DRC - BCBSM Health Care Reform Webinar

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A PowerPoint presentation created by the Detroit Regional Chamber and Blue Cross Blue Shield of Michigan. It was produced to people and businesses about the changes in regulations that will result from current health care reform.

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  • to calculate the tax will be reduced by 50 percent for federally tax-exempt HMOs like BCN.
  • DRC - BCBSM Health Care Reform Webinar

    1. 1. What’s Next for Small Employers? A Health Care Reform Webinar September 20, 2012This material is for general information and educational purposes only. The information is based on our current understanding of the national health reform provisions referenced. However, interpretations of applicable statutes andregulations vary. The federal government continues to issue guidance on how the provisions of national health reform should be interpreted and applied. While some of the information deals with federal law, it does not constitutelegal or compliance advice. Applicability and interpretation of the law depends on the specific facts and circumstances of each individual’s situation. If you have specific questions about application of the law to your situation, you areencouraged to consult an attorney for advice. As required by IRS Circular 230, unless expressly stated otherwise, if this message contains any tax information concerning one or more Federal tax issues, it is not a formal legalopinion and cannot be used by any person to avoid Federal tax penalties, and cannot be quoted or referenced to promote or market to another party any transaction or matter addressed in this communication Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 1
    2. 2. Small employer considerations • Health care reform timeline • Group to individual • New taxes and fees transition • Definition of “small group” • Employer penalties* • Where to SHOP • Individual mandate • Small business tax credit • Advanced premium tax • Plan year, benefit year, credits renewal date • Cost-sharing subsidies • Rating factor changes • Plan design changes*The employer excise tax or penalty does not apply to certain groups whomeet the government’s definition of small group. Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 2
    3. 3. 2012Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 3
    4. 4. Women’s Preventive Services – Services for women must be covered with no cost sharing beginning on plan years on or after August 1, 2012; including:  Screening for gestational diabetes  Human papillomavirus, or HPV, testing  Screening and counseling for interpersonal and domestic violence  Contraceptive counseling and methods  Breastfeeding supplies – Those employers that meet the tax codes narrow definition of religious employer will be allowed an exemption from the contraceptive mandate – Several documents related to drug coverage and religious status must be maintained on an annual basis to ensure benefits are applied appropriately for each group type Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 4
    5. 5. Women’s Preventive Services The following employer groups may require special handling and important documentation: • Grandfathered groups • Groups with no prescription drug coverage • Prescription drug coverage with carve-out arrangement • Religious groups • Religious-based employers (temporary safe harbor) Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 5
    6. 6. Summary of Benefits and Coverage (SBC) RequiredCapabilities• Effective Sept 23, 2012 group health plans and health insurance issuers offering group or individual coverage are required to provide an SBC, coverage examples and a uniform glossary of health insurance terms to enrolled and prospective members• Employers offering fully insured coverage are jointly responsible for distribution• The SBC includes: – Summary of Benefits and Coverage – Coverage Examples – Uniform Glossary Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 6
    7. 7. Summary of Benefits and Coverage (SBC) Required Capabilities Upon request Application Renewal SBC Changes Special Material (Automatic)* Between Enrollees Modification*** Application and Enrollment**Issuer to Within 7 7 business days of 30 days before Before 1st day NA 60 calendarGroup business days receipt of plan year of coverage days prior to theHealth of request application (If 30 days is not effective date ofPlan given, 7 days after change intent to renew) For each triggering event:Issuer/ Same Include with written Same Same 90 days SameGroup to app materials or if fromParticipant none then1st day enrollment eligible to enrollIssuer to Same 7 business days of Same Same NA SameIndividual receipt ofCustomer application *Written Renewals require SBC the date that the application materials are delivered. **SBC Distribution only required if changes happen between application and enrollment. ***Material modifications denote mid-plan year changes and require either an SBC or a notification of the benefits change. Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 7
