Healthcare Reform: The Road Ahead


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Are you ready for the upcoming 2014 provisions of the new healthcare reform act? Do you know what the implications are to you as a small or midsize company?

Our webinar will help you become familiar with upcoming requirements under the Patient Protection and Affordable Care Act.

Expect to learn the following and more:

What is the Patient Protection and Affordable Care Act
How does an organization determine their 2014 cost to comply?
What should organizations be doing now to prepare?

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Healthcare Reform: The Road Ahead

  1. 1. To protect the confidential and proprietary information included in this material, it may notbe disclosed or provided to any third parties without the approval of Aon Hewitt.Health Care Reform Update:The Road AheadPresented May 9, 2013
  2. 2. 1Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/2013AgendaIntroductionHealth Care Reform – The Road AheadQ&A
  3. 3. 2Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/2013Introduction Patient Protection and Affordable Care Act (PPACA)– Also known as:• The Affordable Care Act (ACA)• ―Obamacare‖• Health Care Reform (HCR) Co-employment and the Affordable Care Act (ACA)– No PEO-specific provisions in the ACA– PEO clients should be looked at separately from the PEO in terms of complying with the law,based on legislative history and guidance from AlphaStaff compliance resources and ERISAcounsel• Employer Play or Pay requirement• Nondiscrimination testing (postponed)• Small Business Tax Credits All AlphaStaff-sponsored major medical plans are fully insured and are compliant withcurrent ACA requirements and will continue to be updated as new provisions becomeeffective.
  4. 4. 3Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/2013The Rules of Health Care Reform Deal with what you know Apply the ―Jello‖ Theory
  5. 5. Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/2013Current State of PPACAHealth InsuranceExchanges withReformed RulesExpanding/Improving Coverage Paying for Expanded CoverageOptionalState Expansion ofMedicaidEmployerMandate―IndividualMandate‖—now a―Shared ResponsibilityPayment‖Federal SubsidiesTo Buy Health InsuranceIn ExchangesMedicare/MedicaidPayment ChangesTaxation ofHigh-Cost EmployerHealth CareCoverageIncrease inOther Taxes= Direct impact to employers= Indirect impact to employers= Direct and indirect impact to employersIncreased MedicareTaxes on High-Income IndividualsACA Penaltieson Employer1 Supreme Court ruled states could decline to expand Medicaid eligibility without losing existing Medicaid funding2 Supreme Court ruled ―mandate‖ is a tax on not having health insurance4
  6. 6. Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/20132011 Plan Year 2011 2012 2013 2014 2018• Lifetime dollar limits onEssential Health Benefits(EHB) prohibited*• Preexisting ConditionExclusions Prohibited forChildren under 19*• Overly restrictive annualdollar limits on EHBprohibited*• Extension of Adult ChildCoverage to Age 26*• Prohibition on Rescissions*• No Cost Sharing andCoverage for Certain In-Network Preventive HealthServices**• Effective Appeals Process**• Consumer/patientprotections**• Nondiscriminationrequirements on fully insuredplans** (DELAYED)• Certain Retiree MedicalClaims Reimbursable (ERRP)• Retiree Drug Plan FASLiability Recognition• Over-the-CounterMedicines NotReimbursable UnderHealth FSA, HRAs, orfrom HSAs Without aPrescription, ExceptInsulin• HSA Excise Tax Increase• Public Long-Term CareOption (CLASS Act) –NoLonger Supported byHHS• Medicare Part DDiscounts for CertainDrugs in ―Donut Hole‖• Employer Distribution ofSummary of Benefitsand Coverage toParticipants* (DELAYED)• ComparativeEffectiveness Fee• Employer Quality of CareReport**• Medical Loss Ratiorebates (insured plansonly)*• Employer Reporting ofHealth Coverage onForm W-2 (due January31, 2013)• Notice to InformEmployees of CoverageOptions in Exchange(DELAYED)• Limit of Health Care FSAContributions to $2,500(Indexed)• Elimination of Deductionfor Expenses Allocableto Retiree Drug Subsidy(RDS)• Medicare Tax on HighIncome• Addition of women’spreventive healthrequirements to No CostSharing and Coveragefor Certain In-NetworkPreventive HealthServices **• Determining full-timeemployees• Non-discrimination rules(DELAYED)• Individual Mandate toPurchase Insurance or PayPenalty• State Insurance Exchanges• Employer Responsibility toProvide Affordable MinimumEssential Health Coverage***• Preexisting ConditionsExclusions Prohibited*• Annual Dollar Limits on EHBProhibited*• Automatic Enrollment(DELAYED)• Limit of 90-Day WaitingPeriod for Coverage*• Employer Reporting ofHealth Insurance Informationto Government andParticipants• Increased Cap on Rewardsfor Participation in WellnessProgram**• Cost-sharing limits for allgroup health plans, not justHDHPs/HSA (deductiblesand OOP maximum)**• Excise Tax onHigh-Cost Coverage*Denotes group/insurance market reforms applicable to all group health plans.**Denotes group/insurance market reforms not applicable to grandfathered health plans.*** This requirement applies to full time employees (e.g., 30 hours per week) and will requirecoverage that is affordable and satisfies a certain actuarial value to avoid the penalty.Guidance forthcoming.Health Care Reform General Timeline5
