Preparing for the Big Year Ahead! 2014 is going to bring greatchanges to the world ofemployee benefits The kinds of coverage availablewill change, as will therequirements and options foremployers and employees Change can be scary but it’s alsoa time of great opportunity The need for an educatedinsurance broker to guideemployers through the processand help them make strategicplan decisions is greater thanever
What is Access Health CT Access Health CT is a new marketplace that offersindividuals, families and small employers a range ofqualified, approved health insurance plans from brand-name carriers. Access Health CT is the only place where people and smallbusinesses can get a break on their health insurance costs ifthey qualify, in the form of discounts for individuals andtax credits for business owners.
Overview What is Access Health CT? Access Health CT is a new health insurance marketplacebeing developed by the State of Connecticut to satisfy therequirements of the federal Affordable Care Act. Ourmission is to increase the number of Connecticut residentswho are insured, lower their costs, promote health andeliminate health disparities. Access Health CT will operateat no cost to the state or its taxpayers. A 14-member Board of Directors, chaired by Lt. GovernorNancy Wyman, oversees the Exchange. Four advisorycommittees, which include a wide variety of stakeholders,provide the board with different perspectives on initiativesand operations.
Tax Credits and Subsidy $$ If you earn up to $44,680 a year, you may qualify fora discount on monthly health insurance payments. Families earning up to $92,200 a year may alsoqualify for a discount, depending on family size. These discounts, which come in the form of taxcredits, are applied toward your monthly premium,reducing your health insurance costs. Small businesses that qualify will also benefit fromdiscounts in the form of a tax credit. However,they will receive this credit when they file theirincome taxes in 2015 for the 2014 calendar year.
Who Qualifies It will depend on your income level. Thanks to an expansion ofMedicaid under the Affordable Care Act, all Connecticut citizens inhouseholds under a certain income level – up to $15,400 for a singleperson or $31,809 for a family of four – will be eligible for Medicaid.Connecticut citizens above this income level may be eligible fordiscounts on a qualified health plan purchased through Access HealthCT. Access Health CT will serve as a single point of entry for Connecticutresidents to get any type of healthcare coverage, including Stateprograms. Whether you were already eligible for Medicaid programs,have just recently become eligible, or qualify for a discount on a healthinsurance plan instead, you will go through one process to apply andenroll.
Small Business 2 to 50 employees Your business must be based in Connecticut and have2–50 employees. In addition, you must contribute atleast 50% of each employee’s insurance premium. Theaverage annual wage you pay must also be less than$50,000. Formula
Next Steps With the Administration Much focus will be on shaping new federal regulations and guidance that willgovern health reform implementation for individual consumers and employerclients Additional focus will be the role of brokers and exchanges moving forward Comments recently submitted on pending regulations Market Rules Actuarial Value and EHBs Risk Adjustment Issues Multistate Plans Wellness Employer Responsibility Requirements Waiting for Regulatory Action Additional exchange guidance for brokers 105 h Non Discrimination for Fully Insured Groups Employer reporting requirements Additional information on minimum value and employer mandate
Agents and Brokers and Federal Exchanges Additional guidance on broker issues expected soon. Here’s what we know and have been able to achieve regarding agentsand brokers and exchanges today: Unless a state specifically acts to exclude agents from exchanges, itis assumed that agents and brokers can continue to assist theirclients and sell and service exchange-based products, includingsubsidized policies, and be compensated for doing so. So far, no state has acted to exclude agents and brokers, and in factthey have primarily embraced the agent community. The federal government will assume primary responsibility foragent and broker issues in fully-federally facilitated and partnershipexchanges States will continue to license producers and handle consumerprotection and the outside marketplace.
