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Health Care Reform Dialogue Webinar Series


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Part 2 of a 4-part webinar series on Health Care Reform, presented by Twin Cities Business magazine and sponsored by HealthPartners, Lindquist & Vennum, and Doherty Employer Services on June 19.

Published in: Business, Economy & Finance
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Health Care Reform Dialogue Webinar Series

  1. 1. Welcome Presented by: Sponsored by:
  2. 2. Julie Bunde Director, Product Management, Product & Market Solutions, HealthPartners Ed Wegerson Partner, Employee Benefits and Executive Compensation, Lindquist + Vennum Greg Thurston Director of benefits, Doherty Employer Services Speakers
  3. 3. Moderator Dale Kurschner Editor in Chief, Twin Cities Business
  4. 4. Other than Grandfathered Plans ACA: Benefit Reform 2010-12 2011 • No CDHP reimbursement for OTC medications without prescription • Penalty for non-qualified HSA payments increased to 20% • Medical Loss Ratio 2012 • Supreme Court affirms ACA "tax" • Summary of Benefits & Coverage 2013 • Medical FSA capped at $2,500 2010 • Coverage of dependents to age 26 • No pre-existing condition exclusions for children • Preventive care must be covered at 100 percent • No lifetime limit/restricted annual limit on essential benefits • ER covered at the same level in and out of network • New claims and appeals process
  5. 5. • Covering all adult individuals and dependents  Guaranteed issue and renewal  Individual mandate (or pay tax) to have coverage  Medicaid expansion • Employer requirements – “Play or Pay” • Essential Health Benefits required for all plans • Exchange - new marketplace • New taxes and assessments ACA: Coverage Reform 2014
  6. 6. • AKA “pay or play penalty” • Not applicable to controlled groups with fewer than 50 full-time (FTE) and full-time equivalent employees • Requires large employers to offer coverage to 95% of FTEs (30+ hours/week) that is affordable and provides minimum value or pay penalties • Effective January 1, 2014 • Detailed scenarios posted at Employer Shared Responsibility
  7. 7. Does the employer, on a controlled group basis, have at least 50 full-time (avg. 30 hours per week) and full- time equivalent employees (aggregate hours of all non- full-time employees divided by 120) on average during the preceding calendar year? Coverage Does the employer offer minimum essential health coverage to at least 95% of its full-time employees and their dependents? Minimum Value Does the health plan pay for at least 60% of the total costs of benefits provided under the health plan? Affordable Is the employee’s contribution for health coverage 9.5% or less thanthe employee’s household income? The employer does not owe any play or pay penalties. Minimum Coverage Penalty The employer may be required to pay a penalty equal to $166.67 per month ($2,000 annually) for every full-time employee of an entity (minus up to 30 employees) if at least one full-time employee of the entity enrolls in health coverage through a Health Exchange and receives a premium tax credit or cost- sharing reduction The employer is not subject to the play or pay penalties. Value & Affordability Penalty The employer may be required to pay a penalty equal to $250 per month ($3,000 annually) for each full-time employee that enrolls in health coverage though a Health Exchange and receives a premium tax credit or cost-sharing reduction Yes No No No No Start Health Care Reform: Employer Play or Pay Penalties Yes Yes Yes
  8. 8. Must employ an average of < 50 full-time equivalent employees over 6 month period in 2013 for 2014 status • Aggregate employees of all companies in controlled group • Aggregate monthly hours of part-time employees and divide by 120 to determine full-time employee equivalent • May exclude seasonal employees • Work less than 120 days per year • "Seasonal" not defined in ACA; good faith determination for 2014 • Small employer worksheet available at Small Employers Exempt from Pay or Play Tax
  9. 9. Large Employer Minimum Coverage Penalty Employer entity must offer minimum essential coverage to at least 95% of FTEs (30+ hours/week) employees and their dependents IF NO The employing entity must pay a penalty of $166.67/month ($2,000 per employee per year) for every FTE of an entity (minus up to 30 FTEs) if at least one FTE of entity • enrolls in health coverage through a Health Exchange • receives a premium tax credit or cost sharing reduction
  10. 10. Calculating Full Time Employees 95% of FTEs is calculated monthly in 2014 for tax penalty FTEs are employees "reasonably expected to work 30 hours or more per week" (130 hours/month) • Actual hours for hourly • 8 hour/day or 40 hours/week equivalent for non-hourly Penalty can fluctuate monthly
  11. 11. Calculating Full Time Employees Safe Harbor for counting hours • Measure FTEs in prior year (measuring period) • Next year's tax on prior year's FTEs (stability period) • Up to 90 days between periods (administrative period) Safe Harbor prevents fluctuations in FTEs during the year • Helps for variable hour employees (where employer can't determine if expected to work 30 hours/week) • Special measuring period for new hires • Must offer coverage if new hire changes from variable to FTE during initial measurement period • Tracking software available
  12. 12. Large Employer Affordability Penalty • Large employer health plan must pay 60% or more of health care costs AND • Employee must pay 9.5% or less of income for single coverage IF NO Large employer must pay penalty of $250/month ($3,000) only for those FTEs who enroll through Health Exchange and receive premium tax credit Scenarios at
  13. 13. Top Issues to be Dealing With Today 1. Benefit and cost sharing requirements 2. State of MN legislative activity 3. Updates on minimum value 4. Exchange trends and activity 5. Employer reporting requirements
  14. 14. Benefit and Cost Sharing Requirement Small Employer Plans Large Employer Plans Essential Health Benefits Must cover the 10 general categories and follow state or federal benchmark plan. No annual or lifetime maximums on essential health benefits. Cost Sharing Limits Out of pocket maximums no greater than HSA qualified plan limits (HDHPs). In 2014 those are $6,350/$12,700. Medical and Rx OOP limits must be combined. Out of pocket maximums no greater than HSA qualified plan limits (HDHPs). In 2014 those are $6,350/$12,700. Medical and Rx OOP limits must be combined. Actuarial Value/Minimum Value Actuarial value must meet “metal levels” bronze, silver, gold, platinum. Minimum value of .60 actuarial value to avoid employer penalty. Preventive Care No cost sharing. No cost sharing.
