Presentation Transcript

1. Strategic Considerations in Health Insurance Walking Through Changes and Options for 2014 and Beyond Janet Trautwein National Association of Health Underwriters September 2013
2. Recap/Political Overview What’s About to Change For Individuals What’s About to Change in the Marketplace What’s About to Change for Employers What’s About to Change for Agents/Brokers Resources and Questions
3. Political Landscape
4. Preparing for the Big Year Ahead! 2014 is going to bring great changes to the world of health benefits The kinds of coverage available will change, as will the requirements and options for individuals, employers and employees Change can be scary but it’s also a time of great opportunity The need for an educated insurance broker to guide consumers and help them make strategic plan decisions is greater than ever
5. Health Reform Implementation
6. ?
7. What Has Actually Been Delayed So Far? Employer Mandate PENALTIES Mandatory Employer Reporting to Exchanges SHOP employee choice and premium aggregation (for FFM and Partnership States) Other Federal Exchange “Pare-Downs” Out-of-pocket Limit Transition
8. What Happened With OOP Limits? Rules on how health reform’s out-of-pocket limit provision would be implemented were announced in February, but they just got a lot of national coverage due to a New York Times story about them on August 13th OOP Limits apply to all non-grandfathered group plans, including large groups and self-funded plans New rules call for a limit calculation that is stricter than what is traditionally applied today—all individual copays count toward the total The February rules include transition relief for health plans with more than one benefits administrator. These plans don't have to combine their tallies of members’ out of pocket spending into one total until 2015. If a plan does not impose an OOP maximum for RX, they do not need to apply one until 2015. An exception to the new rule is for plans that use a separate provider to run their behavioral health benefits. Under the Mental Health Parity and Addiction Equity Act of 2008, health plans can't apply separate out-of-pocket maximum limits for those benefits This is not a true delay, but more of a phase-in that applies to certain carriers and employer-sponsored plans
9. What is still happening? Individual mandate.  The law’s health insurance market reforms that go into effect as of the first day of the plan year that begins in 2014 Health insurance exchanges. The marketplace notice.  All employers subject to the Fair Labor Standards Act (not just PPACA’s employer mandate provisions) are required to send a marketplace notice to all employees by October 1, 2013.  The affordability/minimum value tests. These terms don't just relate to the mandate, they are concepts relevant to ANY employee if ANY employer (regardless of size) who is eligible for employer sponsored coverage and who wishes to apply for a subsidy in the exchange.  Summaries of Benefit and Coverage PCORI Fee. The transitional reinsurance fee, the new national health insurance premium tax and other new taxes W-2 Reporting requirements. The limit on Health FSA salary reductions.
10. Recap/Political Overview What’s About to Change For Individuals What’s About to Change in the Marketplace What’s About to Change for Employers What’s About to Change for Agents/Brokers Resources and Questions
11. Individual Mandate YES or NO People will need to demonstrate that they have minimum essential coverage or meet an exception.
12. Proposed Rule on Minimum Essential Coverage
13. The new availability of tax credits for qualified low income people purchasing individual coverage through exchanges could be a game changer. QUALIFIED individuals with family incomes between 100-400% of the federal poverty level will be eligible for sliding scale premium tax credits that will cap the amount they may pay for coverage. Individuals with family incomes at or below 250% of the FPL also qualify for reduced cost-sharing.
14. The Congressional Budget Office’s Take on the Subsidies
15. Who Gets A Subsidy?
16. Premium Tax Credit’s Varying ImpactSource: Kaiser Family Foundation’s Subsidy Calculator
17. How Will the Subsidies Work?
18. What About Income Verification?
19. Medicaid Expansion In states that do not expand Medicaid, people making less than 100% of FPL won’t be eligible for a premium tax credit subsidy.
20. The elephant in the room is how is health reform going to impact premium rates and the amount people actually pay for coverage? Right now rate and price predictions are all over the map.
