Health Reform Strategic Considerations for Employers
•Download as PPT, PDF•
0 likes•480 views
A few months into the roll-out of healthcare.gov and things have not gone as planned. As an employers, it has no doubt been frustrating. Nonetheless, here we are and as we continue down this path, there are several important issues employers will need to consider in order to comply with the health reform mandates.
Recommended
Recommended
More Related Content
Similar to Health Reform Strategic Considerations for Employers
Similar to Health Reform Strategic Considerations for Employers (20)
Recently uploaded
Recently uploaded (20)
Health Reform Strategic Considerations for Employers
- 1. The PPACA: Thinking Strategically Shawn Daughenbaugh, MHA Society for Human Resources Management: Lakeshore Chapter January 13, 2014 hfmhealth.org Copyright © 2013 Holy Family Memorial. All rights reserved.
- 2. Shawn Daughenbaugh, MHA hfmhealth.org Health Reform “Enthusiast” • Fellow: Holy Family Memorial – Prior • Wellness Coach, CoxHealth • Project Manager, CoxHealth • Education: Master of Health Administration – Research focused extensively on health insurance marketplace (“exchanges” back then) 2
- 3. Words of Wisdom “There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. There are things we don't know we don't know.” ~ Donald Rumsfeld hfmhealth.org 3
- 6. March 23, 2010 hfmhealth.org PPACA signed into law 6
- 7. In Wisconsin hfmhealth.org • Federally Facilitated Marketplace (FFM) – For individuals and small business • 13 companies in individual, 5 in Small business Health Options Program (SHOP) • Affects BadgerCare+, uninsured, individuals without employer sponsored care 7
- 9. Qualified Health Plans (QHPs) hfmhealth.org “Metal Plans” • Each metal indicates the actuarial value Source:HealthPocket 9
- 10. Premiums Examples Manitowoc, Wisconsin: Zip Code 54220 hfmhealth.org 10
- 11. Starting Now hfmhealth.org Shifting gears • Recognize many provisions begin 1-1-2014 • Model potential employer penalty • Identify “Safe Harbor” methods and measurement period • Strategic Considerations of ACA 11
- 12. (Large) Employer Mandate hfmhealth.org Delayed until 2015 • ACA “shared responsibility” provision requires Large Employers to provide coverage or face penalty – No coverage fine – Tax subsidy or affordability fine • Small Employers Exempt – Option for Small Business Health Option Program or SHOP Exchange 12
- 14. No Coverage Penalty hfmhealth.org Employers not offering coverage • Dependents only means children, not spouse 14
- 15. Affordable Penalty hfmhealth.org Employers offering coverage • Note this penalty is not all employees, only those receiving subsidy and pay more than 9.5% 15
- 16. Clarification point hfmhealth.org Foundational to employer penalties • Tax Credit – Available to individuals between 100%-400% of Federal Poverty Level (FPL) – Can be used on any plan • Cost-sharing subsidy – Available to individuals between 100%-250% FPL – Can only be used on silver “benchmark” plan 16
- 17. Strategic Consideration Will you, as an organization, pay or play? hfmhealth.org 17
- 18. FTE Safe Harbor Methods hfmhealth.org Determining who to count 18
- 19. Associated and Non-regular FTE hfmhealth.org Considering Organizational Charts • Aggregated businesses counts – “Controlled” organizations that have common owners are counted as one business • Seasonal Employees • Temp or Contract Employees 19
- 20. Affordability Safe Harbor hfmhealth.org Plans cannot exceed 9.5% 20
- 21. hfmhealth.org SOURCE: Washington Council Ernst & Young; Ernst & Young LLP http://www.nahu.org/meetings/capitol/2013/attendees/jumpdrive/WCEY_AffordabilityNumbers_021313.pdf 21
- 22. Strategic Consideration Which Safe Harbors should you choose Do you start to cut employee hours? hfmhealth.org 22
- 24. New BadgerCare+ Eligibility hfmhealth.org New effective date 3/31/13 70,000 5,000 Source: WHA 24
- 25. Strategic Consideration If workforce has members formerly on BadgerCare+, can they afford your insurance? hfmhealth.org 25
- 26. Future Benefit Package hfmhealth.org How does your design change? • Changes to future plans – Minimal Value – Children on plan until age 26 – Essential Benefits • New fees – Reinsurance fee – PCOI fee 26
- 27. Strategic Consideration ACA directs company benefit plans to pay at least 60% of employee healthcare costs – How rich is your plan? hfmhealth.org 27
- 28. Final Thoughts Employer Sponsored Insurance • Large Employers – Does a private marketplace offer better rates and less risk? Sears and Walgreens think so • Small Employers – By attempting to offer coverage, are you in fact hurting your employees? hfmhealth.org 28
- 29. PPACA: More than a webpage hfmhealth.org 29
- 30. Thank you. Questions? January 13, 2014 hfmhealth.org Copyright © 2013 Holy Family Memorial. All rights reserved.