    8. 8. 2013Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 8
    9. 9. Summary of NHR taxes and fees Initial FocusLine of sight:– Medical device tax: Effective for sales made after Dec. 31, 2012, this tax is assessed on the manufacturer, producer or importer of any taxable medical device. The tax is a 2.3 percent of the value of the sold item.– Pharmaceutical tax: In 2011, manufacturers of brand-name pharmaceutical drugs were taxed based on the total amount of their drug sales compared to overall national drug sales. Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 9
    10. 10. Timing of ACA taxes and fees 2012 2013 2014 2015 2016 2017 2018 2019 Comparative Effectiveness Research Fee Market Share Tax Exchange User Fee Reinsurance Fee Excise TaxInitial Payment Dates• Comparative Effectiveness – July 31, 2013• Reinsurance – January 15, 2014• Market Share - September 30, 2014 Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 10
    11. 11. 2014Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 11
    12. 12. Employers have three key decisions: Employer offers coverage The employer-sponsored coverage must have at least a 60 percent actuarial value and provide essential health benefits The employee share of premium cost cannot exceed 9.5 percent of the employee’s household income Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 12
    13. 13. Definition of Small Group• For many health insurance provisions, the federal small group definition effective Jan 1, 2014 will be 1- 50 employees.• This definition will include full-time, part-time and seasonal employees unlike prior years• It is important to note variations in the government’s definition of small group by provision.• Employer penalties in the form of an excise tax will not be imposed on employers with fewer than 50 employees who decide not to offer coverage Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 13
    14. 14. Where to “SHOP”• Small Business Health Options Program (SHOP)• Purchasing coverage on the Exchange is required to receive the small business tax credit in 2014• Open enrollment begins on Oct 1, 2013 for coverage effective on Jan 1, 2014. Rolling enrollment is available through the year to allow an open enrollment period that coincides with the group’s plan year.• Medicare Advantage and Medicare complementary plans will not be available on the Exchange. Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 14
    15. 15. The Exchange is a new way to shop Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 15
    16. 16. A closer look at the Exchange• Exchange • Competitive List of Plans • Provider Directory• Individuals • Ability to compare and select plans • Can receive Advance Premium Tax Credit • Can receive subsidies • Cost Sharing • 90 day Grace Period • Individual Enrollment• Small Group (SHOP) • No premium/cost share subsidies • Ability to compare and select plans • Group Enrollment • Group Member Enrollment • Billing Aggregation — Consolidates into one payment • Small Business Tax Credit (2 years only) — Business with approximately 25 or less FTEs/average wage of 50K Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 16
    17. 17. How will the Exchange work? Insurers cannot medically 1 Insurers must offer Essential 5 underwrite or apply pre- Benefits existing condition clauses Products should conform to Price parity required if same2 metal tiers (Bronze, Silver, 6 product sold on and off Gold, Platinum) exchange Insurers must offer at least Minimum network adequacy3 one Silver and one Gold 7 requirements product Restricted rating factors to Approval and qualification4 age, tobacco use, 8 process for plans and geography and family status prices Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 17
    18. 18. What are the metal tiers?Actuarial value:Example: a plan with an actuarial value of 70% means that for a standard population, the plan willpay 70% of their expense for essential health benefits, while the enrollees will pay 30% throughsome combination of deductibles, copays, and coinsurance. Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 18
    19. 19. Group to Individual Transition • After careful consideration some groups may determine that they will no longer offer employer-sponsored coverage to employees • The Blues have a comprehensive process to assist in transitioning employees to a BCBSM individual plan. This process is available to groups, agents and individuals to support them through this transition. • Scenario-based decision making is recommended. You may seek: – Tax advisor – Consultant – Agent • Timing is critical because of downstream impacts to your business model and your employees and their families • Communication should begin soon Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 19