  7. 7. Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/20136Small Employer Provisions – Small Business Tax Credits Effective January 1, 2010 Employers with fewer than 25 full-time equivalent employees and average wages below$50,000 that provide qualified health plan coverage are eligible to receive a healthinsurance federal tax credit Employer must pay a uniform % not less than 50% of the premium Credit of up to 35% on health premiums (50% in 2014) for eligible small employers or25% for tax-exempt small employers Premium taken into account capped at average small group market premium for Stateor local area The Internal Revenue Service has mailed postcards to 4 million small employerspublicizing the new tax credits and to remind them that the new tax credits take effectthis year. The postcard and additional information can be located at,,id=221511,00.html
  8. 8. Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/2013Employer Checklist—Act on 2013 Provisions Now2013 ProvisionsAdministrative & CommunicationActionsMedicare taxes for high-income  Do calculations Coordinate with payroll Tell affected employees (optional)$2,500 FSA Limit  Communicate in off-cycle enrollments Provide decision support Update SPDsWomen’s preventive health coverage  Communicate in off-cycle enrollments Update SPDsNotifying employees about stateexchanges (Delayed) Communicate to all employees aboutexchanges (eligibility, services and contactinformation)Patient-Centered Outcomes ResearchInstitute (PCORI) Trust Fund Fee Based on average covered lives $1 for 2013; $2 for 2014 Reporting and payment of fees on IRSForm 720
  9. 9. 8Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/2013Start Preparing for 2014 Provisions2014 Provisions Administrative & CommunicationActionsEmployer mandateFree-rider penaltiesPremium tax creditsAutomatic enrollment (Delayed)Minimum essential benefitsFully-effective group market andinsurance reformsEducating employees on how stateexchanges will workTransitional Reinsurance FeeIncreased wellness rewards cap 30% ofcost of health coverageExpanded preventive care Incorporate provisions into enrollment Develop a communication strategy andtactics Provide decision support Create or update SBCs/ SPDs/ SMMsGuiding Principles Focus on participant actions Stay objective Simplify messages Provide guidance Capitalize on the opportunity
  10. 10. 9Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/20132014—Exchange Update Coverage through the exchanges will begin in every state on January 1, 2014, withenrollment beginning October 1, 2013. States can elect to:– build a fully state-based exchange,– enter into a state-federal partnership exchange, or– default into a federally-facilitated exchange. The Affordable Care Act (ACA) directs the Secretary of Health and Human Services(HHS) to establish and operate a federally-facilitated exchange in any state that is notable or willing to establish a state-based exchange. In a federally-facilitated exchange, HHS will perform all exchange functions. Statesentering into a state-federal partnership exchange may administer plan managementfunctions, in-person consumer assistance functions, or both, and HHS will perform theremaining exchange functions. If a state opts for a state-federal partnershipexchange, it has until February 15, 2013, to submit an exchange blueprint to HHS.
  11. 11. 10Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/20132014—SHOP Exchange Small Business Health Options Program (SHOP) will be designed to make insuranceoptions available for small businesses. THE SHOP will allow the small business to select the level of coverage offered to theemployees and how much the employer will contribute. There will be an expanded Small Business Healthcare Tax Credit that will provide atax credit of up to 50% of the employer’s contribution towards providing coverage tolow and middle income employees. Premiums will be impacted by Medical Loss Ratio requirements. Employers will be able to enroll through a broker, through a website or through a tollfree telephone number. .These were to become effective January 1, 2014. However, the federal governmentrecently announced that the federal SHOP Exchanges only will now be postponeduntil January 1, 2015. State SHOP Exchanges may follow suit, to be determined. This delay does not preclude an employer from meeting the employer mandaterequirements.
