Health Care Reform (PPACA)Summary for Today & Tomorrow Presented by Raphy Timour Pontrelli, Timour & Associates, Inc. Insurance Services & Amanda Kench, Benefits Administrator Total HR
Today’s Agenda• Brief History of the Preferred Protection & Affordable Care Act.• Provisions that have already been implemented.• Future Provisions.• Employer Compliance Issues• What it all means & how Total HR will help• Where do we go from here
History of PPACA• Signed into Law on March 23, 2010• Numerous Court Challenges• June 28th, 2012 Upheld by the United States Supreme Court. • Individual mandate is constitutional under the power of Congress to “lay and collect” taxes • Some limits on the power of Congress to withhold Medicaid funding • Provisions that affect employers remain intact
Goal of PPACA• Decrease the number of uninsured.• Reduce the overall cost of Health Care.• Improve healthcare outcomes.• Streamline delivery.• Initial Bill 2400 pages• Expected to be over 200,000 pages once complete.
Provisions Enacted in 2010• Child Dependents Covered up to age 26• No Lifetime or Annual Dollar Maximum Limits• No Pre-existing Condition Exclusions for anyone under the age of 19.• Tax Credits for Small Employers.• Preventative Services Covered at no Cost.
Provisions Enacted in 2011• Medical Loss Ratios - Insurers must spend at least .80 or .85 cents of every premium dollar on health costs and claims (Depends on the size of the group)• Cannot purchase over-the-counter drugs using money from an FSA, HSA, or HRA, unless prescribed.
Provisions for 2012• Employers must report the annual cost of eligible benefits on Employees W2. – Waived this year for those companies who generated less than 250 W2’s last year. Total HR has audited their client base to make sure they are reporting this information and added the information for many clients. – Currently waiting for IRS regulations as to when all sized companies will be required to report employer contributions on W2’s.• SBC (Summary of Benefits and Coverage) – Establishes guidelines and uniformity to Health Plan Benefit Descriptions
Summary of Benefits and Coverage• For any sized company that renews on or after September 23rd, 2012. This will affect Total HR clients on our benefit plans effective May 1, 2013.• A shorter, new summary document provided by carriers – Intended to help people easily compare one benefit plan to another – A four-page, two-sided document with very specific layout and information format is provided by the Dept. of Labor• Must be provided to each participant or beneficiary for each benefit package offered that the participant or beneficiary is eligible for. Total HR will make sure these summaries are up to date and handed out to client employees.
SBC’s Continued• Must include several pieces of information including, but not limited to: – Uniform standard definitions of medical and health coverage terms – Description of the coverage including the cost sharing requirements such as deductibles, coinsurance, and co- payments, – Information regarding any exceptions, reductions, or limitations under the coverage – Renewability and continuation provisions
SBC’s Continued• Must be uniform and easy to understand• Very stringent formatting requirements – 12 point font – All shading, bolding and symbols must be replicated exactly – Can’t exceed four double-sided pages in length
SBC’s Continued• Can be distributed electronically by a plan sponsor to participants who are eligible but not enrolled if: – The format is readily accessible (such as in an html, MS Word, or pdf format); – The SBC is provided in paper form free of charge upon request; and – If the SBC is provided via an Internet posting address the employees must have internet access at the workplace. Total HR will be taking a multi-dimensional approach that will be customized to each client which will ensure our client’s employees are receiving this information. The options will include online access via email or an online enrollment tool, mailings to employee’s home addresses and paper packages on site at each client location.
Medical Loss Ratio Rebates• PPACA guidelines state that in Small Group, which is 2- 100 employees, at least 80% of all insurance premiums must be used on actual medical related costs. (For companies with over 100 employees, .85 cents of every dollar)• Any spending below these thresholds will result in a rebate to policy holders. Plan sponsors or fiduciaries must act impartially, prudently, and solely in the interest of the plan participants and beneficiaries.• Calculations can become challenging. Total HR will be responsible for doing all rebate calculations for our clients and employees.
Provisions for 2013• Flexible Spending Accounts (FSA) reduces the amount one may contribute towards Health contributions to $2,500.00• This will impact clients on Total HR FSA plans effective May 1, 2013.
Provisions for 2014• Individual Mandate – Most individuals must acquire health insurance or face a fine.• Employer Mandate to provide health insurance for those who employ more than 50 Full Time or Full Time equivalent employees.• Waiting period cannot exceed 90 days.• Auto Enrollment for large employers over 200 employees.(Pending final rulings)• Discrimination Testing.(Pending final rulings)• Establish Health Insurance Exchanges
Play or Pay Mandate• Any employer with 50 or more full-time/equivalent employees must provide insurance to all eligible employees. Full time is considered anyone who works 30 hours or more a week. Total HR will determine which clients will be impacted.• Must be offered to all eligible employees and their dependents.• Must be affordable. Total HR will do the affordability calculations for our clients and share the results with them.• Must offer a plan that meets the Minimum Essential Coverage requirement. Total HR & PTA will advise which plans meet the coverage requirements and will advise our clients ahead of time if they will need to change their plan offerings.• Not providing appropriate, affordable coverage to eligible employees would result in a fine. Total HR will determine if it would be cost effective for each client to “play” by meeting all of these requirements or if it would make more financial sense to “pay” the fines. Total HR will provide these calculations for each client which will assist you in your final decision.
Play or Pay Who is eligible?• How do you determine who is eligible? – Establish a “Look back or Measurement period” • Not less than 3 months, but not more than 12 consecutive months. • Anyone that averages 30 hours or more per week is considered eligible. – Employers may use reasonable and good faith interpretation of “Seasonal” employees to help determine eligibility. • Definition: Anyone who works less than 120 days • Seasonal employees are not eligible. Total HR will figure this all out for you this is just so you understand how we are coming up with the calculations!
Play or Pay When Would a Penalty Apply?• When it is determined that you have over 50 full-time employees and do not offer coverage to your eligible employees and their dependents. – Penalty: $166.67 per month, per eligible employee, minus the first 30 employees.• If you offer coverage, but an employee is expected to spend more than 9.5% of his W2 earnings on his or her health coverage only.(Final employer contribution guidelines are still not established) – Penalty: $250 per month, per eligible employee who receives a premium credit for coverage purchased through the exchange.
Employer Size CalculationsA. Number of full time employees in the last year. 45B. Total hours worked by a part timer in a month. 96C. Total number of part timers used in B. 15D. Multiply B times C. 1440E. Divide (D) by 120. 12F. Add (A) and (E). 57 – The company has 57 full time equivalent employees. The company would be mandated to offer health insurance to its eligible employees
Challenges Facing Employers• Need will remain to recruit and retain quality employees.• Benefits will continue to be a significant factor in overall employee compensation and company culture• Compliance will be an ongoing issue and challenge for many employers.• Total HR will be here to guide and assist you throughout these changes. We will ensure that you are meeting the compliance requirements.
Where do we go from here• Healthcare Reform is still a “moving target”… • Possibility of legislative changes • Ongoing regulatory efforts— • Federal level— • IRS • DOL • HHS• State level changes• Total HR & PTA will continue to monitor these changes and keep our client informed and up to date on how Health Care Reform will impact them.
Questions?Call James Harwood or Amanda Kench 818-248-0049