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All Rights ReservedDigital Insurance VACO What does your business need to know? Nancy Grasso Digital Benefit Advisors.

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Presentation on theme: "All Rights ReservedDigital Insurance VACO What does your business need to know? Nancy Grasso Digital Benefit Advisors."— Presentation transcript:

1 All Rights ReservedDigital Insurance VACO What does your business need to know? Nancy Grasso Digital Benefit Advisors

2 All Rights ReservedDigital Insurance Health Care Reform Discussion Topics 1.The first years A A.Age 26 B.Preventive Care C.No pre-x for children D.Non discrimination ( 105H) E.Supreme Court Ruling F.Expansion of Women’s Health G.Essential Benefits Defined H.Medical Loss ratio rules and rebated I.Summary of /benefits and Coverage J.Increased Taxes

3 All Rights ReservedDigital Insurance Health Care Reform Discussion Topics 2. Now and in the future A.2013 A.Expanded W-2 reporting B.Essential Benefit Established C.Plan Actuarial Value Determination D.Open Enrollment to the Exchanges B.2014 A.90 Day waiting period implementation B.Guarantee Issue- Community Rating C.Mandate to Purchase D.Pay or Play E.Affordability testing with Safe harbor rules F.Penalties Assessed G.Reporting Requirements

4 All Rights ReservedDigital Insurance Health Care Reform Implementation –2013 Patient Protection and Affordable Care Act of 2010 (PPACA)

5 All Rights ReservedDigital Insurance Minimum Actuarial Value (IRS Notice Issued 4/26/12 ) Proposal Determination of type of method to use HHS and Treasury develop an actuarial value calculator (AV) or a minimum value calculator (MV) Checklists to determine minimum value Certification by a certified actuary utilizing approved methods What is this? The methodology to calculate whether an employer-sponsored plan provides the required minimum essential value Determines employee’s eligibility to receive a premium tax credit through the Exchange

6 All Rights ReservedDigital Insurance Healthcare Exchanges open for enrollment October 2013 Effective dates of Jan 2014 Does not constitute Open Enrollment Model Notice Requirement Subsidies to those under 400% FPL No subsidies for dependents who are eligible for an affordable plan.

7 All Rights ReservedDigital Insurance Health Care Reform A New Age-2014 Patient Protection and Affordable Care Act of 2010 (PPACA)

8 All Rights ReservedDigital Insurance 105H Written and Enforced Cannot discriminate in favor of Highly Compensated employees ( top25%) Cannot apply different methods of contribution for classes, tenure or position Cannot apply different waiting periods Must offer coverage to all 30 hour employees In the case of fully insured plans, the nondiscrimination rules are enforced through the imposition of an excise tax of $100 per day per individual discriminated against under IRC 4980D(d). This excise tax is the penalty that generally applies under the IRC for failure to comply with IRC requirements relating to group health plans

9 All Rights ReservedDigital Insurance Guarantee Issue and Rate Increases All Plans Guarantee Issue No Pre – X’ No Declines No additional Rate for health individual on small group Insurance and individual Rating Bands Narrowed / Eliminated Complete Community Rates 2-99 – Average age of the group – Geographic Region – Plan Design Purchased – Network – Insurance Carrier

10 All Rights ReservedDigital Insurance Rating Rules and Methodologies (HHS and CMS: PPACA; Health Insurance Market Rules; Rate Review 11/26/12 proposed rule) 1.Issuers = individual member ratings Employers = individual or composite rating 2.Age rating – limited to 3:1 3.Tobacco rating – limited to 1.5:1 4.Family size – individual v family a.Maximum of 3 oldest family members under age 21 b.No cap for family members over age 21 5.Geographic region a.States or CMS can establish one or more rating areas b.Maximum of 7 rating areas c.One rating area for state, county-based or 3-digit zip codes, or metropolitan statistical areas (MSAs) and non-MSAs 6.Re-underwriting is prohibited Will apply to non- grandfathered large group if state permits coverage to be offered through an Exchange in 2017 Applies to non- grandfathered health insurers (not self-funded) Apportioned to each family member

11 All Rights ReservedDigital Insurance Rate Action is Imminent Why? How? Compression of underwriting age bands and no health risk adjustments Upward cost pressure from new benefits and increased demand Impact of currently uninsured New fees and taxes (approaching 4-6% for full year!) 11

12 All Rights ReservedDigital Insurance PPACA Mandate to Purchase The keystone of the Patient Protection and Affordable Care Act (PPACA) is an unprecedented individual mandate tax requiring virtually all U.S. citizens and legal residents to either have health insurance or pay a tax Taxes begin in 2014 and rise in years following. In each year, the tax consists of the higher of a dollar amount or a percentage of household income. For a given household, the tax applies to each individual, up to a maximum of three. Following is the schedule of taxes: 2014: The higher of $95 per person (up to 3 people, or $285) OR 1.0% of taxable income. 2015: The higher of $325 per person (up to 3 people, or $975) OR 2.0% of taxable income. 2016: The higher of $695 per person (up to 3 people, or $2,085) OR 2.5% of taxable income. After 2016: The same as 2016, but adjusted annually for cost-of-living increases

