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1 ACA Primer for Employers Jay McLaren, Director of Government Relations July 31, 2013.

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1 1 ACA Primer for Employers Jay McLaren, Director of Government Relations July 31, 2013

2 2 Employer Overview of the ACA Core Issues  2014 Employer Penalties  2014 Employer Rating and Product Requirements  Taxes and Assessments  MNsure – Minnesota’s Insurance Exchange  ACA Impact on Minnesota  What You Need to Know

3 3 2014 Employer Penalties

4 4 Employer Play or Pay Recent Developments  One-year delay - Applies to penalties and affiliated requirements - Applies to reporting requirements applied to businesses and insurers - Does not apply to other portions of the ACA that impact group coverage  Delay impacts the penalties and affiliated requirements; examples include: - Coverage for employees working 30 hrs/week or more - Affordability safe harbors (9.5% of employee income) - Report that was to begin January, 2015

5 5 Employer Play or Pay What Does This Mean?  Wait for the release of regulations to learn details - Full year delay or partial year delay? - How will the delay work? - Which existing requirements will change and how?  Large employers must still implement other portions of the ACA upon renewal in 2014; examples include: - 90-day waiting period maximum - Maximum out-of-pocket requirement - No annual limits on coverage  Employees and their families may still qualify for subsidies through the Exchange

6 6 Employer Penalties Penalties apply to large employers (> 50 employees)  Penalty for employers who do not offer coverage - $2,000 penalty per employee - First 30 employees exempt from count  Penalty for employers who do offer coverage but have at least one employee certified to access a subsidy - Employees eligible for subsidy if: Plan’s share of the total allowed costs of benefits provided is less than 60 percent of such costs Premium > 9.5 percent of the employee’s household income - $3000 penalty per employee certified to receive a subsidy

7 7 Employer Penalties Previously Released Information  Employer safe harbor: - Offer coverage to its full-time employees (and their dependents) - Ensure actuarial value of coverage is at least 60% - Ensure employee portion of the self-only premium for the lowest cost coverage does not exceed 9.5% of the employee’s income  Three possible safe harbors for determining how to calculate 9.5% of employee’s income - W-2 - Rate of Pay - Federal Poverty Line

8 8 Employer Penalties Previously Released Information  Two different employee calculations 1.Employer size Full-time employees, part-time employees, and seasonal employees Does the employer qualify for a seasonal employee exception? 2.“Full-time employees” Generally working more than 30 hours per week Options for determining variable hour employees are complicated, but may be beneficial: Look- back periods, administrative periods, and stability periods

9 9 2014 Market and Product Rules

10 10 Market and Product Rules Guarantee Issue Requires health plans to accept or renew every employer that applies for coverage - Applies to all groups Prohibits any pre-existing condition exclusions or discrimination based on health status - Applies to all groups Small Group Coverage Health plans may apply participation and contribution requirements throughout the year

11 11 Market and Product Rules Rate Variation  Premiums for small group and individual health insurance may vary only by: - Family structure - Rating area - Age (not more than 3 to 1) - Tobacco use (not more than 1.5 to 1)  Applies to 51-100 groups beginning in 2016  Applies to larger groups at the discretion of the state beginning in 2017  Does not apply to self-insured groups

12 12 Market and Product Rules Rate Variation: Tobacco  Use of tobacco on average of four or more times per week within no longer than the last six months  Includes all tobacco products  Limited to legal use of tobacco (18 years & older)  Health plan may retroactively apply the rating factor if an enrollee reported false or incorrect information  Exemptions: - Religious or ceremonial use - Wellness program participation through a small group employer

13 13 Market and Product Rules Small Group Deductibles Limits  Limited to $2000 for individual coverage and $4000 for family coverage - Exception to meet the metal level coverage - Exception applies at least to the Bronze plan  Remember: “Small Group” expands to include 51- 100 groups in 2016 and may include larger groups beginning in 2017

14 14 Market and Product Rules Annual Out-of-Pocket Limits  In 2014, limited to the thresholds established by IRS for High Deductible Health Plans  Current limits - Self-only: $ 6,250 ($6,350 in 2014) - Family: $12,500 ($12,700 in 2014)  Applies to all products fully and self-insured  Limits adjusted annually by national per capita premium change

15 15 Market and Product Rules Actuarial Value  Every individual and small group product must meet one of the following actuarial values. - 60% - Bronze - 70% - Silver - 80% - Gold - 90% - Platinum  Plans can deviate +/- 2% from these levels

