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CFMA 8/19/10

CFMA 8/19/10

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1509865 1 1509865 1 Presentation Transcript

  • PREPARING FOR HEALTH CARE REFORM THE PATIENT PROTECTION AND AFFORDABLE CARE ACT FOR: Construction Financial Management Association August 19, 2010 Julie A. Pace Heidi Nunn-Gilman The Cavanagh Law Firm The Cavanagh Law Firm 602.322.4046 602.322.4080 jpace@cavanaghlaw.com hnunngilman@cavanaghlaw.com
  • Health Care Demographics There are approximately 300 million Americans 2  177 million w/ employer based coverage (59%)  26 million w/ individual private insurance (9%)  83 million w/ Medicare, Medicaid, or Military (28%)  46 million are uninsured (15%) Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • The Big Picture 3  Health care reform enacted in two separate bills  Individuals must “enroll or pay”  Individuals will have access to basic health coverage through:  Employer-sponsored group health plans  Individual insurance policies offered through an Exchange  Government plan (Medicare, Medicaid, Veterans’ or CHIP)  Employers must “pay or play” - offer coverage or pay taxes  Array of Federal subsidies for small businesses and lower income individuals Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Employer Options - Now & In the Future 4  March 23, 2010-January  Post January 1, 2014: 1, 2014:  Continue Grandfathered  Continue coverage that Plan existed as of 3/23/2010  Employer insured group (Grandfathered Plan) plan  Other employer group  Employer self-funded plan plan  Insured  Provide Exchange  Self-funded support  No coverage  Offer Exchange plan (when available)  No coverage Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Grandfathered Health Plan 5  Grandfathered health plan’’ is defined as  any group health plan or  individual health insurance coverage  in which an individual was enrolled on the date of enactment  Family members may enroll, if such enrollment was permitted under the terms in effect as of March 23, 2010  “New employees” and their families may enroll Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Requirements for Grandfathered Plans 6  For plan years beginning on or after 9/23/2010 Grandfathered Plans  No pre-existing condition provisions may apply to children < 19  Cannot have dollar value limits on lifetime or annual benefits  Must extend benefits to children up to age 26  Must provide uniform benefits summary information  May not have a waiting period in excess of 90 days  May not rescind coverage, other than for fraud  Other market reforms and Exchange requirements do not apply to Grandfathered Plans (before or after 2014) Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Coverage of Adult Children 7  For plan years after September 23, 2010, GHP, including Grandfathered Plans, that provide dependent coverage must  “Continue to make such coverage available” for an adult child  Until the child (unmarried or married) turns 26 years of age  Not required to cover a child of a child receiving coverage  Code amended to exclude expanded coverage from income tax  Prior to January 1, 2014, coverage for older dependent only required if child is not eligible to enroll in an eligible employer-sponsored health plan other than the grandfathered plan  Secretary to promulgate regulations Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Collectively Bargained Agreements (CBAs) 8  CB Plans ratified before the enactment date are grandfathered until the date on which the last of the CBAs relating to the coverage terminates  Coverage requirements applicable to other Grandfathered Plans, including dependent coverage, do not apply  Any CBA coverage amendment which amends coverage solely to conform to any requirement added by the Act shall not be treated as a termination of such CBA Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Non-Grandfathered GHPs 9  Employers may offer health plans other than “grandfathered plans” before and after 2014  All non-grandfathered GHP, including self-insured plans, are subject to additional coverage improvement and reporting requirements  Most become effective for plan years after September 23, 2010, unless otherwise noted  After January 1, 2014, employer-sponsored coverage must meet minimum essential benefit requirements to qualify under individual and employer play or pay provisions Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Additional Coverage Improvements 10  In addition to the coverage requirements that apply to Grandfathered Plans, GHP coverage must:  Cover preventive health services without cost-sharing requirements  Satisfy appeal process requirements  Quality reporting annually to Health & Human Services (HHS) Secretary  Insured plans must account for claims/non-claim costs and rebate to enrollees if non-claims costs too high Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Preventive Health Benefits 11  GHP must cover, without any cost-sharing requirements,  Evidence-based items and services (currently recommended by U.S. Preventive Services Task Force)  Immunizations  Pediatric preventive care and screenings  Women’s health preventive care and screenings including breast cancer screening, mammography Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Market