Presentation on theme: "Benefits Network Health Care Reform and Compliance Seminar Hosted by Benefits Network, Inc. May 10, 2010 Copyright 2010 Benefits Network, Inc."— Presentation transcript:
Benefits Network Health Care Reform and Compliance Seminar Hosted by Benefits Network, Inc. May 10, 2010 Copyright 2010 Benefits Network, Inc.
Dave Straight Founder, President & CEO of Benefits Network, Inc. Former VP and Chief Marketing Officer for HealthAmerica and Aetna Former hospital administrator and consultant
Welcome Thank you for trusting Benefits Network with your business We always do our best for you! Todays seminar… –Is loaded with valuable information (perhaps too much information) –Might make you a little uneasy –Should provide some moments of comfort –May raise more questions than there are answers for today
Introductions Mike Pasterick, Director of Marketing Operations & Chief Compliance Officer John Mueller, VP Michelle Efremenko, VP Aleyne Secor, Director of Service Arlene Pushcar, Director, Individual and Small Group Marketing Matt Montgomery, Regional Director Diane McGann, Business Manager Cheranne Jurena, Director, Producer Services Martha Bielo, Manager, Producer & Business Services Kevin Buckley, American Pension Benefits Jim Monteleone, M&M Insurance
Agenda Reform Overview –Specifics of Reform –Q&A Benefits Network Investments –Real resources to help you through the tsunami and after shocks –Q&A
Primary Resources Department of Health and Human Services Department of Labor National Association of Health Underwriters NFP Benefits Partners Kaiser Family Foundation HR 3590 and HR 4872 (The Reform Laws)
Health Care Reform Passage On March 21, 2010, The House passed HR 3590, the bill passed by the Senate on December 24, 2009, with a vote The House and Senate also passed a reconciliation bill, HR 4872, with packages of fixes, to the Senate Bill President Obama has signed both bills into law Many components of the new laws are yet to be defined –Guidelines are being written for some of the provisions that will take effect soon and regulations will follow
Weve Got Problems! Cost Problems –Premiums/costs will increase under reform –Reform laws do not address cost controls Risk Management/Compliance Problems –An onslaught of new regulations –Stiff penalties –17,000 IRS agents to be hired to enforce Education/Communication Problems –2,400 pages of new law still to be defined
For every page in the health care reform law, we are expecting 60 pages of regulations. –Janet Trautwein, National Association of Health Underwriters Thats 144,000 pages of regulations!
Expect seven to ten years of rulemaking. –Brian Latkowski, NFP Benefits Partners
Original Goals of Reform Provide coverage for uninsured Americans Reduce costs and make health care more affordable Improve quality of care
Impact of Reform Reform will benefit millions of Americans in many ways Painful Reality: Employer costs will increase –Heavy tax burden on insurance carriers and others is expected to ultimately be passed on to employers –New underwriting restrictions will make it difficult for insurers to assess risk which will likely drive up premiums –New insurance reform mandates will increase costs –New administrative burdens and compliance requirements placed on employers will lead to higher costs –Reform laws do little to impact the cost of medical care to curb current medical cost trends from continuing Employer cost increases will ultimately be shared to some extent with workers
This really isnt funny…
Reform Timeline Immediately Grandfathered Health Plan Status Plans can be grandfathered if the only plan changes made are to add or delete new employee/dependents or part of a collective bargaining agreement Coverage must be in effect on March 23, 2010 to qualify Grandfathering allows plans to avoid some of the reform requirements such as no cost preventive care Other mandates will be required. These changes will not impact grandfathered status but may increase cost Guidelines have not been released yet –Requirements are unknown Key decision for renewal If you like your plan you can keep it!
