Healthcare Reform—An Overview forEmployersMay 15, 2013Jeff Rubleski, MBADirector of Sales StrategyCertified Healthcare Ref...
Introductory Questions• Why consider providing health insurance at the worksite?• What impact will the Affordable Care Act...
Today’s AgendaWhat You Need to KnowReview 7 Key Topics:1. Marketplaces (Exchanges) & Subsidies2. Counting to “50” and how ...
Marketplaces & SubsidiesIndividuals GroupsMarketplace(Exchange)Eligibility“Individual Marketplace”•Open to all individual ...
55Who QualifiesFor Subsidies?Beginning Jan. 1, 2014• Unless:xCoverage is available throughan employer planxEmployer offers...
Employers with 50+ full time equivalent employeesmust meet a minimum 60% AV standard or paypenalties for every full-time e...
Counting to Play or Pay Rule of “50”►How to Determine Full-Time Equivalent Employees► How to Determine Coverage for Variab...
‘Rule of 50’ Test(s)To Determine FTEsTest 1| Number Full Time Employees 1Jan Enter # EmployeesFebMarAprMayJunJulAugSepOctN...
NOTE:For new seasonal or “variable employment” workers, the standard measurement period and administrative period must be ...
Calculating Employee Income Safe Harbors for EmployersEmployers With 50 or More FTEs Have 3 Safe Harbors*:1. W-2 Wages—thi...
Price ChangesFactors That Will Impact Health Insurance Pricing11
Tax/Fee Description CalculationMethodRemittance Responsibility1 ComparativeEffectiveness FeeAn annual fee that funds resea...
Price Changes:Taxes and FeesWhenHowMuchIndividualGroupMedicare MedicaidInsured ASC1 ComparativeEffectivenessJuly2013$1 - $...
Reform-Mandated Benefit Changes►Reform Will Require Changes to Health Benefits14
Benefit Changes:OverviewEffective date for ComplianceKey ACA Provisions Impacting products andpricing(On and Off ―Marketpl...
The ACA ensures that all individual and small group “qualified health plans” include 10 essentialhealth benefits for which...
Wellness Incentives Will ExpandHIPAA Expansion of Wellness Program Incentives►Health-Contingent Wellness Programs►Particip...
General incentives• Increases the maximum permissible reward under a health-contingentwellness program from 20% to 30% of ...
5 Strategic Reform Considerations1. How will your organization prepare for Reform?--Consider forming a Reform Action Team ...
Questions?20
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Healthcare reform overview for employers, delivered 5/15/13

  1. 1. Healthcare Reform—An Overview forEmployersMay 15, 2013Jeff Rubleski, MBADirector of Sales StrategyCertified Healthcare Reform Specialist®Blue Cross Blue Shield of Michigan1
  2. 2. Introductory Questions• Why consider providing health insurance at the worksite?• What impact will the Affordable Care Act have on employers thatcontinue providing group sponsored coverage and those that do notsponsor coverage?• How many people do you employ? What is your mix of those thatwork over 30 hours per week and those that work fewer than 30hours per week?• Is finding and keeping employee talent in your company a keyissue?• If you employ 50 or more full-time equivalent employees, will it makesense to pay the Employer Mandate penalty for not offeringemployees health insurance coverage?2
  3. 3. Today’s AgendaWhat You Need to KnowReview 7 Key Topics:1. Marketplaces (Exchanges) & Subsidies2. Counting to “50” and how to count “variable hour”employees3. Reform Mandates4. Price Changes (Taxes & Fees)5. Benefit Changes (Reform Mandates)6. Wellness Incentive Expansion7. 5 Strategic Reform Considerations3