21. Why can no one agree about the rate/price impact of health reform? Rate comparisons with present-day policies may be hard because in many cases rating factors, plan design requirements, mandated benefit requirements and more will substantially different than what is required today. In most cases, particularly in the individual market, benefit packages will be richer, but networks may be reduced. Many rate analyses do not take into consideration new taxes and fees that will be included in premiums moving forward. Most of the pricing impact will hit the individual and small group markets. There are risk-sharing protections built into those markets to protect against adverse-selection costs, but they are untested. While rates have to be actuarially justified, carriers are making big assumptions about market impact when developing 2014 rates and there are wide variances. Subsidized individuals will be shielded from price impact because the amount they must spend is limited by income. But even though the subsidized consumer won’t personally absorb an increase, prices remains the same.
22. Recap/Political Overview What’s About to Change For Individuals What’s About to Change in the Marketplace What’s About to Change for Employers What’s About to Change for Agents/Brokers Resources and Questions
23. Exchange Marketplace As envisioned, “streamlined, easy to use, consumer friendly, neutral online marketplace for health insurance” with one-stop shopping for Medicaid, CHIP, subsidized coverage and other individual coverage Subsidized coverage will only available for individuals purchasing through an exchange, not those in an employer group People with adequate and affordable group coverage cannot leave group plan for subsidized individual exchange coverage Obama Administration is attempting to rebrand Exchanges as “Marketplaces” Three Governance Options: State-Owned and Operated State-Federal Partnership Model Federal Fallback Exchange Certified agents should be able to sell and service exchange-based policies in all states and be compensated via means similar to today’s market
24. State Exchange Decisions Coverage through the exchanges will begin in every state on January 1, 2014, with enrollment beginning October 1, 2013. State decisions and blueprints on oversight of the exchanges were required by January 1, 2013 for a state-based exchange and by February 15, 2013 for a partnership exchange or federally-facilitated exchange. Even if a state elects a state-based exchange, if they are not able to make the exchange operational for consumers in time, or if their efforts are not sufficient for certification by HHS, the federal government will assume operations. Status of state exchange marketplaces Sixteen states plus the District of Columbia declared that they intend to establish a state-based marketplace and have received conditional approval from HHS Mississippi’s application was rejected due to conflict between the elected Insurance Commissioner and Governor Utah has received conditional approval for a state-based SHOP exchange only Seven states are planning to pursue a state-federal partnership marketplace Twenty-six states will have a federally-facilitated exchange in 2014
25. State Exchange Decisions for 2014
26. SHOP Exchange Update Statute gives great flexibility to states regarding SHOP exchanges, but there are requirements for states in the new final exchange rules. On May 31, 2013 HHS released final rule on SHOP exchange establishment http://www.ofr.gov/OFRUpload/OFRData/2013-13149_PI.pdf The final rule delays the provision of the law that would allow a small employee to choose multiple health plans to offer its employees, as well as the required premium aggregation. Until 2015, the federal SHOP Exchange will, instead, assist small employers in choosing a single qualified health plan to offer their employees. State-operated SHOP Exchanges may, but are not required to, apply the same restrictions.
27. Inside and Outside Exchanges Changes Are Looming that Will Impact Premiums
28. Other Changes Will Impact The Marketplace and Product Design
29. Participation Requirements HHS rules have prohibited participation and contribution requirements for large group market issuers and required small group carriers to have a requirement-free open enrollment period from Nov 15-Dec 15 annually Unknowns right now include: Will carriers limit small group participation/contribution requirement reprieves to the one month November 15-December 15 open enrollment window? Will exchange coverage be counted as a valid waiver? Is the stop-loss marked affected and in any case how will it react?
30. Does A Renewal Date Change Help? Employers and carriers have contemplated the idea of changing renewal dates to delay PPACA compliance and related costs Changing a renewal date is a complicated decision and a responsible broker needs to help clients weigh all involved factors Market reforms are generally implemented on a plan-year basis, but individual mandate is not. There are some employer mandate transition relief options for non-calendar year plans, but a renewal date switch generally negates them. It’s still unclear how transition relief will work with the mandate penalty delay. There may be Cafeteria plan considerations Current rules require documentation of a sound business reason for a renewal date change and a switch may trigger a DOL audit. Recent HHS changes to participation and contribution requirements and the creation of a November 15-December 15 open enrollment period could be a business reason for a change.
