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Health Care Reform Update

Health Care Reform Update

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Health Care Reform Update

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  1. Health Care Reform Update What you need to know Health Care Reform AWI Presentation 02/13/2014

  2. Health Care Reform What does it look like? Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  3. Health Care Reform Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  4. Health Care Reform Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  5. ACA Early Years 2010-2012Several Provisions Already in Force • Adult child coverage until age 26 • No pre-ex exclusions for children under age 19 • Lifetime dollar limits prohibited • HSA/HRA/FSA limitations for OTC medications • Preventive services covered with no cost sharing* • Women’s Preventive Services • Small Business Tax Credit becomes available • Medical Loss Ratio (MLR) goes into effect *Applies to non-grandfathered plans Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  6. ACA Provisions Effective in 2013 • W-2 reporting – • Required for 2012 W-2’s distributed to employees in January 2013, and annually thereafter. At this time, W-2 reporting remains optional for small employers (employers filing fewer than 250 W-2s) • New rules regarding Summary of Benefits and Coverage (SBC) • $2500 cap on Health FSA Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  7. Summary of Benefits & Coverage (SBC) Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  8. 2014 Market Reforms Following are insurance market reforms that will become effective in 2014: • Individual Mandate • Individuals will be responsible to purchase coverage, or face tax penalties • Adjusted Community Rating for Small Groups* • Guaranteed Issue Coverage must be guaranteed for all individuals and fully insured small group health plans • Pre-existing Conditions Insurers will not be able to exclude individuals or employees based on pre-existing conditions *Does not apply to grandfathered plans Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  9. 2014 Market Reforms (cont’d) • Waiting periods for coverage cannot exceed 90 days • Essential Health Benefits • Annual limits on essential health benefits are prohibited* • New ACA taxes and fees will impact premiums and rates • Exchanges (or Health Insurance Marketplaces) are scheduled to open in 2014 *Does not apply to grandfathered plans Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  10. Essential Health Benefits • Preventive and wellness services • Prescription drugs • Laboratory services • Ambulatory patient services • Emergency services • Maternity and newborn care • Pediatric services, including dental and vision care • Rehabilitative/habilitative services and devices • Hospitalization • Mental health and substance use disorder services, including behavioral health treatment Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  11. New Taxes and Fees • Patient-Centers Outcomes Research Fee (PCORI) $1/member/year starting for plan years ending after 10/1/12. Fee goes to $2/member/year for the next plan year and may rise with inflation, then ends in 2019 • Insurer Tax Approximately 3.5% of premium to fund health exchanges (required if you have a fully-insured plan) • Transitional Reinsurance Fee Effective for 3 years (2014-2016) as exchanges develop and mature. 2014 cost is estimated to be $5.25/member/month or $63/member/year (belly buttons on plan). Both fully-insured and self-funded plans are required to pay this fee Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  12. Individual Mandate & Penalty • Almost all U.S. Citizens and legal residents must have minimum essential coverage starting January 1, 2014* • The Individual Mandate works as a “conditional tax” for individuals who do not purchase health insurance coverage • Annual tax for not having minimum essential coverage will be the greater of: • 2014 - 1% of household income or $95 • 2015 – 2% of household income or $325 • 2016 – 2.5% of household income or $695 * Exemptions include incarceration, religious conscience, membership in an Indian tribe Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  13. Are you a Small Employer or a Large Employer? • Until 2016, states have the option to limit Small Employers to businesses with up to 50 employees (Illinois) • Other states, up to 100 employees • Large Employers are groups 50 and over (Illinois) • Starting in 2016, ALL states will consider a Small Employer to be up to 100 employees Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  14. Are You a Small or Large Employer? • Under ACA • “Small Employer” equals less than 50 full-time equivalent employees • “Large Employer” equals 50 or more full-time equivalent employees • Full-time Employees are employees working 30 hours per week, on average # Full-time Equivalent Employees # Full-time Employees Aggregate # hours worked by part-time employees, divided by 130 Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  15. Small Group