Health Care Reform Taking Action in 2014 and Beyond
True or False • What I tell you today may not be true tomorrow, or next week or next year • Health Reform is more complicated than shipping through the U.S. Postal Service • 40 will be the last time Republicans vote to repeal Health Reform • If you’re over 40 and eat and drink considerably more than you exercise, you will gain weight
What are we dealing with? • 4 in 10 Americans (42%) are unaware that ACA is still the law of the land, including 12% that believe the law has been repealed by Congress, 7% that believe is was overturned by the Supreme Court and 23% that say they don’t know enough to speculate on the current status of the law • Close to have of the population (49%) say they don’t have enough information about health care reform to understand how it will impact their own family • When it comes to where they are getting information about the law, Americans most commonly cite friends and family (40%), newspapers, radio or other online news sources (36%), and cable news (30%). About 1 and 10 report getting information from a health insurer, a doctor, an employer, or a non-profit organization
Delaying that “part” will cost the American taxpayer$12 billion Roughly amounts to $160 per household assuming ½ the population pays taxes Source: Congressional Budget Office
What exactly is delayed? • For large employers they will not have to consider whether they employ 50 or more FTEs or equivalents (part time) during the previous calendar year • No longer have to count employees hours to determine if they average 30 or more hours per week • Don’t have to offer minimum essential coverage next year or offer coverage to employees averaging 30 or more hours per week • Offer coverage that is of “minimum value” nor does it have to be “affordable”
How could the delay affect you? • If employers are not reporting, how will HHS know whether coverage is “affordable”? • If employers offer a substandard plan (less than 60%), will an individual still be liable for a penalty for not having health insurance? • The exchanges can dispense benefits “based on an applicant’s attestation” about employment insurance and income without verification • Does this create an unintended consequence of migration from group coverage to the exchange?
Many Provisions Still in Play • No Annual Limits on Essential Health Benefits • No Pre-Existing Condition Exclusions for Anyone! • Maximum 90-day waiting periods on all plans • Notice of Public Exchange • New requirements for wellness programs
Many Provisions Still in Play • The individual mandate • Limits on cost-sharing (some of which is delayed) and deductible limits for small employers • Rating restrictions for small employers • Subsidies for low-income individuals for Exchange coverage
Maximum 90 Day Waiting Period Waiting periods for enrollment must shorten to 90 days. Recent guidance allows 1st of the month IF enrollment occurs by 91st day. This means 1st of the month after 60 days is okay Applies to grandfathered plans
Notice of Public Exchange Employers must provide written notice to: • Existing employees by October 1, 2013 • Annually (presumably March, but awaiting guidance) • New employees upon date of hire • Includes info about the local State Exchange, possible subsidies, and ineligibility for employer contributions if covered through Exchange • Model notice available in English and Spanish (located on DOL website) • Same delivery rules as SPDs
Changes to Wellness Programs • Maximum incentive increases from 20% to 30% • Additional 20% (up to 50% total) if to prevent/ reduce tobacco use (apparently delayed on exchange coverage in 2014) • Additional administrative rules will apply – particularly to outcomes based programs. Consult you benefits or legal advisor
The Individual Mandate Individuals must have insurance or pay a penalty Family members under 18 receive 50% penalty reduction
Limits on Cost Sharing Out-of-pocket limits must comply with OOP limits for HSA plans. Copays for EHB services must count toward the OOP max. Not required for grandfathered plans
Essential Health Benefits (EHB) Metallic/ Actuarial Value Essential Health Benefits must be offered by individual policies and small group non-grandfathered insured plans at 4 levels of coverage: Actuarial value: The average percentage a health plan will pay of an enrollee’s health care expenses.
Essential Health Benefits (EHB) Health Plans must provide Essential Health Benefits for individual and small group
Adjusted Community Rating Rate factors are limited to geographic area, age (3:1 limit) and tobacco use. Rates may not vary by gender, health status, claims history, group size or industry Not required for grandfathered plans
Things to Think About … If you’re a Small Employer • Are you really a large employer subject to the mandate? • Measured over prior calendar year: • Employers with 50 FTEs on average • Measured by looking at entire controlled group/ affiliate service group • A special transition rule allowing a shorter look-back may be available for 2015 but we don’t know yet
Things to Think About … If you’re a Small Employer • Should you remain grandfathered with an older employee demographic? • Consider self-funding if you have a younger, healthier demographic? • Should you renew early (December) to avoid Community Rating and “rate compression”?
Things to Think About … If you’re a Small Employer • Drop coverage and send your employees to the exchange? • How will you make employees “whole”? • How will it impact your ability to attract/ retain? • Offer coverage through the SHOP exchange? • Only one option offered in 2014
Things to Think About … If you’re a Large Employer • Pay or Play is delayed but not dead. Still need to determine “eligible” employee and offer plans that meet minimum value/ affordability requirement. • Weigh your options for eliminating employer-sponsored health insurance and sending employees to the Exchange.
Things to Think About • If considering dropping coverage, these are some things to consider: • Based on contributions today, how will I make employees “whole”? Current contributions are tax deductible, compensation is not. • How will this impact the employer – employee relationship? • How will this impact my ability to attract a quality workforce?
Things to Think About • Consider self-funding • Review of premium increases by HHS doesn’t apply to self-funded plans • Greater flexibility in plan design • Avoid 2.3% of premium Insurer Fee associated with fully insured plans • Avoid mandated services for fully insured plans, estimated to increase premiums by as much as 15%
Things to Think About • Self-funding • More transparent. Self-funded plans allow employers to determine what true costs of coverage are. • Obtaining better data, employers can address high-cost services more directly and future premium increases are tied specifically to the employer population
Things to Think About • Be aware of the new “aggregator rule” • Office visit copays now apply to out-of-pocket maximums • For low deductible plans with low OOP max, adjust those maximums now to account for the additional exposure • Auto enrollment for employers with 200+ employees • Non-discrimination rules for fully-insured plans (effective dates TBD)
Pay or Play Mandate 2015 Forecast for Employers