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Health Care Reform Preparedness: An Employer's Pocket Guide


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In less than one year, major provisions of the Patient Protection and Affordable Care Act are taking effect at state and federal levels, and many of those new provisions will directly impact businesses around the country. At this event, we’ll present fact-based, non-partisan information that’s important to Colorado business leaders: the timeline of the law and important dates.

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Health Care Reform Preparedness: An Employer's Pocket Guide

  1. 1. HEALTH CARE REFORM PREPAREDNESS 102: An Employer’s Pocket Guide Brought to you by:
  2. 2. Observations• Healthcare Reform is emotionally-charged and everyone has an opinion. Neither evil nor savior.• Final guidance on a number of provisions must be provided and will almost certainly include amendments and/or “safe harbors”.• HOWEVER: – Employers have requirements to meet – Employees deserve fact-based, real-time answers – Strategic planning is professionally expected AND it is your fiduciary responsibility 2
  3. 3. Cost Trends• Healthcare Spending – $1.4 Trillion in 2001 vs. $3.1 T for 2012 Healthcare/GDP – 17.7% of our GDP projected for 2012 Health care• 2012 average annual premiums Other were 3-4% higher than in 2011 – Single: $5,615 – Family: $15,745• 2013 SEGAL Trend Survey Projected at 8.7% – First single digit trend in 11 years – Even at this rate, healthcare costs double every 8 years – 8x higher than the Consumer Price Index (CPI) – and 5x higher than the average annual increase in earnings 3
  4. 4. More Cost Trends180% 168% Health Insurance Premiums160% Workers Contribution to Premiums 160%140% Workers Earnings120% Overall Inflation 98%100%80% 93%60% 50%40% 24% 38%20% 21% 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Kaiser/HRET Survey , 1999-2011. 4
  5. 5. Trend IngredientsSource: AON Hewitt 2011 Health Insurance Trend Driver Survey5
  6. 6. Immediate Changes (90 Days)Small When? Started with the 2010 tax yearEmployer Tax Who? Employers with less than 25 employees and average wages underCredits $50,000 What? Full details next slideGrand - Available for existing plan(s) already in place on 3/23/2010. If planfathering changes were kept within the required limitations, documented and communicated properly, then the plan(s) maintained the ability to forego certain PPACA requirements.High-High-Risk Pool Those who could not obtain coverage due to pre-existing conditions gained access to a high-risk pool (created by June 23, 2010) which guaranteed them coverage (GettingUsCovered).Changes for A temporary reinsurance program was established for employersEmployers providing coverage to early retirees over age 55 who are not eligible forwith Retiree Medicare. The tax deductibility of the Part D subsidy tax credit forCoverage employers with post-65 retiree benefits was eliminated. 6
  7. 7. Small Employer Tax Credit ELIGIBLE EMPLOYER Contribute 50% or more of EE only prem? Yes Fewer than 25 FTEs? Yes Avg. annual wages <50,000? Yes Includes Common Ownership, Controlled Corporations, Affiliated Service Groups, Etc. • Kick out owners, partners, shareholders,1 (within specified limits) and family members Figure total wages paid to • Kick out seasonal EEs (120 days/yr. or less) FTEs2 and leased EEs Divide by number of FTEs. • Divide total hours worked by remaining EEs Round Down. Done!3 into 2080. Round down. Done! 7
  8. 8. Grandfather Status• Grandfathered plans are NOT required to: – Give up their management carve-outs or discriminatory contribution structures (if fully insured); – Cover certain clinical trials; – Implement a specific appeals process, including an external review process; – Implement various health management activities and reporting to the Health and Human Services Department; – Or allow a pediatrician or OB to serve as a PCP.• Status LOST if you change: – Elimination of Benefits – Co-insurance – Co-payments – Deductibles and Out-of-Pocket Maximums – Employer Contribution – Fully-Insured Carriers (Amended, but March - Nov. 2010 not retro)8
  9. 9. Next Renewal On or After 10/1/10Benefit Limitations Plans may not impose lifetime limits on the dollar value of essential benefits. Emergency room claims must be paid the same regardless of network status.Coverage for Adult Children may stay on their parents’ policies until age 26 if coverage isn’tChildren available through their work. Employer contributions are tax-deductible for the employer and not taxable income for the member.Pre-Pre-Ex Conditions Plans may no longer impose pre-existing conditions exclusions for children under 19.Preventive Services New policies may not assess any cost-sharing for a broad range of preventive care. This includes recommendations by the U.S. Preventive Services Task Force; recommended immunizations, preventive care for infants, children and adolescents.Nondiscrimination ALL plans now subject to Section 105(h) (already applied to self-fundedRules plans). Note: This does NOT apply to grandfathered fully-insured plans or those with SIMPLE cafeteria plans. Further, on 12/22/10 the IRS, DOL and HHS jointly announced a delay for this requirement, pending further issuing guidance. 9
