Health Care Reform Update Florence Unified School District Governing Board July 11, 2012 Florence/2013/Meetings/07112 Board meeting/12 board ppaca overview 0711.ppt

Supreme Court Decision  Affirmed PPACA  Future: Debate, Elections in November  Further Legal Challenges Possible  So, Onward and Upward

Upcoming PPACA Issues  2013: 2012 W-2 to contain Aggregate Health Benefit Cost Information  Open Enrollment (7/1/2013): Summary of Benefits and Coverage (SOBC) –4 Pages Maximum –Specific Information –$1000 Penalty for non compliance

Upcoming PPACA Issues  2014 Reporting Requirements –Minimum Essential Benefits –Qualifying and Affordable Coverage  Penalty for non compliance: –$50 for each missed employee; $100,000 maximum

Upcoming PPACA Issues  2018: Cadillac Tax  40% Excise Tax on Value of Benefits in excess of –$10,200 Individual –$27,500 Family

Upcoming PPACA Issues  State Exchange to be “up and running” as of 2014  Deductible limits of $2,000 individual and $4,000 family, unless contributions are offered that offset excess deductibles.  Maximum out of pocket: $5,950 Individual; $11,900 Family

Upcoming PPACA Issues Plans to be offered through the State Exchange: Bronze Plan Provides 60% of actuarial value of minimum qualifying coverage. Silver Plan Provides 70% of actuarial value of minimum qualifying coverage. Gold Plan Provides 80% of actuarial value of minimum qualifying coverage. Platinum Plan Provides 90% of actuarial value of minimum qualifying coverage. A catastrophic only policy would be available for those 30 and younger.

Upcoming PPACA Issues  Individual Mandate to Purchase Health Insurance  If employer does not offer “affordable and qualifying” coverage: –Penalty for non compliance (or “tax” as SCOTUS has interpreted)  Possible subsidy depending upon income

Household Income2014 Penalty2015 Penalty2016 Penalty $10,830$108.30$325.00$ $21,660$216.60$433.20$ $32,490$324.90$694.80$ $43,320$433.20$866.40$1, $55,125$551.25$1,102.50$1, $66,150$661.50$1,323.00$1, $77,175$771.75$1,543.50$1, $88,200$882.00$1,764.00$2, Helping Employees Prepare for Health Care Reform Legislation (Individual Refusal to Purchase Coverage) Penalty Table

Upcoming PPACA Issues  Employer Mandate:  Don’t have to offer, but….. –Penalty “if you don’t” –Penalty possible “if you do” If coverage is not “qualifying or affordable”

TOPIC Effective Date of the Change Description of the Change Employer Penalty for Offering Coverage that’s not “Qualifying” and “Affordable” January 1 st, 2014 Mandates only apply to employers with an average of at least 50 full-time employees during the preceding calendar year. Penalties assessed if employer coverage is considered “unaffordable”; employee contributions to the plan must not exceed 9.5% of employee’s household income or if the plan is not “qualifying” – has an actuarial value of less than 60% of covered health care expenses. Penalty: $3,000 per full time employee who receives a subsidy through an insurance Exchange; capped at $2,000 X total # of FTEs with 1 st 30 FTEs excluded. % of FPLMax. % Single Income Maximum Single Premium Family of 4 Income Maximum Family of 4 Premium 400%9.50%$43,320$342.95$88,200$ “Qualified and Affordable Plans” and Penalties

Determination and Potential Application of Employer Penalty for Categories of Employees Employee Category How is this category of employee used to determine “large employer” Once an employer is deemed to be a “large employer” could the employer be subject to a penalty if this type of employee received a premium credit? Full - time Counted as one employee, based on a 30 hour or more work week Yes Part – time Prorated (calculated by taking the hours worked by part-time employees in a month divided by 120) No Seasonal Not counted, for those working less than 120 days in a year Yes, for the month in which a seasonal worker is full-time Temporary Agency Generally, counted as working for the temporary agency (except for those workers who are independent contractors) Yes, for those counted as working for the temporary agency

PPACA Modeling  Recommending a Customized Impact Study to quantify effect of PPACA in 2014  Modeling Scenario:  Actual employee and employer contributions  US census data  To project cost impact and employee migration due to PPACA  Report generated based upon:  No change to current benefit plans in 2014  Termination of group medical plan in 2014  Employer sponsors only a 60% actuarial value plan in 2014

Questions