Presentation on theme: "Current Political Dynamic Where We are Today President in Obama Holds veto power Can only be overridden by two-thirds vote of both houses The U.S. House."— Presentation transcript:
Where We are Today President in Obama Holds veto power Can only be overridden by two-thirds vote of both houses The U.S. House of Representatives 241 Republicans; 191 Democrats; 4 vacancies All members of the House are up for election every two years The Senate 53 Democrats; 47 Republicans 33 seats up for reelection 21 Democrats; 10 Republicans; 2 Independents
2012 Elections Impact Things may stay as is, as implementation of health reform moves forward as is If President Obama is reelected, implementation moves forward because of veto power If Mitt Romney is elected but Senate remains as is, there could be delays but most change measures could be blocked If Republicans win in every area, Senate parliamentary procedure could still prevent full repeal, but major changes would be likely
How many full-time employees do you have? If ≥ 50 Business is subject to ACA ACA looks to part-time employees to determine full- time employee equivalents. If total full- time and full- time equivalent employees ≥ 50 Business is subject to ACA employer mandate penalty and coverage provisions If total full- time and full- time equivalent employees ˂ 50 Business is exempt from ACA employer mandate penalty and coverage provisions Slide Courtesy of National Retail Federation Separate businesses under common control are considered one business if determined so by IRS rules Rules may vary by structure (e.g. corporation or partnership) of business. Generally requires 80% control to be considered common control. If less than50 Key considerations: How many employees do you have? ACA applicability might be a consideration in determining future hiring decisions in advance of the January 1, 2014 effective date for employer mandate penalties.
A full-time employee is defined under the Affordable Care Act (ACA) as an employee who works 30 hours per week, per month, on average. Slide Courtesy of National Retail Federation If an employee is hired for – or promoted to – a full-time position (for an ACA- covered employer), then the employee will be eligible for the employer’s health plan after the employer’s waiting period (maximum 90 days) if applicable. If an employee is hired on other than a full- time basis (e.g. on a part-time, temporary, or seasonal basis), then they need not be offered coverage. But, employers may have to monitor their hours to determine if they become eligible for coverage. The Department of Treasury is considering a method of tracking hours on average to recognize eligible employees without the expense of enrolling and dis- enrolling employees into coverage, as they gain or lose eligibility. This proposed “look-back” method would allow employers to average hours over a set period (not to exceed 12 months) in exchange for an equal or greater period of stable coverage without regard to eligibility for coverage. Seasonal employees working fewer than 120 days per year are excluded from calculation of whether an employer is an ACA-covered large employer and from penalty calculations.
What are the employer responsibility penalties? Failing to offer coverage to full-time employees Offering coverage to full- time employees where the cost of the coverage exceeds 9.5% of family income The penalty for the failure to offer coverage is $2,000 x full- time employees not covered, minus the first 30 employees, i.e. your first 30 full time employees are exempt from the calculation. The penalty for the failure to offer “affordable” coverage is the lesser of two penalty calculations: $3,000 per applicable employee or $2,000 times every full-time employee, minus the first 30 employees. At least one employee must receive subsidized coverage in the exchange to trigger penalties. Slide Courtesy of National Retail Federation Applicable employers can be penalized for : Key considerations: What is your mix of full and part-time employees? Could an adjustment of employee status reduce your penalty exposure? If you provide coverage today, how does the cost of that coverage compare to your total penalty exposure? Consider all options, including non- monetary concerns. NRF maintains a Health Mandate Cost Calculator at www.retailmeansjobs.com/health care which can model the penalty effect on your business. www.retailmeansjobs.com/health care NRF maintains a Health Mandate Cost Calculator at www.retailmeansjobs.com/health care which can model the penalty effect on your business. www.retailmeansjobs.com/health care
An applicable employer who offers qualifying coverage to full-time employees can still be penalized if that coverage fails a two-part “affordability” and “minimum value ” testaffordabilityminimum value Slide courtesy of National Retail Federation Coverage must be “affordable.” The employee’s cost for coverage (self-only coverage) must not exceed 9.5% of family income. Coverage must also be of “minimum value.” The plan’s share of total allowed benefit cost must be more than 60 percent. This is generally understood to be a 60% actuarial value test. The Departments of Treasury and Health and Human Services are considering several approaches to defining the standard, including: a minimum value calculator; a safe-harbor checklist; and actuarial certification. Actuarial value is based on plan payments for a standard population and charges minus individual share of premiums, co- insurance and co- pays. A potential regulatory safe harbor under consideration for employers would base this on 9.5% of the employee’s current W-2 wages. Low-income employees not eligible for Medicaid or Exchange tax credits may be able to access catastrophic or limited benefit coverage. The question of dual income/coverage households has not yet been addressed.