  10. 10. Changes Effective 1/1/2011 Health Savings Increases tax for non-qualified HSA withdrawals from 10% to 20%. Account Penalty Pre- No Pre-Tax HSAs, HRAs and FSAs may no longer be used to purchase over-the-counter drugs, OTC Drugs unless prescribed by a doctor. Note: Debit cards may still be used. Small Employer Provides grants for up to five years for small employers that establish wellness Wellness Grants programs. Note:Applications and Awards DELAYED10
  11. 11. Changes in 2012 - 2013Reporting on 2012 Companies who issue more than 250 W-2’s must report the value of employerW-2 sponsored health insurance on the 2012 W-2 (distributed in 2013).2012 Summary of To enable easier comparisons of plans across different employers and carriers, aBenefits and Coverage uninform description of benefit plans is now required. These SBCs must be provided in conjunction with your next renewal after September 23rd, 2012.2012 Preventative Additional preventative services for women such as contraception, sterilization, and well-Services for Women woman exams are now required to be covered without any cost sharing. Takes effect with the next renewal on or after 8/1/12.2013 Increased Medicare tax rate on individuals goes from 1.45% to 2.35% for individuals with moreMedicare Taxes than $200,000 in earnings and couples with more than $250,000. Those above the same thresholds will also pay a 3.8% Medicare tax on investment income.2013 FSA Contributions to flexible spending accounts are limited to $2,500 a year, indexedContributions annually for inflation. (Note:“tax year” defined as “plan year”.)2013 Additional Fees PCORI: PCORI: A new fee is imposed on group health plans to fund comparative effectiveness research ($1 per participant through 2013; $2 indexed for inflation through 2019, then the fee phases out). Medical Device Fee: Added tax of 2.3%. ) Fee 11
  12. 12. 2014 Market ChangesPre-Pre-Existing Group health plans can no longer impose pre-existing conditionsConditions exclusions for any person of any age. Note: 10/1/2010 and beyond this was established for children under 19.Guaranteed Issue Health insurers must accept every employer and individual who applies.Community Rating All employers under 100 will pay the same for health insurance, regardless of health status, with only limited rate differences by age (3 to 1), geography, family composition and smoking status (1.5 to 1)Exchanges State and federal health insurance exchanges starting 1/1/2014 for small businesses and individuals. Plans must meet specified “metallic levels.”Essential Benefits 10 essential benefits at designated levels must be included in plans offered in the exchange, as well as in the individual and small group markets outside the exchange. Annual limits on essential health benefits are prohibited.New Taxes / Fees Temporary Reinsurance program ($5.25 PEPM) and the Insurer Tax of 2.3% will add costs to your renewal, and are pro-rated on 2013 renewals too.Mandates Individual and Employer Mandates.12
  13. 13. Employer MandatesEmployer Beginning in 2014, employers with 50 FTEs are required to provide “minimumMandate essential coverage” or potentially pay an assessment if: 1. they do not offer coverage or 2. if they offer coverage that isn’t affordable.Definition of Full Full-time employees are those working 30 hours/week or more. Part-timeTime Equivalent employees total hours worked divided by 120 is then added to the number of full-timers for a FTE count. Seasonal workers (120 days/year or less) may be excluded from the final FTE count.Non-Non- Coverage: NO Coverage:Compliance • Penalties apply if one of your employees gets a tax subsidy to buyPenalty insurance under an exchange st • $2,000 for each employee over the first 30 employees (ie 1 30 are “free”) Coverage is not “minimum essential affordable”: affordable”: Penalty is the lesser of: • $3,000 for each employee receiving a premium credit, or • $2,000 for each full-time employee. 13
  14. 14. 2014 Employer Plan ChangesWaiting Periods Waiting periods cannot exceed 90 days. (New guidance released Jan. 2013.)Cost-Cost-Sharing Limits The maximum annual “Out of Pocket” limit imposed under group health plans is limited to current Health Savings Account amounts. Cost-sharing includes deductibles, coinsurance, copays, etc. Small groups under 50 employees will also face a deductible limit of $2,000 single / $4,000 family, but ERs can use HSA/HRA/FSA to help comply. comply. Note:This does not apply to grandfathered plans.Wellness Incentives Allowed expansion up to 30% of total coverage costs (up to 50% for the prevention or reduction of tobacco use).Auto-Auto-Enrollment Groups of 200+ must auto-enroll newly eligible employees in the least expensive plan; employees may opt out.Cadillac Tax (2018) A new excise tax goes into effect for high-value health plans: 40% for amounts over $10,200 (single) and $27,500 (family). 40% 10, 27,
  15. 15. Thank You! Questions? Kristen Russell Eden Ripingill(303) 369-3200 (303) 306-2561kristen@fallriver Eden.M.Ripingill