Health Care Reform: The Good, The Bad & The Ugly Part II

Transcription

1 Health Care Reform: The Good, The Bad & The Ugly Part II What Small Business Owners, Sole Proprietors & Individuals need to know about The Affordable Care Act!

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3 Panel Presentation/Discussion Overview of ACA Employer Mandate, SHOP & Individual Mandate The Health Insurance Marketplace Plans on & off Exchange for Individuals Alison Eckis Jessica Rogers Alison Eckis Small Business 2-49 & Large Business 50 > Employer Plans Dottie Allen W-2 reporting, Small Business Tax Frances Goldman Credit, other ACA taxes

4 The Affordable Care Act Supreme Court passed PACCA/ACA 2010 The intent was to offer affordable coverage to cover more Americans BUT split decision; left Medicaid expansion to each state- unintended consequence. VA has over 1.2 Million uninsured AND over 400,000 are below 100% of the poverty level AND will NOT qualify for subsidies on the federal exchange

5 NAWBO Jessica Rogers, Esquire Sands Anderson PC 1111 E. Main Street, Suite 2400 Richmond, Virginia

6 Notice to Employees Notice of the health insurance exchange must be provided to ALL existing employees by October 1, Thereafter, notice must be given within 2 weeks of hire to new employees. Model Notices are available at one for employers who offer coverage and one for employers who do not. COBRA notification requirements have changed to include this information. Model COBRA notice is also available at 6

7 Employer Reporting Requirements Employers are required to report the cost of employer-sponsored coverage for employees. Additional reporting requirements: Whether employer offers coverage to full-time employees. Monthly premiums and the employer s share of the total costs of benefits. Number of full-time employees per month. Identifying information on each full-time employee covered under the plan. The Administration has indicated that the employer reporting requirements have been delayed until 2015, to give them time to simplify the requirements. 7

8 Employer Shared Responsibility Payments The Act requires large employers, with 50 or more full-time employees, to either (i) offer affordable health care coverage with minimum value to all full-time employees and their dependents, or (ii) pay a penalty. There are two penalty scenarios: A penalty for offering NO coverage. A penalty for offering coverage that is deemed unaffordable or of inadequate value. Both penalties are triggered by a full-time employee receiving a subsidy for coverage through the exchange. 8

9 Applicable Large Employer To be subject to penalties, an employer must have at least 50 full-time employees, or the equivalent thereof. A full-time employee works, on average, 30 or more hours a week, for the previous calendar year. The Act uses the common-law definition of employee. The 2014 calendar year will be used for determining large employer status for

10 Large Employer: Full-time Equivalents Part-time employees hours are aggregated in the calculation of full-time equivalent positions (FTEs). Each month, the hours of all part-time employees (but no more than 120 hours per part-time employee) are added together and divided by 120. This gives the number of FTEs for the month. If the number of full-time employees, plus the number of FTEs for the year, divided by 12 is 50 or more, penalties apply. 10

11 Controlled and Affiliated Service Groups The Act says that any employer treated as one employer under IRC 414(b)(c)(m) or (o) will be treated as one employer for purposes of the Act. If two related entities are under common ownership and control, they will be treated as one employer, for purposes of determining employer size. However, each member of a controlled group is penalized separately. The 30 employees disregarded for penalty purposes are split among controlled group members. 11

12 SHOP Exchange Small Business Health Options Program: a marketplace for small businesses to purchase health insurance for their employees. SHOP exchanges will eventually offer small businesses a choice of plans, from which their employees may choose, all administered through the exchange. Full implementation has been delayed until

13 Small Business Tax Credit Small Business Tax Credit: Credit for small businesses and non-profits who pay at least half of the costs of health care for employees. Businesses with 25 or fewer full-time equivalents, with average annual wages of $50,000 or less are eligible. Maximum credit is 35% for businesses, and 25% for non-profits through In 2014, the maximum amounts increase to 50% for businesses and 35% for non-profits. 13

14 Individual Shared Responsibility Payments Individual Mandate : Requires most citizens and legal residents to have minimum essential coverage or pay a penalty. Exemptions for people for whom bronze-level coverage is unaffordable, those with incomes below the income tax filing level, prisoners, those not lawfully present, members of recognized Indian tribes, members of recognized religious sects or health care sharing ministries, those residing outside the US, and anyone the Secretary of HHS determines has suffered a hardship. Individuals with incomes up to 138% of the federal poverty level who reside in states that do NOT expand Medicaid will also be exempt. 14