Agents and Brokers and Federal Exchanges CMS is currently consulting with NAHU directly and regularly on broker issues The federal government plans to fully utilize registered agents and brokers to sell andservice both individual and small-group exchange policies in all federally-facilitatedand partnership exchanges. The plan is for broker compensation regarding exchange-based policies to behandled by the broker with the health insurance carrier, as it is today. It’s been proposed that a federal exchange will only certify carriers as having aqualified health plan if they can demonstrate that broker compensation forindividual and small group exchange products is on par with compensation in theoutside market. Agents and brokers will be allowed to use their own websites to sell exchange-basedproducts and offer exchange-based subsidies (using the state or federal exchangedata hub for subsidy verification). The federal government is developing a specific broker portal so that agents andbrokers can assist their individual and group clients more efficiently with exchange-based coverage. Health insurance exchanges, including the federally-facilitated exchanges, arerequired to consult with producers as a stakeholder group in exchange development.
Navigators in the Exchanges Navigator duties are listed in the PPACA as follows: Conduct public education activities to raise awareness of theavailability of qualified health plans (QHPs); Distribute fair and impartial information concerning enrollment inQHPs, and the availability of premium tax credits and cost sharingreductions; Facilitate enrollment in QHPs; Provide referrals to any applicable office for any enrollee with agrievance, complaint, or question regarding their health plan,coverage, or a determination under such plan or coverage; Provide information in a manner that is culturally and linguisticallyappropriate to the needs of the population being served by theexchange.
Health Reform ImplementationAlready Implemented 2012-2o13 2o14 Beyond 2014Grandfathered planrequirements and consumer-directed plan changesSummary of coveragerequirements for allplansIndividual mandate Auto-enrollment forgroups 200+Small business tax credits forpurchasing private coverageExchange notificationrequirements for allemployersEmployer responsibility/minimum valuerequirements for 50+ groupsAutomatic expansionof state small groupmarkets to 100employeesSept. 23rd reforms- all plansDependent coverage to 26No pre-ex for childrenRestrictions on rescissions andannual/lifetime limitsEmployee FSAcontributions cappedat $2,500Health insuranceexchanges, private coveragesubsidies and Medicaidexpansion in willing statesStates can let largegroup join exchanges,triggering marketreforms for all fully-insured large groupsSept. 23rd reforms for non-grandfathered plansPreventive care105h nondiscrimination rules(enforcement delayed)New coverage appeals processComparativeeffectiveness researchfunding tax impacts allplansInsurance market reformsand new coverage standardsfor individual/small groupmarket plansThe “Cadillac”40% excise taxgoes into effect forall high-valuegroup plans,including self-insured plansMedical loss ratio requirements Expanded W2reportingNew national premium taxfor fully-insured plans
Summary of Potential Employer Penalties under PPACA, Congressional ResearchService, May 14, 2010
Counting Employees—The Basics for ER Applicability The employer responsibility requirements apply in a calendar year ifthe company averages at least 50 full-time or full-time equivalentemployees during the prior calendar year FT = working least 30 hours per week on average a month PT employees count towards the total on a pro-rated basis. Youdivide the total hours of service of all employees who are not full-time for the month by 120 Seasonal employees count towards the total for determining ERapplicability unless: The group’s workforce exceeds 50 full-time employees for 120days or fewer during a calendar year, and those seasonalemployees are what put the employer over the threshold All members of a controlled group count when determining theapplicability of the ER requirement
Counting Hours—The Specifics It is expected that current DOL rules for counting hours forpension plan purposes will be used to count an employee’s hoursof service as a full-time employee or full-time employeeequivalent. Under these rules, a person is considered to havecompleted an “hour of service” with each hour for which he is paidfor work, vacation, holiday, sick time, layoff, jury duty, militaryduty, etc. When converting time to a monthly basis, 30 hours per weekwould mean 130 hours per calendar month. Under the ER requirements, affordable/minimum value coveragehas to be offered to each FT employee or the employer ispenalized. Guidance gives clear safe harbors for establishing if someone is FT
Safe HarborsTo enroll employees: The employer can create a reasonable time window (up to 90 days) betweenthe standard measurement period and the associated stability period todetermine who is eligible for coverage, and notify and enroll employees.This is called an administrative period. It must overlap with the prior stability period to avoid gaps in coverage forongoing employees. New Variable Hour Employees A new employee is a variable-hour employee if, based on the facts andcircumstances at his/her start date, it cannot be determined that theemployee is reasonably expected to work, on average, at least 30 hours perweek It is not required that coverage be offered to these employees until theycomplete the measurement period Seasonal Employees The seasonal employee definition only applies to ER applicability For extending coverage, the FT/Variable Hour counting rules apply
Coverage Affordability Coverage also must be “affordable” The employee’s cost for coverage (self-only coverage) must notexceed 9.5% of family income. Treasury has proposed a safe harbor for employers to consider theW2 wage rather than family income Employers may want to consider premium subsidy adjustments, asdependent coverage assistance is not factored into the “affordability”calculation Even in a small employer group, if the employee has a valid offer ofaffordable and quality coverage from their employer, they and theirdependents are not eligible to go to the exchange and get subsidizedcoverage.
