual Mandate• Mandate not constitutional under commerce clause, but deemed a tax• Taxes that encourage citizens or behaviors is deemed allowable• Medicaid expansion…
  • 9. Employer RequirementsIf you don’t offer coverage, you still have to meet most of the requirements outlined here.Determining whether you will continue to offer group coverage will be addressed later.
  • 10. If you offer coverage…2012  September (New Hires after 9/23) Summary of coverage required to all applicants and enrollees (not more than 4 pages front and back in 12 point font – template has been provided by HHS)  Submit annually to DHHS and to plan enrollees during the annual open enrollment period a report on whether the benefits under the plan or coverage include the specified components2013  W2 reporting of aggregate cost of employer sponsored health coverage for taxable years after 12/31/2012 for employers who issue more than 250 W2s.
  • 11. If you offer coverage…2014  Waiting periods not to exceed 90 days for employer sponsored health coverage
  • 12. Whether you offer coverage or not…2013  January: Collect Employee Medicare payroll tax increase of 0.9% for earnings over $200,000 for individuals and $250,000 for joint filers  March: Provide notice to employees informing them of the existence of an Exchange, the availability of premium assistance if the actuarial value of the employer’s plan is below 60% in the upcoming plan year (2014)2014  (Date TBD) State required to offer premium assistance to Medicaid beneficiaries for employer sponsored coverage  Penalties for employers with 50+ full-time equivalent employees who have one or more employees receiving the tax credit
  • 13. Whether you offer coverage or not…2014  Coverage documentation (by employee) reported to both individuals and to the IRS, including the following: – Whether the employer offers minimum essential coverage to full-time employees; – Any waiting period for health coverage; – The monthly premium for the lowest cost option in each enrollment category under the plan; – The employer’s share of the total allowed cost of benefits provided under the plan; – The number of full-time employees during each month; – The name, address and taxpayer ID (SSN) of each full- time employee, and the months each employee was covered under the employer’s plan, and; – Other information to be determine by HHS Secretary in regulations.
  • 14. Benefit Changes2013  Flexible Spending Account deferrals will be limited to $2,500 beginning in 2013.  Additional preventive care benefits, including birth control covered at 100% with no cost share.
  • 15. Changes still to be implemented2012  States must submit to HHS by November 16, 2012 if they wish to operate a state-based exchanges or a Partnership exchange. Currently Indiana is “studying options” according to kff.org.2013  Increases the threshold for the itemized deduction for unreimbursed medical expenses from 7.5% of adjusted gross income to 10% of adjusted gross income; waives the increase for individuals age 65 and older for tax years 2013 through 2016.  Imposes an excise tax of 2.3% on the sale of any taxable medical device.
  • 16. Changes still to be implemented2014  Create state-based Exchanges and SHOPs through which individuals and small businesses can purchase qualified coverage  Creates a temporary reinsurance program to collect payments from health insurers in the individual and group markets to provide payments to plans in the individual market that cover high-risk individuals  Limit deductibles for health plans in small group market to: – $2,000 for individuals – $4,000 for families (unless contributions are offered that offset the deductible amounts above these limits)
  • 17. Modified Community Rating Requirements2014  Applies to all individual health insurance policies, all fully insured group policies 100 lives and under, and all plans offered through Exchanges  Premium variations only allowed for: – Age 3:1 – Tobacco Use 1.5:1 – Family Composition – Geographic Region (defined by state)  Experience rating will be prohibited  Wellness discounts are allowed under specific circumstances
  • 18. Minimum Loss Ratio Requirements 2011  Applies to insurers in all markets  85% for large group plans  80% for individual and small group plans (100 and below)  Carriers will have to issue a premium rebate to individuals for plans that fail to meet the minimum MLR requirementsAugust  In Indiana, small groups for Anthem will receive rebates 2012 this year. No markets for United Healthcare will receive rebates. Average rebate from Anthem: $86/participating employee. Will be sent to employer to either return to employees or offset future premium costs.
  • 19. Employee Requirements2013  Individuals with earnings over $200,000 (or $250,000 for joint filers) will pay an additional $0.9% Medicare Hospital Insurance Tax (HI)  Same individuals will pay an additional 3.8% HI tax on unearned income  Itemized deduction for unreimbursed medical expenses increased from 7.5% of AGI to 10% of AGI for regular tax purpose; increase waived for individuals age 65 and older for t.ax year 2013 through 2016. Note: Individuals are required to increase their tax withholdings to pay for increased Medicare Tax
  • 20. Employee Requirements 2014  TBD: Medicaid eligibility increased to 133% of FPL  Premium assistance for employer-sponsored coverage Each state for Medicaid beneficiaries will be  All American citizens and legal residents required to allowed to purchase qualified health insurance coverage determine  Exceptions:next steps on – religious objectors eligibility for Medicaid – individuals not lawfully present – incarcerated individualsIndiana: TBD – taxpayers with income under 100 percent of poverty, and those who have a hardship waiver – members of Indian tribes – those who were not covered for a period of less than three months during the year – People with no income tax liability
  • 21. Requirements to Buy CoverageUnder theAffordableCare ActBeginning2014
  • 22. Requirements to Buy CoverageUnder theAffordableCare ActBeginning2014