Small Employer Decisions: How many full-time employees do you have? Slide Courtesy of National Retail Federation Less than 50 employees≥ 50 employees Not required to offer coverage to full-time employees and dependents Mandated to offer coverage to full-time employees and dependents Will coverage in small business exchange (SHOP) be more affordable than coverage available today? What will the effect of mandated benefits and rating rules in SHOP and the market outside be? More expensive? What will the effect of mandated benefits and rating rules in SHOP be? More expensive? Tax credit for eligible small businesses is available but difficult to qualify for. Small business tax credit is not available. Limited to 25 or fewer employees with additional strings. Can I compete for employees without offering coverage?
Offer coverageOffer SHOP exchange coverage Not offer coverage If 50 or more full-time employees or equivalents, could be subject to penalties for “unaffordable care” Small employer purchasing exchange (SHOP) If 50 or more full-time employees or equivalents, subject to penalty if do not offer coverage to full-time employees and dependents Coverage is expensive, perhaps more so in future. Health insurance tax and reinsurance assessments will add to cost. Tax subsidies for low income employees may be available, but phase out sharply above three to four times the poverty level. Employees purchase coverage in individual Exchange, particularly if subsidies are available. Market reforms may increase available coverage and remove barriers to coverage. Private exchanges may be another option Essential health benefits coverage and rating rules also apply outside the exchange – also increasing coverage costs Coverage will be available outside of the Exchange. High dollar plan tax may apply after 2018 Slide courtesy of National Retail Federation Small Employer Coverage Choice Decisions & Considerations
Large Self-Insured Employer Considerations Offer coveragePublic ExchangeNot offer coverage Continue to offer coverage directly to employees and dependents Move full-time employees to the small employer exchange (known as the “SHOP Exchange”) Pay penalty Employees purchase coverage in exchange, particularly if subsidy available Challenges and Opportunities to Each Situation Likely greater flexibility in benefit design, ability to integrate benefits Not available to large employers (>100 employees) until at least 2017 Generally more predictable, fixed cost 1, though indexed for inflation and subject to change; escapes potential liability for “unaffordable” coverage 2 Uncertainty as to future costs and changing regulatory requirements. Reinsurance assessments and health insurance tax add cost. National coverage will not be available – will be subject to state variation/benchmarks Penalty is not tax deductible Potential “unaffordable coverage” penalties based on family income or W-2 wages and minimum value offered SHOP Exchange success uncertain as to cost, coverage, employee satisfaction. Difficult for employers to administer across multiple exchanges. Administrative expense of tracking part-time, temporary or seasonal employees continues High-dollar plan tax may apply after 2018Ability to integrate health, wellness, other benefits uncertain Administrative expense of tracking part- time, temporary or seasonal employees continues Administrative expense of tracking part- time, temporary or seasonal employees continues. Definition of “small employer” may vary by state. Higher wages, less turnover More full- time employees Competitive market for skills More generous health benefits Lower wages, high turnover More part-time, temporary or seasonal employees More basic or limited benefits Slide Courtesy of National Retail Federation
*Additional Points to Consider re: Coverage Decision Penalties may increase as more employers choose to pay penalties rather than provide coverage. Penalties do not fully offset coverage costs in exchange, adding incentive for increases in penalty amounts. If employer increases salary to make up for lost benefits, employer FICA tax obligations will also increase; employer-sponsored benefits are excluded from income. If employees choose to remain uninsured rather than seek coverage: 1) Increased absenteeism and presenteeism may result. 2) Workers Compensation cost may go up for what are actually non-work related health costs. Competitors may seek advantage by continuing to offer coverage. Coverage through the exchange may be more expensive due to the rating requirements and essential health benefits coverage. Subsidies phase out rapidly: subsidies will be significantly less for those at three and four times the poverty level than for those at two times and below. Some employees may not be eligible for subsidies at all and will bear the cost entirely on their own. 1) These employees may depart to seek employment with coverage elsewhere. Preceding Slides courtesy of National Retail Federation
Summary of Benefits and Coverage Benefits Description Uniform Format 4 pages, double sided, at least 12 point font May be grayscale May be provided with SPD if prominently displayed Set template – very prescriptive Premiums not required – that was a change in final rules
SBC Must Be Linguistically and Technologically Appropriate This provision applies if the notice will go to an address in a county where 10% or more of the population is literate only in a non- English language Uses same rules as Claims and Appeals regulations Plan or issuer must provide oral language transition in the non- English language, provide notices upon request in the non-English language, and include in all English versions a statement in the non-English language indicating how to access the language services provided by the plan or issuer. Written translations in Spanish, Chinese, Tagalog and Navajo are available at http://cciio.cms.gov/programs/consumer/summaryandglossary/in dex.html http://cciio.cms.gov/programs/consumer/summaryandglossary/in dex.html County by county data can be found at http://www.cciio.cms.gov/resources/factsheets/clas-data.html http://www.cciio.cms.gov/resources/factsheets/clas-data.html
Combined Coverage SBCs The SBC can be combined for coverage tiers, for example, separate documents are not required for single vs. family coverage The SBC can also be combined if the participant will be selecting based on the same plan, but with a choice of different deductibles, copayments, and/or coinsurance.