31. What about Self-Funding? Increased interest in self-funding amongst smaller and midsized groups Increased interest in the integration of self-funded options with other group coverage options Participation requirement changes in the fully-insured market could change dynamics DOL requested more information about small group self-funding last year and is conducting annual market studies Market interest in self-funded workarounds has already resulted in DOL guidance about changes for HRAs. They need to be attached to a group chassis. Some states are looking at regulation of attachment points as a way of limiting smaller group self-funding More increased interest may bring even more increased regulatory scrutiny
32. Recap/Political Overview What’s About to Change For Individuals What’s About to Change in the Marketplace What’s About to Change for Employers What’s About to Change for Agents/Brokers Resources and Questions
33. What are employers talking about?
34. Employer Responsibilities Under PPACAIt’s Not Just The Mandate Employers are also responsible for maintaining a PPACA-compliant plan, which includes adherence to market reform requirements, notice requirements, MLR requirements, etc. While health insurance carriers assume some responsibility for fully insured plans, there are compliance burdens for all size employers too The Department of Labor has the primary responsibility for enforcing plan compliance via audits and other means Significant funds have been directed to the DOL for health-reform specific audits, and Audit triggers include employee complaints, DOL’s memorandum of understanding with the IRS, and plan’s relationships with third-parties including agents There can be significant penalties for noncompliance, with fines of up to $100 per day per violation. Educating and assisting employers with their compliance responsibilities can be a significant opportunity for a producer
35. Employer Coverage Market Requirements
36. Other Employer Requirements
37. Employer Responsibilities Regarding Exchanges All employers that offer group health benefits are going to have responsibilities regarding the exchanges, even if they do not want to purchase exchange-based coverage or isn’t eligible to purchase exchange coverage. Exchange Notices Coverage Verification Individual Mandate Employer Mandate Subsidies Quality reporting
38. Employers Have To Provide Exchange Notices All employers subject to the Fair Labor Standards Act must provide notice to current employees and new hires about exchange and subsidies. Requirement is based on FLSA applicability, not based on whether or not the employer offers coverage. Employers must provide a notice of coverage options to each employee, regardless of plan enrollment status (if applicable) or of part-time or full-time status. Employers are not required to provide a separate notice to dependents or other individuals who are or may become eligible for coverage under the plan but who are not employees Current employees must receive the notice by October 1, 2013. Employers are required to provide the notice to each new employee at the time of hiring beginning October 1, 2013. For 2014, the DOL will consider a notice to be provided at the time of hiring if the notice is provided within 14 days of an employee’s start date.
39. FLSA Applicability FLSA covered enterprises are unified operations or common controlled organizations for a common business purpose and: Whose annual gross volume of sales made or business done is not less than $500,000 (exclusive of excise taxes at the retail level that are separately stated); or Who is engaged in the operation of a hospital, an institution primarily engaged in the care of the sick, the aged, or the mentally ill who reside on the premises; a school for mentally or physically disabled or gifted children; a preschool, an elementary or secondary school, or an institution of higher education (whether operated for profit or not for profit); or Who is an activity of a public agency. The #1 section of FLSA applicability was revised in 1990 to include the $500,000 test. Entities that were subject to the FSLA before that test was implemented continue to be subject to the overtime pay, child labor and recordkeeping provisions of the FLSA, but they are not subject to the PPACA exchange notice provisions. The notice requirement does apply to the following, regardless of their dollar volume of business: hospitals; institutions primarily engaged in the care of the sick, aged, mentally ill, or disabled who reside on the premises; schools for children who are mentally or physically disabled or gifted; preschools, elementary and secondary schools, and institutions of higher education; and federal, state, and local government agencies.