Reform Timeline Immediately Small Business Tax Credit Small businesses with less than 25 employees may be eligible for a tax credit on a sliding scale based on number of employees and average payroll –Up to 50% of premiums for up to two years –Employer must contribute at least 50% of the total premium cost –Average salary must be $50,000 or less –Business owner salaries are not included in the calculation Effective for amounts paid or incurred in 2010 Businesses with no tax liability and non-profits are eligible Credit is claimed on annual income tax return
Reform Timeline 2010 No Pre-X for Kids - Requires coverage for pre- existing conditions for children 19 and under* No Limits - No lifetime limits on health plan coverage* –Annual limits will be prohibited completely by 2014 and regulations for limited use will be out soon No Rescinding - Prohibits insurers from rescinding coverage except in cases of fraud and prohibits pre-existing condition exclusions for children* Coverage to 26 - Raises the age of a dependent for health plan coverage to 26* –Dependents can be married, do not have to be tax dependents, and do not have to be students –Through 2014, grandfathered plans only have to cover those dependents who do not have another source of employer sponsored coverage *Within six months of enactment
Reform Timeline 2010 (continued) ER Coverage - Emergency services must be covered in-network* PCP Designation – Enrollees may designate any in-network doctor as their primary care physician No Cost Preventive Care - Mandated coverage of specific preventive services with NO cost sharing* –Includes recommended immunizations, preventive care for infants, children, and adolescents, and additional preventive care and screenings for women –Unclear if dental and vision for children will be included in preventive care requirements – could be costly –Does not apply to grandfathered plans New Coverage Appeal Process –Does not apply to grandfathered plans *Within six months of enactment
Reform Timeline 2010 (continued) Early Retiree Reinsurance - Temporary reinsurance program for early retirees over age 55 who are not eligible for Medicare* MLR Requirement - Health plans will be required to maintain a minimum medical loss ratio (MLR) of 85% for plans in the large group market and 80% for plans in the individual and small group markets –Requirement to report medical loss ratio effective plan year 2010 –Requirement to provide rebates effective January 1, 2011 High Risk Pool – A $5 billion high risk pool will be created for individuals who cannot obtain current individual coverage due to preexisting conditions *Within six months of enactment
Reform Timeline 2010 (continued) Wellness for Small Employers – Federal grant program for small employers providing wellness programs to their employees will take effect October 1, 2010 Information Portals – By July 1, 2010, states and the Secretary of HHS must develop web-based information portal options for state residents to obtain uniform information on sources of affordable coverage –Information must include private health insurance options, Medicaid, CHIP, the new high risk pool coverage and existing state high risk pool options
Reform Timeline 2011 No OTC Drugs - Over-the-counter drugs will no longer be reimbursable under FSAs, HSAs, HRAs unless prescribed by a doctor Class Act LTC Program - Creates a new public long-term care program and requires all employers to enroll employees, unless the employee elects to opt out. This is an employee paid program with no benefit for 5-years Pharmaceutical Industry Tax - Impose new annual fees on the pharmaceutical manufacturing sector Health Savings Account Penalty – The tax on distributions from HSAs that are not used for qualified expenses increases from 10% to 20% Simple Cafeteria Plans – Small employers (less than 100) will be allowed to adopt new simple cafeteria plans
Reform Timeline 2012 W-2 Forms - Employers must start reporting the value of health benefits on W-2 forms Premium Tax - A new federal premium tax on fully insured and self-funded plan, equal to $2 per enrollee per year (includes covered dependents), takes effect to fund federal comparative effectiveness research 5500 Forms - The Department of Labor will conduct annual mandatory studies on self-funded plans which may require additional reporting on 5500 forms Reporting - Group plans must report to HHS on whether benefits provided meet criteria to be established by the Secretary on improving health outcomes, reducing medical errors, and wellness and health promotion activities New SPDs - All plans must provide a new summary of benefits to enrollees at specified times (4 pages)
