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Affordable Care Act - Planning For The 2014 and 2015 Mandates
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Affordable Care Act - Planning For The 2014 and 2015 Mandates


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Make sure you company is prepared for health insurance changes on the horizon. By Bob Hoffer, DBL Law

Make sure you company is prepared for health insurance changes on the horizon. By Bob Hoffer, DBL Law

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  • 1. Affordable Care Act – Planning for the 2014 Mandates Bob Hoffer Dressman Benzinger LaVelle
  • 2. Challenges to the Individual Mandate  On June 28, 2012, the U.S. Supreme Court upheld the entire Affordable Care Act (ACA) as constitutional.
  • 3. Penalty  The Affordable Care Act (ACA) was largely upheld.  Penalty is now called a tax.  States can “opt out” to expand Medicaid Programs.
  • 4. Responsibilities  ACA is the health care reform law currently in effect.  Employers should continue to prepare for ACA changes that become effective in 2013.  Employers should also keep in mind the ACA reforms that will take place in 2014 and 2015.
  • 5. Should Have:  Determined Grandfather status  Reviewed the Small Business Credit (<25 –ees)  Allow dependent children coverage to age 26  Remove lifetime limits  Eliminate pre-ex on under 19  Created a break room of nursing mothers (>50 –ees)  Provided Summary of Benefits Coverage (SBC) distribution (9/23/12)  Reported “applicable employer sponsored coverage” on Form W-2 (1/1/2013)  FSA limit to $2,500 in 2013  Medical Loss Ratio rebates (8/1/12)  Review Medicare tax on highly compensated -ees
  • 6. ACA REFORMS - 2012 AND 2013 Form W-2 Reporting Requirements  Employers with more than 250 employees should have reported aggregate cost of employer-sponsored group health coverage on W-2 Forms for 2012.  The report was due in January 2013.  This requirement was optional for smaller employers  Reporting was for informational purposes only; was not intended to affect the taxability of benefits.
  • 7. ACA REFORMS - 2012 AND 2013 Women’s Preventive Care Services  Effective for plan years starting on or after Aug. 1, 2012.  Non-grandfathered plans must cover specific preventive services without cost-sharing. (deductibles, co-payments and coinsurance)  These services include:  well-woman visits, breastfeeding support  domestic violence screening  STD screening and contraceptives  HPV DNA testing  Screening for gestational diabetes  Counseling for HIV  Exceptions to the contraceptive coverage requirement apply to certain exempt religious employers.
  • 8. ACA REFORMS - 2012 AND 2013 Medical Loss Ratio (MLR) Rebates  Fully insured plans may have received rebates in August 2012  Insurance companies must spend a percentage of premium dollars on medical care and health care quality improvement, not administrative costs.  Groups with less 50-80%  Groups greater than 50-85%  Employers may have received rebates from issuers  Any portion of a rebate that is a plan asset must be used for the exclusive benefit of the plan’s participants and beneficiaries.  This may include, for example, reducing participants’ premium payments.
  • 9. FSA $2,500 Contribution Limit  Effective for plan years beginning on or after Jan. 1, 2013, an employee’s contribution to a health FSA offered under a cafeteria plan is limited to $2,500. ACA REFORMS - 2012 AND 2013
  • 10. ACA REFORMS - 2012 AND 2013 Medicare changes  Effective for 2013, the deduction for the retiree drug subsidy (Medicare Part D) will be eliminated.  Effective Jan. 1, 2013, an additional 0.9% Medicare tax will apply to high-income individuals.  Employers are required to withhold the additional Medicare tax on an employee’s wages in excess of $200,000 ($250,000 for married couples filing jointly).
  • 11. ACA REFORMS - 2012 AND 2013 Health Insurance Exchanges – Notice of Availability  Employers must provide all employees with a written notice about ACA’s health insurance Exchanges and the consequences of forgoing employer-sponsored coverage and purchase a qualified health plan through an Exchange.  This notice requirement was to become effective as of March 1, 2013; however, this deadline was extended with no new date specified.  The Department of Health and Human Services (HHS) has indicated that it intends to issue model Exchange notices.
  • 12. ACA REFORMS - 2012 AND 2013 Nondiscrimination Rules for Fully Insured Plans Effective date delayed for regulations. Important to review each renewal date.  Fully-insured plans must follow rules regarding nondiscrimination in favor of highly-compensated employees  Cannot discriminate with respect to eligibility or benefits (e.g., Doesn’t allow for Class Carve-Outs. Must be consistent on contributions toward cost of insurance paid by Employer, etc.)  Highly Compensated Employees (Testing Applies):  5 highest paid officers, more than 10% shareholder, or highest paid 25% of all employees
  • 13. ACA REFORMS – 2014 Additional ACA coverage mandates and reforms become effective in 2014. For example, group health plans may not:  Impose pre-existing condition exclusions on any covered individual, regardless of the individual’s age;  Have a waiting period for coverage that exceeds 90 days; or  Apply any annual limits on essential health benefits.
  • 14. ACA REFORMS – 2014  ACA’s state-based insurance Exchanges are scheduled to be operational.  Also in 2014, the individual mandate will become effective.  The ACA’s “pay or play” penalties for employers were originally slated to take effect in 2014, but have been delayed for one year.