Reforms 12  Effective for plan years after January 1, 2014  Prohibition on discrimination on the basis of health status  Health and Wellness Program safe harbor  Allow incentives of up to 30% of premium  Limits on fair health insurance premiums  Guaranteed availability and renewability (individuals over age 19)  Comprehensive coverage requirements to be established Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Premium Variation Limits 13  Limit variation in premium rates based on  Family structure  Age (3:1)  Tobacco use (1.5:1)  Geographic rating area Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Post-2014 Options 14  Continue Grandfather Plan  Qualified health plan (through an Exchange or otherwise)  Exchanges available for small employers beginning 2014  Available for largest of employers beginning 2017  Employer may provide support for a coverage level  Any employer* or individual may enroll in a health plan offered outside an Exchange (non-qualified health plan)  Subject to State insurance law mandates  May be subject to “pay or play” penalties if plan does not meet minimum essential coverage requirements * Congress and its staff may only enroll in an Exchange plan Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • How to Stay a GHP 15  Regulations define the changes that may be made and still be considered a GHP  Prohibit major cuts in benefits  Prohibit significant cost increases  Permits “routine changes” Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • “Routine Changes” to GHP Permitted 16  Cost adjustments in line with medical inflation  Addition of new benefits  Modest adjustments to existing benefits  Adoption of consumer protections under PPACA  Changes to comply with federal or state law Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • “Significant” Changes Threaten GHP Status 17  Cannot significantly cut or reduce benefits  Cannot raise coinsurance charges  Cannot significantly raise copayment charges  Increases less than or equal to the greater of medical inflation + 15% or $5.00 are permitted  E.g., medical inflation 4%, increase of 19% permitted  Cannot significantly raise deductibles  Increases less than or equal to medical inflation + 15% okay  Cannot reduce % of employer contributions by more than 5%  Cannot add or reduce annual limits  Cannot change insurance companies Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Requirement that Individuals Enroll or Pay Fine 18  To avoid a penalty, individuals must have acceptable coverage from one of the following sources:  Employer-sponsored plan (including a grandfathered plan)  An individual policy (purchased through a private insurer or through an Exchange)  Government program (Medicare, Medicaid, Veterans, CHIP) Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Requirement that Individuals Enroll or Pay Fine 19  Those without coverage face the greater of a dollar penalty or a percentage of household income penalty  Dollar penalty equals ½ of the amount listed below for each uninsured dependent under the age of 18  Total dollar penalty for a family is capped at 300% of the normal penalty  Penalties phased in  2014 $95 or 1.0% Income  2015 $325 or 2.0% Income  2016 (and after) $695 (indexed) or 2.5% Income Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Employers Pay or Play 20  Large ERs (=50 EEs)  that do not offer health coverage and have at least one FT EE who receives premium tax credit must pay a penalty  $2,000 per FT EE (excludes the first 30 EEs)  that offer health coverage and have at least one FT EE who receives a premium tax credit because employment-related health coverage is not adequate or affordable (plan covers less than 60% of costs or EE’s contribution to ER coverage > 9.5% of household income) must pay the lesser of  $3,000 per employee who is receiving a premium tax credit  $2,000 for each FT EE Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Employers Pay or Play 21  Small ERs (< 50 EEs) are exempt from penalties  For “pay or play” purposes, employees are  FT EEs (30 or more hours/week)  FT Equivalent Employees (total monthly part-time hours / 120)  ER assessments are not tax deductible  Vouchers for EE at less than 400% of federal poverty level who choose Exchange Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Incentives for Small Employers to Provide EE Benefits 22  ER criteria for tax credits  ER must pay at least 50% of EE health care coverage  ER must have no more than 25 FT Equivalent EEs  Maximum credit for ERs with 10 or fewer FT Equivalent EEs  ER must pay average wage < $50K/year  Maximum credit for ERs that pay average wage < $25,000  Amount of tax credits  Phase I (2011- 2013)  Credit up to 35% of ER contribution toward EE’s health insurance premium  Phase II (2014 and later)  Credit up to 50% of ER contribution toward EE’s health insurance premium  Tax exempt entities are eligible for FICA credits Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Health Care Exchanges 23  What is an Exchange?  A marketplace of health insurance issuers (traditional, for-profit insurance companies and non-profit cooperatives) that will offer QHPs to individuals/small ERs  Exchanges will be operational by January 1, 2014  Large ERs may be eligible to purchase coverage through Exchanges in 2017  Who creates an Exchange?  