  12. 12. 11Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/2013Public Exchange Status by StateCAOREWANEVUTAHCOIDAHOWYONMARIZNDSDNEBKANSASOKTEXASMINNIOWAMOArkLAMSFLORIDAGASCKYWIS MNIL INDOHIOPAW VAVANCTNNYNJMDDECTVTNHMAINEMASSACHUSETTSMONTANAALASKAALAHAWon’t Create ExchangeCreating ExchangePartnership Exchange with FedsDemocrat GovernorRepublican GovernorWANYVTMASSACHUSETTS11
  13. 13. Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/2013Half of States Are Expanding Medicaid in 2014CAORWANVUTCOIDWYNMAZNDSDNBKSOKTXMNIAMOARLAMSFLGASCKYWIMNIL INOHPAWVVANCTNNYNJMDCTVTNHMEMAMOAKALHI9 States Won’t Expand Medicaid13 States Will Expand Medicaid16 States Undecided on Medicaid ExpansionDemocrat GovernorRepublican Governor5 States Leaning toward expanding Medicaid5 States Leaning toward Not Expanding MedicaidDhE12
  14. 14. 13Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/20132014—Individual Mandates Individual Mandate– In 2014, participants will be required to maintain health coverage that meets MinimalEssential Coverage or they will be subject to a shared responsibility payment which is a taxon not having health insurance• This is known as the Individual Mandate• An individual avoids the Individual Mandate by enrolling in Minimum Essential Coverage– The penalties will be as follows:• 2014: Greater of 1% of salary or $95• 2015: Greater of 2% of salary or $325• 2016: Greater of 3% of salary or $695– If the cost of insurance exceeds 8.0% of an individual’s income, then the individual is notsubject to the mandate. Other exemptions include religious exemptions and persons in jail
  15. 15. Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/2013What’s Next for Health Care Reform: 2014• Individuals earning up to 400% of the Federal Poverty Level that are not Medicaideligible will have tax credits available to them to help cover the costs of medicalpremiums in a state exchange. The levels of income qualification, based on 2012guidelines, would be as follows:Individuals in Household 2012 FPL 400% of FPL1 $11,170 $44,6802 $15,130 $60,5203 $19,090 $76,3604 $23,050 $92,2005 $27,010 $108,0406 $30,970 $123,8807 $34,930 $139,7208 $38,890 $155,560Qualification of Federal Subsidies
  16. 16. Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/2013What’s Next for Health Care Reform: 2014• The amount of the tax credit is based off the cost of the second lowest cost Silver planwhich would have an actuarial value of 70%. The actual amount of the tax credit wouldvary based on income and family size as follows:Up to 133% FPL 2.0% of income133% to 150% 3.0 to 4.0% of income150% to 200% 4.0 to 6.3% of income200% to 250% 6.3 to 8.05% of income250% to 300% 8.05% to 9.5% of income300% to 400% 9.5% of incomeAs an example, Sue is single and has an annual income of $28,000, which is 250% ofthe FPL. Based on her age of 45 and where she lives, the cost of the second lowestSilver plan is $5,733. She would not have to pay more than 8.05% of her income or$2,254 to enroll. Her tax credit would then be $3,479 ($5,733 minus $2,254).Qualification of Federal Subsidies (cont’d)
  17. 17. 16Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/20132014—Employer Mandates Employer Mandate– The Employer Mandate is also referred to as• The free rider penalty (historical terminology), shared responsibility payment, the assessablepayment, and the employer responsibility payment– A Large Employer is one that employs 50 or more FTEs• FTE generally means an individual, with respect to any month, who is employed on average at least30 hours of service per week– The Employer Mandate requires a Large Employer to offer• Minimum Essential Coverage that meets Minimum Actuarial Value requirements• Coverage that is ―affordable‖• Available to ―substantially all‖ (i.e., 95% or more) full time employees Employers must also offer coverage to dependent children up to age 26, however this coveragedoes not need to be affordable The dependent definition does not include spouses
  18. 18. 17Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/20132014—Employer Mandate - DetailPenalties for failing to comply with the Employer Mandate $2,000 Tax Penalty– Applies when an employer fails to offer its FTEs the opportunity to enroll in MinimumEssential (health) Coverage (MEC)• If one full-time employee goes to an Exchange and qualifies for a subsidy, then the employer wouldbe subject to a $2,000 penalty for each individual that was not offered coverage that met MECguidelines• There is a waiver for the first 30 full-time employees.• The penalty is calculated on a monthly basis. $3,000 Tax Penalty– Applies when an employer offers its FTEs the opportunity to enroll in MEC and the employeecontribution for single coverage exceeds 9.5% of their income, thus being consideredunaffordable• The penalty generally is $3,000 per year for each full-time individual who enrolls in an Exchange andqualifies for a subsidy• There is no 30 life waiver• Example of 9.5%: Employee earning $35,000/year; 9.5% of salary = $3,325 annually or $277 permonth. This is the most that an employee can be asked to contribute for single coverage.
