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ESB-2132-0913 Copyright 2013 American Fidelity Assurance Company.

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Presentation on theme: "ESB-2132-0913 Copyright 2013 American Fidelity Assurance Company."— Presentation transcript:

1 ESB Copyright 2013 American Fidelity Assurance Company

2 ESB Copyright 2013 American Fidelity Assurance Company What You Need to Do from Now to 2015 This is only a brief summary that reflects our current understanding of select provisions of the law, often in the absence of regulations. All of the interpretations contained herein are subject to change as the appropriate agencies publish additional guidance.

3 ESB Copyright 2013 American Fidelity Assurance Company Summarize the key provisions affecting plan sponsors Provide action steps for each Review long-term plan sponsorship options

4 ESB Copyright 2013 American Fidelity Assurance Company 1,000 pages of legislation drafted and enacted very quickly Rules are still being developed –Federal agency guidance –Role of states

5 ESB Copyright 2013 American Fidelity Assurance Company

6 ESB Copyright 2013 American Fidelity Assurance Company Cornerstone year of Health Care Reform –State Exchanges –Individual mandate –Federal premium tax credit to purchase Exchange coverage –“Employer responsibility ”

7 ESB Copyright 2013 American Fidelity Assurance Company States must build Exchanges or federal government will provide default Bronze, silver, gold, and platinum options Coverage will be guaranteed issue, no preexisting condition limits, no individual medical underwriting

8 ESB Copyright 2013 American Fidelity Assurance Company Must obtain minimum essential coverage or pay a tax, beginning January 1, 2014 Penalty is capped at average cost of bronze level Exchange coverage Exceptions if coverage is unaffordable, for low income taxpayers, and short coverage gaps

9 ESB Copyright 2013 American Fidelity Assurance Company May use to purchase Exchange coverage Available to certain individuals with household income up to 400% FPL Credit not available if eligible for: –Adequate/affordable employer coverage –Government provided coverage

10 ESB Copyright 2013 American Fidelity Assurance Company Penalty may apply if: – No coverage offered to full-time employees and dependents – Coverage is “unaffordable” or “inadequate” – Employee enrolls in Exchange coverage and qualifies for a federal premium tax credit Effective January 1, 2015

11 ESB Copyright 2013 American Fidelity Assurance Company Transitional relief for non-calendar year plans Large employer : – 50+ full time equivalents – Members of a controlled group treated as single entity to determine “large employer”

12 ESB Copyright 2013 American Fidelity Assurance Company Full-time employees: – 30+ hours/week or 130+ hours/month – Includes non-work time for which pay is due

13 ESB Copyright 2013 American Fidelity Assurance Company Variable hour and seasonal employees: – Optional “measurement” and “stability” periods – Look-back over measurement period to calculate actual hours worked – Measurement period may be 3-12 months – Stability period must be as long as measurement and not less than 6 months

14 ESB Copyright 2013 American Fidelity Assurance Company Special rules for educational institutions: – Two methods for determining full-time employees Use “measurement period” excluding employment breaks Treat employee as credited with hours for employment breaks

15 ESB Copyright 2013 American Fidelity Assurance Company Penalty for failing to offer coverage : – 1/12th x $2,000 per month/per employee (after 1st 30 employees) – Must offer to “substantially all” full-time employees – Includes children to age 26; does not include spouses

16 ESB Copyright 2013 American Fidelity Assurance Company Penalty if available coverage is inadequate or unaffordable: – 1/12th x $3,000 per month (per employee who qualifies for a federal premium tax credit) – Inadequate: plan pays <60% allowable costs – Unaffordable: employee pays >9.5% household income for employee-only coverage

17 ESB Copyright 2013 American Fidelity Assurance Company Affordability examples: – Coverage is affordable – Coverage is unaffordable Enroll in coverage anyway Enroll in spouse’s plan Enroll in Exchange

18 ESB Copyright 2013 American Fidelity Assurance Company Mechanics: – Notice – Timing – Method of payment

19 ESB Copyright 2013 American Fidelity Assurance Company Questions?

20 ESB Copyright 2013 American Fidelity Assurance Company Plan sponsor must provide a Summary of Benefits and Coverage (SBC) Effective for annual enrollments/plan years beginning on or after September 23, 2012 Distribute with annual enrollment materials, following special enrollment events, and upon request

21 ESB Copyright 2013 American Fidelity Assurance Company Government provided template –Fully insured – get SBC from insurer –Self-funded – employer fills in template –In either case, the employer is responsible Must also provide Uniform Glossary upon request

22 ESB Copyright 2013 American Fidelity Assurance Company

23 ESB Copyright 2013 American Fidelity Assurance Company Employee contributions are limited to $2,500 Effective plan years beginning on or after January 1, 2013 Applies per individual Must amend plan by December 31, 2014

24 ESB Copyright 2013 American Fidelity Assurance Company STAND-ALONE HRAS Stand-alone HRAs violate prohibitions on annual and lifetime limits Employees must elect HRA and other coverage (not just have the option to elect) HRAs may not be used to pay for individual market insurance coverage

25 ESB Copyright 2013 American Fidelity Assurance Company Two components effective January 1, 2013 – Additional 0.9% Medicare tax on wages – New 3.8% Medicare contribution tax on unearned income

26 ESB Copyright 2013 American Fidelity Assurance Company Generally applies to income over $200,000 for individuals, $250,000 for couples Employers must withhold 0.9% tax once employee’s wages exceed $200,000

