NJ CUPA HR The Affordable Care Act & Its Implication for Employers April 4, 2014

Transcription

1 NJ CUPA HR The Affordable Care Act & Its Implication for Employers April 4, 2014

2 About NJBIA Represents 21,000 companies of all sizes and types, which employ over 1 million workers in the State. Advocate for business representing their interests in both legislative and regulatory arenas in order to make this state a great place to do business. NJBIA provides a wide range of benefits and services to members, including: insurance programs, committees and seminars.

3 Additional member resources from NJBIA: Healthcare Issues Network: Electronic updates about developments that affect the cost and availability of health insurance. Health Affairs Committee: Meetings that bring a wide range of healthcare stakeholders together to hear from lawmakers & policy leaders. NJBIA Fast Facts: Fact sheets to help businesses comply with laws & regulations affecting business. Seminars: An annual series to assist businesses of all sizes make health insurance purchasing decisions.

4 Employer Coalition for Technical Education Businesses can allow vocational technical students to come in and experience firsthand what goes on in a business through internships and demonstrations. Business operators themselves can go into the classroom and provide students with instruction from the unique perspective of an employer. And businesses can contribute by helping vocational technical schools develop a curriculum that teaches the skills that are needed in the working world.

5 Employer Coalition for Technical Education NJBIA formed a partnership with the NJ Council of County Vocational Schools to help get businesses directly involved in education. The goal is to align our education a policy with workforce needs to create a pipeline of qualified students that have the workplace readiness skills that employers need.

6 Minimum Wage, etc. Minimum wage will be increased under new federal contracts to $10.10 an hour, from $7.25 (federal). Regulatory changes to the Fair Labor Standards Act are also expected to be proposed in the near future to narrow the white collar exemption. New Jersey s state minimum wage rose to $8.25 on January 1, 2014 (with annual inflation adjustments each September).

7 Average Annual Health Insurance Premiums and Worker Contributions for Family Coverage, % Total Premium Increase $16,351 $9,068 $11,786 $6,657 89% Worker Contribution Increase $2,412 $4, Worker Contribution Employer Contribution SOURCE: Kaiser/HRET Survey of Employer Sponsored Health Benefits,

8 However, Garden State residents self reported awareness of the reforms doesn t necessarily correlate with their knowledge of specific aspects of the law. Just 1 in 3 New Jerseyans have heard a lot (11%) or some (23%) regarding the new health care exchanges, or marketplaces, which open on October 1st. Another 31% have heard only a little and 33% have heard nothing at all.

9 90% of the respondents to the Midwest Business Group on Health survey reported that employees wondered how the Affordable Care Act would affect their benefits. Other survey highlights: About 90% of self funded employers say they will not steer their covered lives into either public or private exchanges in the near future instead, choosing to study the HIX model further before making any moves. Source: Midwest Business Group on Health (MBGH) survey conducted in June and July, released in September respondents.

10 More high deductible health plans and fewer managed care plan options, including point of service plans, are expected among MBGH members during the next four years, though there s uncertainty about the number of employers planning to offer only HDHPs. Nearly 70% of respondents are developing their own ACA messaging on open enrollment options, as well as an overview of health care reform and its impact on benefit programs. Few of them indicated that they are relying solely on their health plan for employee communications in this area.

11 Key areas of focus for ACA compliance include educating employees about the law (71%), benefit designs that will reduce exposure to excise taxes (59%) and wellness plan incentives (49%). More than 70% of respondents say they will not increase salaries for employees who obtain insurance coverage from public exchanges. Employees of MBGH members are most concerned about the impact of the ACA on their benefits (64%) and higher out of pocket costs (63%), but they also are eager for information about the exchanges (53%).

12 What Should Employers Know?

13 The individual mandate Requires most US citizens and legal residents to purchase health coverage or incur a tax penalty of $95 (or 1% of adjusted gross income), whichever is greater for Individuals under 18 pay one half. Exemption: There are some, including for certain religious backgrounds and the so called hardship exemption if the cost of the annual premiums exceed 8% of household income.

14 Penalty calculation: Generally, the penalty is based on a percentage of the taxpayer s household income, and is imposed on a monthly basis. The flat dollar amount is phased in over three years ($95 for 2014; $325 for 2015; and $695 for 2016 and then indexed for inflation). The applicable percentage is 1% for 2014; 2% for 2015; and 2.5% for 2016 but cannot exceed the annual premium for the bronze level plan offered thru the exchange.

15 Effects of the individual mandate: Gives all taxpayers, including employees, an incentive to obtain coverage Increases the likelihood of 1. Employees seeking a premium tax credit and 2. Triggering IRS assessments against employers What is a premium tax credit? A refundable (advanceable) federal tax credit available to certain lowincome individuals who were not offered affordable, minimum value plans to subsidize exchange obtained coverage.

16 Small Employer Tax Credit Beginning in 2014, the credit refunds 50% of health insurance expenses for eligible employers purchasing thru exchange and is available for any two consecutive years. (Credit was 35% for ) The credit is fully available to companies with 10 or fewer full time employees and average wages below $25,000. The credit phases out as the number of employees increases to 25 and wages grow to $50,000. Tax exempt organization of maximum credit of 35%.

