Presentation on theme: "State and HE Agency Benefit Coordinators"— Presentation transcript:
1 State and HE Agency Benefit Coordinators Affordable Care ActIssues and ImpactPresentation to theState and HE Agency Benefit CoordinatorsAugust 15, 2014Patrice Steinhart & Melissa WisemanBenefits Administration, State of Tennessee
2 Presentation Outline Affordable Care Act (ACA) – broad strokes Practical issues facing employers and health plan administratorsACA ImpactTN Hours for Benefits
3 Stated Intent of the ACA To establish a mechanism to provide for health care coverage to uninsured individuals and families at affordable ratesTo provide that coverage through employer-sponsored plans or through competitive marketplacesTo help ensure that pre-existing conditions would not be a barrier to health careTo help ensure that the insurance coverage offered meets established standards
4 Affordable Care Act — Compliance Timeline 2011 Plan Year20112012201320142018Lifetime dollar limits on Essential Health Benefits (EHB) prohibitedPreexisting Condition Exclusions Prohibited for Children under 19Overly restrictive annual dollar limits on EHB prohibitedExtension of Adult Child Coverage to Age 26Prohibition on RescissionsNo Cost Sharing and Coverage for Certain In-Network Preventive Health ServicesEffective Appeals ProcessConsumer/patient protectionsNondiscrimination requirements on fully insured plans (DELAYED)Certain Retiree Medical Claims Reimbursable (ERRP)Retiree Drug Plan FAS Liability RecognitionOver-the-Counter Medicines Not Reimbursable Under Health FSA, HRAs, or from HSAs Without a Prescription, Except InsulinHSA Excise Tax IncreasePublic Long-Term Care Option (CLASS Act) –No Longer Supported by HHSMedicare Part D Discounts for Certain Drugs in “Donut Hole”Distribution of Summary of Benefits and Coverage to Participants (Ongoing)PCORI (Comparative Effectiveness) FeeQuality of Care Report (delayed)Medical Loss Ratio rebates (insured plans only)Employer Reporting of Health Coverage on Form W-2 (due January 31, 2013)Notice to Inform Employees of Coverage Options in ExchangeLimit of Health Care FSA Contributions to $2,500 (Indexed)Addition of women’s preventive health requirements to No Cost Sharing and Coverage for Certain In-Network Preventive Health ServicesElimination of Deduction for Expenses Allocable to Retiree Drug Subsidy (RDS)Individual Mandate to Purchase Insurance or Pay PenaltyState Insurance ExchangesEmployer Responsibility to Provide Affordable Minimum Essential Health Coverage***Preexisting Conditions Exclusions ProhibitedAnnual Dollar Limits on EHB ProhibitedAutomatic Enrollment (DELAYED)Limit of 90-Day Waiting Period for CoverageEmployer Reporting of Health Insurance Information to Government and ParticipantsIncreased Cap on Rewards for Participation in Wellness ProgramCost-sharing limits for all group health plans, not just HDHPs/HSA (deductibles and OOP maximum)Coverage of routine patient costs for participants in approved clinical trialsTransitional reinsurance contributionsExcise Tax on High-Cost Coverage*** Applies to full time employees (e.g., 30 hours per week) and will require coverage that is affordable and satisfies a certain actuarial value to avoid the penalty.Employer Responsibility noted in RED above
5 Plan Compliance Requirements Extension of adult child coverage to age 26Summary of Benefits & Coverage communication100% coverage for preventive servicesW2 reporting of the value of coverageElimination of pre-ex for childrenFinal appeals moved to Independent Review OrganizationMarketplace notificationWomen’s preventive services
6 Plan Compliance Requirements Employer mandate to provide affordable minimum essential health coveragePreexisting conditions exclusions prohibitedNo annual dollar limits on essential health benefitsLimit of 90-day waiting period for coverageCost-sharing limits for all group health plans (deductibles and OOP maximum)
7 Employer Mandate (a.k.a. Shared Responsibility) Requires employers with 50 or more “full time employees” to offer “affordable health coverage” that provides a “minimum actuarial value” and “minimum essential coverage” to at least 95%* of their full-time employees and their eligible dependents, or else face a penaltyWho is a “full-time employee”?What is “affordable coverage?”What is “minimum actuarial value”?What is “minimum essential coverage”?*70% in 2015
8 Health Care Reform Impact – Individual Responsibility Individuals have a responsibility to maintain minimal essential coverage or pay a penalty that is generally based on taxable incomePayable on tax return for the year in which the penalty was incurredIndividuals on Independent and Service Contracts will evaluate their own employment status to determine if they must maintain coverage
9 Key QuestionsHow will we handle PT and seasonal employees and those who will not be considered FT under the ACA and who could trigger a penalty?How will we handle PT employees who work two positions?Are any of our PT or contractors considered to be common law employees according to IRS guidelines?What measurement period makes sense for our organization?
