Affordable Care Act: Strategic Implications For Employers Presentation Transcript
Affordable Care Act:Strategic Implications for Employers
Our Expertise> The Alliance moves health care forward by controlling costs, improving quality, and engaging individuals in their health.> We are an employer-owned, not-for- profit cooperative 180 members; 83,000 individuals Wisconsin, Illinois and Iowa
Objectives> Cover legislative intent vs. reality of the ACA> Summarize specific provisions that impact employers> Provide a broad overview of exchanges> Options and opportunities for employers
Legislative Intent> Get more people covered Mainly through entitlements but also through market reforms> Address problems with individual and small employer markets Market reforms – EHBs, community rating Exchanges – transparent, actionable marketplace New health insurance options Subsidies
Legislative Intent, cont.> Keep employer money on the table Grandfathering provisions Provide benefits or pay a penalty Tax credits for small employers> Federal investments to make it work Subsidies Health system changes with no immediate pay off
Reality of the ACA, to date> Coverage will increase although some states will forgo Medicaid expansions> Issues with individual and small group market: EHBs, community rating, prevention requirements likely to come at a significant cost particularly in the individual market. Most states have deferred to feds on SHOP exchanges.
Reality of the ACA, cont.> Most employers are likely to continue providing benefits but decisions made on new set of variables Consultants/brokers other trusted benefits partners play critical role> Affordability Winners and Losers Health system reforms a big ?> Lots of uncertainty heading into 2014
Reality of the ACA, cont.> The more things change, the more they stay the same. Employers, health plans have to take matters into their own hands if they are to make the most of these environmental changes.> In reality, options for employers haven’t changed that much, but ACA has created huge environmental change, and change brings opportunity
Insurance Market Reforms> All plans: Lifetime and annual limits, recissions, dependents to age 26, preexisting conditions, SBCs, and waiting period limitations> Large group plans also subject to certain new taxes and reporting requirements
Insurance Market Reforms, cont.> Non-grandfathered plans: coverage of preventive health services with no cost- sharing, prohibition on discrimination under an insured plan in favor of highly compensated individuals, access to emergency services, required appeals process for benefit denials
Insurance Market Reforms, cont.> Non-Grandfathered Plans: In 2014, certain reporting requirements, coverage requirements for clinic trials and provider discrimination requirements also apply.> Grandfathering significant – but can you hang on to your plan?
Insurance Market Reforms, cont.> Insured Plans: Need to also comply with Essential Health Benefits (sm group), MLR, Rate Review, Guaranteed Issue and Renewal and rating restrictions> Insurers also subject to insurer-specific new taxes and reporting requirements
Employer Specific Impacts> Changes in Plan Design Wellness rewards increase from 20% to 30% of total cost of employee-only coverage, 50% for smoking cessation Account based plan adjustments, namely $2,500 FSA limit 2013 and new HRA restrictions Cost sharing limitations applicable to non- grandfathered plans> Notice to employees that exchanges exist
Employer Specific Impacts, cont.> Small employers eligible for a tax credit for the purchase of employer coverage Applies to employers with 25 or fewer employees with average wages not to exceed $50,000. Employer must contribute 50% of premium.> Small employers do not have to offer coverage, but need to know Pay or Play rules
Employer Specific Impacts, cont.> Large Employers: Shared responsibility “Pay or Play” and reporting requirements W-2 Reporting – only applicable to employers filing 250 W-2s Auto-enrollment – only applicable to employers with 200 or more employees
Employer Specific Impacts, cont.> Taxes, fees and new regs applicable to health plans will increase costs Insurer Excise Tax Temporary reinsurance program (3 years) – Assessment of $63 per covered life per year for all plans. Only individual plans benefit. PCORI fee on health insurance policies (ends 2019) Excise tax on high cost coverage > Effective in 2018
Employer Specific Impacts, cont.> Other provisions that will impact: Individual mandate MLR New options in the market > Self-funding, MSPs, CO-OPs Exchanges > Employees cannot access subsidies if you provide “affordable” coverage > Risk selection issue?
Public Exchanges: Will TheyWork?> Responsibilities shared by federal govt. and Illinois initially (conditional approval) Manage health plans and ensure they meet ACA requirements Screen for Medicaid eligibility Determine eligibility for subsidies, both premium credits and cost sharing reductions Establish a Web-Based Marketplace allowing for the comparisons between insurance plans on a level playing field Assist consumers/enrollment Ensure Accountability
Public Exchanges: Will TheyWork?> Longer term, Illinois could opt for more “active purchaser” role “Massachusetts Model” – Intense negotiation Only those that meet requirements are offered Competing bills currently being considered for 2015
Public Exchanges: Will TheyWork?> Financing Federal govt has issued almost $2 billion in grants to states so far for development Must be self-sustaining by 2015 Most exchanges will be financed by charging health plan “user fees”
Public Exchanges FPL Chart Financial Assistance available on a sliding fee scale: > Refundable and Advanceable Tax Credits (up to 400% FPL) > Cost Sharing Reductions (up to 250% FPL) > Out of Pocket Limits (up to 400% FPL)
Shop Exchanges> Available to employers with 50 or fewer employees (Illinois definition), but in 2016 that increases to 100 employees> No government subsidies other than limited tax credits discussed earlier> In 2014, employers will be able to choose a plan or allow employees to choose different plans through defined contribution
Private Exchanges> Not actually new or ACA related, several examples from around the country> Remains to be seen how they will differentiate from the marketplace Defined contribution platform?> Models vary, success dependent on both insurers and employers buying in
Public or Private Exchanges> Plus: Potential for economies of scale, marketplace where having options on level playing field leads to more competition and transparency.> Minus: We don’t have answers today as to the cost, or which ones will still be standing in 2017. Employees will have questions, especially after employers have to provide a notice on exchanges.
What Options Exist forEmployers Now?> Maintain a grandfathered plan (i.e. minimum changes = fewer regulations)> Purchase new coverage on the private insured market, including private exchanges> Get bolder on cost containment strategy – especially important for self-funded plans> Do not offer health coverage> Purchase coverage from a public exchange (if 50 or fewer employers)
Summary: What Options Existfor Employers Now?> Only the public exchange is a new option> Environment is very different, and in flux> The ACA did little to change employers’ reasons for providing benefits> Employers are paying closer attention to their options than ever before. Some are even finding opportunities in the ACA.
Examine YourHealth Benefit Strategy> ID everyone involved in benefit decisions and perform compliance review/gap analysis> Involve your insurance broker and tax advisors> Evaluate financial impacts of options through 2018> Evaluate non-financial impacts> Count 2013 FTEs> Plan employee communication strategy
Resources> Alliance Website: www.the-alliance.org> IRS ACA Website: http://www.irs.gov/uac/Affordable- Care-Act-Tax-Provisions> Healthcare.gov: http://www.healthcare.gov/index.html> Consumer Reports: http://www.consumersunion.org/pub/pdf/healthcare20 12.pdf> Kaiser Family Foundation: healthreform.kff.org
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