April 29 2.45pm roger abramson


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April 29 2.45pm roger abramson

  1. 1. Surviving ReformRoger Abramson, General CounselAmeriFlex Business SolutionsApril 29, 2013
  2. 2. HCR: One Stubborn Three-Year Old
  3. 3. 2011: When HCR Could Barely Walk• Happy Birthday, Health Care Reform” (BSE, Opryland Hotel,April 2011)• The Two-Factor Theory:– Does the provision expand coverage?– Has the provision gone into effect?
  4. 4. 2011: When HCR Could Barely Walk
  5. 5. 2012: The Terrible Twos• January - May: Republican Presidential Primaries– Mitt Romney wins• June: Supreme Court Ruling– “Individual Mandate” upheld– Only Medicaid mandates affected• November: President Obama re-elected• 11/6/12 at 11:17 EST: Skynet becomes self-aware; startsdeveloping and issuing regulations
  6. 6. 2013: Where We Are Now• ACA now as much a part of the benefits legal landscape asERISA, COBRA, HIPAA, etc.• Congress out of the picture until at least 2015• Playing field has shifted to the agencies• The Five Stages of Grief = Completed!– Right?
  7. 7. 2013: Where We Are Now
  8. 8. Understanding Administrative Law• Executive Branch: Where the action is now• Not just “enforcement,” but “administration”• President holds all of the cards• Health care reform law gives agencies wide latitude
  9. 9. Understanding Administrative Law• Administrative Procedure Act (1946)– Codified the Washington we know and love today– Borne out of the Great Depression/WWII/FDR Era– Essentially put into place an entirely new lawmaking process– Understanding this is key to understanding the next phase of healthcare reform implementation
  10. 10. Understanding Administrative Law• The Rulemaking Process– Proposed Rule– Public Comment– Final Rule– Judicial Review?• Was Congress’ intent clear?• If not, is agency’s statutory construction permissible?• Courts tend to grant wide latitude
  11. 11. Administrative Law & the ACA• The ACA’s Three-Agency Circus– Internal Revenue Service– Department of Labor– Department of Health and Human Resources• Internet HQ: http://www.dol.gov/ebsa/healthreform/
  12. 12. Administrative Law & the ACA• Sometimes It’s Pretty Straightforward– Insurance Market Reforms– Essential Benefits– Affordability– Actuarial Value– Exchanges & “Play-or-Pay” (more to come)
  13. 13. Administrative Law & the ACA• Sometimes…It’s Not: HRAs Anyone?– HRAs: The HCR Wedding Crasher– Not “HCR,” but “HIR”  Who Invited HRAs?– HRAs = “Group Health Plans”– But they are not insurance– Legislative afterthought– Agencies have struggled to deal with them
  14. 14. The HRA/HCR Conundrum• Annual limits– Annual limits prohibited for group health plans– The great “waiver” controversy of 2010– 2011 – “Pre-existing” HRAs grandfathered in– 2014 – Window closing– Stand-alone HRAs now at risk• Retiree plans OK• Vision/dental plans OK
  15. 15. The HRA/HCR Conundrum• HRAs & the Summary of Benefits and Coverage (SBC)– Applies to “group health plans”– So applies to HRAs– Started doing those for clients in fall 2012
  16. 16. The HRA/HCR Conundrum• HRAs & PCOR Fees– Patient-Centered Outcomes Institute– Usually a “per-participant” fee paid by insurers– HRA application• Stand-alones: Pay• Integrated with insurance plan: Pay on top of insurance PCOR fee• Integrated with self-insured plan: One combined fee
  17. 17. The HRA/HCR Conundrum• HRAs & “Valuable” Coverage– Yes, if “integrated”• Calculations to come– Stand-alones may be left out in cold– What about “cost-sharing”?• Small groups cannot use HRAs to lower deductible to required$2,000/$4,000 threshold• “Administrative concerns”
  18. 18. The HRA/HCR Conundrum• HRAs & the “Cadillac Tax”– Down the road– Likely determined by the answers to above questions• Or whatever direction the wind is blowing then
  19. 19. Exchanges, Playing, Paying & All That Stuff• The “Play-or-Pay” Penalty– Intended Purpose: Shared responsibility– Two ways to lose• Not offering minimum essential health care coverage for allFT EEs• Insufficient benefits– Not offering “affordable” coverage (premium exceeds 9.5% ofEE’s household income)– Not offering “minimum value” (at least 60%)– Penalty is due if any FT EE purchases health insurance through anExchange using a premium tax credit or cost-sharing reduction
  20. 20. Exchanges, Playing, Paying & All That Stuff• The “Play-or-Pay” Penalty– Applies to “applicable large employers”– Average 50 FT EEs during previous calendar year• Generally, FT= at least 30 hours a week• Count FTEs for part-time EEs– BUT: PT EEs do not count for purpose of the penalty– Watch out for controlled groups– Complicated calculations for ERs on “the line”