Reform Timeline 2013 Medicare D Subsidy - The employer subsidy under Medicare Part D will be eliminated and for those who have received this subsidy, it may have immediate impact on employers' liability and income statements Tax on Wealthy - An additional 0.9% Medicare Hospital Insurance tax and a new 3.8% Medicare contribution tax on certain unearned income will be imposed on those earning $200,000 and above and joint filers earning $250,000 and above FSA Cap - A $2,500 cap on Medical FSA contributions annually indexed for inflation begins
Reform Timeline 2013 Continued FSA Cap - A $2,500 cap on Medical FSA contributions annually indexed for inflation begins Medical Devise Tax - Impose an excise tax of 2.3% on the sale of any taxable medical device Itemized Medical Deductions – Increases threshold on unreimbursed medical expense deductions from 7.5% to 10% of AGI –The increase would be waived for individuals age 65 and older for tax years 2013 through 2016 Notice of Exchanges – All employers must provide notice to employees of the existence of state-based Exchanges by March 2013
Reform Timeline 2014 Tax on Health Insurers - Imposes significant (multi- billion dollar) annual taxes on private health insurers based on net premiums. Insurers will pass this cost on to customers –$8 billion in 2014, $11.3 billion in 2015 and 2016, $13.9 billion in 2017, $14.3 billion in 2018 –This tax will not apply to self-insured plans Guaranteed Issue Coverage - Requires all health plans to issue coverage regardless of health status, and would eliminate the use of pre-existing conditions exclusions and be guaranteed renewable –Opens door to eligibility to all American citizens –Redefines small groups as employees
Reform Timeline 2014 Continued Community Rating – All individual health insurance policies and all fully insured group policies 100 lives and under (and larger groups purchasing coverage through the Exchanges) must abide by strict modified community rating standards –Premium variations only allowed for age (3:1), tobacco use (1.51), family composition and geography –Geographic regions to be defined by states –Experience rating would be prohibited –Wellness discounts are allowed for group plans under specific circumstances No Annual Limits - Annual limits will be prohibited completely
Reform Timeline 2014 Continued Individual Mandate - An individual mandate takes effect requiring all American citizens to purchase qualified health insurance coverage (with some exceptions) or be fined for non-compliance –Because the fine for most is less than the premium cost, the mandate may not achieve the desired results, thereby increasing risk and costs to insurers that will be passed on to customers Formation of Exchanges - Requires each state to create an Exchange to facilitate the sale of qualified benefits plans for individual and small group coverage –Includes new federally administered multi-state plans and non-profit cooperative plans –States may allow large groups (over 100) to purchase coverage through the Exchanges in 2017 –Creates sliding-scale tax credits for non-Medicaid individuals with incomes up to 400% of FPL to buy coverage exclusively through the Exchange
Reform Timeline 2014 Continued Auto-Enrollment - Requires employers of 200 or more employees to auto-enroll all new employees into any available employer sponsored health insurance plan. Employees may opt out if they have another source of coverage Waiting Period Limits - Waiting periods in excess of 90 days are prohibited Tax Credit for Low Income Individuals – Sliding-scale premium assistance tax credits will be implemented for individuals with incomes up to 400% of the FPL to buy through the Exchange Medicaid Expansion – Medicaid eligibility is increased to 133% of the FPL Wellness Provisions – Improves upon HIPAA bona fide wellness program rules and increases the value of workplace wellness incentives to 30% of premiums with HHS ability to raise it to 50%
Reform Timeline 2014 Continued Essential Benefits Packages Defined The Federal government will define its essential benefits packages for plans purchased through the Exchanges –Based on actuarial equivalents –Defines cost-sharing, mandates, and minimum covered benefits Multiple levels Self-funded plans may not be subject to all requirements, but may not meet employer mandate requirements if they dont comply Allows catastrophic-only policies for those 30 and younger
Reform Timeline 2014 Continued Employer Mandate For companies that employ more than 50 full time employees (FTEs) Coverage must meet the essential benefits requirements to be compliant with the mandate If an employer does not provide qualified coverage and just one employee receives a tax credit through the exchange, the employer will pay a penalty for ALL full-time employees –The fine for noncompliance is $2,000 per employee annually, but the first 30 employees are not counted
