Presentation on theme: "Benefits Network Health Care Reform and Compliance Seminar"— Presentation transcript:
1 Benefits Network Health Care Reform and Compliance Seminar Hosted by Benefits Network, Inc.May 10, 2010Copyright 2010 Benefits Network, Inc.
2 Dave Straight Founder, President & CEO of Benefits Network, Inc. Former VP and Chief Marketing Officer for HealthAmerica and AetnaFormer hospital administrator and consultant
3 Welcome Thank you for trusting Benefits Network with your business We always do our best for you!Today’s seminar…Is loaded with valuable information (perhaps too much information)Might make you a little uneasyShould provide some moments of comfortMay raise more questions than there are answers for today
4 IntroductionsMike Pasterick, Director of Marketing Operations & Chief Compliance OfficerJohn Mueller, VPMichelle Efremenko, VPAleyne Secor, Director of ServiceArlene Pushcar, Director, Individual and Small Group MarketingMatt Montgomery, Regional DirectorDiane McGann, Business ManagerCheranne Jurena, Director, Producer ServicesMartha Bielo, Manager, Producer & Business ServicesKevin Buckley, American Pension BenefitsJim Monteleone, M&M Insurance
5 Agenda Reform Overview Benefits Network Investments Specifics of ReformQ&ABenefits Network InvestmentsReal resources to help you through the “tsunami and after shocks”
6 Primary Resources Department of Health and Human Services Department of LaborNational Association of Health UnderwritersNFP Benefits PartnersKaiser Family FoundationHR 3590 and HR 4872 (The Reform Laws)
7 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 voteThe House and Senate also passed a reconciliation bill, HR 4872, with packages of “fixes,” to the Senate BillPresident Obama has signed both bills into lawMany components of the new laws are yet to be definedGuidelines are being written for some of the provisions that will take effect soon and regulations will follow
8 We’ve Got Problems! Cost Problems Risk Management/Compliance Problems Premiums/costs will increase under reformReform laws do not address cost controlsRisk Management/Compliance ProblemsAn onslaught of new regulationsStiff penalties17,000 IRS agents to be hired to enforceEducation/Communication Problems2,400 pages of new law still to be defined
9 “For every page in the health care reform law, we are expecting 60 pages of regulations.” Janet Trautwein, National Association of Health UnderwritersThat’s 144,000 pages of regulations!
10 Brian Latkowski, NFP Benefits Partners “Expect seven to tenyears of rulemaking.”Brian Latkowski, NFP Benefits Partners
11 Original Goals of Reform Provide coverage for uninsured AmericansReduce costs and make health care more affordableImprove quality of care
12 Impact of ReformReform will benefit millions of Americans in many waysPainful Reality: Employer costs will increaseHeavy tax burden on insurance carriers and others is expected to ultimately be passed on to employersNew underwriting restrictions will make it difficult for insurers to assess risk which will likely drive up premiumsNew insurance reform mandates will increase costsNew administrative burdens and compliance requirements placed on employers will lead to higher costsReform laws do little to impact the cost of medical care to curb current medical cost trends from continuingEmployer cost increases will ultimately be shared to some extent with workers
14 Reform Timeline Immediately If you like your plan you can keep it!Grandfathered Health Plan StatusPlans can be grandfathered if the only plan changes made are to add or delete new employee/dependents or part of a collective bargaining agreementCoverage must be in effect on March 23, 2010 to qualifyGrandfathering 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 costGuidelines have not been released yetRequirements are unknownKey decision for renewal
15 Reform Timeline Immediately Small Business Tax CreditSmall businesses with less than 25 employees may be eligible for a tax credit on a sliding scale based on number of employees and average payrollUp to 50% of premiums for up to two yearsEmployer must contribute at least 50% of the total premium costAverage salary must be $50,000 or lessBusiness owner salaries are not included in the calculationEffective for amounts paid or incurred in 2010Businesses with no tax liability and non-profits are eligibleCredit is claimed on annual income tax return
16 No Limits - No lifetime limits on health plan coverage* Reform Timeline 2010No 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 soonNo 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 studentsThrough 2014, grandfathered plans only have to cover those dependents who do not have another source of employer sponsored coverage *Within six months of enactment
17 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 physicianNo 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 womenUnclear if dental and vision for children will be included in preventive care requirements – could be costlyDoes not apply to grandfathered plansNew Coverage Appeal Process*Within six months of enactment
18 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 marketsRequirement to report medical loss ratio effective plan year 2010Requirement to provide rebates effective January 1, 2011High 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
19 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, 2010Information 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 coverageInformation must include private health insurance options, Medicaid, CHIP, the new high risk pool coverage and existing state high risk pool options
20 Reform Timeline 2011No 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-yearsPharmaceutical Industry Tax - Impose new annual fees on the pharmaceutical manufacturing sectorHealth 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”
21 Reform Timeline 2012W-2 Forms - Employers must start reporting the value of health benefits on W-2 formsPremium 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 research5500 Forms - The Department of Labor will conduct annual mandatory studies on self-funded plans which may require additional reporting on 5500 formsReporting - 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 activitiesNew SPDs - All plans must provide a new summary of benefits to enrollees at specified times (4 pages)
22 Reform Timeline 2013Medicare 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 aboveFSA Cap - A $2,500 cap on Medical FSA contributions annually indexed for inflation begins
23 Reform Timeline 2013 Continued FSA Cap - A $2,500 cap on Medical FSA contributions annually indexed for inflation beginsMedical Devise Tax - Impose an excise tax of 2.3% on the sale of any taxable medical deviceItemized Medical Deductions – Increases threshold on unreimbursed medical expense deductions from 7.5% to 10% of AGIThe increase would be waived for individuals age 65 and older for tax years 2013 through 2016Notice of Exchanges – All employers must provide notice to employees of the existence of state-based Exchanges by March 2013