15 Individual Shared Responsibility Payments, cont d The individual shared responsibility payment for each adult without coverage will be the greater of: $95 in 2014, $325 in 2015, and $695 in 2016; or The following percentage of income that is greater than the federal income tax filing threshold ($9,350 for singles and $18,700 for couples): 1 percent in 2014, 2 percent in 2015, 2.5 percent in 2016 and thereafter. The amount for children is half that for adults, but total household penalty is capped at 3 times the adult penalty or the national average premium for a bronze level plan for the household. No criminal penalties. Transition rules for

16 Individual Health Coverage The NEW Marketplace/Exchange Alison Eckis

17 New 2014 Health Plans for Individuals Open Enrollment begins 10/1/2013-3/31/2014* The Individual Exchange or Marketplace in VA the SCC endorsed 9 health plans for Individual: Richmond, Chesterfield & Henrico, Hanover Aetna, Coventry Health Care of VA, Anthem Healthkeepers & Optima Health The rest of metro Richmond and the Tri-Cities- Healthkeepers & Optima Health Northern Virginia- Care First Blue Cross, Kaiser, Group Hospitalization & medical Services, Inc., Innovation Health (Aetna) Southwest VA- Piedmont Community HealthCare * Must elect policy by 2/15/2014 to be exempt from penalty for 2014

18 The New 2014 Health Plans All plans in or out of the Exchanges- coverage must include the following: 10 Minimum Essential Benefits (EHB)-including pediatric dental- embedded with health or free standing option Preventive Care for 0-age 64 including contraceptive coverage for women No pre-existing conditions No lifetime limits and annual limits only as permitted by HHS through 2014

19 The New 2014 Health Plans Catastrophic coverage for under age 30 available on individual exchange only- not eligible for subsidy Actual Value Requirements (AVR): 4 metal levels Bronze (60%), Silver (70%), Gold (80%), Platinum (90%)

20 2014 Health Plans Benefit Designs/Networks Plans using selected hospital networks with tiered pricing Some carriers not offering PPO plans Some carriers not covering out of network benefits Carriers offering Select Drug List

21 Health Plan Benefit Designs/Networks Cost sharing and out of pocket costs will > Various value ranges: PCP co-pay: $10-$50 Specialist Co-Pay: $20-$75 Deductibles: $500-$6,300 Coinsurance: 0%-50% Out of Pocket Maximums: $6,350-$12,700

22 Rating in 2014 for Individual Rates may not vary based on health factors.* Rates may vary only by 4 criteria: 1. Unisex rating by Age (3 ages bands with no more that a 3:1 ratio across rating bands- 0-34, 35-49, 50-64), as established by HHS; 2. Tobacco use (by no more than a 1.5:1 ratio); 3. Self-only or family enrollment; each member rated separately 4. Rating area (as specified by the state)

23 Affordable Plans on The Marketplace Eligible for premium tax credit : based on annual household income from 100%- 400% FPL in VA Credit or subsidy is based on cost of second level Silver (AV 70%) EHB plan for individual or family Eligible for cost-sharing reduction which limit OOP costs-based on income % FPL

24 What do Individuals/Sole Proprietors Need to do NOW Work with your Broker/Agent to determine: Is your individual health plan grandfathered? What are your 2014 plan choices on & off the Marketplace/Exchange? Compare your current 2013 plan to the 2014 options Are you eligible for a subsidy and/or cost- sharing reduction?

25 I am a business owner- What should I do??? Dottie Allen

26 How do Brokers/Agents help their clients with the increased cost of health care? Topics to address: What will Employee Benefits Programs look like in 2014? How will Health Care Reform (The Affordable Care Act- ACA) affect each client s unique situation? How to determine if the Employer should offer group or individual benefits? What specific strategies need to be implemented to insure that our clients have a successful renewal season?

27 The NEW Role of the Benefits Broker: EDUCATING Clients on Health Care Reform

28 Strategic Partnerships for Employers What are the resources your organization is currently using in regard to the new health care reform law? Insurance Broker 73% SHRM s resources on the new health care reform law 54% Legal Counsel (external or internal) 48% Consultants 30% Internal Experts 17% Other 12% *SHRM- Society of Resource Management and NAHU 2011 Note: n = 759. Percentages do not total 100% as multiple responses were allowed. Respondents were allowed to select their top two options

29 Employer Concerns for 2014 Insurance premiums will increase for some and decrease for others Pushing premiums up (for many) New taxes and fees Cost of mandated benefits Loss of discounts (age and health status) Minimum Coverage Subsidies Pushing premiums down (for some) Small Employer Tax Credit Elimination of surcharges *Other Costs: Hospitals, Doctors, (RX) Pharmaceutical Companies, Medicare, Medicaid, Electronic Records, etc. will push up the cost of implementing ACA!