13 All Rights ReservedDigital Insurance Employer Mandate IRS Notices , , and IRS 4980H Deign Your Essential Benefits Understand Needs Keep Informed Stay Compliant Control Costs Educate and Engage What does this mean: Certain employers will be required to provide coverage to its full- time employees and dependents. Who does this apply to: “Applicable large employers” with 50 or more full-time equivalent employees Entity that is an employer of an employee under common- law test All entities are treated as a single employer All employees of a controlled group are taken into account

14 All Rights ReservedDigital Insurance Employee Definitions (Proposed amendments to Employer Sharing Responsibility REG ; pub ) Employees included in calculations: All full-time employees with, on average, 30 hours or more of service per week; 130 hours if using a monthly standard Part-time, variable, or seasonal employees Hours for services performed outside the U.S. for which an individual receives U.S. source income Special rules: Teachers and employees of educational organizations – traditional breaks in academic school year will often be periods of paid leave so would be counted as hours of service Commission-based employees, transportation employees, adjunct faculty and analogous employment positions – non-standard employees paid on commission or subject to safety regulations, e.g. airline pilots – under review. In interim consider all hours necessary to perform work

15 All Rights ReservedDigital Insurance Affordability Test and Safe Harbor Rules $3,000 penalty per year for each employee whose health insurance premium contribution for single coverage exceeds 9.5% of their annual household income Affordability safe harbor -an employer will not be subject to the $3,000 penalty as long as the employee portion of the self-only premium for the employer's lowest cost plan that provides the minimum value required is not more than 9.5% of the employee's current W-2 wages from the employer. The IRS also confirmed that the affordability test applies only to individual coverage, meaning employers can charge disproportionately more for family coverage.

16 All Rights ReservedDigital Insurance Employer Mandate IRS Notices , , and IRS 4980H Deign Your Essential Benefits Understand Needs Keep Informed Stay Compliant Control Costs Educate and Engage What are the penalties associated with non-compliance? Employers may be assessed fees for any month they: 1.Fail to offer employer-sponsored minimum essential coverage to FTEs and their dependents a.AND at least one person enrolls for coverage, from the Exchange, and receives a subsidy b.Assessment = 1/12 of $2,000, or $ per month, for each FTE, less the first 30 employees 2.Offer employer-sponsored minimum essential coverage to FTEs and their dependents but the employee contribution is deemed unaffordable a.AND 1 or more employees enroll for coverage, from the Exchange, and receive a subsidy b.Assessment = the lesser of: i.1/12 of $3,000, or $250 per month, for FTE receiving a subsidy OR ii.1/12 of $2,000, or $ per month, for each FTE, less the first 30 employees

17 All Rights ReservedDigital Insurance Compliance with §4980H(a), (b) (Proposed amendments to Employer Sharing Responsibility REG ; pub ) Deign Your Essential Benefits Understand Needs Keep Informed Stay Compliant Control Costs Educate and Engage Assessment penalties can be avoided if the employer offers minimum essential coverage under an employer-sponsored plan to its full-time employees and their dependents. Minimum Essential Coverage (MEC): to be defined in a future regulation Definition of dependent: An employee’s child under age 26 – does not include spouse Employers will not face a tax penalty if not offering coverage to spouses, who will be able to seek a federal premium tax credit to purchase health insurance in an Exchange if other minimum essential coverage is not available. Offer of coverage in case of non-payment: Employer will not be deemed as not offering coverage if employee fails to pay their portion of the premium – this regulation adopts the COBRA 30-day grace period rule Offer of coverage: Employer will satisfy requirement as having offered if they offer to 95% of their employees Assessment payments: These are not tax deductible

18 All Rights ReservedDigital Insurance Reporting requirements Employer Plan Reporting Who must report? Any entity that provides minimum essential coverage Those employers required to meet the shared responsibility, i.e. employer mandated coverage What is to be reported and how often? Annual returns required Fully insured group health plan = provided by the health insurance issuer Full demographic and coverage information on each individual participant Identification if a qualified health plan offered through an Exchange and any advance premium payment Employer required to offer coverage: Terms and conditions of health care coverage provided to full-time employees for the year Employee information for those full-time employees who received it and when they received it New IRS Notice , issued 5/14/12 Comments taken through 6/11/12

19 All Rights ReservedDigital Insurance Fines and fees for the upcoming year

20 All Rights ReservedDigital Insurance What is your responsibility in helping employees As mandated by the Patient Protection and Affordable Care Act (PPACA), employers are required to provide notice to their employees regarding the availability of the Health Insurance Marketplace, and explain how the exchanges will operate and the criteria to obtain a federally funded subsidy to help offset the cost of premiums

21 Health Care Reform Resources

22 All Rights ReservedDigital Insurance Healthcare Reform References Dept. of Health and Human Services Kaiser Family Foundation America’s Health Insurance Plans National Association of Health Underwriters Internal Revenue Service

23 Health Care Reform Q & A


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