Federal Poverty Limit -FPL 2011 FPLHourlyRate (40 hrweek)W2WageEmployee Share of Single Premiums perMo @ 9.5% income Standard100% (Possibly MedicaidEligible) $10,890 $5.24/hr 9.5% $86/mo133%(Possibly MedicaidEligible) $14.484 $6.96/hr 9.5% $114/mo150% (Minimum Wage) $16,335 $7.85/hr 9.5% $130/mo200% $21,780 $10.47/hr 9.5% $172/mo250% $27,225 $13.09/hr 9.5% $216/mo300% $32,670 $15.71/hr 9.5% $259/mo350% $38,115 $18.32/hr 9.5% $302/mo400% $43,560 $20.94/hr 9.5% $345/mo400% family of 4 $89,400 $20.94/hr 9.5%$345/mo since employer only has to usethe single rate for lowest tier plan tocalculate affordabilityDoes Group Coverage Meet theAffordability Test?
Calculating Penalties What is your mix of full and part-time employees? Could an adjustment of employee status reduceyour penalty exposure? Could the adjustment of premium subsidies toemployees versus dependents make a difference? If you provide coverage today, how does the cost ofthat coverage compare to your total penaltyexposure? Consider all options, including non-monetaryconcerns.
Financial Calculators Three are a number of online calculators out there thatcan tabulate potential penalties and also potentialindividual exchange subsidy awards. NRF maintains a Health Mandate Cost Calculator atwww.retailmeansjobs.com/healthcare which can model the penaltyeffect on your business The Kaiser Family Foundation maintains the most accurate subsidycalculator available, although it has its limitationshttp://healthreform.kff.org/subsidycalculator.aspx But it’s not just about doing the penalty math. Whenmaking coverage decisions you have to take a moreholistic approach.
Why Offer Employer-Sponsored Coverage? Employers can provide substantial economic value and financial peace of mind toemployees by offering group health insurance coverage. This gives employers anadvantage when competing in the labor market. A healthy workforce is directly linked to productivity Offering benefits can allow employers to attract the best workers and remaincompetitive. Employers have great flexibility and can pick and choose among new benefit,payment, and organization innovations and can implement new programs andhalt unsuccessful ones relatively quickly The federal government supports employer-sponsored coverage through the taxcode by recognizing firms’ insurance premiums paid on behalf of their workers asa business cost, which are generally deductible for tax purposes. For workers, there are a multitude of advantages to employer-sponsored coverage,including: The significant contribution most employers make towards the cost of coverage forboth the employee and their dependents Individuals with employer-sponsored coverage also have the ease of purchasingcoverage through workplace enrollment that comes with group coverage Administrative costs are also lower since coverage is provided to many individualsthrough a single transaction with one employer..