  15. 15. Autism Mandate • Effective January 1, 2014 as groups renew • Applies to fully insured, large group plans • Not required for individual, small group or self- insured • Must cover diagnosis, evaluation and treatment for children under age 18 – Mandate expands coverage to include Applied Behavioral Analysis (ABA) • No dollar limits State of MN Legislative Updates
  16. 16. Civil Marriage Amendment • Effective August 1, 2013 same sex partners can be legally married in the State of MN • We do not anticipate needing to make changes to plan documents • Current definitions of a spouse and a domestic partner will continue to apply • Self-insured groups that write their own plan documents will want to review them in light of the new law State of MN Legislative Updates
  17. 17. Tax & legal considerations of marriage amendment • The state law does not change the federal definition of marriage • Coverage for the same-sex spouse must be counted as imputed income for federal tax purposes • For self-insured groups, COBRA provisions will not attach to the same-sex spouse State of MN Legislative Updates
  18. 18. • Minimum Value of Eligible Employer-Sponsored Plans and Other Rules Regarding the Health Insurance Premium Tax Credit - Proposed Rules released May 3, 2013 – Comments due by July 2, 2013 • Individuals cannot get a premium tax credit if they are eligible for affordable coverage under an eligible employer sponsored plan that provides MV Minimum Value Update
  19. 19. Minimum Value Update Minimum Value: Does the health plan pay at least 60% of the total cost of benefit? Three options to calculate: 1. Minimum Value Calculator: final-4-11-2013.xlsm 2. Safe Harbor Plan Designs 3. Actuarial Certification (only if other options not sufficient)
  20. 20. • Given the caps on out of pocket maximums equivalent to HSA qualified plans ($6,350/$12,700), most health plans will meet minimum value • Safe harbor plans • All small group metal level plans meet requirement Minimum Value Calculator
  21. 21. 1. $3,500 integrated medical/Rx deductible/80% coinsurance/$6,000 OOP Max 2. $4,500 integrated medical/Rx deductible/70% medical coinsurance/$6,400 OOP Max/$500 HSA contribution 3. $3,500 medical deductible/60% medical coinsurance/Rx copays of $10/$20/$50 and 75% coinsurance for specialty/$6,400 OOP Max Safe Harbor Plan Designs
  22. 22. • Oregon/California rates released – Carriers got a “do-over” in Oregon – California plans priced lower than expected • Subsidy calculators • Rate shock defense National Exchange Trends and Activity
  23. 23. National Exchange Trends and Activity
  24. 24. MNsure: Minnesota’s Exchange Medicaid for parents, children 19-20 and adults under age 65 Advanceable Tax Credits (subsidies) for Individuals and Families (all plans are guaranteed issue and offer the Essential Health Benefit Set) 0% 75% 400%138%* 200% 275% MNCare (in lieu of BHP) *133% plus 5% income allowance. Medicaid for infants to age 2 (280%) and for pregnant women and kids 2-18 (275%) 2013 Federal 1 person $15,856 $22,980 $31,598 $45,960 Poverty Level (FPL) Family of 4 $23,550 $47,100 $64,763 $94,200 No subsidies available (all plans are guaranteed Issue and offer the Essential Health Benefit Set) Market for individuals and families (all plans are guaranteed issue and offer the Essential Health Benefits set, purchased directly from insurers or through brokers)
  25. 25. • Model notice of the existence of the Health Insurance Marketplace • COBRA notice modifications • Summary of Benefits and Coverage changes • Patient-Centered Outcomes Research Institute (PCORI) fee • Employer reporting of coverage Employer Reporting Requirements
  26. 26. • Virtually all employers required to provide notice • All current employees by October 1, 2013 • New employees hired after October 1, 2013 upon hire Model Notice of the Existence of the Health Insurance Marketplace
  27. 27. • (employer offering coverage) • (employer not offering) • Optional page with customized information for each individual employee Model Notice of the Existence of the Health Insurance Marketplace
  28. 28. • • Includes notice of alternatives through the Health Insurance Marketplace COBRA Notice Modification
  29. 29. • Effective January 1, 2014 must state whether plan provides “Minimum Essential Coverage” and meets the “Minimum Value” requirement • Extends additional safe harbors for content and delivery Summary of Benefits and Coverage