  • 15. ACA REFORMS – 2015  The ACA’s “pay or play” penalties for employers will become effective in 2015.  Under the pay or play rules, certain employers with at least 50 full-time equivalent employees will face penalties if one or more of their full-time employees obtains a premium credit through an Exchange.  An individual may be eligible for a premium credit either because the employer does not offer health care coverage or the employer offers coverage that is either not “affordable” or does not provide “minimum value.”
  • 16. Health Care Reform: Individual Effects The 65+ now receive:  Free preventive services under Medicare  Once those with Medicare prescription drug coverage enter the “doughnut hole” coverage gap, they will be entitled to 50 percent off certain brand-name medications.  Medicare beneficiaries earning $85,000 or more will pay higher Part B premiums until 2019.  Those with Medicare Advantage plans may lose some benefits or experience an increase in co-payments.
  • 17. Health Care Reform: What Does it Mean for You? Low-income employees:  Even without children or a disability, those among the lowest-income workers will be eligible for Medicaid as of 2014.  Those who earn less than 400 percent of the federal poverty level (about $88,000 for a family of four) will be eligible for subsidies to help buy coverage.  The expansion of funding for community health centers, designed to offer free and reduced-cost care, will also provide relief.
  • 18. Health Care Reform: What Does it Mean for You? Children with a pre-existing condition: Group health plans and health insurance issuers may not impose exclusions on coverage for children with a pre-existing condition. Provision applies to all employer plans and new plans in the individual market.
  • 19. Health Care Reform: What Does it Mean for You? Adults with a pre-existing condition:  Starting 2014, adults with pre-existing conditions will be able to obtain individual coverage through an insurance exchange.  Insurers cannot place annual or lifetime limits on coverage, nor can they deny coverage or charge higher premiums due to a pre-existing condition.
  • 20. Health Care Reform: What Does it Mean for You? Unemployed and uninsured:  Most individuals who are unemployed and uninsured likely qualify for Medicaid under the coverage expansion that began in 2010.  The expansion of funding for community health centers, designed to offer free and reduced-cost care, will also provide relief.  Certain uninsured individuals with pre-existing conditions can obtain coverage through the temporary high-risk pool as well (e.g., PCIP).
  • 21. Health Care Reform: What Does it Mean for You? Small-business owners:  Organizations with 25 or fewer workers may be eligible for a tax credit to help provide coverage for employees (e.g., average annual wages of less than $50,000 per FTE).  Those with 50 or more employees must provide benefits or incur a penalty tax starting in 2015.  Credit is up to 35% of premiums paid for small businesses or 25% for nonprofits  Must pay at least 50% of cost of single coverage for credit
  • 22. Health Care Reform: What Does it Mean for You? Young adults:  Children may stay on their parents’ policies until age 26.
  • 23. Grandfathered Plans  Exemptions if plan is grandfathered  First dollar preventive care  Non-discrimination rules on fully insured plans  New appeals process  Guarantee issue and renewal  Automatic enrollment
  • 24. Grandfathered plans  Reforms that are not exempt from grandfathered plans:  Annual lifetime limits  Cannot rescind plan benefits for unintentional mistake on application  Coverage for children must extend to age 26
  • 25. Grandfathered plans  Will lose status if:  Reduce benefits related to specific condition  Increase co-insurance percentages  Increase deductible or out of pocket limits  Increase copayment by certain amount  Decrease employer contribution by 5% or more  Reduce annual limit  Switch insurance company
  • 26. “Play or Pay” Mandates in 2015
  • 27. ACA - Seeing the Whole Picture “The winds and waves are always on the side of the ablest navigators.” – Edward Gibbon
  • 28. E – A – S – I Approach  E ducate – Owners & Employees  A ssess – Snapshot of the current situation  S trategize – Planning for 2014 and 2015  I mplementation – Collaberative efforts
  • 29. Spectrum of Approach PLAY PAY Business Planning for Health Care Reform Reporting and Compliance Mandated for All Business Owners
  • 30. The Employer Decision
  • 31. Calculate Full Time Equivalents (FTE)
  • 32. Calculating Full Time Equivalents (FTE)  >30 hrs. weekly = Full Time  <30 hrs. weekly = Part Time  <120 days annually = Seasonal (Excluded)  <90 day probation = Ineligible (Excluded)
  • 33. Calculating Tax – Sample Calculation  45 FT –ees  25 PT –ees @ 20 hrs. avg. weekly  (25 PT * 20 Hrs. = 500) x 4 wks = 2,000 hrs./120  16 FTE  45 + 16 = 61 FTE  61 FTE – 30 Allowed reduction = 31  31 employees x $166.67 monthly = $5,167  Report to HHS monthly – Pay Annually
  • 34. Minimum Value: IRS designed spreadsheet Affordability
  • 35. Practical Approaches  FTE calculations  Renew medical plan prior to January, 2015  Monthly reporting and budgeting annual payment  90 day Probation - $100/day fine per employee  Define Net Cost of Benefits vs. Non-deductible Tax  Restructure and Redeploy  Define strategic partners/Work collaberatively
  • 36. Communication is Critical