Highlights of the New Market Rules Increases the maximum permissible reward under a health-contingent wellnessprogram from 20% to 30% of the cost of health coverage. The agencies alsoproposed increasing the maximum reward to as much as 50% for programsdesigned to prevent or reduce tobacco use. Calls for HHS to collect a user fee from health insurance issuers participating in afederally-facilitated Exchange. Provides additional guidance on the definitions and counting methods used todetermine whether an employer is a small or large employer for exchangeparticipation purposes. Proposes to let Exchanges and SHOPs selectively list on their website only brokersregistered with the Exchange or SHOP and calls for parity in broker compensationby carriers regarding individual and group policies sold inside and outside theexchanges. Sets the standards for multi-state health insurance plans. At least two of theseprivate-market plans must be offered exchanges, and the new rules give the federalgovernment the authority to directly negotiate premiums with the insurers offeringthese plans, conduct its own rate review and appeals process, and address “ otherterms and conditions as are in the best interest of the enrollees.”
Employer Rule Highlights Employers are only responsible to offer coverage to full-time employees and theirdependents, and stipulates that dependents are children under age 26. Large employers will not face tax penalties for not offering coverage to spouses, whowill be able to seek a federal premium tax credit to purchase health insurance in anExchange if other minimum essential coverage is not available (such as through thespouse’s employer). While coverage must be offered to children employers do not need to provide or takeinto account dependent premium contributions when determining the affordability oftheir coverage. The rule formally establishes a safe harbor for employers to use the employee’s W-2wages when determining whether or not employer coverage is affordable and also addssafe harbors based on the rate of pay and the federal poverty line. The proposed regulations state that a large employer will be treated as offeringcoverage to full-time employees if they offer coverage to 95% of their full-timeemployees.
HHS seeks comment onMarketplace Application 21 pages, requires: Social Security numbers (or document numbers for anylegal immigrants who need insurance) Birth dates Employer & income information for everyone in yourfamily (for example, from paystubs or Forms W-2, Wageand Tax Statements) Policy numbers for any current health insurance Information about any job-related health insuranceavailable to your family
Proposed SHOP Rules - DelayFor plan years beginning on or after January 1, 2014 andbefore January 1, 2015, a SHOP would not be requiredto permit qualified employers to offer their qualifiedemployees a choice of QHPs at a single level ofcoverage but would have the option of doing so. Forplan years beginning on or after January 1, 2014 andbefore January 1, 2015, Federally-facilitated SHOPs (FF-SHOPs) would not exercise this option, but wouldinstead assist employers in choosing a single QHP tooffer their qualified employees
Frequently Asked QuestionsWill the January 1, 2014 requirements bephased in by plan year or will they all takeeffect on the first day of the new year?The ER requirement will start on January 1.It’s been proposed that the market reformswill begin on a plan year basis. Safe harborsare proposed for employers with noncalendar year plans.What about the employer exchange noticerequirement in March of 2013?We have been told this will be delayed.If my client owns multiple businesses, howare they treated for PPACA compliancepurposes?For the ER requirements, IRS controlledgroup rules apply. For coverage purchases,state/carrier participation rules apply. ForW2 reporting, it’s the mandatory electronicfiling rules.If a state decides not to operate its ownexchange, will a Federally FacilitatedExchange be legally able to give outsubsidies/enforce the employerresponsibility requirements?The short answer is yes, because even thoughthere is a lawsuit challenging the ability ofthe federal government to make suchdisbursements, the Obama Administrationbelieves it has the authority to give outsubsidies in federally facilitated exchangesand it will begin doing so next year beforethe challenge lawsuit can make its waythrough the courts.
Frequently Asked QuestionsWhat will happen to high-deductible plans and CDHCproducts? I heard there was adeductible cap?There is a deductible cap of $2000/$4000 in 2014 for smallgroups. A proposed regulation would give plansflexibility on this and we anticipate legislation to repeal itin the 113th Congress. It only applies to SG fully insuredplans. The proposed rules make allowances for the sale ofCDHC products to continue in all markets, but like allproducts there will be changes in 2014 particularly forindividuals and small groups.What if an employer uses adifferent standard for FTEsthan 30 hours a week?They will have to use the PPACA definition for compliancewith the ER requirements.Can a person leave an employergroup to go to the exchange?Yes, but if they have a valid offer of affordable and qualityemployer coverage, they and their dependents are noteligible for a subsidy.If a small employer buys SHOPexchange coverage foremployees, do low incomeemployees get a subsidy?No, premium tax credit subsidies are only available in theindividual exchange and are only for people without offersof valid, affordable and quality employer-sponsoredcoverage.Are there exceptions if a unionplan covers my workers.No, as it stands now, union employees count towardsemployee totals and an employer is obligated to offer FTunion employees coverage if the employer is subject to theER mandate.