    20. 20. Health care reform will shift definitions anddecision timing• Plan year vs. renewal year – reform provisions are most often effective on plan year while business decisions and rate changes occur at renewal• Complex and flexible plan designs vs. simplified and standard plan designs – All plans must offer essential health benefits – Actuarial value requirements limit flexibility to “tweak” cost sharing• Some rating categories may be eliminated based on the new definition of “small group” in favor of community or experience rating depending on group size.• Some migration of small group membership to the individual market is expected in 2014-2017 Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 20
    21. 21. Principles of BCBSM’s 2014 small groupproduct strategy BCBSM will provide an array of affordable, easy to understand traditional products and new well-priced innovative options Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 21
    22. 22. Better alignment in small group portfolios New BCBSM SG products New BCN SG products New Platinum Products New Platinum ProductsCommunity BCN 5 Blue New Gold Products New Gold Products New Gold Products New Gold Products Price BCN 10Simply Blue & New Silver Products New Silver Products HSA/HRA High Deductibles New Bronze Products New Bronze Products & Other Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 22
    23. 23. Premium tax credits and cost-sharingsubsidies are available, but there are rules Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 23
    24. 24. What is the premium tax credit? Premium tax credit = Silver plan premium – maximum % of income a consumer must pay Federal Poverty Level Percentage of income 100-150%* 2.0 - 4.0% 150-200% 4.0 - 6.3% 200-250% 6.3 - 8.05% 250-300% 8.05 - 9.5% 300-400% 9.5% Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 24
    25. 25. What employees would qualify for financial assistance? Employees qualify if they meet the However, they will not qualify if: following criteria:  Have income 100 to 400 % FPL Employer offers a plan of at least ▪ Single individual income: $11,170 - $44,680 bronze level equivalent (60% actuarial ▪ Family of 4 income: $23,050- $92,200 value), AND The employee’s contribution to Purchase coverage through the premium would Exchange, and not exceed 9.5% of household income, OR Other coverage (not including U.S. citizen or legal immigrant individual market) is available (such as through Medicaid or Medicare)FPL: Federal Poverty Level; Medicaid eligibility is generally extended to 133 percent FPL calculated witha 5 percent income disregard. Thus, Medicaid eligibility is effectively up to 138 percent FPL Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 25
    26. 26. How is the penalty for the individualmandate calculated? Legal residents who don’t purchase minimum essential coverage may have to pay a tax. This tax is the greater of two calculations : $695 per person per year 2.5% of household up to a maximum of OR income (the $2,085 max $2,085 per family does not apply) Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 26
    27. 27. APPENDIX• Background on Exchanges• Overview of Exchanges• Application of the Excise Tax or “Employer Penalty”• Eligibility Chart for Individual Premium Tax Credits and Cost-sharing subsidies• Illustrative State Implementation Timeline for the Exchanges Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 27
    28. 28. ExchangesBackground• The National Healthcare Reform legislation provides funding for the states to establish Health Benefit Exchanges that “facilitates the purchase of qualified plans” (Sec. 1311). The scope of the Health Benefit Exchanges include, combined or separately, an individual Exchange and a SHOP (Small Business Health Options Program) Exchange.• The State of Michigan received a planning grant and a “level 1” grant from HHS for Exchange development, but the state legislature did not authorize the use of the level 1 grant.• The state has announced that it will not have a state-based Exchange in 2014. Rather, it is preparing for a federal exchange or a state-federal partnership. In either model, we expect that the state will manage QHP (product) certification for an exchange that operates on the federal technology solution. The state could elect to stand up a state-based Exchange in 2015 or a subsequent year.What the Blues are doing:• BCBSM is working toward the assumption that the State of Michigan will participate in 2014 on the State/Federal Partnership model.• BCBSM will transition to the State exchange once it is established Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 28