40. Model Exchange Notices DOL has model notices available online http://www.dol.gov/ebsa/newsroom/tr13-02.html Employers may use one of these models, as applicable, or a modified version, provided the notice meets the content requirements. Required notice content includes: Informing the employee of the existence of the Exchange including a description of the services provided by the Marketplace, and the manner in which the employee may contact the Marketplace to request assistance; If the employer plan's share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, that the employee may be eligible for a premium tax credit and If the employee purchases a qualified health plan through the Marketplace, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes. Model language allows for the employer to skip the questions about minimum value its not known and allows the employer to project what 2014 benefits and employer contributions will be if the plan year will change within three months
41. Coverage Concepts All Employers (and Employees) Need to Know The concepts of minimum essential coverage, affordable coverage and minimum value coverage aren’t just important for employers who are subject to the law’s shared responsibility requirements. All employers of all sizes who offer any type of coverage will need to know if the coverage they offer meets these concept tests. All employees of all types (FT, PT, seasonal, etc.) will need to know what kinds of coverage has been offered to them (if they if they seek a subsidy through the exchanges.
42. Coverage Tests Affordable Minimum Value
43. Minimum Essential Coverage Minimum essential coverage is the standard individuals need to meet to complete the individual mandate requirements and employers need to meet to avoid a “no coverage” penalty. It includes the following: Employer-sponsored coverage (including COBRA coverage and retiree coverage) Coverage purchased in the individual market Medicare Part A coverage and Medicare Advantage Most Medicaid coverage Children's Health Insurance Program (CHIP) coverage Certain types of veterans health coverage administered by the Veterans Administration TRICARE Coverage provided to Peace Corps volunteers Coverage under the Nonappropriated Fund Health Benefit Program Minimum essential coverage does not include coverage providing only limited benefits, such as coverage only for vision care or dental care, Medicaid covering only certain benefits such as family planning, workers' compensation, or disability policies. The Department of Health and Human Services (HHS) has authority to designate additional types of coverage as minimum essential coverage.
44. Employers Will Also Have To Help The Exchanges Verify Coverage
45. Is It Party Time? The delay of the employer mandate penalties has many employers and brokers wondering if we can we all stop counting employees right now, relax for a year and then start back up with all of this next summer? NAHU strongly urges our membership to use 2014 as a transition year with your clients. It’s a great opportunity to test employee counting strategies, managing hours worked, etc. and to assess liabilities and system vulnerabilities without significant financial consequences!
46. Helping Your Clients Make The Right Decisions There are a number of online calculators out there that can tabulate potential penalties and also potential individual exchange subsidy awards. NAHU has an online decision tool to use with your employer clients. https://members.nahu.org/NAHU_Prod_Imis/?ReturnUrl=https://members.nahu.org/nahu_prod_imis/SSO/BounceBack.aspx?doRedirect=http://www.nahu.org/members/benefits/acatool.cfm The Kaiser Family Foundation maintains the most accurate subsidy calculator available, although it has its limitations http://healthreform.kff.org/subsidycalculator.aspx But it’s not just about doing the penalty math. When making coverage decisions you have to work with your employer clients and lead them through a holistic decision making process. All of the new options on the table for employers translate into an excellent opportunity for an educated and motivated broker.
47. Other Points to Consider About Offering Coverage There are no penalties or employer responsibility requirements now, yet most employers offer coverage today. Penalties may increase over time as more employers choose to pay penalties rather than provide coverage. Penalties do not fully offset coverage costs in exchange, adding incentive for increases in penalty amounts. If employer increases salary to make up for lost benefits, employer FICA tax obligations will also increase; whereas employer-sponsored benefits are excluded from income. Employers who offer coverage rarely, if ever have a 100% take-up rate. However, employers who fail to offer coverage pay penalties for 100% of eligible workers. If employees choose to remain uninsured rather than seek coverage, increased absenteeism and presentee-ism may result. Furthermore, workers compensation costs may go up for what are actually non-work related health costs. Employers that drop coverage generally must drop it for all—in all likelihood management carve outs will be tough to maintain post-2014 Competitors may seek an advantage by offering coverage There may be a PR back-lash for not offering coverage
48. Recap/Political Overview What’s About to Change For Individuals What’s About to Change in the Marketplace What’s About to Change for Employers What’s About to Change for Agents/Brokers Resources and Questions
49. Good brokers have already been talking to their clients about what they know about ACA for some time. Brokers that aren't doing extensive ACA outreach are in danger of losing their clients. .
