Healthcare Issues Facing Public Employers

ACA Employer Reporting ACA ”Cadillac” Excise Tax 411 Liability Aging Population ACA Shared Responsibilities Commercial Rollback Future Trends? Managing Costs and Plan Design

WHAT SHOULD YOU BE FAMILIAR WITH? o Affordable Care Act – On the Radar Screen  Employer Shared Responsibility  Employer Reporting Requirements o Cost of the Affordable Care Act  Fees and Taxes  Predictive Modeling o 411 Medical Liability o Future Trends in Healthcare

o Applies to groups with 50 or more Full Time Equivalent Employees (FTE)  Employers with 50 to 99 FTEs - Must make an offer to all qualifying employees starting with the plan year beginning on or after 1/1/2016  Employers with 100 or more FTEs - Must make an offer to all qualifying employees starting with the plan year beginning on or after 1/1/2015 EMPLOYER SHARED RESPONSIBILITY

 Starting in 2015 coverage must be offered to 70% of all full-time employees, as well as all part-time, seasonal or variable hour employees averaging 30 or more hours per week (95% in 2016)  Coverage offered must be affordable and provide minimum value to avoid penalties  Part-time, seasonal and variable hour employees hours must be tracked to determine if they qualify as full-time status EMPLOYER SHARED RESPONSIBILITY

Admin. Period Measurement Period 4 10 Months Stability Period 3 12 months Admin. Period Admin. Period Measurement Period 2 10 Months Measurement Period 2 10 months Stability Period 2 12 months Stability Period 1 12 months Measurement Period 1 10 Months Administration Period Tracking Ongoing (Existing) Employees (Employees who were hired before the start of the first measurement period)

Stability Period 1 12 months Measurement Period 1 10 Months Admin. Period Measurement Period 2 10 Months Measurement Period 1 10 Months Admin. Period Measurement Period 2 10 Months Stability Period 1 12 months Admin. Period Measurement Period 1 10 Months Measurement Period 2 10 Months Stability Period 1 12 months January March August Tracking New Employees EMPLOYER SHARED RESPONSIBILITY

o Effective for the 2015 calendar year, generally filed by March 31, 2016 o Applies to large employers with 50 or more FTEs. o Insured Plans  Carrier will file 6055 reporting  Employer must file 6056 reporting o Self-Funded Plans  Employer must file both 6055 and 6056 reporting EMPLOYER REPORTING REQUIREMENTS

o 6055 Reporting  Information about the entity providing coverage, who’s enrolled and the months they were enrolled o 6056 Reporting  Information about the employer offering coverage, who’s enrolled, information about the coverage and the cost of the coverage EMPLOYER REPORTING REQUIREMENTS

o Determine the risk level? o Keeping up with changes in the law o Data versus tracking analysis o Cost, time and staffing o Do you have a decision model prepared? COMPLIANCE ISSUES

COST OF THE AFFORDABLE CARE ACT o What are the costs involved?  Health insurance tax  Temporary reinsurance tax  PCORI tax  Benefit cost of compliance  2018 Excise Tax o What provisions will affect you? o Are you in compliance with the law?

COST OF THE AFFORDABLE CARE ACT o 2018 Excise Tax (All Employers)  40% tax on “excess benefits” that exceed $10,200 a year for individuals or $27,500 for families, multiplied by the health cost adjustment factor and increased by the age and gender excess premium amount.  Annual limits are increased by $1,650 and $3,450, respectively, for employees in high-risk professions (e.g., law enforcement, EMT/paramedics, construction, mining, longshoremen, etc.

COST OF THE AFFORDABLE CARE ACT o 2018 Excise Tax (All Employers)  Insured Plans - The tax is imposed pro rata on the issuer.  Self-insured group health plan, a health FSA or an HRA - The tax is paid by the entity that administers benefits under the plan (the “plan administrator”).  Self-Administration - The tax is paid by the employer if it acts as plan administrator to a self-insured group health plan, a health FSA or an HRA.  If the employer contributes to an HSA or an Archer MSA, the employer is responsible for payment of the excise tax, as the insurer.

COST OF THE AFFORDABLE CARE ACT Predictive Modeling

COST OF THE AFFORDABLE CARE ACT 2018 Excise Tax

411 MEDICAL LIABILITY o Iowa Code Chapter 411  Municipalities must provide and finance medical care for Police and Fire members when injured in the performance of their duties  Municipalities must continue to provide medical coverage for such injuries and diseases incurred in the performance of their duties while receiving retirement allowances  Higher costs due to requirement of medical and prescription discounts not being able to be paid through medical insurance?  Solution? (see attached brochure)

FUTURE TRENDS IN HEALTHCARE Expected trend has averaged 8.1%. Actual trend (growth) has averaged 5.2% Cost Trends – United States - All PPO Plans

FUTURE TRENDS IN HEALTHCARE o Care continues is moving from more costly settings to retail clinics and mobile health o Replacement Generation…new knees, hips…etc. o The federal readmission penalties appear to have reduced readmissions by nearly 70,000 in 2012 o 17% of employers now offer a high deductible health plan as the only option for employees o Higher enrollment due to the ACA will boost benefit spending o Employers believe health management is helping to slow medical trend

FUTURE TRENDS IN HEALTHCARE o How do you control Costs?  Cost shifting, incentives for healthy lifestyles  Spousal surcharge  Tobacco surcharge  Tighter utilization management  Wellness, disease management (implementation difficulties in public sector)  Insured to partial self-funding or fully-self- funding

THANK YOU!! 1555 S.E. Delaware Avenue Suite A Ankeny, Iowa or