  19. 19. Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/2013What’s Next for Health Care Reform: 2014• Employer A: 15 FT employees, 10 PT employees @15 hrs/wk, 10 Seasonal Workers• Total 20 FTEs (15 FTs + 5 FTEs + 0 for seasonal workers) = Penalties do notapply. Applies to employers with at least 50 Full-Time Employees (FTEs), whichincludes a combination of full-time workers (those working 30+ hours/week) pluspart-timers (seasonal workers with fewer than 120 days do not count).• Employer B: An employer with 35 full-time employees and 30 part-time employees whoeach work 15+ hours/week = 50 FTE.• There are two penalties:• The first penalty is $2,000 per all full-time employees for not offering coverage ifone employee goes into a state Exchange and qualifies for a subsidy. There is awaiver for the first 30 full-time workers. Employer B potential penalty is $20,000($2,000 x 5 full-time employees)• $3,000 penalty per each employee whose premium contribution is greater than9.5% of income or whose plan covers less than 60% Actuarial Value (AV) basedon Minimal Essential Coverage (MEC) of allowable costs. Applied to eachindividual that goes into a state Exchange and qualifies for a federal subsidy.Calculation
  20. 20. 19Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/2013Defining Full-Time Employees Recent guidance on definition of full-time employee (FTE) provides safe harbormethods for determining whether– An existing (ongoing) employee is an FTE; and– A newly-hired employee is an FTE Guidance applies to– Variable Hour Employees• Based on facts and circumstances at start date, it cannot be determined that employee is reasonablyexpected to work 30 hours/week– Seasonal Employees• A worker who performs labor/services on a seasonal basis; good faith test for now. Generallyconsidered to be less than 120 calendar days or three months.
  21. 21. 20Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/2013Defining Full-Time Employees—Ongoing2013 Measurement Period (MP) 2013 Administrative Period (AP) 2014 Stability Period (SP)3 – 12 months Up to 90 daysAt least 6 months but noshorter than MP Determines coverage in stability period Average hours worked Buffer between MP and SP Allows for measuring and enrolling full-timers Eligibility period for employees averaging 30hours or more during MPMP Considerations Longer period reduces number of full-timersgiven high turnover Shorter period provides more time to makeworkforce adjustments to mitigate costSP Considerations Shorter period reduces coveragecommitment but creates administrativecomplexity Longer period that aligns with calendaryears is most practical administratively20
  22. 22. 21Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/2013Defining Full-Time Employees—Newly HiredNew Variable Hour and Seasonal EmployeesInitial Measurement Period (IMP) Administrative Period (AP) Stability Period (SP)3 – 12 months Up to 90 days Same length as ongoing employeesConsiderations IMP plus AP must not last beyond last day of first calendar month following employee’s one-year anniversary– No more than 13 months plus a partial month Transition to ongoing allows for extension of coverage for balance of overlapping ongoing stability period21
  23. 23. Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/201322What’s Next for Health Care Reform: 2014The Health Care Reform Law prohibits non-grandfathered insured group health plans fromdiscriminating in favor of highly compensated individualsRules similar to those under Internal Revenue Code (Code) section 105(h) that are applicable toself-insured medical reimbursement plans will apply to non-grandfathered insured plans. Finalrules are being defined.Highly compensated individuals generally include:the 5 highest paid officers,any 10% owners, and,the highest paid 25% of all employeesTesting is required to ensure that a sufficient number of non-highly compensated individuals benefitunder the planPotential penalty is $100 per day per discriminated employee up to $500,000.Final rules are expected for 2014.Non-Discrimination Testing