24 Reform Timeline 2014Tax 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 2018This tax will not apply to self-insured plansGuaranteed 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 renewableOpens door to eligibility to all American citizensRedefines small groups as employees
25 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 standardsPremium variations only allowed for age (3:1), tobacco use (1.5”1), family composition and geographyGeographic regions to be defined by statesExperience rating would be prohibitedWellness discounts are allowed for group plans under specific circumstancesNo Annual Limits - Annual limits will be prohibited completely
26 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-complianceBecause 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 customersFormation of Exchanges - Requires each state to create an Exchange to facilitate the sale of qualified benefits plans for individual and small group coverageIncludes new federally administered multi-state plans and non-profit cooperative plansStates may allow large groups (over 100) to purchase coverage through the Exchanges in 2017Creates sliding-scale tax credits for non-Medicaid individuals with incomes up to 400% of FPL to buy coverage exclusively through the Exchange
27 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 coverageWaiting Period Limits - Waiting periods in excess of 90 days are prohibitedTax 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 ExchangeMedicaid Expansion – Medicaid eligibility is increased to 133% of the FPLWellness 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%
28 Reform Timeline 2014 Continued Essential Benefits Packages DefinedThe Federal government will define its essential benefits packages for plans purchased through the ExchangesBased on actuarial equivalentsDefines cost-sharing, mandates, and minimum covered benefitsMultiple levelsSelf-funded plans may not be subject to all requirements, but may not meet employer mandate requirements if they don’t complyAllows catastrophic-only policies for those 30 and younger
29 Reform Timeline 2014 Continued Employer MandateFor companies that employ more than 50 full time employees (FTEs)Coverage must meet the “essential benefits” requirements to be compliant with the mandateIf 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 employeesThe fine for noncompliance is $2,000 per employee annually, but the first 30 employees are not counted
30 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 employeesAn 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 coverageIf the actuarial value of the employer’s 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 employee’s family income toward the cost of coverage
31 Reform Timeline 2014 Continued Employee “Free Choice” VouchersEmployers will be required to provide a voucher to use in the Exchange instead of participating in the employer-provided plan in limited circumstancesFor this to occur, employees must be ineligible for subsidies and affordability testing is requiredEmployee is required to contribute between 8% and 9.8% of the employee’s household income toward the cost of coverageThe employee’s household income is less than 400% of the FPLVoucher value is adjusted for age and the employee can keep amounts of the voucher in excess of the cost of coverageThe amount of the voucher must be equal to the amount the employer would have provided toward coverageEmployee can keep amounts of the voucher in excess of the cost of coverage
32 Reform Timeline 2018Cadillac 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 coverage40% of the value of the plan that exceeds the threshold amountsTax 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 employerThe value of the plan includes reimbursements under FSAs, HRAs, employer contributions to HSAs and coverage for supplementary health insurance coverage (excluding dental and vision)
33 Public Opinion and Challenges Public opinion remains against the new health care reform lawsDespite this, repeal is highly unlikelyEven with projected Republican gains in the House and SenateMany states are challenging the constitutionality of the individual mandateA growing number of states are refusing funding for the high risk poolMay 3, 2010 Rasmussen Poll of American Voters
34 Next ChallengesThe barrage of regulations tied to each provision and the “devil in the details”Technical changes to legislationNeed better specificity on what encompasses/composes a “grandfather plan”Makeup of essential benefits packageComposition of medical loss ratioLegal challengesImpact of mid-term electionsYears of implementation
37 Director of Marketing Operations & Chief Compliance Officer Mike PasterickDirector of Marketing Operations & Chief Compliance Officer
38 Federal Compliance Before Reform Plan DocumentsSummary Plan Description (SPD)Summary of Material Modification (SMM)Summary of Material Reduction in Covered Services or BenefitsForm 5500Schedule A, Form 5500Schedule B, Form 5500Schedule C, Form 5500Schedule D, Form 5500Schedule E, Form 5500Schedule G, Form 5500Schedule H, Form 5500Schedule I, Form 5500Schedule R, Form 5500Schedule SSA, Form 5500Accountant’s Report, Form 5500Summary Annual Report (SAR)Initial COBRA Notice (also known as “COBRA General Notice”)COBRA Election NoticeNotice of Unavailability of Continuation CoverageNotice of Early Termination of COBRA CoverageUniformed Services Employment and Reemployment Rights Act (USERRA)Certificate of Creditable CoverageNotice of Special Enrollment RightsGeneral Notice of Pre-existing Condition ExclusionIndividual Notice of Period of Preexisting Condition ExclusionHealth Insurance Portability and Accountability Act (HIPAA) Privacy Policies and PracticesNotice of Privacy PracticesHIPAA Security Policies and PracticesBusiness Associate AgreementWomen’s Health and Cancer Rights Act (WHCRA)Newborns’ and Mothers’ Health Protection ActQualified Medical Child Support Order (QMCSO)Qualified Domestic Relations Order (QDRO)404(c) Compliance404(c) Disclosure NoticeIndividual Benefit StatementsMedicare Part D Disclosure Notice to CMSMedicare Part D Disclosure Notice to Eligible IndividualsTaxation of Group Term Life InsuranceTaxation of Same-Sex BenefitsDiscrimination Rules and TestingFamily and Medical Leave Act (FMLA)Notice to Employees Regarding Employer Contributions to HASPA Mini-COBRA General NoticePA Mini-COBRA Election NoticeCOBRA/PA Mini-COBRA Subsidization ProcessesPA Act 4 – Adult Children Insurance CoverageCHIP/CHIPRA NotificationIs Your Business Compliant with All These Regulations?