Combined Coverage SBCs Another instance where a combined document is permitted is in the instance where different providers provide different coverage elements, such as in the case of mental health carve-outs or prescription drug benefits. Note: If these are combined with fully insured coverage, the carrier can’t be held liable for not including the components not provided by them.
Combined Coverage SBCs If a plan offers add-ons to medical coverage that affect cost-sharing or other information in the SBC, such as HRAs, health FSAs, HSAs, or wellness programs, the plan can combine these programs to better illustrate the overall benefits associated with the plan.
Option Variations Template variations include: Headers and footers can be on each page or only on the first and last page The coverage period can reflect the coverage period for the group plan as a whole Plan names can be generic, such as “standard option” or “high option”
Other Comparison Charts Other use of the SBC, or parts of the SBC, can be used in a way to facilitate comparisons of different benefit packages Such a chart, website or other comparison does or satisfy the requirements under the act or remove the requirement to provide the full SBC.
Summary of Benefits and Coverage Examples Examples are for normal maternity and Type II Diabetes HHS is developing an SBC Calculator to assist employers and plan sponsors in determining the reportable cost Does not use actual contract rates for the plan, but rather a national average developed by HHS The examples assume in-network providers
Summary of Benefits and Coverage Uniform Glossary of Terms Defined Terms Allowed Amount Appeal Balance Billing Co-insurance Complications of Pregnancy Co-payment Deductible Durable Medical Equipment Emergency Medical Condition Emergency Medical Transportation Emergency Room Care Emergency Services Excluded Services Grievance Habilitation Services Health Insurance Home Health Care Hospice Services
Summary of Benefits and Coverage Uniform Glossary of Terms More Defined Terms Hospitalization Hospital Outpatient Care In-network Co-insurance In-network Copayment Medically Necessary Network Non-Preferred Provider Out-of-network Provider Out-of-network Co-insurance Out-of-network Copayment Out-of-pocket Limit Physician Services Plan Preauthorization Preferred Provider Premium Prescription Drug Coverage
Summary of Benefits and Coverage Uniform Glossary of Terms More defined terms Prescription Drugs Primary Care Physician Primary Care Provider Provider Reconstructive Surgery Rehabilitation Services Skilled Nursing care Specialist UCR (Usual, Customary and Reasonable) Urgent Care Final Page Following the definitions, the glossary includes examples of: How the deductible works How co-insurance works after the deductible is met How the out-of-pocket limit works
Who Has to Comply? Insured plans Self-insured plans Large, small and individual market Grandfathered health plans HRA and certain wellness plans Excludes HIPAA excepted benefits (e.g. stand-alone dental, specific disease, indemnity), Expat plans, FSAs, HSAs
SBC’s If fully insured, carrier will provide employer with SBC If Self Funded, negotiate to have carrier create the SBC Distribution falls on the plan sponsor (Employer) All plans – individuals, group, grandfathered Penalties can be severe Up to $1000 for each failure DOL FAQ Part VIII mentions “approach marked by emphasis on assisting rather than imposing penalties
Medical Loss Ratio – Rebate checks MLR rules require health insurers spend a certain percentage of its premium revenue on direct patient care and health care quality improvements rather than on administrative costs Generally, large group must spend 85% on claims & quality Small group must spend 80% of each premium dollar
Medical Loss Ratio – Rebate checks Fully insured medical only Carrier Calculation based on calendar year First applicable CY 2011 First checks to be issued by August 1, 2012 Look for them to arrive in July – many already received Carrier to send participants and group policyholder notification Group policyholder to be issued rebate
Medical Loss Ratio – Rebate checks Rebates to be distributed proportionate to CY 2011 employer contribution structure Chasing down former participants is not necessarily required Treat COBRA, FMLA, WC Leave like any other similarly situated employee Recommend distribution of rebate to employees within three months of receipt to avoid being held in trust Taxable to employees if paid with pre tax dollars – IRS FAQ revised April 2012
Medical Loss Ratio – Rebate checks Steps to take if a check is received: Review health policies of plan documentation (SPD) to determine if addresses the treatment of rebates Evaluate the sources (employer; employee) of premiums Determine if paid pre-tax or post tax (IRS FAQ) Evaluate the allocation and disbursement methods Premium credit /reduction Cash payment, payout in payroll Benefit enhancements Distribute within three months to a void holding in trust