10 ESR – Determining covered employees – special considerations -Seasonal employees expected to work less than 6 months per year – not full time -Volunteers – not full time -Student work-study programs – not full time -Educational employees - not part time simply because school is closed or operating on limited schedule during summers -Adjunct faculty – final regulations allow crediting 2.25 hours of service in addition to each of hour of teaching or classroom time
11 Look-Back Measurement Safe Harbor DETERMINING FULL-TIME EMPLOYEE STATUSTime Periods under Proposed IRS GuidelinesOnly pay 4980H penalty during stability period if requiredOngoing EmployeesStandard Measurement Period 12 months to determine if full timeAdmin Period up to 90 daysStability Period 12 monthsMeasurement & Stability Periods repeatNew Variable Hour and Seasonal EmployeesInitial Measurement Period 12 months to determine if full timeAdmin Period 30 daysStability Period 12 monthsCannot exceed 13 months for new EEThen use the Measurement Period for Ongoing employeesSource: Congressional Research Services (CRS) based on IRS Notice Determining Full-time Employees for Purposes of Shared Responsibility for Employers Regarding Health Coverage.
12 Employer Responsibility Flow Chart Sources: Kaiser Family Foundation, Segal
13 Employer Mandate & Penalties delayed “No Coverage Penalty” (Code section 4980H(a))Employer does not offer Minimum Essential Coverage (“MEC”) to all eligible FTEs and eligible dependents and at least one FTE enrolls in Exchange and receives Federal subsidyPenalty equals $2,000 per year for all FTEs (minus first 30 FTEs), regardless of whether the FTE elected employer-provided health care coverageApplies if less than 70% of FTEs (and their eligible dependents) are offered coverage in 2015 (95% in future years)OR“Inadequate Coverage Penalty” (Code section 4980H(b))Employer offers MEC to FTEs but coverage is either“Unaffordable,” orDoes not provide “minimum actuarial value” (State plans exceed this threshold)Penalty equals $3,000 per year per each FTE who enrolls in an Exchange insurance product and receives a Federal subsidyNot more than the No Coverage PenaltyAlso applies to the excluded 5% above
14 Not Just About Insurance Not a new employment issue - new financial risksState of Tennessee created a working group of financial, insurance, human resource, and procurement staff toIdentify riskCommunicate this risk to relevant partiesDevelop a solution to mitigate the risk going forward
15 Solutions to Mitigate Risk Part-Time report for managers to monitor hours workedDecision model to hire an employee, obtain independent contractor, or temporary employeeSimple questionnaire for hiring managers to determine whether to hire an employee or contractor using IRS 20 Common Law questionsContract language for agencies to use for RFPsMaster contract that includes contractor relationships and defines employer responsibilities
16 ESR – Liability for payment -IRS will review the credits paid to individual taxpayers -Employers will be sent notice that they may be liable for an ESR payment -Earliest notices would be issued in Employers should research and dispute liability if appropriate -Payment will be $2,000 per full time employee
17 Regs Require Employer Offered Coverage Regulations only require that employers provide information about offers of coverageDecision guide mailed to all eligible membersState will require proof that newly hired employees declined coverageUsing ESS is the preferred approachEnrollment form
18 Current Eligible not Enrolled 4,000 State employees who are eligible but not enrolledThese employees will receive a letter in mid-September notifying them that they are eligible for coverage and can enroll during Open Enrollment this year.
19 Key Administrative Employer Requirements W-2 reportingSummary of Benefits and Coverage (SBC)Employer Exchange-related noticesReporting to IRS starting in 2015Automatic enrollment (not yet issued)
20 IRS Reporting Two reporting requirements; single report: Form 1095-C Employer-sponsored coverage provided to full-time employeesEmployer-sponsored minimum essential coverageStatements to employees notifying them of the information reported to the IRS (on for before 2/1/16)File electronic returns to the IRS on or before 3/31/16
21 Key QuestionsHow will we handle PT and seasonal employees and those who will not be considered FT under the ACA and who could trigger a penalty?How will we handle PT employees who work two positions?Are any of our PT or contractors considered to be common law employees according to IRS guidelines?What measurement period makes sense for our organization?