  • 23. Requirements to Buy CoverageUnder the Key Facts:Affordable •Premiums for health insurance bought throughCare Act Exchanges would vary by age. The Congressional Budget Office estimates that the national averageBeginning annual premium in an Exchange in 2016 would be2014 $4,500-$5,000 for an individual and $12,000-$12,500 for a family for Bronze coverage (the lowest of the four tiers of coverage that will be available. •In 2010 employees paid $899 on average towards the cost of individual coverage in an employer plan and $3,997 for a family of four. •A Kaiser Family Foundation subsidy calculator illustrating premiums and tax credits for people in different circumstances is available at: http://healthreform.kff.org/subsidycalculator.aspx
  • 24. Exchange Benefit Tiers Bronze planrepresents minimum creditable coverage
  • 25. Exchange Out-of- pocketlimits (ForSilver Plan Only) Scale forincomes up to 400% of FPL:
  • 26. Exchange2014  Exchanges must offer: – At least 2 multi-state plans – At least one plan must be offered by a non-profit entity – At least one plan must not provide coverage for abortions beyond those permitted by federal law  Allow states to merge the individual and small group markets
  • 27. Employer Flowchart
  • 28. Employer Flowchart (continued)
  • 29. How do you count employees? Some provisions are based on employer size. The number of “full-time” employees you have is based upon the following Full-Time FTE = Equivalent (FTE) formula: Full-time  Employees working at least 30 or more hoursEquivalent per week (averaged monthly) = 1 FTE  Full-time Seasonal employees working less than 120 days during the year are excluded. Per the  Part-time employees: Total hours for PPACA 4 weeks/120 = # FTE
  • 30. Part 2 How the Reform Impacts Employer Provided Healthcare
  • 31. 7 Step Process• Step 1 – Prepare employee census and cost analysis• Step 2 – Identify future coverage options• Step 3 – Calculate and project estimated cost from each option• Step 4 – Analyze the cost of offering healthcare or not• Step 5 – Conduct analysis of workforce• Step 6 – Compare cost analysis against workforce dynamics• Step 7 – Make decision
  • 32. Step 1 – Current Cost Support• Prepare a spreadsheet with the following details: – Employee – Status (full time, part time, seasonal) – Age – Compensation – Health Coverage – Cost support
  • 33. Step 2 – Identify Coverage Options Commercial Assoc Private Carriers Exchanges Self-Funded Health Plans PEO Exchange SmallToday <50 EEs N/A >100 EEs Small Groups N/A Groups Small Groups Small Groups Large Groups SmallFuture Small Groups New <100 EEs <50 <100 >25 Groups Expected to Depends ?? Community Community No – actualPricing Controls be Community on plan Community Pricing 3:1 Pricing 3:1 claims Pricing 3:1 type Pricing 3:1 Group: YesPre-Tax Yes Yes Yes Yes Yes Individual: No Negotiate Only pay Negotiate Negotiate Older/High Risk Older/High Risk Lower rates Actual Claims lower MLR Lower rates Groups – Groups – as maybeAdvantages – Appeal to as MLR may Pricing Should Pricing Should able to young/healthy Self- be lower Decrease Decrease decrease groups funded? MLR Large Young/Healthy Young/Healthy AdverseDisadvantages Higher $ Risk group W-2 Unknown Prices Increase Prices Increase Selection reportingGovernment Subsidy Group: No No No No No Nofor 133%-400% Individual : YesMinimum Essential Yes Yes Not required Yes/No Yes/No YesBenefits
  • 34. Price Price Controls – Community Ratingcontrolstoday forsmallgroup thatallow for5:1 butnow it willmove to3:1 plusremovinghealthconditionswill amplifychanges
  • 35. Step 3 – Calculate and Project Costs• Initially this will require both math and creativity• As 2014 nears your numbers will become more accurate• Today you will need to use some of the variables to guess impact your future rates – average age, health conditions, impact of price controls
  • 36. Step 4 - Analyze Cost to Offer or Not• Using the employee census• Calculate for both offering coverage and not offering coverage• Offering coverage: – Estimate costs for each current employee based upon coverage options (commercial carrier, self-funded) – Calculate your total cost support – Economic value of pre-tax deductions
  • 37. Step 4 - Continued• Not offering coverage: – Calculate compensation increase to adjust for economic equality – Calculate ER penalties if applicable – Based upon compensation calculate government subsidies per employee (this is problematic to know family income) – Economic disadvantage of post-tax• Determine total with our without
  • 38. Step 5 – Workforce Analysis• Size of your company• Growth plans• Average wage• Sophistication• Culture• Competition for employees• Retention• Competition
  • 39. Step 6 – Weigh Costs vs. Workforce• Will you need to increase pay to retain employees?• Will competition for employees force you to keep employees?• Are your insurance costs so high and workforce demographics encourage dropping coverage?• Can you find a more competitive and affordable solution?
  • 40. Step 7 – Make the Decision• This should provide you with the major components to make an informed decision….• The challenge is now employees will be also viewing their employment opportunities differently….
  • 41. Lets Discuss the Employee’s Perspective• Age• Wage• Family health• Geographic location (states)• Employer provided health or compensation subsidized
  • 42. In Summary• Regulatory and reporting challenges• Coverage options• Alignment of workforce and economics• Decisions, decisions, decisions
  • 43. 2014 Premium Assistance CreditContributions will increase based Available on a sliding scale to eligible individuals andupon the excess families with incomes between 133-400% FPL to of the premium purchase insurance through the Exchanges. Credit growth over the will be tied to the second lowest cost silver plan in the rate of income area and will be set on a sliding scale such that the growth for premium contributions are limited to the following 2014-2018. percentages of income for specified income levels: Beginning in 2019 further Income Premium Contribution adjustment to Up to 133% FPL 2% of Incomereflect excess of 133-150% FPL 3-4% of Income premium growth over CPI if 150-200% FPL 4-6.3% of Income aggregate 200-250% FPL 6.3-8.05%of Incomepremiums & cost 250-300% FPL 8.05-9.5% of Incomesharing subsidies exceed .54% of 300-400% FPL 9.5% of Income GDP
  • 44. THA Y NK OU