Affordable Care Act Jointly Sponsored by:
Webinar Reminders • PowerPoint at the following link: • Use question pane to pose questions - all questions are private and there are no dumb questions! • Ask questions. We will find the answer if we don’t know it today. If we don’t answer during the Webinar, we’ll get back to you. • We are also recording the webinar and will send you the link.
Webinar Overview • First in a series of jointly sponsored webinars with Iowa State Education Association (ISEA) and ISFIS. • Focus will be to connect you with experts in the field who can remove the jargon and give everyone a sound understanding. • We realize there are bargaining related implications but we want to avoid those discussions and focus on core facts and information that everyone needs.
Webinar Panelists David Lyons, Founder and CEO of coOportunityHealth Carl M. LingenPayroll, HR, and Benefit ConsultantGBL Payroll & HR Solutions
Webinar Organizers Randy Richardson, Associate Executive Director for Field Services, ISEA Larry Sigel, Partner, ISFIS
Webinar Agenda • Big picture overview of the ACA • Issues that will impact the marketplace, employees and employers • Timelines and deadlines • Exchanges: How they operate and what they mean • Understanding fees associated with the ACA
Overview of the ACA and Understanding Exchanges David Lyons
New Insurance Marketplace • What’s Happening & Why? • How Will Individuals & Businesses Be Impacted? • Where Do We Go From Here? CoOportunity Health | 4/4/2013 | 9
Why The Big Changes? • Health Insurance costs increasing 4Xs rate of inflation. • Projected to consume 20% of GDP by 2015. • Percent of population uninsured or under-insured increasing (affordability and underwriting) • Average costs of insurance rising to $5,000 individual and $15,000 family.
What Does It Mean? • Everyone must be insured whether individual, employer or government based (exceptions?) • No one can be excluded • There will be penalties for non-compliance ( for who?) • All policies must meet new minimum standards (unless?) • There will be assistance for financially needy (who and how much?) • This assistance will provide intense interest in something new called “Insurance Marketplaces”. (Why?)
Exchanges (er… I mean Marketplaces) • Think “food court” at the Mall …. or Expedia comes to Health Insurance. • Individuals must use the Marketplace to monetize their subsidies and small businesses to monetize new tax credits. • Relevant? Yes, over half of population will at least consider. • Easy? No, complicated two step process. • Affordable? Maybe, but probably not immediately and certainly not to existing consumer expectations of ACA. • Businesses too? Yes, SHOP Exchange … but market behaviour and regulatory delays will make less relevant for 2014.
INDIVIDUAL MARKET Changes Coming in 2014 New Health Insurance Marketplace opens Oct. 1 No one can be denied coverage for medical reasons Tax credits and subsidies for those who need it most $ Tax penalties start at $285 for family of 4 Rates higher for tobacco users Many states are expanding to 138% of FPL CoOportunity Health | 4/4/2013 | 13
Huge Market Changes for Groups Small Group (1-50) Impacts Large Group (>51) Impacts CoOportunity Health | 4/4/2013 | 14
GROUP MARKET Changes Coming in 2014 Rating and market rule changes for small group SHOP Exchange for small groups (1-50) Required coverage categories, levels and amounts Expanded tax credits for small groups with 1-25 FTEs Employer and insurer fees to support new marketplace Requirements for groups with >50 employees $ CoOportunity Health | 4/4/2013 | 15
New option for Iowans and Nebraskans • Nonprofit CO-OP (consumer operated and oriented plan); member owned and governed • CO-OPs established in the Affordable Care Act • “Invented” to provide affordable options for individuals and families • 24 CO-OPs approved to date • Low-interest startup loans provided by federal government • Must beginmarketing health plans October 1 • On Exchange plans for individuals and small businesses • Off Exchange plans for all market segments • Alternative to traditional commercial carriers CoOportunity Health | 4/4/2013 | 16
Key Strategies for Schools Carl Lingen
Key Strategies for Schools • IDENTIFY - costs associated with employer and employee contributions Accounting or Payroll System needs to be able to track and report on these value.