39 Ouch: The Cost of Non-Compliance Penalty up to $110 per dayEndangerment of the plan’s favorable tax treatmentUp to 10 years in prisonUp to $100,000 fine$1 to $1,100 per dayLegal action may be brought by participantEmployer may be held liable for any medical costs incurred by participantLegal action may be brought by the DOLInternal Revenue Service (IRS) may assess a $100 per day penaltyThe 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 yearLegal action may be brought by alternate recipient or state authorityPlan fiduciaries could be held liable for losses associated with participants exercising individual control over assetsLoss of government subsidizationPenalty of 35% excise tax for the employer on all calendar year employer contributions
40 Help! Which regulations apply to my company? Where do we go for help? When are we supposed to have this completed?What do we do if we get audited?To whom do we report that we’ve completed this?How much could non-compliance cost us?Questions every employer hasWhich penalties would apply to our situation?How will we handle this administrative burden?
41 Don’t Go It Alone “Your Compliance Express” is your turnkey partner We will rescue you from the health care reform tsunami and after shocksWe 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 businessProviding you with meaningful tools to guarantee your compliance with health care reform and all other Federal compliance lawsOffering you expert guidance at key decision points along the way
42 Components Health Care Reform Website Health Care Reform Blasts Health Care Reform Resource BinderSeminars and WebinarsConsultingCompliance DashboardThis isSpecial!
43 Reform WebsiteThis proprietary custom health care reform website will provide you with access to:Recorded webinars explaining compliance issues in detailCompliance checklistsWhite papers, trends and studiesHealth care reform timetable, updates and informationExclusive online-library of compliance and health care reform resources and materialsLinks to important resourcesPortal to Benefits Network’s Compliance Dashboard
44 Reform BlastsWith Your Compliance Express, you will never miss important and time sensitive informationOur Health Care Reform Blasts will be sent to you whenever there is meaningful information to communicateIf you get a Blast, consider it importantWe will not waste your time with fluff
45 Reform Resource Binder You will also receive a Your Compliance Express Health Care Reform Resource Binder for use as master compliance guideContains all applicable deadlines, explanations, laws and forms needed to stay compliantFormat is modular, and updates to content provided as soon as changes or additions to legislation are madeAs components of the laws are implemented, we will send you additional information to keep your binder current at all times.It’s an encyclopedia of health care reform knowledge.
46 Seminars & WebinarsMuch of the information that will be disseminated by the government in the coming years is complex and confusingWhen it makes sense, we will host seminars and conduct webinars to share information in an interactive environmentWe will tap notable experts to bring you the most accurate and timely information.
47 ConsultingUnder health care reform law, there will be times when you have critical decisions to make on behalf of your business and employeesYou can trust us to give you the guidance and direct to help you make the right callOur team of experts is available by phone, , and face-to-face to consult with you as neededYou can count on us and the vast resources we have assembled to give you expert adviseNFP Benefits Partners Compliance DepartmentERISA AttorneysActuarial Expertise
48 Compliance DashboardLeading web-based solution for helping employers comply with the federal laws that govern health & welfare plansIncluding Health Care Reform LawsYou no longer have to worry about whether you are meeting your compliance obligationsGives you the information you need, when you need itCompliance Dashboard will tell you what you have to do and when you have to do it
49 Compliance DashboardEstablishes a reliable and verifiable compliance processSaves staff timeSends a notification when it is time to perform a compliance taskProvides all of the relevant information and materials needed to complete the compliance taskAutomatically tracks completion dates and sends reminders when a task has not been performedFull documentation of compliance efforts
51 Conclusion Reform is here and it’s real! We have to deal with itBenefits Network has made a significant investment in order to lead!We can be your advocateWe can get you through thisYour Benefits Network representative will be in touch with you to discuss “Your Compliance Express” and “Compliance Dashboard”