17 Exchange Enrollment Enrollment in the individual exchange began October 1 and ran thru March 31, 2014 for individuals. For 2014, open enrollment will be delayed until Nov. 15 ending Feb. 15, 2016 SHOP enrollment for employers will be on going, however there was an annual open enrollment period from October 15 November 15. Coverage began Jan. 1, To find out more, visit Healthcare.gov and find information links. Alternatively, call

18 Marketplace: The Basics NJ has a federal Individual and SHOP Marketplaces Each plan s actuarial value (AV) must fall within the metallic tier (Bronze 60%, Silver 70%, Gold 80% and Platinum 90%). AV=% of total average costs for covered benefits that a plan will cover Rating is now to the member level so a rate is paid for each individual and each member of their family e.g. At Widget LLC Adam pays $300/m, Betsy pays $225/m and Chris pays$350/m.

19 Marketplace: The Basics Other rating changes: No gender rating Tobacco use is not a permitted rating factor in NJ, but is permitted in other states by as much as 1.5x Plans available on the exchange are also available off the exchange What happened in 2014? Widespread disruption. New rating, taxes and benefit changes contributed to higher premiums while metallic tiers, MOOP and networks lead to new plans for many.

20 Q. Can I buy in the SHOP if I m self employed or own a small business? A. If you re self employed with no employees, you can shop for coverage on the exchange. If you have fewer than 50 employees, you can get coverage for yourself and your workers through the Small Business Health Options program, known as the SHOP Marketplace.

21 Employers with 1 49 employees: Considered a small employer No mandate that small employers provide coverage This is a new definition. New Jersey formerly defined small employer as having 2 49 employees

22 The Employer Mandate Large employers must offer their workers affordable and minimum essential health care coverage that has minimum value or pay a penalty. What is minimum essential coverage? No definition yet but we know the broad categories that What is affordable coverage? An employees contribution may not exceed 9.5 percent of the employees income. What is minimum value? Generally, the plan s share of total allowed cost of benefits is not less than 60%.

23 Who is a large employer? The mandate applies to employers with 50 or more full time employees during the previous calendar year. The law considers an employee who works at least 30 hours a week a full time employee, as well as two employees who each work 15 hours per week to count as one full time employee. The mandate does not apply to employers that exceed 50 employees for 120 days or less, and whose extra employees are considered seasonal workers.

24 What is the penalty? The company could be subject to an annual penalty of $2,000 for each full time employee that 1) doesn t offer health coverage and 2) at least one employees receives government subsidized insurance through the marketplace, minus the first 30 employees. Employers whose coverage is deemed unaffordable or low value could be subjected to a penalty of $3,000 for full time employees that receives government subsidized insurance through the government insurance exchange.

25 The Phase in: Employers with Employees Required to provide a minimum level of affordable coverage 2015 must provide information on the number of employees 2016 penalties are assessed

26 The Phase in: Employers with 100+ Employees Required to provide a minimum level of affordable coverage 2015 must cover 70% of employees 2016 (and beyond) must cover 95% of employees. Penalties are assessed.

27 Determining the Number of Employees 30+ hours/week on average = 1 FTE Part time employees count in calculating FTEs e.g. two 15 hour ees = 1 30 hour FTE Entire company, including subsidiary, is analyzed in determining FTEs. If combined companies meet threshold, all companies must comply. Reassess FTEs annually.

28 Employer Manadte: Adjunct Hours Recent guidance suggest that adjuncts should be credits for 1.25 hours of prep for each hours spent teaching Guidance was released in Feb 2014 by the IRS and Treasury

29 How is the ACA paid for? New taxes Health Insurance Tax: taxes health insurance (not selffunded coverage) and is paid by the carrier Generates $8B in 2014 and more then $100B over the next 10 years Transitional Reinsurance Fee: A fee of $63 for each covered person which will be collected for three years. The purpose is to offset cost of coverage for people with preexisting conditions

30 Maximum 90 day waiting period 90 days max, does not mean 3 months. Prevents cost control through longer waiting periods In combinations with the employer mandate, may makes certain employees classifications irrelevant (probationary, intern, non benefit eligible)

31 Key ACA Dates January 1, 2014 Marketplace coverage begins Individual mandate for health coverage Medicaid expansion New taxes and fees: Reinsurance Fee: $63 per covered life Health insurer fee: 2 3% to collect $8 billion Medicare withholding for high wage earners: indiv over $200,000/joint over $250,000 FICA increases from 1.45% to 2.35

32 Key ACA Dates January 1, 2014 (cont.) Maximum 90 day waiting period Maximum out of pocket $6,350/$12,700 (all nongrandfathered plans) for Increases to $6,600 in No annual dollar limits on essential benefits Pre existing condition exclusions are prohibited (all plans) Dependent to age 26 (applies to all plans now) Provider discrimination: all non grandfathered plans cannot discriminate on covered services based on the provider

33 Key ACA Dates January 1, 2014 (cont.) Clinical trials: must be covered by nongrandfathered plans Preventative services on US Preventative Services Task Force must be covered without cost sharing (nongrandfathered plans) Wellness programs: ACA permits rewards (or penalties of up to 30% of the total cost of coverage and 50% of the total cost of for tobacco cessation

34 January 1, 2015 Employer "play or pay" mandate (delayed from 2014) Employer information reporting to the IRS on employee coverage 2016 All SHOP exchanges must open to employers with up to 100 FTEs

35 2017 States may open exchanges to businesses with more than 100 employees 2018 Cadillac Tax 40% excise tax on high cost health plans

36 Where are we headed? Exchanges watch the trend toward private exchanges Workplace wellness Self funding of health benefits (100+)