27 ESB Copyright 2013 American Fidelity Assurance Company Plan sponsors and insurers must pay a fee to help fund comparative effectiveness research Fee must be paid by the following July 31 st – File tax form 720 – First forms due July 31, 2013

28 ESB Copyright 2013 American Fidelity Assurance Company Amount of the fee is based on the average number of covered lives – $1 per individual for 1 st plan year ending after Sept. 30, 2012 – $2 per individual for the next year – Increases in subsequent years

29 ESB Copyright 2013 American Fidelity Assurance Company Employers subject to FLSA must provide information about the state Exchanges – One or more employees – Generally firms with $500,000+ annual business – Plus hospitals, schools, and government agencies – Internet compliance tool is available to determine applicability

30 ESB Copyright 2013 American Fidelity Assurance Company Notice must be provided: – To all current employees (including full-time and part-time) by October 1, 2013 – To all subsequent new hires in 2013, at the time of hire and for new hires in 2014 within 14 days

31 ESB Copyright 2013 American Fidelity Assurance Company May be paper or electronic (if satisfy DOL safe harbor rules) Two model notices were provided Model COBRA notice was also updated

32 ESB Copyright 2013 American Fidelity Assurance Company 2014 MANDATES All plans must comply –Waiting periods –Annual limit prohibition –Preexisting condition limits –Coverage for adult children

33 ESB Copyright 2013 American Fidelity Assurance Company 2014 MANDATES Additional requirements for non-grandfathered plans –Essential health benefits (insured small group plans) –Clinical trials –Limits on deductibles (insured small group plans) –Limits on out-of-pocket maximums –Provider nondiscrimination Copyright 2013 American Fidelity Assurance Company

34 ESB Copyright 2013 American Fidelity Assurance Company Limited to fraud or intentional misrepresentation of material fact Plan document must allow and must provide notice May want to consider dependent verification reviews

35 ESB Copyright 2013 American Fidelity Assurance Company Fully-insured, non-grandfathered plans may not discriminate in favor of highly compensated individuals Self-funded plans are subject to similar rules, regardless of grandfathered status Effective for plan years beginning on/after 9/23/2010; IRS enforcement is delayed

36 ESB Copyright 2013 American Fidelity Assurance Company Insurers and plan sponsors of group health plans must pay fee to HHS Applies for 3 years beginning 2014 – HHS estimate for 2014: $63/covered life

37 ESB Copyright 2013 American Fidelity Assurance Company Originally January 1, 2014, one year delay Employers with 50+ full-time employees must report extensive details about the employer’s health coverage and workforce to the IRS Employers are also required to submit the same information to each employee plus contact information

38 ESB Copyright 2013 American Fidelity Assurance Company Future regulations are expected to establish the form and content – First reports will be due January 2016 – Employers must collection information beginning January 1, 2015 Must provide a written statement to each employee named in the return each year

39 ESB Copyright 2013 American Fidelity Assurance Company Plan sponsors with 200+ full-time employees must automatically enroll newly eligible full- time employees Must provide notice Employees may opt out Effective date to be established by regulations

40 ESB Copyright 2013 American Fidelity Assurance Company Effective 2018: 40% non-deductible excise tax Imposed on aggregate value of health coverage that exceeds threshold amounts Applies for specified health coverage

41 ESB Copyright 2013 American Fidelity Assurance Company General thresholds: –$10,200 individual coverage –$27,500 family coverage Indexed for inflation –CPI-U: 3-4% per year –Medical inflation: 7-10% per year

42 ESB Copyright 2013 American Fidelity Assurance Company

43 ESB Copyright 2013 American Fidelity Assurance Company Assess the impact of the Free Rider Penalty Obtain/complete/distribute SBCs Amend Health FSA if necessary Consider status of stand-alone HRAs and possible revision Prepare to withhold additional Medicare tax

44 ESB Copyright 2013 American Fidelity Assurance Company ACTION PLAN (CONT’D) Prepare to pay PCORI fee Send Exchange notices Grandfathered plans –Reassess eligibility and value –Gather documentation Plans losing grandfathered status – Adopt additional plan design mandates – Revise employee communication Copyright 2013 American Fidelity Assurance Company

45 ESB Copyright 2013 American Fidelity Assurance Company Comply with 2014 mandates Budget for Exchange Reinsurance Fee Watch for guidance May want to begin considering cost- management strategies or changes in health coverage

46 ESB Copyright 2013 American Fidelity Assurance Company WHAT DO YOU DO NOW? 1.Understand your responsibilities 2.Assess whether costs are sustainable 3.Understand your choices 4.Design an implementation strategy 5.Implement your plan

47 ESB Copyright 2013 American Fidelity Assurance Company

48 ESB Copyright 2013 American Fidelity Assurance Company AFAS is ready to assist: –HCReducation.com –http://benefitsblog.americanfidelity.com –VIP s and monthly webinars –Health Care Reform consulting (packages, retainer arrangements, and custom solutions)

49 ESB Copyright 2013 American Fidelity Assurance Company AFAS is ready to assist (cont'd): –Time management software to assist with the Free Rider Penalty –Variable hour employee billing –Notice compliance support and fulfillment –Resources to help communicate plan changes to employees

50 ESB Copyright 2013 American Fidelity Assurance Company Thank you! This is only a brief summary that reflects our current understanding of select provisions of the law, often in the absence of regulations. All of the interpretations contained herein are subject to change as the appropriate agencies publish additional guidance.


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