Health Care Reform Preparedness 103: The Post-Election Direction

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The Election is over. Health care Reform is here to stay, and Colorado is also moving forward on a number of health care issues independently of the federal government. Conversely, employers in the state have to make huge employee benefit decisions based on changing and sometimes limited information.

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Health Care Reform Preparedness 103: The Post-Election Direction

  1. 1. HEALTH CARE REFORM PREPAREDNESS 103: The Post-Election Direction Brought to you by:
  2. 2. Agenda• Quick recap of past 2 sessions• Tips and strategies from the latest guidance and everything we’ve learned since the election• Preview of what’s coming in the next three sessions2
  3. 3. Recap of Previous Sessions Changes through 20132010 – 2011 • Small employer tax credit rolled out • Employers can declare their plans grandfathered • No lifetime maximum on benefits • Kids covered up to age 26 • Preventative care provided with no cost sharing • No over-the-counter drugs under HSA/health FSA2012 • Must report value of health coverage on W2 • New SBC format for easier plan comparisons • Expanded preventative care including free contraceptives2013 • Health FSA now limited to $2,500 • New PCORI fee of $1 per employee per year ($2 next 6 yrs) • New Medicare taxes on those earning over $200,0003
  4. 4. Recap of Previous Sessions Changes in 2014 & BeyondMarket • All policies must be guaranteed issue with no exclusions forChanges pre-existing health conditions • All group policies for 2-50 EE’s will be community rated • New individual and small group exchanges will be available • New fees on insurance companies will be added to premiumsPay or Play • NO MANDATE ON EMPLOYERS WITH LESS THAN 50 EE’SMandate • Larger employers must provide coverage or pay penalties • If no coverage, penalty is $2,000 per EE except first 30 • If coverage not “affordable,” pay $3,000 for each EE w/subsidyCoverage • Waiting periods can’t exceed 90 daysChanges • Cost sharing limits: $2,000/$4,000 deductible for small employers, out of pocket max is limited to HSA limits for all • Cadillac tax in 2018 on premiums that exceed $850/mo single4
  5. 5. The Post-Election Direction• Multiple court challenges to ACA ended in Supreme Court Ruling June 2012: – Law is constitutional under Congress’ authority to impose a tax (individual mandate) – Feds may not, however, require states to agree to Medicaid expansion• November Election solidified the ACA’s future, for now• Future scenarios: – 2014 mid-term elections – 2016 presidential election5
  6. 6. Top 10 New Topics Under ACA• Perhaps not quite as exciting as…6
  7. 7. Top 10 New Topics Under ACA#10: Limited Medical waiversexpire 12/31/13• These plans were mostly used by large companies• Plans typically have a very low limited max and thus don’t meet the new requirements• Insurers and large employers received temporary waivers, which expire the end of this year7
  8. 8. Top 10 New Topics Under ACA# 9: New Transition rules for expatriateplans • Plans will be deemed compliant until 2016 if in compliance with pre-HCR rules, such as: • Mental Health Parity • ERISA Claims Procedures • HIPAA non- discrimination8
  9. 9. Top 10 New Topics Under ACA #8: Newly Released Preventative Care FAQsNo Cost Sharing Allowed:• Polyp removal during colonoscopy• Genetic testing for breast cancer• Breastfeeding equipment and support• Preventive OTC meds with Rx• Out-of-net preventative services IF no in-net doc who can provide a certain service• Annual HIV testing for women 9
  10. 10. Top 10 New Topics Under ACA#7: 90 Day Waiting Period Clarified• Many plans feature a “first of the month” provision for ease of payroll deductions. • 90 Calendar days is TRUE max • Could only use FOM if following 60 days of less • See exception later for Variable Hour employees10
  11. 11. Top 10 New Topics Under ACA# 6: Yes, Aggregation Rules Apply! Controlled groups and affiliated service groups will be added together to determine whether they have 50 employees for the purposes of the Pay-or-Play penalty11
  12. 12. Top 10 New Topics Under ACA#5: Safe Harbor Definition of SeasonalWorker for Employer Shared Responsibility • IF an employer’s workforce exceeds 50 full-time employees for 120 days or fewer during a calendar year, • AND the employees in excess of that 50 who were employed during that period of no more than 120 days were seasonal employees • Then, the employer would not be an applicable large employer. • For this purpose, “seasonal worker” means a worker who performs labor or services on a seasonal basis, as defined by the Secretary of Labor, including (but not limited to) workers covered by 29 CFR 500.20(s)(1) and retail workers employed exclusively during holiday seasons.12 Source: Towers Watson HCR Bulletin September 2012.
  13. 13. Top 10 New Topics Under ACA#4 Variable Hour Employee Safe Harbor 12/1/2013 11/30/2014 1/1/2015 12/31/2015 Start Date End of 12 Mo Covg Starts End of 12 Mo Measurement Period Stability Period Administrative Period13
  14. 14. Top 10 New Topics Under ACA #3: Is it More Expensive to Pay Penalties or Buy Coverage? Modeling Penalties vs. ER Contributions on $400 Premium Salary Number of Average 100% ER Contrib 80% ER Contrib 60% ER Contrib 0% ER Contrib Category Employees Salary ER Cost Penalties ER Cost Penalties ER Cost Penalties ER Cost Penalties < $10K 2 $8,800 $9,600 $0 $0 $6,000 $0 $6,000 $0 $4,000 $10 - $20K 69 $15,700 $331,200 $0 $265,000 $0 $0 $207,000 $0 $138,000 $20 - $30K 35 $24,700 $168,000 $0 $134,400 $0 $100,800 $0 $0 $70,000 $30 - $40K 19 $35,600 $91,200 $0 $73,000 $0 $54,700 $0 $0 $38,000 $40 - $50K 17 $45,400 $81,600 $0 $65,300 $0 $49,000 $0 $0 $0 $50K + 13 $89,500 $62,400 $0 $49,900 $0 $37,400 $0 $0 $0Total 155 $29,500 $744,000 $0 $587,600 $6,000 $241,900 $213,000 $0 $250,000After Tax Impact of Costs 65% 100% 65% 100% 65% 100% 65% 100%Total Costs $483,600 $387,940 $370,235 $250,000 14
  15. 15. Top 10 New Topics Under ACA#2:Community Rating: BIG for SMALL Groups Oldest Members 2013 2014 3 to 1 6 to 1 Youngest Members15
  16. 16. Top 10 New Topics Under ACA#1: Small Group $2,000 Deductible Limit • Starting with next anniversary in 2014, small employers must have a deductible of no more than $2,000, indexed for inflation • Starting with next anniversary in 2014, small employers must have a deductible of no more than $2,000, indexed for inflation • Are higher deductibles possible?16
  17. 17. Top 10 New Topics Under ACA Whew!17
  18. 18. Preview of Upcoming SessionsHCR104: • How will the new on-line marketplaces work?The State of the • What are the advantages and disadvantages to using them?Exchange • What should we expect as the October enrollment start approaches?HCR105: • Regardless of the ACA, healthcare trends have been high forMaking Healthcare decades and costs are unsustainableMore Affordable • What can an employer do about it? • Learn strategies specific to small, mid-sized, and large employersHCR106 : • What do we know so far about the Exchange plans?Where Do We Go • What are the latest regulations that affect planning for 2014?From Here? • Given everything we know now, how should employers proceed?Future Seminars We hope to continue this series throughout the year. Please join us for the latest information you need to know!
  19. 19. Thank You! Questions? Kristen Russell Eden Ripingill(303) 369-3200 (303) 306-2561kristen@fallriver Eden.M.Ripingill benefits.com @kp.org

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