- 31. hfmhealth.org Like today’s presentation? Please take a few minutes and recommend me on LinkedIn: https://www.linkedin.com/in/sdaughenbaugh Thank you for your kind attention! Shawn 31
- 32. hfmhealth.org Question and Answer Slides 32
- 33. “Administrative Fix” hfmhealth.org “We fumbled the rollout” • November 14th, 2013 – President Obama offers “administrative fix,” allowing non-compliant individual market plans to renew for 2014 • This “fix” does not affect business directly; only individuals buying from the private, individual market – Allows 2013 plans to be renewed without change in 2014 33
- 34. Affordability Safe Harbors Explained hfmhealth.org • Form W-2 Box 1 – Employer is able to judge affordability based on wages from that employers only; • Rate of Pay – Hourly rate of pay for each health plan eligible employee at start of year – Multiply by 130 hours per month (benchmark of full-time in PPACA) – Make determination of affordability on wages 34
- 35. Affordability Safe Harbors Explained hfmhealth.org • Federal Poverty Line – Premium for employee self-only coverage cannot exceed 9.5% of the FPL for single individual 35
- 36. Employer Size Exceptions hfmhealth.org Seasonal Employees • Seasonal Employee Exception – If an employer is an “applicable Large Employer” because of seasonal employees, seasonal employees who work less than 120 days are not considered in FTE calculation – This needs to be kept in mind when hiring summer interns, college students, winter workers, etc. 36
- 37. Essential Benefits hfmhealth.org Must be covered in group plans 1. 2. 3. 4. 5. Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health and substance use disorder services 6. Prescription drugs 6. Rehabilitative and habilitative services and 7. Laboratory services; 8. Preventive and wellness services and chronic disease management 9. Pediatric services, including oral and vision care. 37
- 38. FTE Calculations hfmhealth.org • Calculate number of full-time employees – Total number of employees who work 30 hours/week (130 hours/month) • Calculate number of full-time equivalents – Aggregate number of hours worked by all employees who did not work 30 hours/ week divided by 120 – If quotient is fraction, you may round down • Add total together 38
- 39. FTE Safe Harbors Explained hfmhealth.org Ongoing • Ongoing Employees – An employee who has been employed for at one standard unit of measurement – Standard unit of measurement is determined by employer and is flexible: – “Look back period” • Not shorter than 3 months; no longer than 12 months • Administrative Period Safe Harbor Extension – No longer than 90 days between measurement and stability periods 39
- 40. FTE Safe Harbors Explained hfmhealth.org New Employees • New Employees: Reasonably expected to work full-time – This allows plans to take additional “reasonable” periods of time to see if employee meets plan conditions • Must comply with standard unit of measurement clause 40
- 41. FTE Safe Harbors Explained hfmhealth.org New Employee: Variable and Seasonal • Initial measurement period – 30 hours per week expected • Variable Employee – If at time of hire, it cannot be determined individual will work 30 hours per week • Seasonal Employee – If work force exceeds 50 FTE for 120 days during year, these employees are full-time 41
- 42. Participating insurers hfmhealth.org Manitowoc County • FFM – Common Ground Healthcare Coop – WPS Health Plan, Inc. (Arise) – Dean Health Plan, Inc. (Preva 360) – Molina Healthcare of WI, Inc – Compcare Health Services Ins. Corp. (Anthem) • SHOP – Arise – Common Ground Healthcare Coop 42
- 43. Tax Credit: Mathematical example hfmhealth.org All figures are annual costs • Smith Family: Married couple with 2 children • Income: $47,100; equals 200% of FPL – This means the max amount the Smith family is able to be charged is 6.3% of $47,100; equals $2,968 per year max plan charge • 2nd lowest silver plan premium $10,000/ year • Credit due to Smith Family is $7,032 – $10,000 minus $2,968 Source: Health Affairs 43
- 45. hfmhealth.org • MV Calculator – http://cciio.cms.gov/resources/regulations/index.html • Tax Subsidy Calculator – http://kff.org/interactive/subsidy-calculator/ • New SBC templates – http://www.cms.gov/CCIIO/Resources/Forms-Reports-and-OtherResources/index.html#Summary of Benefits and Coverage and Uniform Glossary • Reinsurance Fee Background – http://www.shrm.org/hrdisciplines/benefits/Articles/Pages/PCORI -Reinsurance-Fees.aspx 45