30 Small Group Rating in 2014 How will the new underwriting/rating effect health premiums? Rates may not vary based on health factors.* Rates may vary only by 4 criteria: 1. Age (3 ages bands with no more that a 3:1 ratio across rating bands- 0-34, 35-49, 50-64), as established by HHS; 2 Unisex rating 3. Tobacco use (by no more than a 1.5:1 ratio); 4. Self-only or family enrollment; each member rated separately Rating area (as specified by the state) *Rating base on health status, medical condition, medical history, genetic information and evidence of insurability are all strictly prohibited.

31 Unintended Consequences Negative Effects of New Rating Employers may issue a surcharge to employees who use tobacco products; employees may pay more towards their health premiums Employers may require their employees to participate in Wellness Programs - smoking cessation, health risk assessments, health coaching for chronic conditions** No height/weight rating factor-will this lead to increased medical claims/costs? *WSJ Article Shape Up or Pay Up: Firms Put in New Health Penalties *Orlando Sentinel RTD Penalizing workers for unhealthy habits ** Refer to DOL Employer Notification of Marketplace/Exchange Part B.

32 More Unintended Negative Consequences Employers reducing # hours employees work per week to < 30 hours ( 29ers )* or # of FTE so they won t have to offer coverage for companies < 50 ees; Employers laying off or not hiring employees to keep their FFEs to < 50 ( 49ers )*so they will not be subject to penalties; Employers not offering to spouses and dependents ** *WSJ Article Feb.23-24, 2013 ObamaCare and the 29ers **Refer to DOL Employer Marketplace/Exchange Notification

33 The New 2014 Health Plans Small Business Options Program (SHOP) (Open Enrollment delayed until 11/1/2013) + Small Business Tax Credit available for groups up to 25 ees + No employer contribution required - Limited carrier/plan choices - Limited provider networks- physicians & hospitals - Select Rx list - No out of network benefits with HMO plans

34 The New 2014 Health Plans All plans in or out of the Exchanges- coverage must include the following: 10 Minimum Essential Benefits (EHB)-including pediatric dental- embedded with health or free-standing option Preventive Care for 0-age 64 including contraceptive coverage for women No pre-existing conditions No lifetime limits and annual limits only as permitted by HHS through 2014 Maximum Out of Pocket Limits: $6,350/$12,700

35 The New 2014 Health Plans New Coverage Levels Actual Value Requirements (AVR): 4 metal levels: Bronze (60% covered by carrier/40% cost share) Silver (70% covered by carrier/ 30% cost share) Gold (80% covered by carrier/20% cost share) Platinum (90% covered by carrier/10% cost share)

36 Employer Options 4 th Quarter 2013 Keep Existing Coverage - Renew at normal renewal date Early Renewal- 4 th Q Health Carriers offering early renewals in for fully insured groups; i.e. 12/1/2013 to 11/30/2014 Disband coverage -Allow Employees to go to the Marketplace & potentially qualify for the tax credit (subsidy) Simple Cafeteria Plan -Avoids most discrimination testing -Contributions can be a % of income up to 6% (2% minimum)

37 Employer Options for 2014 Offer self- funded plans that do NOT require/include the 10 essential benefits; would reduce both the cost and level of coverage; Some health carriers are offering self funded hybrid plans for groups with <50 employees To offer plan(s) in or outside of the Small Business Option Plan (SHOP) exchanges Private Exchanges- agency platform/portals being developed which can assist with offering coverage on/off exchanges -Group vs. Individual Coverage Options -Defined Contribution Funding Strategies

38 What will Employers do Now? In the future, will employees and employers be able to better evaluate what health care means to them? Will this mean. Employer-sponsored plans to cover employees only? Fewer Employer-sponsored plans? Higher pay due to lack of insurance? More costly health premiums? What Obamacare Means for Your Business Refer to DOL Employer Notification of Marketplace/Exchange Part B.

39 What do Employers Need to do NOW? Talk with their Strategic Partners : -Benefits Broker, Accountant/CPA, Attorney to know what the ACA 2014 regs are and how they apply to their business and their employees Focus on strategies that will enable choice, flexibility & financial stability Emphasize revenue growth opportunities

40 Health Care Reform- What to do?

41 Sources & Resources for Additional Information: Articles & Website References The National Association of Health Underwriters Kaiser Family Foundation National Federation of Independent Businesses Insurance and Financial Advisors Employee Benefits News Virginia Health Information Health Resources and Services Administration The Wall Street Journal The Washington Post The Richmond Times Dispatch Anthem Blue Cross, Jeff Ricketts, VP of Sales