    29. 29. Overview of the Exchange• What is an “Exchange”?• An Exchange is a competitive marketplace for individuals and small employers to directly compare available private health insurance options on the basis of price, quality, and other factors.• Purpose and Function of an Exchange• Offers consumers a choice of health plans and focuses competition on price.• Provides information to consumers.• Creates an administrative mechanism for enrollment.• Moves towards portability of coverage. o “Coverage through an exchange can be de-linked from employment, helping make health insurance more portable for people moving from job to job”• Reforms the insurance market. o “Health reform proposals require insures to accept all applications without consideration of the applicants health and further prohibits or significantly limits premium variation related to health status”• http://www.kff.org/healthreform/upload/7908.pdf Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 29
    30. 30. How is the excise tax calculated?• Excise tax applies to “applicable large employers.” An applicable large employer is an employer with an average of 50 or more full-time equivalent employees in the preceding calendar year• The excise tax that must be paid depends on whether the employer offers coverage and whether any employees receive subsidies on the individual market exchange• While the definition of applicable large employer is determined on an annual basis, the excise tax penalty is assessed on a monthly basis and there are multiple scenarios to calculate the excise tax:1 Employers that do not offer coverage, and have at least one full-time employee that receives a premium tax credit on the exchange: Excise tax = $2,000 X (# of full-time employees – 30 employees)2 Employers that offer coverage and have at least one full-time employee that receives a premium tax credit on the exchange. The excise tax is the lesser of: $3,000 for each full-time employee receiving a tax credit OR $2,000 for each full-time employee – 30 employees Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 30
    31. 31. Individuals who purchase on the Exchange may be eligible forsubsidies ▪ Individual market participants:100% and 400% of federal poverty levelWho is (FPL)eligible for a ▪ Single Individual income: $11,170 - $44,680subsidy? ▪ Family of 4 income: $23,050- $92,200 ▪ Not if group coverage is available Subsidy = Silver plan premium – Maximum payablePremium Limit on Premium: Applies to:Subsidy “Maximum Premium Payable” (% Sliding scale: 100 - 400% FPL of income): 2% - 9.5% Cost Sharing Change: Applies to:Cost SharingSubsidy ▪ Out of Pocket Limit ▪ Sliding Scale: 100-400% FPL Reduction: 1/3 – 2/3 ▪ Sliding Scale: 100-250% FPL ▪ Actuarial Value Improvement: 3% - 24% Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 31
    32. 32. ILLUSTRATIVE State Exchange Implementation Timeline Oct 2011 Jan 2012 Apr 2012 Jul 2012 Oct 2012 Jan 2013 Apr 2013 Jul 2013 Oct 2013 t s eT m t s yS Early-Mid 2012 – Final Regulations e ) 3102/ 40 – 2102/ 01( 06/12 Most Legislative Sessions EndState Exchange Work Integration with Other Parties 3102/ 21 – 3102/ 01 01/12 Business 04/12 Design 10/12 Payor 04/13 All A t ne mp rI nE ne p O Requirements Complete Product Load 03/13 Navigator Systems Go 12/11 Operational Complete Complete Training Complete Leads in place ll om 3102/ 80 3102/ 90 3102/ 90 3102/ 01 t ne m o ev e D Q ) 2102/ 01 – 2102/ 40( • Web Portal pl • Work with selected Vendor(s) • All QHP Shopping • Hub Eligibility • Call Centers Test And Enrollment • QHP Management testing • Employer Management • Navigator Management l a not ar ep O eg na hcx E et at S • Outreach & Education g nt s eT ss en daeR ) 3102/ 80 – 3102/ 40 ( • Notice & Appeals i i • Enrollment (Single Streamline Application) • Reporting • Financial Management i • Federal Program Eligibility/ Premium Subsidies • State Program Eligibility Rules ng s e D eg na hcx E ) 2102/ 40 – W N O( • Shopping • QHP Product Comparison Based on Proposed Federal Regulations • QHP Cost Calculator Legend Critical State Milestones • SHOP Functionality i Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 32
    33. 33. Where does my Insurance Agent fit in? Knowledgeable on plan options AND Federal and State Legislation that could impact your businessBlue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 33
    34. 34. Where does my Insurance Agent fit in? Employer Requirements under PPACA Exchanges and Employer Sponsored Plans Up-to-date guidance on recent regulations Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 34
    35. 35. To find a knowledgeable insurance agent in your area, go to: http://www.nahu.org/consumer/findagent.cfm Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 35
    36. 36. Further Discussion and Questions Please go on to B4BConnect.com immediately following the webinar.Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 36
    37. 37. Updates To receive invitations to future updates and educational opportunities please register at MyChamberAdvantage.comBlue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 37

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