- 46. hfmhealth.org • Grandfather plans – http://www.shrm.org/hrdisciplines/benefits/Articles/Pages/FAQsGrandfathered-Plans.aspx • Federal Poverty Level chart – http://wccf.org/pdf/poverty_level_tables_2013.pdf • Employer Penalties – http://www.fas.org/sgp/crs/misc/R41159.pdf • FTE Safe Harbor Methods – http://www.irs.gov/pub/irs-drop/n-12-58.pdf 46
Editor's Notes
- Good afternoon, I am Shawn Daughenbaugh and today we are going to talk about the Patient Protection and Affordable Care Act and specifically what it means for your business. There probably will not be anything new or ground breaking to you during this presentation however I would like to use this opportunity to help you think of the implications of this act in a new manner
- Just a brief bio of who I am and where I have been. To being, use the term “enthusiast” lightly. While some form of health reform was needed in this county, this may not have been what was expected. Just today a study by USA Today found 67% of Americans are unhappy with the way this has turned out Currently work as the fellow at Holy Family Memorial. The fellow is an administrative residency, similar to the residency of a physician, in which I work solely for the CEO on a variety of strategic planning projects and gain experience in the overall operations of a health system. Prior to this I worked in a 5 hospital, 1 Billion dollar system. As a wellness coach, gained a variety of experiences working with employer plans and my hospitals PPO plan. I have a Master of Health Administration and focused on Strategic planning, Policy and Health Reform Work with DHS and WHA
- Words of Wisdom A Known Known example might be health reform was intended to change a volume driven system to a value system Known Unknown would have been how many insurers would have joined the marketplace Now I do not have a future example of an unknown unknown, however 3 years ago when this started we had no idea what changes in policies might occur. For instance, many insurer simply cancelled non ACA compliant plans Lets begin with a little background on the PPACA and why it was created.
- Lets for a minute talk about the world’s health systems. Study conducted by WHO measured 191 countries health systems. WHO measured average lifespan, average cost of care, uninsured raets, health outcomes and other health behaviors France ranked #1 overall with an average life span 81 years and has a national health system covering 92% of the population Switzerland ranked #20 with an average life span of 81 years. Market driven systems and government has tax like subsides for poor Finally, ranking at #37, the USA. Average life of 78 years and 46 million uninsured. Spend the most of any country
- 2010 United States National Health Expenditures (NHE) ranked #1 world wide $2.6 Trillion or 16.0% GDP $7,910 per capita Next closest is switzerland spending $5,270 France at #1 spending 48% less than we do
- March 23, 2010… the day which lives in infamy… PPACA signed into law. The PPACA can be divided into two categories. One for funding and one for access Under the funding, we have the mandates which we are all to similar with; this being the individual and employer mandates Also new taxes are assessed on group plans Reduced reimbursement from governmental insurance in order to pay Now not mentioned is the “tax” or penalty for not having coverage. Currently it is 1% of taxable or $95 a year. Currently too small to detour anyone away from not having coverage Under the access side, we have insurance reform. PPACA is arguably more about insurance reform than anything else. Marketplace, the new creation under the PPACA that will insure millions of individuals Finally, Medicaid expansion in some states
- In Wisconsin, we are operating a Federally Facilitated Marketplace. Initial set up and operation controlled by federal government No state involvement in operations, but interesting side note is Wisconsin government is attempting to have a large amount of control over policy for FFM Currently, ~106000 Americans have signed up for insurance via marketplaces by healthcare.gov
- Let’s talk about the individual whom the marketplace will directly affect. There are those on the state’s BadgerCare+ program. Recent laws changed eligibility for badgercare+ and as result, 75,000 have been kicked off. This is your workforce. These are individuals making min. wage. Those on individual market, who do not have employer sponsored care. This can be individuals working for small business. Finally, there is Wisconsin’s uninsured population.