Reform Timeline 2014 Continued Employer Mandate (continued) If an employer does offer coverage but has at least one FTE receiving a tax credit in the exchange, the employer will pay the lesser of $3,000 for each of those employees receiving a tax credit or $2,000 for each of their full-time employees An individual who has employer sponsored coverage available and has family income up to 400% of federal poverty level (FPL) is eligible for a tax credit through the Exchange instead of employer coverage –If the actuarial value of the employers coverage is less than the minimum standard (actuarial value of 60%) or the employer requires the employee to contribute more than 9.5% of the employees family income toward the cost of coverage
Reform Timeline 2014 Continued Employee Free Choice Vouchers Employers will be required to provide a voucher to use in the Exchange instead of participating in the employer-provided plan in limited circumstances For this to occur, employees must be ineligible for subsidies and affordability testing is required –Employee is required to contribute between 8% and 9.8% of the employees household income toward the cost of coverage –The employees household income is less than 400% of the FPL Voucher value is adjusted for age and the employee can keep amounts of the voucher in excess of the cost of coverage The amount of the voucher must be equal to the amount the employer would have provided toward coverage Employee can keep amounts of the voucher in excess of the cost of coverage
Reform Timeline 2018 Cadillac Tax - An excise tax is imposed on insurers of employer-sponsored health plans with aggregate values that exceed $10,200 for individual coverage and $27,500 for family coverage –40% of the value of the plan that exceeds the threshold amounts –Tax is imposed on the insurer of the health insurance policy, which in the case of a self-funded plan is the plan administrator, or in some cases, the employer –The value of the plan includes reimbursements under FSAs, HRAs, employer contributions to HSAs and coverage for supplementary health insurance coverage (excluding dental and vision)
Public Opinion and Challenges Public opinion remains against the new health care reform laws Despite this, repeal is highly unlikely – Even with projected Republican gains in the House and Senate Many states are challenging the constitutionality of the individual mandate A growing number of states are refusing funding for the high risk pool May 3, 2010 Rasmussen Poll of American Voters
Next Challenges The barrage of regulations tied to each provision and the devil in the details –Technical changes to legislation Need better specificity on what encompasses/composes a grandfather plan Makeup of essential benefits package Composition of medical loss ratio Legal challenges Impact of mid-term elections Years of implementation
Questions Thank You!
Dont panic… Benefits Network can help!
Mike Pasterick Director of Marketing Operations & Chief Compliance Officer
Federal Compliance Before Reform Plan Documents Summary Plan Description (SPD) Summary of Material Modification (SMM) Summary of Material Reduction in Covered Services or Benefits Form 5500 Schedule A, Form 5500 Schedule B, Form 5500 Schedule C, Form 5500 Schedule D, Form 5500 Schedule E, Form 5500 Schedule G, Form 5500 Schedule H, Form 5500 Schedule I, Form 5500 Schedule R, Form 5500 Schedule SSA, Form 5500 Accountants Report, Form 5500 Summary Annual Report (SAR) Initial COBRA Notice (also known as COBRA General Notice) COBRA Election Notice Notice of Unavailability of Continuation Coverage Notice of Early Termination of COBRA Coverage Uniformed Services Employment and Reemployment Rights Act (USERRA) Certificate of Creditable Coverage Notice of Special Enrollment Rights General Notice of Pre-existing Condition Exclusion Individual Notice of Period of Preexisting Condition Exclusion Health Insurance Portability and Accountability Act (HIPAA) Privacy Policies and Practices Notice of Privacy Practices HIPAA Security Policies and Practices Business Associate Agreement Womens Health and Cancer Rights Act (WHCRA) Newborns and Mothers Health Protection Act Qualified Medical Child Support Order (QMCSO) Qualified Domestic Relations Order (QDRO) 404(c) Compliance 404(c) Disclosure Notice Individual Benefit Statements Medicare Part D Disclosure Notice to CMS Medicare Part D Disclosure Notice to Eligible Individuals Taxation of Group Term Life Insurance Taxation of Same-Sex Benefits Discrimination Rules and Testing Family and Medical Leave Act (FMLA) Notice to Employees Regarding Employer Contributions to HAS PA Mini-COBRA General Notice PA Mini-COBRA Election Notice COBRA/PA Mini-COBRA Subsidization Processes PA Act 4 – Adult Children Insurance Coverage CHIP/CHIPRA Notification Is Your Business Compliant with All These Regulations?