FSA Plan max $2500 $2500 max follows tax year beginning Jan 1, 2013 End of May IRS Notice 2012-40 What defines a tax year? The cafeteria plan year is the “tax year” – the notice determines that an “off calendar year” can fall into 2013 and still have an unlimited Health FSA amount
W-2 Reporting Guidance Issued Form W-2 reporting has been revised Box 12 to include a new Code “DD” for reporting the cost of employer-sponsored health coverage
W-2 Reporting Guidance Issued ReportableNot Reportable Group medical coverage (insured and self-funded) HSA and HRA contributions; Archer MSA contributions Dental and/or vision plan integrated in the group medical plan Dental and/or vision plan not integrated in the group medical plan (generally, a HIPPA "excepted" benefit plan) Employer contributions/credits to FSA Salary reduction contributions to FSA Hospital or fixed indemnity insurance if paid on a pre- tax basis Hospital or fixed indemnity insurance if paid on an after-tax basis Coverage only for a specified disease or illness (e.g. cancer) if paid on a pre-tax basis Coverage only for a specified disease or illness (e.g. cancer) if paid on an after-tax basis On-site medical clinics Employer contributions to a multi-employer plan
TX FL NM GA AZ CA WY NV AK OK MS LA MT TN Status of State Legislation to Establish Exchanges, As of May 2012 Source: National Conference of State Legislatures, Federal Health Reform: State Legislative Tracking Database. http://www.ncsl.org/default.aspx?TabId=22122; Politico.com; Commonwealth Fund Analysis. http://www.ncsl.org/default.aspx?TabId=22122 WA OR ID SD ND MN WI MI IA AR IL OH WV VA AL PA NY ME MA NH VT HI Legislation signed into law post passage of ACA Legislation passed one or both houses Governors pursuing non-legislative options Legislation signed: intent to establish an exchange, creation of study panel or appropriation Legislation pending in one or both houses UT CO KS NE IA MO IL IN KY WV VA NC SC DC MD DE NJ CT RI Governor veto or decision not to establish exchange State exchange in existence prior to passage of ACA Legislation failed/no gubernatorial action Governors working with HHS on options No legislative activity to date
The Affordable Care Act (ACA) depends on states to establish Health Insurance "Exchanges," which are virtual marketplaces intended to make it easier for individuals and small employers to shop for, compare, and enroll in health insurance coverage. Coverage offered in the Exchange and SHOP Exchange (and surrounding small group insurance market) will be based on the state-selected essential health benefits coverage benchmark plan. Slide Courtesy of National Retail Federation Individuals and certain businesses (100 or fewer employees) can purchase health insurance coverage through exchanges beginning in 2014 Health Insurance Exchanges OR States will establish both an individual exchange (Exchange) and a small business exchange (SHOP Exchange) The federal government will establish a default exchange or hybrid federal-state exchange Private exchanges may also be available for employers of all sizes. Individuals and small businesses 2 can select from a variety of competing carriers and plans offering different levels of coverage. In most states, health insurance coverage will continue to be available outside of the Exchange. Individuals and businesses may continue to use agents and brokers to assist them with their health plans. OR Some states may combine the individual Exchange and SHOP Exchange, though these markets are quite different. Insurance premiums and out-of- pocket responsibility are varied along a “metal” scale: Platinum, Gold, Silver, and Bronze. For example, Platinum coverage will have the most expensive insurance premium but the least amount of out-of-pocket financial responsibility.
Exchange & Subsidies – NO Employer Sponsored Ins. Age 33, $36,000, Family 4 137% FPL, No ESI Unsubsidized Premium: $13,026 Maximum % income 4.17% Person pays for subsidy Actual required premium $ 1,501 3.21% income, covers 8% prem. Government Tax Credit $11,525 ** Assumes in Higher regional cost, in 2014 dollars & paid with after tax dollars Age 57, $95,000, Family 4 406% FPL, No ESI Unsubsidized Premium: $25,193 Maximum % income None Person pays for subsidy Actual required premium $25,193 0% income Government Tax Credit $0 ** Assumes in Higher regional cost, in 2014 dollars & paid with after tax dollars Kaiser Family Foundation – Health Reform Subsidy Calculator
45 Key Regulations Outstanding How will non-discrimination mandate actually work? What are the Essential Benefits for a National ERISA plan? What will specific states do about their exchanges? How will auto-enrollment work?
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