1 Health Care Reform: Major Provisions and Bargaining Strategies for Retirees MEDICARE Summary of Benefit: Medicare is the federal government s healthcare program for the elderly and certain disabled individuals. Generally, people who are at least 65 years old or who have been on Social Security disability for two years or more are eligible for Medicare. Most firefighters retire before they become eligible for Medicare. A small number of IAFF retirees may be ineligible for Medicare due to alternative arrangements made between their locals and the jurisdiction years ago. Ensure retirees in your local are eligible for Medicare at age 65. Some jurisdictions have supplemental insurance coverage for their Medicareeligible retirees; retirees should fight to have the jurisdiction continue these programs, as their elimination may be proposed during budget-cutting discussions. EXCHANGES Summary of Issue: Starting in 2014, under what s known as the individual mandate, the ACA requires most people to have health insurance or pay a penalty if they don t. Though they have experienced major technical difficulties, the health insurance exchanges/marketplaces opened on October 1, 2013 to allow those who were previously uninsured to buy coverage. (About 17 states are running their own exchange, and the federal government operates HealthCare.gov for people in every other state.) Individuals with income between 100% and 400% of the federal poverty level (FPL), which is $15,510, may be eligible for a tax credit/subsidy to help purchase coverage on the exchange. The Shared Responsibility for Employers Regarding Health Coverage (also known as the employer mandate ) does not mention retirees. This means that the ACA will not impose a tax penalty on employers that fail to provide healthcare to their retirees. Assuming some localities are willing to disregard their contractual or moral obligations to retirees, there is nothing in the ACA that would prevent them from dropping retiree health insurance coverage. Some jurisdictions have already decided to drop the coverage they had previously provided to retirees now that the exchanges are open, and there is concern that others will do the same.
2 Retirees who are 65 or older or otherwise eligible for Medicare are not eligible for a tax credit toward the purchase of coverage on the exchange. Some localities that stop providing health insurance to their retirees are offering a cash stipend or voucher for the retirees to buy coverage on the exchange. Retirees in those jurisdictions must determine whether that benefit is taxable, both for purposes of income tax liability and eligibility for a federal tax subsidy to buy coverage on the exchange. It is also important to know whether this money will be adjusted for inflation in future years. Go to HealthCare.gov to determine how you can shop for health insurance coverage on the exchange, and whether or not your state decided to expand Medicaid. In jurisdictions that offer coverage to retirees but require larger contributions from them than they do from active members, it may actually be cheaper for retirees to buy coverage on the exchange. A retired couple whose only income is a $34,000/year pension (which is typical for a retired firefighter) is at 219% of the FPL, and would therefore receive a sizable subsidy. MEDICAID Summary of Benefit: Medicaid is the healthcare program for low-income individuals, which is run by a combination of the federal government and the state governments. The ACA would have expanded Medicaid to all Americans with income under 138% of the FPL, but the U.S. Supreme Court decided that states could not be forced to expand Medicaid. As of late November 2013, about 26 states are proceeding with the expanded Medicaid program envisioned by the ACA. In the states that are not expanding Medicaid, low-income households may remain uninsured. If your household income is under $15,856 and you live in a state which is expanding its Medicaid program, go to your state s Medicaid website and sign up. VESTED BENEFITS Summary of Issue: While pension benefits are generally vested for employees at a certain point, health and welfare benefits for retirees are generally not. Where there is not unambiguous contract language providing for vesting, courts usually place the burden on the employees or retirees to show vesting of retiree health benefits was intended. With increasing frequency, municipalities are considering dealing with their budget problems by cutting retirees benefits, including healthcare.
3 Retirees are subject to the individual mandate and therefore required to maintain minimum essential coverage. Bargain for unambiguous contract language to provide for the vesting of health and welfare benefits for retirees. Ensure retirees know their rights. Advise retirees to the possibility of buying coverage on the exchange, and the availability of the tax credit. ESSENTIAL HEALTH BENEFITS (EHBs) Summary of Benefit: All non-grandfathered fully insured plans in the small group market are required to provide coverage for EHBs for plan years that begin on or after January 1, (The small group market meant plans covering 50 or fewer employees in 2013; some states are mandating that the 10 EHBs apply to plans covering 100 or fewer employees in 2014; starting in 2016, the 100 or fewer employee threshold applies to all states. You will need to check how your state is handling the transition.) No other plans are required to provide EHBs. Therefore, EHB requirements do not apply to administrative services only (ASO) plans (regardless of group size), fully-insured large group plans, or any grandfathered plans. As mentioned, the employers will not be required to offer healthcare coverage to retirees, but for those retirees which have a health plan, IF the plan covers EHBs, the plan cannot impose any annual or lifetime limits on the dollar value of those benefits. Visit limits are still allowed as long as there is no per visit dollar limit. EHBs include the following: ambulatory patient services, emergency services, hospitalization, maternity, newborn care, mental health and substance abuse, prescription drugs, rehab services, lab services, pediatric services such as vision and dental, preventative and wellness benefits, and chronic disease management. Determine whether your plan is one that is required to provide EHBs. If so, there will likely be additional costs. The plan or the employer may want to shift some of the costs to employees. 1) If you do not know what plan type you have, contact the plan administrator to determine the plan type. 2) Once it is determined that your plan IS required to provide the EHBs, review the summary plan description to determine if all EHBs are covered If the plan does not offer all of the EHBs, those benefits must be added by the employer or plan administrator. Request claims data in order to assess usage of all benefits.