Key Strategies for Schools 2) MODEL- Need to do analysis today on how ACA will financially impact your organization. • Which variable-hour employees will now have to be offered insurance? • Plan design changes • Budget for additional ACA fees starting January 2014
Key Strategies for Schools 2) MODEL- Need to do analysis today on how ACA will financially impact your organization. • Patient-Centered Outcome Institute (PCORI) Fee • $2 per member per year • Transitional Reinsurance Fee • Estimated $5.25 per member per month (HHS Estimation) • Annual Health Insurer Fee • Estimated $7-$9 per member per month
Key Strategies for Schools 3) COMMUNICATE- What is your strategy to communicate required notices and plan changes • Don’t get so caught up in regulation that you forget the HR aspect of offering employment based benefits in the first place. • Need to have a step by step strategy to communicate and implement changes.
School Costs and Special Issues Larry Sigel
Issues: Large Employer and 30 Hour per Week Threshold • Large Employer • 50 or more Full Time Equivalent (FTE) during the “Look Back” period • Group 1: Number of full—time employees (130 hrs or more per month). • Group 2: FTE – all other employee hours divided by 120 • Add them together and this is your FTE calculation for each month. • Can use a 3 to 12 month Measurement Period (Look Back) • Must revisit each year to determine whether you meet the definition • Hours are not just hours worked, but also include vacation time taken during the period, sick leave, etc.
Special Rule for Educational Institutions • For break periods that are paid (eg, winter break or spring break) you must credit the employee for service. • For summer breaks, created an “Employment Break Period” which is equal to four consecutive weeks when an employee is not credited with an hour of service.
Special Rule for Educational Institutions • Must apply one of the following calculation methods: • Apply the average of the hours worked per week excluding the Employer Break Period and use that average for the Employer Break Period. • Take the average hours worked during the measurement period (not including Employer Break Period) and apply that to the Employer Break Period • Maximum number of hours an employee can be credited for under this provision is 501 hours.
Mandate Penalties • If you are a large employer you are subject to the Employer Mandate penalties. • If you do not offer qualifying coverage to all the FTE (Pay Penalty). • If the coverage you do offer is not good enough (Play Penalty). • Beginning in 2018, if your coverage is too rich you can be penalized (Cadillac Penalty).
Penalty Calculations • Pay Penalty Calculation • (Full-Time employees – 30) X $2,000 (if any employee receives a subsidy on a Health Insurance Exchange) • Play Penalty Calculation • $3,000 for every employee who receives a subsidy on a Health Insurance Exchange if you fail Affordability or Minimum Value Tests • Cannot exceed the amount of the Pay Penalty Calculation if chose not to offer health insurance • Employee share of individual coverage cannot exceed 9.5% of income • Minimum Value test: Plan has to cover at least 60% of health care costs expected to be incurred (actuarial calculation)
Penalty Calculations • Cadillac Penalty • Calculation: 40% of the amount that premiums are higher than allowable • Single Premium: $10,200 maximum • Family Premium: $27,500 maximum • Begins in 2018 and these amounts are indexed in future years.
Fees • Research Fees • Reinsurance Fees • Health Insurance Fees
Wrap-up • Thanks for attending the webinar, we will be following up with a link to the webinar recording. • Please let us know if you have questions or comments. • Look for upcoming webinar invitations on this important topic!
Questions or Comments? Randy Richardson, Associate Director for Field Services, ISEA firstname.lastname@example.org Iowa State Education Association 777 Third Street, Des Moines, IA 50309515-471-8000 Iowa School Finance Information Services 4685 Merle Hay Road, Suite 209 Des Moines, IA 50322 Office: 515-251-5970 www.isfis.net Larry Sigel, ISFIS – Partner Cell: 515-490-9951 email@example.com