  24. 24. Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/2013Leading to Significantly Different DecisionsEmployerPlanStateExchangesMedicaidOpt-OutSelf Insure• If offered, generally the best choice for employees who donot receive a federal subsidy in the exchanges• Insurance plan familiar to most employees• Employees with low family incomes may receive betterbenefits at a lower cost in a state exchange• These individuals can only receive federal subsidies ifemployer does not offer an affordable plan• Only available in states that choose to expand Medicaidcoverage• Employees receive nearly full coverage, although provideraccess is limited• Employees may opt-out for many reasons including aspouse with a better/cheaper plan, TriCare coverage, orsimply not wanting to own health insurance23
  25. 25. 24Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/2013Individual Factors Driving Insurance ChoiceDemographics Age Family Size Geography$Financials Family income Premiums orcontributionsProtection Provider Access Health Status Insurance coverageLoyalty Satisfaction with currentinsurance product Willingness to change24
  26. 26. Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/2013Considerations for Dropping Group Coverage Exchange costs for employers may significantly increase by the timeExchanges are available in 2014. These are hard dollar penalties and are not tax deductible. Employers likely will be pressured to provide additional compensation toemployees who participate in an Exchange Any additional compensation to cover Exchange costs may increase payroll(FICA/FUTA) taxes for the employer, and income and payroll (FICA) taxes forthe employee How does the employer want to be viewed as in terms of ―An Employer ofChoice‖25
  27. 27. 26Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/2013Co-employment ResponsibilityHCR PROVISIONS 2013 - 2014HCR EffectiveDateAlphaStaff PlanEffective DateResponsible Party CommentsDetermine Large Employer status subject to Play orPay2013 for 1/1/2014effective dateN/A Employer (Client)Contact AlphaStaff for assistance. This isdetermined by employer size in 2013.Establish measurement/admin/stability periods forvariable hour employees1/1/2014 N/A Employer (Client) Contact AlphaStaff for assistance.Perform IRS Employee Affordability Analysis (9.5%safe harbor)1/1/2014 N/A Employer (Client) Contact AlphaStaff for assistance.Waiting period maximum 90 days 1/1/2014 9/1/2013AlphaStaff/Client/CarrierNote that AlphaStaff sponsored plans will require amaximum 1st of month following 60 days aswaiting period due to plan design (no mid-monthcoverage dates). Client-sponsored plans will varybased on plan design and AlphaStaffadministration requirements.Health Care Market Place ("Exchange") employeenotifications required by FLSA10/1/2013, thenall new hiresN/AAlphaStaff on behalf ofclient companyExpect guidance on content and Model Notice -tentative delivery date August-SeptemberReview / Update plan documents and regulatorydisclosures (AlphaStaff sponsored plans).Varies N/A AlphaStaffUpdates to plan documents (SPD/Wrap Document)at year end, other docs will be updated as newregs/guidance are issuedIRS Reporting on employer provided coverage 1/31/2015 N/A Client/AlphaStaffGuidance not yet issued on content and reportingrequirements. Unknown if AS or client companywill be required to do reportingAutomatic Enrollment Unknown N/A AlphaStaff/ClientOriginally was effective 1/1/2014, but provisionhas been delayedNondiscrimination Rules Unknown N/A AlphaStaff/ClientOriginally was effective 1/1/2014, but provisionhas been delayedReview Plans for minimum value standards 1/1/2014 9/1/2013 Carrier/AlphaStaffAlphaStaff sponsored plans only. Clientsmaintaining own plans will need to consult withbroker/carrierPPACA 2014 Plan requirements (AlphaStaff sponsoredplans)1/1/2014 9/1/2013 Carrier/AlphaStaffRemoval of all pre-ex, no annual max on EssentialHealth Benefits (EHB), updates to cost-sharingprovisions, and others as identified under PPACAHCR taxes/fees included in premiums (PCORI, InsurerFee, Transitional Reinsurance Fee)1/1/2014 9/1/2013 CarrierWill be included in renewal premium for fullyinsured plans; self-funded plans must self-pay