  30. 30. • Issuers of insurance and sponsors of applicable self- funded plans • Initially $1/year per enrolled individual • Due July 31, 2013 for plan years ending December 31, 2012 • IRS Form 720 Patient-Centered Outcomes Research Institute (PCORI) Fee
  31. 31. • IRS Sections 6055 and 6056 • Reporting begins in 2015 Employer Reporting of Coverage
  32. 32. • Provide coverage through MNsure SHOP – Employers with 50 or fewer employees (100 or fewer beginning in 2016) – Pick a health plan or provided defined contribution amount to employee – Employees can still pay premiums on a pre-tax basis – Small employer tax credit (25 or fewer employees) – May not know the rates or coverage options until October 1, 2013 Small Employers' Strategies
  33. 33. • Restructure Controlled Group (to remain a small employer of < 50 full time equivalent employees) – Remove some entities from the controlled group • Common ownership must be less than 80% • Requires additional independent investors – Each controlled group is tested independently for 50 FTEEs – Scenario: 3 companies each with 24 FTEs • If still large employer can use the full 30 FTE reduction to avoid penalty Small Employers' Strategies
  34. 34. • Benefit restructuring – Shift costs to employees by reducing coverage to bronze or silver type coverage to offset coverage increases – Consider high deductible health plan and HRA/HSA – Reduce cost of non-health benefits by limiting coverage to those working 40 hours • Limit hours of employees to reduce number of FTEs eligible for coverage – Use independent contractors where permitted – Consider potential ERISA 510 and ACA whistleblower claims Small Employers' Strategies
  35. 35. • Groups may consider renewing their plan early • Community rating effective January 1, 2014 • Additional taxes included in premium effective for plans renewing January 1, 2014 Small Group Plans Renewing Early
  36. 36. • Drop coverage – Pay $2,000 after-tax penalty per FTE (minus 30 FTE) – Consider impact on employee morale, retention, recruiting, uncertainty with Exchange coverage – Increase taxable compensation to replace loss of coverage • Expand coverage – Offer coverage to at least 95% of FTE (and dependents) – Reduce eligibility requirements to 25 hours a week to cover variable hour employees who may exceed FTE Large Employers' Strategies
  37. 37. • Limit hours – Limit employee hours to under 30 hours/week • Restructure employees in controlled group – Put employees who are not offered coverage in one entity so that the minimum coverage penalty will only apply to the one entity – Scenario: 3 companies each with 24 employees; 1 company does not offer coverage • Consider potential ERISA 510 interference with benefits – ACA whistleblower claims by employees using Exchange Large Employers' Strategies
  38. 38. • A Minimum Essential Coverage plan avoids the $2,000/ee penalty even if it does not provide Minimum Value • Low cost/low value medical plan could meet MEC • If Minimum Value not met could still face $3,000 penalty/ee receiving subsidy MEC without MV
  39. 39. • Offering multiple plan options • Employee communication and understanding of the options Two-Tier Approach
  40. 40. • July 31: Pay PCORI fee (2012 calendar year) • August 1: Conform definition of "spouse" • October 1: – Cost of adding "essential health benefits" to plan – Cost of 2014 additional taxes to plan – Choose 6 mo. period for determining lowest number of FTEEs – Compare Mnsure SHOP rates to premiums – Deliver Exchange notice – Update SBC and COBRA forms Small Employer 2013 Timeline
  41. 41. • July 31: – Pay PCORI fee (calendar year plans) • August 1: – Conform definition of "spouse" • October 1: – Deliver Exchange notice – Update SBC and COBRA forms • October 1 (calendar year plans): – Cost of 2014 additional taxes to plan – Determine FTEs in measurement period Large Employer 2013 Timeline
  42. 42. Questions and Answers
  43. 43. July 17 Health Care Times e-newsletter August 14 Health Care Reform Webinar #3 September 18 Health Care Times e-newsletter October 16 Health Care Reform Webinar #4 November 13 Health Care Times e-newsletter The Dialogue Continues… Sign up today for the next webinar(s) at
  44. 44. Thank you for joining us!
  45. 45. Sponsored by: Presented by: