ACA Primer for Employers
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Presentation Transcript
ACA Primer for Employers Jay McLaren, Director of Government Relations July 31, 2013
Employer Overview of the ACA • Core Issues • 2014 Employer Penalties • 2014 Employer Rating and Product Requirements • Taxes and Assessments • MNsure – Minnesota’s Insurance Exchange • ACA Impact on Minnesota • What You Need to Know
Employer Play or Pay • Recent Developments • One-year delay • Applies to penalties and affiliated requirements • Applies to reporting requirements applied to businesses and insurers • Does not apply to other portions of the ACA that impact group coverage • Delay impacts the penalties and affiliated requirements; examples include: • Coverage for employees working 30 hrs/week or more • Affordability safe harbors (9.5% of employee income) • Report that was to begin January, 2015
Employer Play or Pay • What Does This Mean? • Wait for the release of regulations to learn details • Full year delay or partial year delay? • How will the delay work? • Which existing requirements will change and how? • Large employers must still implement other portions of the ACA upon renewal in 2014; examples include: • 90-day waiting period maximum • Maximum out-of-pocket requirement • No annual limits on coverage • Employees and their families may still qualify for subsidies through the Exchange
Employer Penalties • Penalties apply to large employers (> 50 employees) • Penalty for employers who do not offer coverage • $2,000 penalty per employee • First 30 employees exempt from count • Penalty for employers who do offer coverage but have at least one employee certified to access a subsidy • Employees eligible for subsidy if: • Plan’s share of the total allowed costs of benefits provided is less than 60 percent of such costs • Premium > 9.5 percent of the employee’s household income • $3000 penalty per employee certified to receive a subsidy
Employer Penalties • Previously Released Information • Employer safe harbor: • Offer coverage to its full-time employees (and their dependents) • Ensure actuarial value of coverage is at least 60% • Ensure employee portion of the self-only premium for the lowest cost coverage does not exceed 9.5% of the employee’s income • Three possible safe harbors for determining how to calculate 9.5% of employee’s income • W-2 • Rate of Pay • Federal Poverty Line
Employer Penalties • Previously Released Information • Two different employee calculations • Employer size • Full-time employees, part-time employees, and seasonal employees • Does the employer qualify for a seasonal employee exception? • “Full-time employees” • Generally working more than 30 hours per week • Options for determining variable hour employees are complicated, but may be beneficial: Look-back periods, administrative periods, and stability periods
Market and Product Rules • Guarantee Issue • Requires health plans to accept or renew every employer that applies for coverage • Applies to all groups • Prohibits any pre-existing condition exclusions or discrimination based on health status • Applies to all groups • Small Group Coverage • Health plans may apply participation and contribution requirements throughout the year
Market and Product Rules • Rate Variation • Premiums for small group and individual health insurance may vary only by: • Family structure • Rating area • Age (not more than 3 to 1) • Tobacco use (not more than 1.5 to 1) • Applies to 51-100 groups beginning in 2016 • Applies to larger groups at the discretion of the state beginning in 2017 • Does not apply to self-insured groups
Market and Product Rules • Rate Variation: Tobacco • Use of tobacco on average of four or more times per week within no longer than the last six months • Includes all tobacco products • Limited to legal use of tobacco (18 years & older) • Health plan may retroactively apply the rating factor if an enrollee reported false or incorrect information • Exemptions: • Religious or ceremonial use • Wellness program participation through a small group employer
Market and Product Rules • Small Group Deductibles Limits • Limited to $2000 for individual coverage and $4000 for family coverage • Exception to meet the metal level coverage • Exception applies at least to the Bronze plan • Remember: “Small Group” expands to include 51-100 groups in 2016 and may include larger groups beginning in 2017
Market and Product Rules • Annual Out-of-Pocket Limits • In 2014, limited to the thresholds established by IRS for High Deductible Health Plans • Current limits • Self-only: $ 6,250 ($6,350 in 2014) • Family: $12,500 ($12,700 in 2014) • Applies to all products fully and self-insured • Limits adjusted annually by national per capita premium change
Market and Product Rules • Actuarial Value • Every individual and small group product must meet one of the following actuarial values. • 60% - Bronze • 70% - Silver • 80% - Gold • 90% - Platinum • Plans can deviate +/- 2% from these levels
Market and Product Rules • Minimum Value (MV) • Requirement placed on employers to offer coverage that meets a minimum value of benefit (60%) • Determined using tools from federal agencies: • MV Calculator available on the IRS or DHHS website • Checklists approved by the IRS • Actuary certification for plans with non-standard features • Any plan in small-group market that meets any of the metal levels satisfies minimum value • An employer’s Summary of Benefits and Coverage (SBC) will show if the plan meets MV or not
Taxes and Assessments • Health Taxes • Tax on insurance companies begins in 2014 • 2014: $8 billion nationally • 2015-2016: $11.3 billion per year • 2017: $13.9 billion • 2018-on: $14.3 billion per year • MNSURE – Minnesota’s Exchange • 1.5% premium withhold in 2014 • Up to 3.5% in 2015 and beyond • Other Taxes (national) • $10 billion transitional reinsurance program payments • $3 billion tax on medications • $2.7 billion tax on medical devices • $300 million for comparative effectiveness research
MNsure – Minnesota’s Exchange • What Is It? • Intended to be a Travelocity or Expedia for health insurance; a virtual health insurance marketplace • Delivery system for federal health insurance subsidies in the individual market • Option for small businesses to offer coverage • What It Is Not • An insurer with its own health insurance products • A purchasing pool or “active purchaser” entity that negotiates with insurers • A takeover of the health insurance market
MNsure – Minnesota’s Exchange • Two Exchanges Within the Exchange • Individual • Eligibility determination for subsidies, Medicaid, and MinnesotaCare • Shop for individual coverage • Medica, HP, BCBS, P1, UCare • Small Business Health Options Program (SHOP) • Option for employers to offer coverage to employees • Carrier risk is pooled inside and outside the exchange • Medica, BCBS, and P1 • Minnesota insurance regulators have stated nine insurers have applied to participate in MNsure
MNsure – Minnesota’s Exchange • Exchanges and Group Coverage • Employer Size • Enrollment limited to small groups (<50) in year 1&2 • Employers with up to 100 employees may use the exchange beginning in 2016 • States can choose to allow even larger groups into the exchange beginning in 2017 • Small Business Health Care Tax Credit • Currently offered to small businesses that qualify • Maximum credit increases to 50% in 2014 • Qualifying employers may only receive it by using the exchange beginning in 2014
MNsure – Minnesota’s Exchange • Board of Directors • 3 consumers, 3 with specific expertise, DHS Commissioner • Appointed to the Board in early May • Prohibited from employment as a health care provider, in health insurance industry, as insurance agent or broker, or Exchange contractors • Finance • 1.5% premium withhold in 2014 • Withhold up to 3.5% in 2015 and beyond • Cost will be spread inside and outside the exchange on individual and small group policies
MNsure – Minnesota’s Exchange • Plan Participation/Selection • Board may apply selection criteria to insurers and plans in 2015 and beyond • Agents/Brokers, Navigators, IPAs, and CACs • Brokers will be available upon completion of MNsure training and certification requirements • Educate on products inside and outside MNsure • May recommend a specific plan • Navigators and others available to educate on offerings inside MNsure
ACA Impact on Minnesota • The Basics • Relatively low uninsured rate of about 9% • Positive indicators • #4 in % receiving employer-sponsored coverage • Relatively generous coverage through public programs • MinnesotaCare likely to continue into 2014 • Some elements of the ACA were already in place • Other indicators • #9 in median income for households of 4 • MCHA phase-out plan • 19th highest cost of self-only coverage through a small employer
ACA Impact on MN Small Group Market • Impact of Community Rating: MN Small Group Market • Study by the State of Minnesota Source: “The Impact of the ACA and Exchange on Minnesota,” a study commissioned by the Minnesota Department of Commerce and completed by Dr. Jonathan Gruber and Gorman Actuarial, LLC.; April, 2012.
What You Need to Know • All Employers • Employee notice of Exchanges by 10/1 • Federal Department of Labor http://www.dol.gov/ebsa/healthreform • Large Employers • New insurance benefit mandate for fully-insured groups beginning in 2014 • Intensive services for children with autism • Applies only to the fully-insured large group market • Employer “Pay of Play” delayed one year • Other ACA requirements go into effect in 2014 • Advice is available through benefit professionals
What You Need to Know • Small Businesses • ACA represents a challenge for relatively healthy small businesses • Key target audience for the SHOP • Advice is available through benefit professionals
