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Healthcare Reform in 2014 UPDATE “Change is a comin g ” What does it mean for us?

Healthcare Reform in 2014 UPDATE “Change is a comin g ” What does it mean for us?. The Patient Protection and Affordable Care Act. Insurance Reforms - Insurers may not have a lifetime limit on benefits and they may not have “unreasonable” annual limit on benefits (begins Sept 2010)

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Healthcare Reform in 2014 UPDATE “Change is a comin g ” What does it mean for us?

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  1. Healthcare Reform in 2014UPDATE“Change is a coming”What does it mean for us?

  2. The Patient Protection andAffordable Care Act • Insurance Reforms - Insurers may not have a lifetime limit on benefits and they may not have “unreasonable” annual limit on benefits (begins Sept 2010) - Insurers must accept everyone regardless of a pre-existing condition (2014) - Insurers must place a limit on annual out-of-pocket expenses – including coinsurance (2014)

  3. The Patient Protection and Affordable Care Act • Insurance Reforms - Insurers must renew coverage on individuals even if they suffer health problems during the year (2014) - Insurers may not look at gender or past claims to determine yearly rates (2014) - Insurers must allow adult children to age 26 to join plan

  4. The Patient Protection andAffordable Care Act • American Health Benefit Exchanges - Each state must have an Exchange that offers qualified health plans - An exchange must: • Certify that offered plans meet gov’t requirements • Provide a comparative analysis of plans • Provide cost information for each plan • Assign a rating to each plan - An Exchange may operate in more than one State • Each State’s Exchange is to be up by 2014

  5. The Patient Protection and Affordable Care Act • Employer mandates - Employers with an average of 50 FT employees during the last year must offer insurance to their FT employees - A FT employee is one who is employed on average at least 30 hours/week during ANY MONTH - PT employees are to be counted when determining if your club has 50 full-timers • Take the total hours worked by PT in a month and divide by 120 then add that number to the number of FT to see if you reach 50 • PT are counted but you don’t have to offer insurance

  6. The Patient Protection andAffordable Care Act • What if Herons Glen says NO!? - Herons Glen meets the 50 FT employee threshold. If we fail to offer insurance we will be fined $66k (federal government graciously exempts the first 30) • If 1 employee enrolls in a separate plan and is entitled to receive a tax credit or subsidy - Employers that meet the threshold and do offer insurance can be fined up to $3k for each employee who • Enrolls in a separate plan and is entitled to receive a tax credit or subsidy

  7. The Patient Protection Plan andAffordable Care Act • Employer mandates - If a club has 50 FT, then its FT seasonal workers must be offered insurance • “seasonal worker” is one who performs labor or services on a seasonal basis • A FT “seasonal worker” is one who averages more than 30 hours/week during ANY MONTH that they are employed • We currently have 20 seasonal employees who would fall under this category of FT and must be offered benefits • Management will enact internal controls so that all seasonal employees will not work more than 25 hrs/week

  8. What does this mean forHerons Glen? • Two biggest factors affecting Herons Glen • We would have to offer coverage to 20 seasonal employees unless we change the amount of hours that they are allowed to work • We would have to cover 12 employees who currently are eligible for benefits but decline coverage

  9. What does this mean forHerons Glen? • There are 3 factors that must be contemplated no matter which option we choose: • Drop PEO (if we decide not to offer benefits or buy from exchange) • Continue to receive benefit coverage through PEO • Purchase health benefits from the Exchange (consider pricing of plans won’t be out until late next year and our renewal is Oct 1st.)

  10. What does this mean forHerons Glen? • Option 1: What if we say “the heck with them!” and don’t offer health benefits? - Since we are above the threshold, if we don’t offer health benefits, and JUST 1 employee went to the Exchange and was eligible for a tax credit or subsidy, we would be liable to pay a fine of…$66,000/yr (based on 43 FT & 20 seasonal – first 30 exempt) - FY 13 budget was approx $140k (GCM underfunded) - Would save District about $74k but would probably lose many key employees, would now be competing for labor against businesses who offered health coverage, and leave employees to go to the Exchange with no assistance)

  11. What does this mean forHerons Glen? • Option 2: What if we operate status quo? What kind of assessment impact are we looking at? A) We would be covering 43 FT and 20 seasonal employees - Increase of $98k in healthcare costs - $75 assessment increase per household (based on FY 13 budget) or 4.5% B) Seasonal employees can’t work more than 25 hrs/wk which excludes them from coverage. - Increase of $63k in healthcare costs - $49 assessment increase per household (based on FY 13 budget) or 3.0% C) Control seasonal employees & assumptions on next slide - Increase of $23k in healthcare costs - $18 assessment increase per household (based on FY 13 budget) or 1.0%

  12. What does this mean forHerons Glen? • Option 3: How do we continue to offer health benefits but not increase our assessment? - FY 13 budget for benefits was $140k - All “seasonal employees” hired must work PT hours (no more than 25 hours/week) so that we aren’t required to offer them benefits - Argument for seasonal employees not taking benefits and working full time hours - With our current employee structure that would still leave us with covering 43 FT positions - The unknown factor in this equation is knowing how many people are covered by Medicare/gov’t assisted programs and how many are just going to take the fine because it is cheaper ($95 vs $1500). We are going to assume that this excludes at least 10 employees from coverage and we aren’t liable for a fine since our plans meet the 2 requirements of affordability and minimum value.

  13. What does this mean forHerons Glen? • Option 3: How do we continue to offer health benefits but not increase our assessment? - The cost for covering 33 FT employees is $160k - The only option to make up that additional $20k is to lower our contribution levels. Each employee would be responsible for paying an extra $600 towards coverage - Our current contribution levels are 80%/85% depending upon income bracket - If we lower these to 70%/75%, we could keep our assessment static and still offer coverage

  14. What does this mean forHerons Glen? • Option 3: How do we continue to offer health benefits but not increase our assessment? - This reduction in contribution levels would also cover a 10% increase in premium for FY 14 - Keep in mind that because our plans currently meet the 2 eligibility requirement of affordability and minimum care then we would not be liable for any penalties even if an employee receives a tax credit or subsidy from the government

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