  21. 21. Exchanges, Playing, Paying & All That Stuff• The “Play-or-Pay” Penalty– Offering employer-sponsored health coverage to FT EEs is the trigger– BUT: Assessing “FT EE” a little different here• Part-timers do not count• Real-time, not retrospective– The “fortunetelling” problem– IRS has developed safe harbors for both new and regular EEs» Summary: “Standard periods” and “measurement periods”
  22. 22. Exchanges, Playing, Paying & All That Stuff• The “Play-or-Pay” Penalty– The “No-Plan” Penalty• No plan with “minimum essential coverage” offered to FT EEs +subsidized FT EE enrollment in a QHP = Penalty– NOTE: Both factors must apply• Penalty = Applicable payment amount ($166.67 in 2014) x # of FTEEs (minus a 30-EE allowance)
  23. 23. Exchanges, Playing, Paying & All That Stuff• The “Play-or-Pay” Penalty– The “Inadequate-Plan” Penalty• Plan failing minimum value or affordability requirement with“minimum essential coverage” offered to FT EEs + subsidized FTEE enrollment in a QHP = Penalty– NOTE: Both factors must apply• “Minimum Value” – three options– Calculator– Safe harbor checklist– Actuarial certification
  24. 24. Exchanges, Playing, Paying & All That Stuff• The “Play-or-Pay” Penalty– The “Inadequate-Plan” Penalty• “Affordability”– Statute = “household income”– IRS safe harbor = EE’s W-2 alone OK to use» EE portion of the self-only premium for the ER’s lowest-cost“minimum value” coverage cannot exceed 9.5% of the EE’swages• Penalty = $250 (1/12 of $3,000) X # of FT EEs getting subsidizedQHP– No “30 EE” reduction– Capped  Cannot be higher than “no-plan” penalty
  25. 25. Exchanges, Playing, Paying & All That Stuff• The “Play-or-Pay” Penalty– How Would the Employer Know?• Exchange sends notice to employer• IDs EE and explains ERs penalty• ER can appeal• Details still being worked out• Expect changes as we go along• Privacy?
  26. 26. Congratulations: You are the New HR Director atHoliday Corp• Holiday Fun & Family Resort (“HFFR”)– Principal business: Family resort in NE US– Main operating season: May 1 – August 31• Seasonal EEs work during this time• Mostly college students– Off-season: September 1 – April 30
  27. 27. Congratulations: You are the New HR Director atHoliday Corp• Stats– 250 total employees– 60 year-round employees• 20 corporate employees– 10 “FT” working at least 35 hours/wk– 10 “PT” working at least 25 hours/wk• 40 resort employees– 25 “FT” working at least 35 hours/wk– 15 “PT” working at least 20 hours/wk– 175 seasonal employees• 90 “FT” working at least 35 hours/wk• 85 variable but no more than 25 hours/wk
  28. 28. The Rubber Meets the Road (Issues)• “Applicable large employer”– Predecessor/successor employers– “Business day”– Full-time & Full-time Equivalents– Seasonal employees– New employers
  29. 29. The Rubber Meets the Road (Issues)• “Full-Time Employee”– Exclude PT EEs this time– Not retrospective this time• Except that it is– What is an “hour of service”?• Up to agencies to define• Hourlies v. Salaried– Actual? Days? Weeks?– “Anti-abuse” rule• “Oddballs” (e.g., airline pilots, adjunct profs)
  30. 30. The Rubber Meets the Road (Issues)• “Full-Time Employee”– The IRS Safe Harbor (aka “Lets Just Ignore What the Statute Says”)• The Measurement Period, etc.• New v. Ongoing EEs• Transition Rule for 2013• “Variable-Hour” EEs• Seasonal EEs
  31. 31. The Rubber Meets the Road (Issues)• The “No-Plan” Penalty– The 5/5 “Margin-of-Error” allowance– “Offer of coverage”– Employees and “Dependents”• Who’s missing?– “Minimum essential coverage”
  32. 32. The Rubber Meets the Road (Issues)• The “Inadequate-Plan” Penalty– Minimum Value Test (at least 60%)• Calculator• Safe Harbor• Actuarial– Affordability Test (9.5% of HH income)• “Form W-2”• “Rate of Pay”• Poverty Line– Role of HRA/HSA contributions?
  33. 33. The Rubber Meets the Road (Issues)• Penalty Assessment– Exchange sends notice to employer– IDs EE and explains ER’s penalty– ER can appeal/detailed process– Expect changes as we go along– Privacy?
  34. 34. The Rubber Meets the Road (Issues)• Transition Rules– Fiscal Year Plan Years/Cafeteria Plan Years– Initial Measurement Period for 2013/4– Coverage for Dependents– Variable-Hour Employee Definition
  35. 35. Keeping It Real• Good Advice = Providing a Reality Check• Better to “play” or “pay”?– False choice?• The Taxation Factor– Bonus-up?• The HR Factor• The PR Factor
  36. 36. Keeping It Real• “Wait-and-see” approach most likely– “Diehards” excepted– Let the pioneers go ahead• “29 hours” may be the new “39 hours”– Legislative movement to lower?• Agencies & exchanges adjusting on the fly– Remember: Expanding or preserving coverage is the key
  37. 37. Questions?