  4. 4. Marketplaces & SubsidiesIndividuals GroupsMarketplace(Exchange)Eligibility“Individual Marketplace”•Open to all individual purchasers in 2014•Individuals choose metal compliantqualified health plans“SHOP Marketplace”•Open to all small groups(Up to 50 FTEs) in 2014•Employer chooses metal – employeeschoose products•Expands to groups up to 100 FTEs in 2016and all sizes in 2017Marketplace(Exchange)Subsides &tax credits,eligibility• Sliding scale based on income up to400% FPL (~$45k single)• Must purchase on individual“Marketplace” Exchange• Medicaid eligibles do not qualify• Less than 25 full time equivalentemployees and…• Average payroll less than $50k andEmployer must pay at least 50% ofemployee premium• Must purchase on SHOPNote: Michigan will be on federally run exchange in 20144
  5. 5. 55Who QualifiesFor Subsidies?Beginning Jan. 1, 2014• Unless:xCoverage is available throughan employer planxEmployer offers a plan of atleast bronze level equivalent(60% actuarial value) and,xThe employee’s contributionto premium would not exceed9.5% of household income (ortwo additional IRS Proposed ―safeharbor‖ limits--see IRS ProposedRegulations, December 28, 2012)Employees qualify if they:Have income 138-400% FPL*Purchase through the exchangeand,US citizen or legal immigrant5*Assuming Michigan Expands MedicaidCoverage to 138% of FPL; if not income will be100% of FPL. Medicaid expansion will addapproximately 450,000 Michigan residents toMedicaid. As of 5-5-13, expansion has not beenauthorized by the Michigan Legislature.Michigan hospitals provide approximately 1.9billion each year on uncompensated care!
  6. 6. Employers with 50+ full time equivalent employeesmust meet a minimum 60% AV standard or paypenalties for every full-time employee receivingpremium assistance on the individual marketplace.The penalty provisions are triggered if a largeemployer:•Does not offer coverage to all its FTEs and theirdependents (for 2014 the requirement is full-timeemployee coverage only)•Offers coverage, but the plan fails to pick up at least60 percent of the overall cost of the benefits beingcovered by the plan•Offers minimum coverage, but the amount theemployee must pay to obtain the coverage makes itunaffordablePay or play mandate rules—Applies to 50+ FTEs Pay or play penalties—Applies to 50+ FTEsNo coverage• Monthly penalty: $166.67 *(# full-time employees – 30)Unaffordable orlow valuecoverage• Monthly penalty: $250 *(# full-time employees)• Capped at amount determined ifyou had provided no coverageAfter 2014• Penalties will be adjusted forinflationReform Mandates:Pay or Play6
  7. 7. Counting to Play or Pay Rule of “50”►How to Determine Full-Time Equivalent Employees► How to Determine Coverage for Variable Hour Employees7
  8. 8. ‘Rule of 50’ Test(s)To Determine FTEsTest 1| Number Full Time Employees 1Jan Enter # EmployeesFebMarAprMayJunJulAugSepOctNovDecTest 2| Hours worked by non-full-time employees 2Jan Enter # hoursworked 2 ÷ 120 ResultFeb ÷ 120Mar ÷ 120Apr ÷ 120May ÷ 120Jun ÷ 120Jul ÷ 120Aug ÷ 120Sep ÷ 120Oct ÷ 120Nov ÷ 120Dec ÷ 120Sum#2Sum #1Pay or Play?Calculation:Total Full-timeEquivalents =([Sum 1] +[Sum 2]) ÷12If= 50 or more,you are a “LargeEmployer”Note 1: Full-time employees are those who work an average of 30 or more hours a week or 130 hours per month.Note 2: Count no more than 120 hours for each non-full-time employee 8
  9. 9. NOTE:For new seasonal or “variable employment” workers, the standard measurement period and administrative period must be the same as for existing employeesExampleAExampleB≤ 90 days3 to 12 months 6 to 12 months≤ 13 months• Standard Measurement Period: Gives employer “reasonable, but not unlimited” time to determine who iseligible for benefits (Must be 3-12 months)• Administration Period (e.g., waiting period): interval allotted for communication and enrollment of eligibleemployees (Cannot exceed 90 days)• Stability Period: period in which employees have ongoing coverage after become benefit-eligible and enrolling(Must be at least 6 months)Illustrative Employerrequires employees towork at least 30 hoursa week in order tobecome benefit-eligibleBenefit EligibleVariable HourCoverage Rules9