16 16 Market and Product Rules Minimum Value (MV)  Requirement placed on employers to offer coverage that meets a minimum value of benefit (60%)  Determined using tools from federal agencies: - MV Calculator available on the IRS or DHHS website - Checklists approved by the IRS - Actuary certification for plans with non-standard features  Any plan in small-group market that meets any of the metal levels satisfies minimum value  An employer’s Summary of Benefits and Coverage (SBC) will show if the plan meets MV or not

17 17 Taxes and Assessments

18 18 Taxes and Assessments Health Taxes  Tax on insurance companies begins in 2014 - 2014: $8 billion nationally - 2015-2016: $11.3 billion per year - 2017: $13.9 billion - 2018-on: $14.3 billion per year  MNSURE – Minnesota’s Exchange - 1.5% premium withhold in 2014 - Up to 3.5% in 2015 and beyond  Other Taxes (national) - $10 billion transitional reinsurance program payments - $3 billion tax on medications - $2.7 billion tax on medical devices - $300 million for comparative effectiveness research

19 19 MNsure Minnesota’s Insurance Exchange

20 20 MNsure – Minnesota’s Exchange What Is It?  Intended to be a Travelocity or Expedia for health insurance; a virtual health insurance marketplace  Delivery system for federal health insurance subsidies in the individual market  Option for small businesses to offer coverage What It Is Not  An insurer with its own health insurance products  A purchasing pool or “active purchaser” entity that negotiates with insurers  A takeover of the health insurance market

21 21 MNsure – Minnesota’s Exchange Two Exchanges Within the Exchange  Individual - Eligibility determination for subsidies, Medicaid, and MinnesotaCare - Shop for individual coverage - Medica, HP, BCBS, P1, UCare  Small Business Health Options Program (SHOP) - Option for employers to offer coverage to employees - Carrier risk is pooled inside and outside the exchange - Medica, BCBS, and P1  Minnesota insurance regulators have stated nine insurers have applied to participate in MNsure

22 22 MNsure – Minnesota’s Exchange Exchanges and Group Coverage  Employer Size - Enrollment limited to small groups (<50) in year 1&2 - Employers with up to 100 employees may use the exchange beginning in 2016 - States can choose to allow even larger groups into the exchange beginning in 2017  Small Business Health Care Tax Credit - Currently offered to small businesses that qualify - Maximum credit increases to 50% in 2014 - Qualifying employers may only receive it by using the exchange beginning in 2014

23 23 MNsure – Minnesota’s Exchange Board of Directors  3 consumers, 3 with specific expertise, DHS Commissioner  Appointed to the Board in early May  Prohibited from employment as a health care provider, in health insurance industry, as insurance agent or broker, or Exchange contractors Finance  1.5% premium withhold in 2014  Withhold up to 3.5% in 2015 and beyond  Cost will be spread inside and outside the exchange on individual and small group policies

24 24 MNsure – Minnesota’s Exchange Plan Participation/Selection  Board may apply selection criteria to insurers and plans in 2015 and beyond Agents/Brokers, Navigators, IPAs, and CACs  Brokers will be available upon completion of MNsure training and certification requirements - Educate on products inside and outside MNsure - May recommend a specific plan  Navigators and others available to educate on offerings inside MNsure

25 25 ACA Impact on Minnesota

26 26 ACA Impact on Minnesota The Basics  Relatively low uninsured rate of about 9%  Positive indicators - #4 in % receiving employer-sponsored coverage - Relatively generous coverage through public programs - MinnesotaCare likely to continue into 2014 - Some elements of the ACA were already in place  Other indicators - #9 in median income for households of 4 - MCHA phase-out plan - 19th highest cost of self-only coverage through a small employer

27 27 ACA Impact on MN Small Group Market Impact of Community Rating: MN Small Group Market Study by the State of Minnesota Source: “The Impact of the ACA and Exchange on Minnesota,” a study commissioned by the Minnesota Department of Commerce and completed by Dr. Jonathan Gruber and Gorman Actuarial, LLC.; April, 2012.

28 28 What You Need to Know

29 29 What You Need to Know All Employers  Employee notice of Exchanges by 10/1  Federal Department of Labor Large Employers  New insurance benefit mandate for fully-insured groups beginning in 2014 - Intensive services for children with autism - Applies only to the fully-insured large group market  Employer “Pay of Play” delayed one year  Other ACA requirements go into effect in 2014  Advice is available through benefit professionals

30 30 What You Need to Know Small Businesses  ACA represents a challenge for relatively healthy small businesses  Key target audience for the SHOP  Advice is available through benefit professionals

31 31 Thank You

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