- What will someone find in the marketplace? QHPs within FFM referred to as “metals” Insurers must sell 1 silver and 1 gold QHP Bronze, platinum, or catastrophic may be offered QHPs must include “essential benefits” The actuarial value corresponds to a value of health care expenses that the insurer will pay. For instance, a bronze metal plan with a 60% actuarial value will pay 60% of health care costs.
- Single with no family Lowest cost plan is the Common Ground Healthcare Cooperative Envision- Catastrophic 6350/100 plan for $135.99/ month. The most expensive plan is Arise Health Plan Healthy1 Engage Platinum plan. $492.92/ month Individual and Spouse Lowest cost plan is the Common Ground Healthcare Cooperative Envision- Catastrophic 6350/100 plan for 331.68/month. The most expensive plan is Arise Health Plan Healthy1 Engage Platinum plan. $1200.98/month Small business owner Lowest cost plan is the Common Ground Healthcare Cooperative Envision- Catastrophic 6350/100 plan for $176.76/month. The most expensive plan is Arise Health Plan Healthy1 Engage Platinum plan. $509.35/month
- Many provisions beginning 1-1-14. Some, such as the notice about the marketplace and what benefits your company offers, happened Oct 1 Others, such as 90 day waiting periods and wellness benefits begin in January School isn’t out for summer, you need to start looking at workforce and penalties. Model potential costs Know your safe harbors, which methods make sense for you Start thinking strategic. PPACA is law, how will it affect you and what can you do to get around it.
- Employer mandate requires Large employers >50 FTEs to provide coverage or face a “share responsibility”… nice way to say fine Under Shared responsibility there is no coverage fine for employers not offering coverage There is also the tax subsidy or affordability fine. This is for employers offering coverage Small employers exempt and Large employer mandate delayed until 2015
- But Beware!
- Talking about the employer not offering coverage penalty. This is an expensive penalty for employers. How this works is: if coverage is not offered to at least 95% of employees AND employee can get subsidy on plan in marketplace and does so…. $2,000 per fte minus first 30 FTEs 51 FTEs at company A. Coverage is not offered. 1 employee goes to FFM and gets coverage. Company A is assessed a fine = 51 EE – 30 * 2,000 = $42,000 annual fine
- For employers that do offer coverage, but coverage is not considered “affordable” Unlike first penalty where it only takes 1 individual to trigger penalty, this penalty only applies to individuals actually receiving subsidy. Company B offers coverage, but too expensive for some min wage employees. 5 employees choose to go to FFM. 5 * 3,000 = $15,000 annual fine
- Standard unit of measurement is determined by employer and is flexible: “Look back period” Not shorter than 3 months; no longer than 12 months : Optional administrative period which allows employers who determine EE was full-time, 90 days to notify them they have receive coverage. Stability period allows employers to see if FTE will remain FTE: IMPORTANT. STABLITY PERIOD MUST BE AT LEAST AS LONG AS MEASUREMENT PERIOD Important consideration: IRS regs state periods must be uniform across same category of employee ie. Salary vs hourly, union vs nonunion, location of employee
- Form W-2 Box 1 Employer is able to judge affordability based on wages from that employers only; Rate of Pay Hourly rate of pay for each health plan eligible employee at start of year Multiply by 130 hours per month (benchmark of full-time in PPACA) Federal Poverty Line Premium for employee self-only coverage cannot exceed 9.5% of the FPL for single individual What to consider when choosing an affordability safe harbor? How stable is workforce? If stable then W-2 is way to go, if you employ a lot of seasonal employees, FPL is better option
- The portion to notice on this slide is the bottom portion since we in Wisconsin chose not to expand Medicaid coverage to the 133% of FPL On the right side is the max amount employees can pay toward premiums under the new law. If they pay more, you may be assessed an affordability penalty
- What to consider when choosing an affordability safe harbor? How stable is workforce? If stable then W-2 is way to go, if you employ a lot of seasonal employees, FPL is better option Do you continue to hire interns, summer help Also should consider which safe harbors to use and how to apply them
- Lower costs by decreasing MV