Health Care Reform PPACA. General Assembly Greensboro, NC 2013

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1 Health Care Reform PPACA General Assembly Greensboro, NC 2013

2 Near-term Provisions 1 These fees apply to both insured and self-insured plans.

3 Additional Coming Changes

4 PPACA Patient Protection and Affordable Care Act - General Essential Health Benefits (EHB s) Cost Sharing Limits Waiting Period limits Other Preexisting conditions prohibited New Wellness incentives Nondiscrimination rules Clinical trial rule

5 Individual Mandate Beginning 2014, penalty (tax) applies to individuals: Who have income above threshold level ($9,350 single; $18,700 married filing jointly); and Who do not enroll for healthcare coverage. Penalty : Greater of $95 or 1% of income 2015: Greater of $395 or 2% of income 2016: Greater of $695 or 2.5% of income For family, penalty capped at 300% of individual rate.

6 Individual Mandate Penalty tax does not apply to individual who: Have religious objections to purchasing health insurance Participate in a health care sharing ministry Are incarcerated Not legally present in the US Are members of an Indian tribe or Receive a hardship exemption

7 Four Complex Mechanisms Individual mandates Individual insurance market reforms Contraceptive coverage Health insurance Exchanges Gov t assistance for low and modest income Premium Tax Credits (PTG s)(federal subsidies). Employer Shared Responsibility Pay or Play or employer mandate Expanded Medicaid states administered but now courts have relieved some of the responsibility

8 Health Insurance Exchanges Exchanges: Competitive, regulated marketplaces for individuals and small employers to obtain health insurance (SHOP). Exchange plan premiums subsidized with PTC for individuals with household income less than 400% of federal poverty level (FPL). Household income = modified adjusted gross income (MAGI). Note: MAGI does not include clergy housing allowance Individuals with Medicare, Medicaid or affordable employer coverage are excluded from these exchange subsidies.

9 Health Insurance Exchanges State-based (or regional) single risk pool. Many states not ready; Federal Exchange will step in. Only insurance companies may offer coverage through Qualified Health Plans (QHPs). Church plans probably not eligible for PTC Premium rate variation limits: Age (3:1 limit), tobacco use (1.5:1), family size and geography. Platinum (90%), gold (80%), silver (70%) and bronze (60%) plans. (actuarial values) PTCs available only to eligible individuals who purchase plan on an Exchange.

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11 Exchange PTCs Individuals (households)* with MAGI between 100% FPL and 400% FPL receive PTC to purchase Exchange coverage. * PTCs are not available to employees of plan sponsors adopting Exchange plans as employers.

12 Who Qualifies for PTCs? Individuals purchasing a Qualified Health Plan (QHP) on an Exchange who are not: Covered by Medicare or Medicaid; Covered by other government coverage, e.g., CHIP, TRICARE, VA, etc.; Offered an affordable employer plan that provides minimum value; Enrolled in an employer plan (even if not affordable).

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14 Exchange Notice Requirement Employers are required to provide employees with written notices about Exchanges. Notices must be distributed to all employees, regardless of enrollment status or part-time or full-time status. Timing for providing notices: Current employees: Must provide by 10/1/2013. New hires: Effective 10/1/2013, new hires must be provided notice within 14 days. Unclear what penalties apply for failure to provide notice.

15 Exchange Notice Requirement Notice must inform employee: of the existence of the Exchange, including a description of the services provided by the Exchange; that the employee may be eligible for a premium tax credit if the employee purchases coverage through the Exchange; and that if the employee purchases coverage through the Exchange, the employee may lose any employer contribution to the employer s health plan, and that all or a portion of the employer s contribution may be excludible from income for federal income tax purposes.

16 Exchange Notice Requirement Notice requirement applies to all employers subject to Fair Labor Standards Act ( FLSA ). No special exception for churches or churchrelated organizations. Absent detailed analysis, it can be difficult to determine if FLSA applies; so probably advisable to just give notice.

17 Employer Mandate Effective 2014, there are penalties for large employers that offer no coverage or provide inadequate/unaffordable coverage. A large employer is one with 50 or more fulltime equivalent employees ( FTEEs ). Penalties apply only if at least one full-time employee ( FT Employee ) participates in and receives subsidies from an Exchange.

18 Employer Mandate Penalties for large employers that fail to offer minimum essential coverage : (after subtracting first 30 FT Employees). Minimum essential coverage includes coverage under an eligible employer-sponsored plan. There are penalties for large employers that offer inadequate or unaffordable coverage.

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20 Determining Full-Time Employee Status Full-time means an average of 30 hours per week; 130 hours per month is treated as equivalent to 30 hours per week Seasonal and part time rules are very complicated

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22 Controlled Group Rules Identify all entities within employer s controlled group. Generally cannot avoid rules by separating organizations Application to Church-Related Organizations Rules do not apply to churches and QCCOS; they do apply to non-qccos.

23 Employer Considerations Notice of exchange availability to be provided to all employees. Form W-2 reporting of health benefit value may be potentially expanded to include employers that sponsor non-erisa plans. Additional reporting with regard to coverage in coordination with the exchanges. Guidestone calculator health reform page

24 SPECIAL CONSIDERATIONS FOR SMALL EMPLOYERS (Churches) What is the current cost of health care coverage, both employer share and employee share? What is the estimated household MAGI for each employee? Who will be eligible for a premium tax credit and how much will the credit be? How much will a silver tier plan cost on the Exchange and what level of benefits will it provide? How much would be saved by terminating health care plan and sending all employees to the Exchange (understanding that it may be necessary to increase salaries to help employees pay for cost of Exchange coverage)?

25 Q & A Watch for coming events and news Tools coming DOL - Guidestone -

26 Notes Small Business Tax Credit W2 Reporting SHOP Plans Foreign Missionary issue Key Dates Sept 6 approved plans - Oct 1 Exchange enrollment More than 9.5% for insurance