Each state must create an Exchange (funded by $6 billion in federal grants)  What is the goal of an Exchange?  Enhance consumer choice  Creation of single risk pools  “Apples to apples” comparison of health insurance coverage Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Health Insurance Exchanges 24  What are the features of an Exchange?  Issuers must be certified by the Exchange  Rating system based on quality and price  Enrollee satisfaction system  Premium rate limits  Age (3:1), tobacco use (1.5:1), family structure and geographic area Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Health Insurance Exchanges 25  Multi-tier with different levels of coverage  Every tier covers essential benefits  % of covered benefits costs ranges 60% to 100%  Out-of-Pocket limit for all tiers capped at $5,950 (individual)/$11,900 (family)  Tiers labeled Bronze, Silver, Gold, Platinum, and Catastrophic  Essential benefits include  Preventive care  Emergency services  Hospitalization  Maternity and newborn care  Mental health and substance abuse  Prescription drugs Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Subsidies for Individuals 26  Modest income  Modest income individuals (between individuals in Exchanges 100% and 400% of the eligible for three federal poverty level) are subsidies eligible for subsidies to  Limits on amount of pay premiums income paid for premiums  Family of 4 - 400% of  Cost-sharing (copays, poverty level is deductibles, etc) limits $88,2000  Out-of-pocket spending limits Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Excise Tax on “Cadillac Plans” (2018) 27  Tax = 40% of “excess benefit”  Excess benefit is the aggregate cost of the benefit in excess of:  $10,200 for single-only coverage (as adjusted)  $27,500 for family coverage (as adjusted)  For qualified retirees and those in high-risk jobs threshold is $11,850/$30,950 Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Other Changes to Plan Design and Operation 28  Medicare Part D  No ER deduction for retiree drug subsidy beginning 2013  Closing the “Donut Hole” on prescription coverage  Nondiscrimination in favor of highly compensated in insured health coverage  New administrative fee for employer-sponsored health plans Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Other Changes to Plan Design and Operation 29  Reinsurance for Early Retirees  Reimbursed 80% of costs between $15,000 and $90,000 for employer sponsored retiree health plan  Program runs only through 2013  HSA and Health FSA changes  FSA contribution limited to $2,500 beginning 2013  OTC drugs no longer covered effective 2011  Excise tax on non-medical HSA distributions increased from 10% to 20% Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Notice to Employees 30  Employers subject to FLSA must provide written notice to current and new employees  Identify the Exchange and how to contact  If employer’s health plan is not sufficiently valuable, notify of the existence of premium subsidies and cost-sharing reductions  If the employee enrolls in an Exchange plan, indicate that the employee may lose any employer subsidy in the employer plan  Effective March 1, 2013 Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Auto Enrollment 31  Large employers (200+ FTEs) must automatically enroll new employees if the employer offers a health plan  Employees may opt out; advance notice required  Effective for the 2014 plan year Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Taxes on High Income Individuals 32  Increases the health insurance (HI) portion of the FICA tax from 1.45% to 2.35% on wages in excess of $200,000 ($250,000 for a joint return)  Same rule for SECA (and no deduction for the additional tax)  Additional 3.8% tax on lesser of:  net investment income (interest, dividends, royalties, rents, passive income)  Modified adjusted gross income in excess of $200,000 ($250,000 for a joint return)  Both provisions are effective in 2013 Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Other Provisions 33  Medicaid expanded to cover people at less than 133% of the federal poverty level  Creation of temporary (through 2014) “high risk” insurance pools for individuals denied other coverage because of preexisting condition Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • Other Provisions 34  Amends the FLSA to require ER to furnish “reasonable break time for an employee to express breast milk for her nursing child” up to one year – breaks provided “as needed” be EE  ER must also provide a place where the EE can express breast milk  The place must be somewhere other than a bathroom and must be “shielded from view and free from intrusion from coworkers and the public”  ER with less than 50 Ees exempt if compliance would impose undue hardship  Applies only to non-exempt employees  Breaks may be unpaid  Effective March 23, 2010  Does not preempt state law more favorable to EE  Awaiting DOL regulations to clarify requirements Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com
  • QUESTIONS?? 35 Julie A. Pace The Cavanagh Law Firm 1850 N. Central Avenue, #2400 Phoenix, Arizona 85004 602.322.4046 jpace@cavanaghlaw.com www.cavanaghlaw.com Julie A. Pace The Cavanagh Law Firm, P.A. 602.322.4046 jpace@cavanaghlaw.com