Next Steps for the Agent/BrokerCommunity in the States Encourage states to stay engaged Regarding exchanges: Prepare for the release of more federal regulatory guidance onnavigators and agents and brokers in exchanges Continue to work with policymakers on the role of the broker toserve group and individual clients in state-based exchanges Encourage state-based regulation and licensure or certification ofnavigators Monitor the use and development of “assisters” In a federally facilitated exchange or a partnership exchange, HHScontrols the rules for agent participation in exchanges and the statecontinues to regulate agents Review state laws relative to agent and broker compensation, fee-collection, consultant requirements and rebates
Next Steps With Clients Look at health reform implementation as an opportunity toexpand your consultative approach Anyone can run rates and use an online calculator Only a great agent or broker can: Run through the tangibles and intangibles with their clientsand help them customize a solution that meets all of theunique needs of both the employer and their workforce Communicate changes and needs to employers andemployees Clients have new and increasing needs. Agents and brokers thatwant to take the time, educate themselves and develop the toolsclients need will continue to be very successful.www.youtube.com/watch?v=0oiW9SNpHvc&feature=player_detailpage
Understand and Carefully Manage Service ExpectationsBusiness owners generally have much higher service delivery expectations. They tendto measureand benchmark the service they receive from their trusted circle of advisors and notnecessarilyagainst other companies i n their similar industry.On this mark, you are not just competing with other advisors, but any given client’s idealvision of “service.”Advisors choosing to specialize in this market must take a very active role in setting andmanaging their clients’ expectations. If this is not done effectively (and continuallyreinforced after every meaningful client contact), advisors may find themselves facedwith completely impractical or unrealistic hurdles to meet..
Broaden Your Solution SuiteBusiness clients can have a broad range of complex needs that require advice fromspecialists across a number of different areas, such as legal , benefit and tax advisors.Advisors need to carefully evaluate whether they have the skills and knowledge to add realvalue to these clients before the need arises. If they don’t, clients may transfer assets to anadvisor or firm that does.Depending on the needs of your clients, you can increase your firm’s capabilities bypartnering with or developing a strong and trusted alliance with other professional serviceproviders. Consider removing this oftentimes challenging hurdle through the one-on-oneconsultative advice of our strategic partner who can deliver definitive advice on complexbenefit planning matters as needed.
Centers of InfluenceIf your firm does not provide such expertise in-house, you can drawon your centers of influence or ther professional networks to findpeople with whom to work and form a referral alliance.Position yourself as an industry leader . Because of their desirabilityas clients, business owners are more likely to have their choice ofpeople servicing their company needs. Advisors who are not widelyacknowledged as one of the premier suppliers of business solutionsmay be at a distinct disadvantage when it comes to attracting andretaining corporate clients.
Survey your audienceWhat is the value of asking your clients for feedback about you and your practice? In addition tothe answers you may receive that can help you tailor your services to better meet their needsand expectations, asking your clients to tell you what you are doing well and what you could bedoing better shows that you are dedicated to consistently improving your service to them: ademonstration that will reflect positively on you and strengthen your client relationships.But there is also a likely economic benefit for you as well advisors who formally ask theirclients to complete satisfaction surveys generate 31 percent more revenue on average thanpeers who do not solicit client feedback.The importance of regularly seeking feedback from clients can never be overestimated, and itis a risk to assume that you know what your clients are thinking, or that a quiet client isnecessarily a satisfied client. This is true within any market condition, but even more so in thewake of health reform.