Rating and Underwriting Changes • Effective January 1, 2014 small group pricing will be Community Rated* • No Medical Underwriting • No Pre-existing Condition Limitations • Guaranteed Renewability of Coverage • No Gender Differentiation *Groups not impacted include grandfathered plans, large full-insured groups and self-funded groups Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  16. Small Group Pricing Factors • Health status and/or claims experience will no longer be used in setting small group premiums. Rate factors are limited to: • Family Structure (coverage type: EE, ES, EC, Fam) • Benefit Plan Design • Geography • Age (3:1 limit) • Tobacco use (1.5:1 limit) Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  17. Plan Design Deductible Limits • Only applies to health plans offered in the small group market • Deductible limits do not apply to any self-funded plans • Maximum deductible limits* - **: • $2000 for single coverage • $4000 for family coverage • * Does not apply to grandfathered plans • ** Carriers may request an exception for higher deductibles if they cannot meet the Bronze Level plan requirements Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  18. Cost Sharing Limits • Applies to all non-grandfathered, fully-insured and self-funded group health plans • Maximum out of pocket limits cannot exceed limits for High Deductible Health Plans (in-network only) – 2014 limits: • $6,350 for single coverage • $12,700 for family coverage • Cost-sharing limits include deductibles,coinsurance and copayments Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  19. Small Business Tax Credit In order to be eligible for the tax credit, an employer must: • Employ fewer than 25 full-time equivalent (FTE) employees • Pay average annual wages of less than $50,000 per FTE, and • Pay at least half of the employee health insurance premiums (based on single coverage) Starting January 1, 2014, the Tax Credit can only be obtained if insurance is purchased through SHOP Exchange and will only be available for 2 years Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  20. 2015 Market Reforms • Affordable Coverage • Cannot exceed 9.5% of employees gross income for lowest plan offering • Minimum Actuarial Value • Employer Mandate (“Pay vs. Play”) • 2015 for groups >100 • Delayed until 2016 for groups 50-100 (released 2/10/2014) Future Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  21. Large Group Employer Penalties • Employer does not offer coverage, or they do not meet the plan or contribution requirements • $2000 penalty per employee • Based on the number of full time employees for that month, multiplied by 1/12 of the penalty • The first 30 employees are exempt from the penalty • Example • ABC Co. has 100 full time equivalent employees, with 70 full time employees. Calculation: $2,000 x (70 FT ees – 30) x 1/12 x 12 = $80,000 annual penalty Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  22. Large Group Employer Penalties • Employer offers coverage to at least 95% of its FT employees, but at least one (1) member received a premium tax credit through the Exchange: • $3,000 annual penalty (assessed on a monthly basis) • Calculated by the number of members who actually receive the tax credit for that month, multiplied by 1/12 of the penalty • Maximum penalty is capped at $2,000 per employee, minus the first 30 Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  23. Counting Employees for Penalties Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  24. Measurement Period for Variable Hour and Seasonal Employees • Three things to measure: • Measurement Period – The period an employee has to complete in order to “earn” benefits • Administrative Period – Similar to an open enrollment period. It’s the period you are counting up all employees’ hours to calculate who is eligible during the upcoming Stability Period • Stability Period – The period you offer them benefits for which they have already “earned” during the Measurement Period Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  25. Exchanges and Subsidies • An employee eligible for subsidized coverage is: • Between 100% and 400% of the federal poverty level (FPL) and enrolls for coverage on the public marketplace (exchange), • Is not eligible for coverage through a government-sponsored program (i.e. Medicaid or CHIP), AND • Is not eligible for employer coverage or the employer coverage is unaffordable or does not provide minimum value coverage Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  26. “Cadillac” Tax • 40% Excise Tax on high-cost health plans that begins in 2018 • Defined as premiums exceeding: • $10,200 for individual coverage • $27,500 for family coverage • Valued as the total premium and includes employer contributions towards FSA or HSA accounts • Vision and dental values are not included • Tax would be paid by insurer or TPA, but passed on directly to the employer Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014

  27. Questions… Benefits Solutions Group, LLC: Health Care Reform AWI Presentation 02/13/2014