Ouch: The Cost of Non-Compliance Penalty up to $110 per day Endangerment of the plans favorable tax treatment Up to 10 years in prison Up to $100,000 fine $1 to $1,100 per day Legal action may be brought by participant Employer may be held liable for any medical costs incurred by participant Legal action may be brought by the DOL Internal Revenue Service (IRS) may assess a $100 per day penalty The Department of Health and Human Services (HHS) may impose a penalty of $100 per failure to comply up to a maximum of $25,000 per year Legal action may be brought by alternate recipient or state authority Plan fiduciaries could be held liable for losses associated with participants exercising individual control over assets Loss of government subsidization Penalty of 35% excise tax for the employer on all calendar year employer contributions
Which regulations apply to my company? How much could non-compliance cost us? Where do we go for help? Which penalties would apply to our situation? When are we supposed to have this completed? To whom do we report that weve completed this? What do we do if we get audited? How will we handle this administrative burden? Help!
Dont Go It Alone Your Compliance Express is your turnkey partner We will rescue you from the health care reform tsunami and after shocks We can minimize the confusion, anxiety and risk for you and your business by: –Keeping you informed about the new laws, implementation and compliance requirements during every phase, and the impact on you and your business –Providing you with meaningful tools to guarantee your compliance with health care reform and all other Federal compliance laws –Offering you expert guidance at key decision points along the way
Components Health Care Reform Website Health Care Reform Blasts Health Care Reform Resource Binder Seminars and Webinars Consulting Compliance Dashboard This is Special!
Reform Website This proprietary custom health care reform website will provide you with access to: –Recorded webinars explaining compliance issues in detail –Compliance checklists –White papers, trends and studies –Health care reform timetable, updates and information –Exclusive online-library of compliance and health care reform resources and materials –Links to important resources –Portal to Benefits Networks Compliance Dashboard
Reform Blasts With Your Compliance Express, you will never miss important and time sensitive information Our Health Care Reform Blasts will be sent to you whenever there is meaningful information to communicate If you get a Blast, consider it important –We will not waste your time with fluff
Reform Resource Binder You will also receive a Your Compliance Express Health Care Reform Resource Binder for use as master compliance guide Contains all applicable deadlines, explanations, laws and forms needed to stay compliant –Format is modular, and updates to content provided as soon as changes or additions to legislation are made As components of the laws are implemented, we will send you additional information to keep your binder current at all times. Its an encyclopedia of health care reform knowledge.
Seminars & Webinars Much of the information that will be disseminated by the government in the coming years is complex and confusing When it makes sense, we will host seminars and conduct webinars to share information in an interactive environment We will tap notable experts to bring you the most accurate and timely information.
Consulting Under health care reform law, there will be times when you have critical decisions to make on behalf of your business and employees You can trust us to give you the guidance and direct to help you make the right call Our team of experts is available by phone, , and face-to-face to consult with you as needed You can count on us and the vast resources we have assembled to give you expert advise –NFP Benefits Partners Compliance Department –ERISA Attorneys –Actuarial Expertise
Compliance Dashboard Leading web-based solution for helping employers comply with the federal laws that govern health & welfare plans –Including Health Care Reform Laws You no longer have to worry about whether you are meeting your compliance obligations Gives you the information you need, when you need it –Compliance Dashboard will tell you what you have to do and when you have to do it
Compliance Dashboard Establishes a reliable and verifiable compliance process Saves staff time –Sends a notification when it is time to perform a compliance task –Provides all of the relevant information and materials needed to complete the compliance task –Automatically tracks completion dates and sends reminders when a task has not been performed Full documentation of compliance efforts
Conclusion Reform is here and its real! –We have to deal with it Benefits Network has made a significant investment in order to lead! –We can be your advocate –We can get you through this Your Benefits Network representative will be in touch with you to discuss Your Compliance Express and Compliance Dashboard