  28. 28. 27Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/20132012 and 2013 Provisions by Year2012 Comments 2013 Comments1. Employer Distribution of UniformSummary of Benefits to Participants1. Limit of health care FSA contributions to$2,500Effective for taxable years beginningafter December 31, 2012.2. Comparative Effectiveness Fee(Patient Outcomes Research Institute –PORI)Applies to Plan Years ending on or after10/01/2012; for 2012 this fee is $1.00per employee enrolled in health plan orFlexible Savings Account (FSA). Feenot assessed on employees notenrolled in either the FSA or medicalplan options. Fee to be remitted viaIRS Form 720 by 7/31/2013.2. Comparative Effectiveness Fee(Patient Outcomes Research Institute –PORI)For each Plan Year 2013 through 2018;this fee is $2.00 per employee enrolledin health plan or Flexible SavingsAccount (FSA). Fee not assessed onemployees not enrolled in either theFSA or medical plan options. Fee to beremitted via IRS Form 720 by7/31/2014.3. Medical Loss Ratio (MLR) rebates Applies to insured plans only. 3. Addition of Women’s preventive healthrequirements to no cost sharing (suchas deductibles, coinsurance) andcoverage for certain in-networkpreventive health servicesEffective January 1, 2013 for calendaryear plans.4. Employer Reporting of HealthCoverage on Form W-2Due January 31, 2013; reporting doesnot need to include standalone dental,vision or FSA plans.4. Medicare Tax on High Income• Increases Medicare tax by 0.9% to2.35% for individuals earning over$200k and joint filers over $250k• New 3.8% tax on unearned incomefor individuals earning over $200kand joint filers over $250kFinal guidance pending.5. Employer Quality of Care Report Final guidance pending 5. Notice to Inform Employees ofCoverage Options in Exchange -delayedGuidance pending (overdue)6. Elimination of Deduction for ExpensesAllocable to Retiree Drug Subsidy(RDS)Not applicable to DMS
  29. 29. 28Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/20132014 Provisions by Year2014 Comments 2014 Comments1. Shared Responsibility Payment(Individual Mandate)Employee must go to Exchangebecause employer’s plan• Was not ―minimum essentialcoverage‖ or• Was either ―unaffordable‖ or didnot provide minimum value5. Reinsurance Fees • Fees will be charged for 2014,2015 and 2016• Declared amount is $63 PMPY2. Minimum Essential Coverage Employers that do not offer―minimum essential coverage‖ to allfull-time employees pay a penalty of$2,000 for each of its full-timeemployees, until the employer offerssuch coverage• Subject to an exemption for thefirst 30 full time employees• Penalty applies if at least oneFTE receives a subsidy6. Comparative Effectiveness Fee For 2014 this fee is $2.00 peremployee enrolled in health plan orFlexible Savings Account (FSA).Fee not assessed on employeesnot enrolled in either the FSA ormedical plan options. Fee to beremitted via IRS Form 720 by7/31/2015.3. ―Unaffordable‖ or not ―Minimum Value‖•Unaffordable - <9.5% of W-2 wages•Minimum Value – 60th percentileactuarial valueIf coverage offered by employer is―unaffordable‖ or not ―minimumvalue‖, employer pays a penalty of$3,000 for each FTE who• Purchases a qualified healthplan in the Exchange• Receives a Federal Subsidy7. Auto Enrollment • Postponed – likely delayed to2015• Plans must automatically enroll allof their eligible employees inhealth coverage unless employeespecifically opts out4. State Exchanges • Exchanges open (bronze, silver,gold platinum)• Subsidies from 133% to 400% ofFederal Poverty Level• Fees on Insurance Companies8. Wellness Program Rewards Cap Increased cap on rewards forparticipation in wellness programsfrom 20% to 30% and 50% forsmokers
  30. 30. 29Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/20132017 and 2018 Provisions by Year2017 and 2018 Comments1. Large employers (> 50 lives) may be allowed into Exchanges2. Excise Tax on ―Cadillac‖ Plans 40% excise tax on insurers and TPS that offer health carecoverage costing more than• $10,200 individual (indexed)• $27,500 family (indexed)Increased threshold applies for retirees ages 55-64 and forselected high-risk occupations• $11,850 individual• $30,950 family- Adjusted for age and gender
  31. 31. 30Consulting | U.S. Health & BenefitsProprietary & Confidential | 02/2013How Can We Help? Analyze current employee population to help determine if you will be subject to theEmployer Shared Responsibility penalty (Play or Pay) by evaluating your company’sfull time and full time equivalent employees. Establish Measurement, Administrative, and Stability Periods. Provide PPACA updates through our Knowledge Center, AlphaAdvisor, andAlphaAlerts. Ensure plans are meeting minimum value requirements Determine what your minimum contribution should be to comply with the 9.5%affordability rule. Look for updates in the AlphaStaff Knowledge Center, AlphaAdvisor, open enrollmentcommunications and future forums such as today’s webinar. Health Care Reform Questions? Contact or contactyour benefits or HR representative.