50. Agents and Brokers and Exchanges Here’s what we know and have been able to achieve regarding agents and brokers and marketplaces today: Unless a state specifically acts to exclude agents from marketplaces, it is assumed that agents and brokers can continue to assist their clients and sell and service exchange-based products, including subsidized policies, and be compensated for doing so. So far, no state has acted to exclude agents and brokers, and in fact they have primarily embraced the agent community. Even when the state elects a federally facilitated or partnership exchange, state insurance regulators are expected to maintain their current roles of overseeing agents and brokers in their insurance markets, including licensure requirements, appointments with issuers, and any compensation standards. QHP issuers participating in federally-facilitated and partnership exchanges must pay the same commission for a QHP sold inside and outside of an Exchange.
51. Agents and Broker Training and Certification State-based exchanges are developing their own specific training and certification requirements for agents. In many cases, they are using NAHU and local brokers as partnership resources with regard to training and certifying agents and brokers. In states that have elected a Federally-facilitated or Partnership exchange, all agents and brokers must register with CMS so that they may assist qualified individuals for individual coverage. Agent registration and training is scheduled to begin in the summer of 2013, prior to open enrollment. In completing the registration process, the agent or broker will: (1) Confirm his or her identity by answering a number of simple questions online (2) Complete a Marketplace-specific online training course (3) Agree to comply with federal and state laws, rules, standards and policies, including those related to privacy and security policies
52. Agent and Broker Access to Exchanges In FFE and Partnership states, producers will be able to assist consumers in three ways: (a) an issuer-based pathway, through which an agent or broker uses an issuer’s website to assist the consumer; (b) a Marketplace pathway, through which an agent or broker assists the consumer using the Marketplace website; (c) through the web-based broker State-based exchanges are utilizing similar methodologies to provide broker access. Market-based option is clunky—no long-term access to application data, limited product comparisons, requires consumer to input producer numbers correctly Some carriers are telling us they will not have their Marketplace pathway ready by October 1 Web-broker platform may be most efficient pending the In any case, brokers in federal exchange states will have to use a combination approach to market to clients For successful implementation, broker access is KEY!
53. Getting People Covered PPACA requires every exchange to have a Navigator program to facilitate health plan enrollment. Agents and brokers are specifically listed by the law as one of the groups that may be Navigators, but the law also stipulates a compensation/financing method that conflicts with traditional agent compensation structures. HHS has also created two new categories of individuals to help people find health insurance coverage via exchanges—Assisters and Application Counselors To ensure consumer protection, the law specifies that navigators (and related non-navigator assistance personnel) must meet any state-level licensure or certification requirements.
54. Oversight of Navigators A proposed rule issued on April 3, 2013 outlines federal standards for both Navigators and non-navigator assistance personnel. http://www.gpo.gov/fdsys/pkg/FR-2013-04-05/pdf/2013-07951.pdf Navigators are subject to conflict of interest standards and will receive annual exam-based training Exchanges must have at least two entities serving as navigators, and least one Navigator must be community/consumer focused non-profit States may impose additional requirements for navigators and/or assisters operating in their state, even if they have elected a federally-facilitated or partnership exchange Over twenty states have
55. Recap/Political Overview What’s About to Change For Individuals What’s About to Change in the Marketplace What’s About to Change for Employers What’s About to Change for Agents/Brokers Recap and Questions
56. Which Provisions Apply?
57. Which Provisions Apply?
58. Which Provisions Apply?
59. NAHU Resources to Help Washington Update Compliance Corner Resources and Webinars Customized Answers to Compliance Questions FAQs PPACA Certification Course New Health Reform Decision Tool for Employer Clients
60. Health reform is complicated. Your can help your clients avoid this situation!