  10. 10. Calculating Employee Income Safe Harbors for EmployersEmployers With 50 or More FTEs Have 3 Safe Harbors*:1. W-2 Wages—this allows employers to compare W-2 wages earnedto insurance premium paid by the employee at the self-only rate ofcoverage. If under 9.5% of W-2 wages, coverage is affordable.2. Rate of Pay—two guidelines—for salaried employees, it is theemployee’s monthly salary; for hourly employees is the hourly rateof pay multiplied by 130.3. Federal Poverty Line (FPL)—base affordability on the FPL for asingle individual. If the employee’s cost for insurance premiumdoes not exceed 9.5% of FPL, the coverage is deemed affordable.(100% of FPL for one person is $11,490 in 2013.)*(From IRS Proposed Regulations, December 28, 2012) 10
  11. 11. Price ChangesFactors That Will Impact Health Insurance Pricing11
  12. 12. Tax/Fee Description CalculationMethodRemittance Responsibility1 ComparativeEffectiveness FeeAn annual fee that funds research on the effectiveness,risks and benefits of various medical treatmentsthrough the Patience-Centered Outcomes ResearchInstitute (PCORI), a nonprofit created through ACA.PMPY Calculation Health Insurance Issuer for fullyinsured business.Plan sponsor for self-insured .2 Federal InsurancePremium TaxA yearly tax due assessed on fully insured premiumsintended to fund premium subsidies and Medicaidexpansion.% of fully insuredpremiumHealth Insurance to Issuer3 Reinsurance FeeQuarterly fee that will support the transitionalreinsurance program with the goal of stabilizingpremiums coverage for the individual market both onand off the exchange.PMPM Calculation Health insurance issuer for fullyinsured business.Third-party administrators for self-insured programs.4 High Cost HealthPlanTax on the value of employer-sponsored healthbenefits.% based onthresholdsHealth insurance issuer for fullyinsured business. Sponsors and TPAsfor self-funded.5 Exchange FeesEstablished to ensure the exchange can be self-sustaining by Jan 1, 2015.3.5% premium Health insurance issuer participatingand offering health plans on the stateor federal exchange.6 Risk Adjustment FeeEstablishes a risk adjustment fee to pay foradministrative expense of running the federal riskadjustment program.PMPY Calculation Health Insurance IssuerPrice Changes:Taxes and Fees12
  13. 13. Price Changes:Taxes and FeesWhenHowMuchIndividualGroupMedicare MedicaidInsured ASC1 ComparativeEffectivenessJuly2013$1 - $2PMPY2Federalinsurancepremium12014% ofpremiumStop loss3 ReinsuranceFee2,32014 -2016$5.25PMPM4 High costhealth plan4 2018+ VariableGroup5 Exchangefees5 2014+ 3.5%6 Riskadjustment fee6 2014+ $1 PMPYSG          1 Federal Insurance Premium Tax levels are 50% lower for HMOs2 Reinsurance fees based on 2014 levels, then phase out completely by 20173 Individual market is charged a reinsurance fee but then receives net proceeds of collected fees through reinsurance payments (which will be reflected in lower premiums)4 HCHP Excise Tax based on 40% of the amount beyond specified cost thresholds5 HHS anticipates collecting user fees by deducting the user fee from Exchange-related program payments6 Newly established fee to pay for administrative expense of running the federal risk adjustment program. 13
  14. 14. Reform-Mandated Benefit Changes►Reform Will Require Changes to Health Benefits14
  15. 15. Benefit Changes:OverviewEffective date for ComplianceKey ACA Provisions Impacting products andpricing(On and Off ―Marketplaces‖)IndividualSmallGroup(Reform)SmallGroup(Non-Reform)100+EEGroupsPlans to meet Essential Health Benefits(EHB)2014 2014 2016 2017*Plans to integrate all cost-sharing for EHBsto single OOP Max2014 2014 2014 2014Maximum deductible limit of $2,000/$4,000(Can only exceed to hit metals)N/A 2014 2016 2017*Maximum OOP limits $6,400/$12,800 2014 2014 2014 2014Qualified Health Plans must hit ―metallevels‖2014 2014 2016 2017*Wellness plans cannot solely incent basedon health factors2014 2014 2014 2014*If state chooses to allow large groups on its exchanges in 2017 then provisions apply to on exchange large group coverage , but not to large group off exchange**If state chooses to allow large groups on its exchange in 2017 then modified community rating rules apply to all large group coverage on and off exchangeBenefitdisruptors15
