Small Group ACA Presentation Looking to 2015 and Beyond. October 2014

Transcription

1 Small Group ACA Presentation Looking to 2015 and Beyond October 2014

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4 Key Terms ACA = Affordable Care Act FTE = Full Time Equivalent GF = Grandfathered Health Plan GM = Grandmothered Health Plan ER = Employer EE = Employee MCR = Modified Community Rates PEO = Professional Employee Organization MEWA = Multiple Employer Welfare Arrangement SF = Self Funding DOL = Department of Labor IRS = Internal Revenue Service SPD = Summary Plan Description

5 Medical Plans for Small Employers

6 Small Employer Designation Less than 51 full time & Full Time Equivalent (FTE) No Employer requirement to offer coverage No Employer requirement to meet affordability Plans, if offered, must conform to ACA benefit provisions

7 I Have Less than 51 Employees What are my medical plan options? Grandfathered Plans Grandmothered Plans ACA Plans ACA Alternatives

8 Grandfathered Plans (GF) Very few carriers offer GF plans Plans in place since 2010 Employer & carrier extremely limited as to any benefit changes $5 OV increase 5% Deductible increase 5% Out of pocket increase Payroll cost to employee almost fixed in nature Employee share % cannot increase by more than 5% Avoids Modified Community Rates (MCR) & Essential Benefit Provisions Avoids Pediatric Dental

9 Grandmothered Plans D.C. s political solution to employer push back & carrier apprehension Modified solution to If you like your plan, you can keep it Avoids Modified Community Rates (MCR) More renewal options than GF plan Multiple carrier interpretations about options at renewal Likely to stay in play until 2016, possibly longer

10 Old Premium Rating Methodology Applicable to both Grandfathered and Grandmothered plans Premiums could be adjusted due to: Male/Female Age Company location Company SIC code Medical risk of employees enrolling for coverage

11 MCR Modified Community Rates Up to 18 regions in state of Ohio are allowed Rates are uni-sex Only premium modifiers allowed are: Age Zip code Tobacco use In essence MCR has created large, state wide, high-risk pools within each carrier

12 Premium Rating Calculations Old systems allows up to a 6 to 1 ratio* 23 year old male $ year old male $750 Total monthly premium $875 6 to 1 Ratio New MCR under ACA rules requires a 3 to 1 ratio 23 year old male $ year old male $656 Total monthly premium $875 69% increase 12% decrease *Approximate Ratio

13 MCR in effect ACA Plans Smaller subset of GF & GM plans Some carriers also have limited networks to keep costs down Once ACA plan is elected, GM &GF plans are no longer available to Employer, i.e. no going back Guarantee issue still required of carriers Ohio one of 5 states to implement the untested SHOP program for 2015

14 Alternatives to ACA Plans PEO Professional Employee Organization Partially Self Funded Plans MEWA Multiple Employer Welfare Arrangement Individual market plans, both on and off exchange

15 PEO Professional Employer Organization Employer becomes co-employer with PEO Employees could become direct employees of PEO PEO management fees apply Payroll taxes & worker s compensation also transfer to PEO at the PEO rates May have better benefit options and rates due to being part of large group PEO can be fully insured or self funded or

16 Partially Self funded Employer determines risk to take on Employer purchases stop loss protection, specific & aggregate Potential run out issues could exist in some carrier contracts Employer can always move to ACA plan at renewal although contract terms may leave employer exposed to additional financial risk at contract termination

17 Self Funding Cost Indicators Fully Insured Self Funded Federal taxes $$ $ + State taxes $ - + Admin charges $$ $ + Risk pool $ - + Expected claims $$$ $$$ = Total expenses $$$$ $$$ + Claims corridor (10-25%) - $ + Run out - $ + Profit $?? = Total Plan cost $$$$$ $$$???

18 Self Funding Contract Type-12/12 January Claim incurred Claims processed & paid 12 Months 12 Months December ER responsible with no Stop Loss protection

19 Self Funding Contract Type-12/15 January Claim incurred 12 Months 15 Months Claim processed and paid Stop Loss protection in place December April ER responsible with no Stop Loss protection

20 MEWA Multiple Employer Welfare Arrangement Numerous employers joining forces to share risk/rewards Usually billed at mature rates, i.e. no run out issues Needs the safety of rock solid stop loss carriers & agreements to protect employer from unexpected risk Exhaustive state and federal oversight exists today Sorted past a challenge to overcome, bad perception in the marketplace

21 MEWA Funding Modified self funding Monthly funding rates generally include all SF components Walk Away contract Pooled resources are the key to cost controls & pricing models Each group is medically underwritten, creating rates indicative of underlying risk for each group Age/sex factors apply SIC code could apply Superior contract compared to stand alone self funding arrangements

22 Regulatory Issues

23 The ACA Balancing Act The Affordable Care Act has created significant government oversight, regulation and employer challenges. Regulatory enforcement courtesy of the Internal Revenue Service (IRS) & The Department of Labor (DOL) Compliance issues are numerous but easily dealt with Summary Plan Description (SPD) continues to be tops on the DOL audit list

24 ERISA Compliance Summary Plan Description Must be furnished within 120 days of the start of ERISA Plan Must be furnished within 90 days of Participation Updated SPD must be furnished at least once every 5 years to all covered Participants Method: To be furnished in a way reasonably calculated to ensure actual receipt of the material using a method likely to result in full distribution A Carrier Certificate of Coverages is NOT an SPD

25 How to get your SPD Fulfill the ERISA requirements for an SPD and avoid penalties Alpha client cost $450/set-up fee waived (regularly $650 + setup fee) To receive enrollment kit and discount ERISA@thealphaga.com Includes: Separate Plan Document and Summary Plan Description (wrap document) ERISA and Affordable Care Act Notices at no extra charge Summary of Material Modification Instructions on how to distribute information to employees alerts regarding changes to ERISA or IRS requirements that could impact Wrap SPD and Plan Document compliance NEW! Premium Conversion Plan

26 The Alpha Group specializes in the design and implementation of employee benefits plans, including retirement plans. Established in 1988, Alpha provides Insurance Products and Consulting Services to over 1100 businesses in Ohio. Our client base ranges from individual contracts to those with well over 1,000 employees in numerous states. Alpha is one of the top 15 Insurance Agencies in Northeast Ohio as reported by Crain s Cleveland Business. Employee Benefits Business & Personal Insurance Retirement Plan Services HR Consulting Services John Wain, Principal The Alpha Group Agency 4200 Rockside Road, Suite 300 Cleveland, Ohio JWain@TheAlphaGA.com Stability in an ever-changing environment.