Health Care Reform: What comes next? A Presentation for OPRA
Law Regulations to be developed between: * Department of Labor * Department of Health and Human Services * Department of the Treasury
Questions and Answers • Do Employers have to provide health insurance for employees? • Fewer than 50 employees: No. • Incentives to participate in SHOP exchange through tax credits • Sequestration
Questions and Answers • Do Employers have to provide health insurance for employees? • More than 50 employees: Yes. • Businesses with 51 or more FTE employees will be fined $2,000 per employee (excluding the first 30 employees) if they do not offer coverage for employees who average 30 or more hours per week. Note that there is no penalty for part-time employees not offered coverage.
Questions and Answers • Do Employers have to provide health insurance for employees? • More than 200 employees: Yes, and the law requires automatic enrollment. • Employers with more than 200 employees are required to enroll new employees in their health care plan, subject to any waiting period. Employers must provide notice of employees’ right to opt out of automatic enrollment.
Questions and Answers • Do Employers have to provide health insurance for employees? • To avoid penalties: • employers must offer insurance that covers at least 60% of the actuarial value of the cost of benefits. (on average it covers 60% of the cost of covered services for a typical population) • The coverage also must be affordable to employees, meaning an individual employee’s premium cannot exceed 9.5% of their household income.
Questions and Answers • What is a full-time employee? • Full-time employees are those who are scheduled to work 30 hours or more per week on average. • Full-time employees must be identified during 2013 • Used to determine if large employer • http://www.irs.gov/pub/irs-drop/n-12-58.pdf IRS directive to help you establish who is a full-time employee.
Questions and Answers • How does the new law apply to self-funded plans? • A self-funded plan is one where the employer accepts the risk for health expenses, rather than buying coverage from an insurance company. • Generally exempt for state insurance regulations – regulated by the Employee Retirement Income Security Act (ERISA). • Health Care Reform does impose some requirements: • Extension of dependent coverage until age 26 • No cost sharing for preventative services • No more than 90 day waiting periods • No lifetime or annual limits on coverage. • As of now – may not have to meet the “minimum essential health benefit requirements”
Questions and Answers • Do employers have to notify their employees about the law? • The new law did require all employers to provide each employee written notification of the existence of health-insurance exchanges and subsidies by March 1, 2013, but because there was not enough information, that date has been extended. • Regulations on this issue, with new dates to be available in Early Fall 2013.
Questions and Answers • Cadillac Insurance Plans: Will employees be taxed for the portion of the health insurance premiums paid by the employer? • Beginning in 2018, plans valued at 10,200 for individuals or $27,500 for families are subject to an excise tax of 40% on the value of the plan • Tax will be levied on insurers and self-insured employers – not on employees. • Threshold amounts will be adjusted for inflation in 2020, or sooner if health care costs rise more than expected.
Questions and Answers • As a Small Business, what can I do now to get ready for enrollment in October of 2013? • 1. Educate yourself on how insurance works, levels of coverage and costs • 2. Set a budget – how much can you afford to spend on coverage for your employees, and how much can they spend for their coverage • 3. Get Organized – have basic information ready, like the number of employees and the hours worked.
Questions and Answers • As a Small Business, what can I do now to get ready for enrollment in October of 2013? • 4. Consider what is most important to your employees – coverage vs. cost • 5. Get Help! Your insurance broker, attorney and accountant should be part of the team. • Even after the SHOPs go into effect you are able to use your own broker or insurance company.
Closer Look at Employer Mandate Beginning in 2014, employers with 50 or more full-time employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit will be assessed a fee of $2,000 per full-time employee, excluding the first 30 employees from the assessment. Employers with 50 or more full-time employees that offer coverage but have at least one full-time employee receiving a premium tax credit, will pay the lesser of $3,000 for each employee receiving a premium credit or $2,000 for each full-time employee, excluding the first 30 employees from the assessment. (Effective January 1, 2014). Employers with 200-plus full-time employees must automatically enroll their employees into health insurance plans.
2014 Cont’d New tax is levied on insurance companies based on net premiums written. This tax will raise an estimated $8 billion in 2014, reaching $14.3 billion by 2018. The tax does not sunset and is indexed thereafter.
Thank You! Mary Louisa L’Hommedieu is a partner with Dodd, L’Hommedieu & McGrievy. She devotes a substantial portion of her practice to the resolution of business and regulatory disputes in the health care industry. She has litigated numerous cases in state and federal courts and before administrative bodies, and has authored articles and presented seminars on corporate, health care, employment and real estate topics. Mary Louisa is a member of the American Health Lawyers Association, OHCA, OPRA and Leading Age. She serves on the Boards of the Hudson Chamber of Commerce and the Hudson Community Foundation .