  16. 16. The ACA ensures that all individual and small group “qualified health plans” include 10 essentialhealth benefits for which all cost sharing accumulates to a single out-of-pocket maximumBenefit Changes:EHBsEssential health benefits must be equal in scope to benefitsoffered by a “typical employer plan”, and thus states mustselect a base-benchmark plan from among the followingoptionsSource: CCIIO Essential Health Benefits BulletinNote: CMS defines portal plan as the discrete pairing of a package of benefits with a particular cost-sharing option (not including premium rates or premium rate quotes)1 Ambulatory patient services2 Emergency services3 Hospitalization4 Maternity and newborn care5Mental health and substance use disorder services, includingbehavioral health treatment6 Prescription drugs (must be packaged for SG plans)7 Rehabilitative and habilitative services and devices8 Laboratory services9Preventive and wellness services and chronic diseasemanagement10 Pediatric services, including oral and vision care3 largestsmall groupportal plansbyenrollment3 largeststateemployeebenefit plansby enrollment3 largestnationalFederalEmployeesHealthBenefitsProgramplans byenrollmentLargestinsuredcommercialHMO in thestatePriority HMO chosen as the MI benchmark – gives BCBSMmore flexibility to create more cost effective plans16
  17. 17. Wellness Incentives Will ExpandHIPAA Expansion of Wellness Program Incentives►Health-Contingent Wellness Programs►Participatory Wellness Programs17
  18. 18. General incentives• Increases the maximum permissible reward under a health-contingentwellness program from 20% to 30% of the cost of health coverage• Tobacco cessation programs increases maximum reward to 50%!• Two types of wellness programs identified:• Participatory wellness programs are separate fromhealth-contingent wellness programs, and have nolimit for the potential reward employees canreceive• Participatory programs are generally available to allemployees independent of their health status.Examples include:– Reimbursement for gym membership– Awards to employees who attend health-relatedseminars• Provide a reward and condition the reward onsatisfying a standard that is related to a healthfactor. Examples:– A program that imposes a premium surchargebased on tobacco use– Programs to help employees maintain a specificcholesterol level or reduce their current level• Rewards can come in multiple forms, including adiscount of premium, the absence of a surcharge,or other financial or nonfinancial incentives(See Proposed Regulations Dated November 26,2012 for specific wellness program guidance)Health-contingent wellness programs Participatory wellness programs20 - 50%Benefit Changes:Wellness Incentive Expansion18
  19. 19. 5 Strategic Reform Considerations1. How will your organization prepare for Reform?--Consider forming a Reform Action Team to assess key Reform Issues--Work with your accountant, your legal counsel, benefits advisorand key members of your organization to make actionable decisions on benefits2. How important are health benefits to the success of yourorganization? Recruiting, retaining and motivating employees?3. Will the Public Health Exchange provide an acceptable experienceand affordable coverage for your employees and their families?4. Will you leverage wellness pricing incentives linked to benefit plandesign to motivate behavior and increase productivity?5. What strategies will you embrace to engage employees on improvingtheir overall health and wellbeing?19
  20. 20. Questions?20

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