4 Use data to assess and consider eliminating other less-used benefits from the plan to cut costs Assess co-pays and prescription coverage as a way to keep costs down 3) If your plan is not required to provide the EHBs, but chooses to provide EHBs, the guidelines contained within the ACA must be followed including that the plan cannot impose any annual or lifetime limits on the dollar value of those benefits. Visit limits are still allowed as long as there is no per visit dollar limit. Know what benefits are being provided Know what benefits are actually being used Request claims data in order to assess usage of all benefits. Use data to assess and consider eliminating less-used benefits from the plan to cut costs Assess co-pays and prescription coverage as a way to keep costs down GRANDFATHERED STATUS Summary of Issue: Grandfathered plans are those that were in existence on March 23, 2010 and haven t been changed in ways that substantially cut benefits or increase costs for consumers. There is no deadline on how long grandfathered status can be maintained, but the following changes cause plans to lose grandfathered status: Plan eliminates all or substantially all benefits to diagnose or treat a particular condition Plan increases a percentage cost-sharing requirement by any amount above the level at which it was set on March 23, 2010 Plan increases a fixed-amount cost-sharing requirement other than a copayment by more than medical inflation plus 15%, as measured from March 23, 2010 Plan increases a fixed-amount copayment for any service by more than the greater of $5 adjusted for medical Inflation or medical inflation plus 15% measured from March 23, 2010 Decrease in employer contribution rate by more than 5% below the contribution rate for the coverage period that includes March 23, 2010 Challenge: Loss of grandfathered status means: Preventive care at 100% Emergency room treatment out-of-network same as in-network Limit on out-of-pocket maximums with medical and prescription drug combined in 2015 ($6,350 individual/$12,700 family includes co-payments, coinsurance, deductibles) Will any of these changes pose a challenge to long-term viability of your plan? Strategy: Do cost projections
5 Data mining claims/cost analysis Make sure employees know about the rules that apply to their plans, as well as about the coverage that would be available on their state s exchange PRESCRIPTION DRUGS Summary of Benefit: The ACA aims to control the amounts patients must spend to obtain prescription drugs. For instance, a health plan that loses grandfathered status will have to cover all costs above patients out-of-pocket maximums, with medical and prescription drug combined in 2015 ($6,350 individual/$12,700 family includes co-payments, coinsurance, deductibles). Challenge: Employer may try to shift costs through adjustments to prescription formularies Work with health plan to be informed about any changes to co-pays or incentives to use generics and mail-order drugs. Understand whether specialty high cost drugs (such as injectables/chemo) are treated differently. COVERAGE FOR CHILDREN UNDER AGE 26 Summary of Benefit: Under the ACA, benefits for adult children are the same as those for dependent children. Adult children who need coverage no longer must be students, live at home, or be financially dependent. They can even be married, although coverage does not have to be provided to the spouse or children from the marriage. Challenge: Additional plan cost for extra years of dependent coverage. The plan or the employer may want to shift some of the costs of extended coverage to plan members. Strategy: Make sure that terms are the same as for other dependent children as the law specifies that coverage for all dependent children must be the same. ELIMINATE LIFETIME LIMITS ON BENEFITS Summary of Benefit: All plans must provide unlimited coverage for EHBs. In the past, some plans limited the amount the plan will pay on behalf of an individual over a lifetime (i.e. $1 million over a lifetime). Eliminating these limits adds cost to the plans. The plan or the employer may want to shift some of the costs of extended coverage to employees.
6 Strategy: Ensure your health plan no longer imposes lifetime dollar limits on benefits. ELIMINATE ANNUAL LIMITS ON BENEFITS Summary of Benefit: Annual limits for non-grandfathered plans were eliminated effective January Ending annual limits adds cost to the plans that had them. The plan or the employer may decide to shift some of the costs to employees. Strategy: Ensure your health plan no longer imposes lifetime dollar limits on benefits. OVERALL IMPACT OF ACA ON BENEFIT LEVELS Summary of Benefit: The ACA may have the effect of reducing plan retirees outof-pocket costs, though the result might actually be more like a shifting of costs, and there will likely be trade-offs. Retirees who have employer-provided healthcare may see their benefits change in 2014 and future years. Prescription plans and physician networks may be altered as a result of the ACA. If private sector health plans diminish, municipalities may come to the bargaining table more inclined to cut firefighters and retirees health benefits. Know what questions to ask about benefits; if employer offers cash for employees to buy coverage on the exchange, affiliate needs to know about health savings accounts (HSAs) and other options to maintain benefits level. Evaluate health plan proposals based on the entire plan design, not only on the amount of premiums.
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