The Affordable Care Act Update

Transcription

1 The Affordable Care Act Update Laurie Kazilionis Senior Vice President Garth Howe Assistant Vice President, Account Management Integrated Benefits Account Management & Sales July 8, 2016 The Church Network Conference

2 Agenda Introductions Who is the Church Pension Group Church Benefits Association and the Church Alliance Healthcare Reform Summary Impact on Health Reimbursement Arrangements and Employer Payments Plans Church Plan Clarification Act Church Alliance Healthcare Reform Initiatives 2

3 Who is the Church Pension Group

4 Church Pension Group We exist to support the clergy and lay employees of The Episcopal Church in their calling to spread the Gospel. 4

5 What We Do: Three Primary Businesses Employee Benefits Since 1917 Property & Casualty Insurance Since 1929 Property & Casualty Workers compensation Risk management services & education Pensions (1917) Retirement savings Health benefits (1978) Life insurance (1922) Annuities Disability Publishing Since 1918 Books eproducts Curricula Church supplies 5

6 Guiding Clients to Quality, Cost-Effective Health Benefits Superior financial performance and strong fiscal management High-quality and cost-effective products and services that meet our clients unique needs Compassionate, informed, and seamless delivery of products and services 6

7 The Episcopal Church Medical Trust Provide access to high-quality benefits and consistent service, balancing compassionate benefits with financial stewardship The Medical Trust Serving the Church Financial Sustainability High-quality health plans that provide robust benefits Advocacy for employers and employees Competitive rating and stability High levels of client service and satisfaction Proactive case/risk management Cost reduction and mitigation Stable and adequate reserving 7

8 The Church Benefits Association and the Church Alliance

9 Church Benefits Association (CBA) Voluntary membership association Approximately 50 church pension boards, religious orders and denominational benefit programs for clergy and church professionals Membership generally open to any organization sponsoring or administering church benefit programs Dedicated to promoting excellence and preserving the traditions of church benefit boards and church benefit plans through nonpartisan education, collaboration and fellowship Source: CBA Website 9

10 Church Alliance (CA) A coalition of the chief executive officers of 37 church benefit programs Providing retirement and health benefits to more than 1 million clergy, lay workers, and their family members Membership includes: Mainline Protestant denominations Two branches of Judaism Catholic dioceses Schools and institutions Source: CA Website 10

11 Church Alliance (CA) (cont d) The Church Alliance strives to: Ensure that legislative and regulatory initiatives continue to fully address, protect and support the unique nature of retirement and health benefit plans operated by churches, religious institutions and affiliated organizations Has addressed church plan issues related to significant pieces of legislation over the years, including: The Employee Retirement Income Security Act of 1974 (ERISA) The Multiemployer Pension Plan Amendments Act of 1980 (MPPAA) The Patient Protection and Affordable Care Act of 2010 (PPACA) The Health Care and Education Affordability Reconciliation Act of 2010 Source: CA Website 11

12 Healthcare Reform Summary

13 Key Provisions Small Business Tax Credit ( ) Note for , credit only available to small employers purchasing coverage on Marketplace Form W-2 reporting (delayed implementation for certain small employers and church plans) Over-the-counter drugs are not eligible for reimbursement under FSAs, HRAs, and HSAs, unless prescribed Restrictions on lifetime and annual limits 13

14 Key Provisions Zero-cost preventive care services No pre-existing conditions regardless of age Restrictions on retroactive rescission of coverage Mandatory claim and appeal process Patient-Centered Outcomes Research Institute Fee ( ) Currently $2.17 per member (adjusted for inflation each year) Transitional Reinsurance Fee ( ) $27 per plan enrollee for

15 Key Provisions Maximum waiting period of 90 days Coverage for individuals participating in approved clinical trials Extension of coverage for children up to age 26 If benefits offered past the age of 26, value of benefit may be taxable (reported as imputed income on Form W-2) Additional Medicare Payroll Tax on High Earners 0.9% Medicare tax on high-income earners Employers must begin withholding when wages exceed $200,000 Employers are not required to match the additional 0.9% 15

16 Key Provisions Summary of Benefits and Coverage April 6, 2016 final revised forms, instructions and example calculator released New forms effective for plan years beginning after April, 2017 Health Insurance Marketplace Notification Employers required to provide notice of the availability of coverage if subject to the Fair Labor Standards Act Must provide notice within 14 days of hire No penalty for non-compliance The Department of Labor created Model Notices 16

17 Key Provisions Nondiscrimination in Health Programs Final rules under ACA section 1557 were issued in May Rules apply to any health program or activity, any part of which receives funding from HHS (e.g., a plan with an EGWP, a hospital) Among other requirements, rules require woman be treated equally with men in health care they receive and prohibits the denial of health care based on an individual s sex, including discrimination based on pregnancy, gender identity and sex stereotyping 17

18 Key Provisions Nondiscrimination in Health Programs (cont d) Plans and programs must be assessable to those with disabilities and individuals with limited English proficiency Several new notice requirements No blanket exemption for religious entities (only general Federal statutory protection for religious freedom and conscience applies) Various effective dates; July 18, 2016, October 16, 2016 (notices must be provided on communications), January 1, 2017 (any required plan benefit changes must be made) 18

19 Key Provisions Cadillac Tax Imposition delayed by Consolidated Appropriations Act from 2018 to % excise Cadillac Tax paid on the Excess Amount Excess Amount = aggregate cost of coverage above thresholds: $10,200 for single coverage* $27,500 for family coverage* Thresholds continue to increase by general rate of inflation beginning 2019 *Excess amounts may be adjusted for certain demographic factors (e.g., age). 19

20 Key Provisions Cadillac Tax (cont d) Purpose Revenue raiser to pay for cost of the ACA Address perceived over-consumption of healthcare coverage Many issues about implementation of the tax remain Demographic adjustments 20

21 Church Alliance Cadillac Tax Comment Letters The impact of the tax on church employers and how the regulations apply to church plans remain a concern Two comment letters filed in 2015 on the Cadillac Tax: May 15 (on Notice ) October 1 (on Notice ) Notice stated: There will be another opportunity to comment on Cadillac Tax when proposed regulations are issued 21

22 Church Alliance Cadillac Tax Comment Letters (cont d) CA s comment letters describe various church structures and contribution setting methods Church plan with lower paid workers not type of plan intended to be treated as Cadillac 22

23 Church Alliance Cadillac Tax Comment Letters (cont d) Explain the challenge of calculating the cost for denominational health plans Not subject to COBRA Obtain contributions, rather than charging premiums Timing for calculations challenging, especially with volunteer treasurers Expect calculation errors, and request extra time for calculations and recalculations 23

24 Premium Tax Credits (PTCs) Creates Confusion Household Income No Access to 100% 400% of FPL * Affordable Healthcare Qualify for PTCs Affordable defined as: Coverage does not exceed 9.66% (for 2016) of household income (excluding housing) for self-only coverage, and Provide Minimum Value (MV): when benefit provisions cover at least 60% of the plan costs Must enroll in a plan offered through Marketplace *Federal Poverty Level 24

25 Additional Complexities with PTCs Loss of employer contributions towards healthcare coverage Loss of pre-tax treatment on employee contributions PTC base = Silver Additional cost for richer plans Non-discrimination rules Changes in household income 25

26 Key Provisions Individual Mandate Each individual must: Have basic health insurance (minimum essential coverage) Qualify for an exemption, or Make shared responsibility payment when filing tax return Shared responsibility payment is equal to the greater of: Per person penalty for 2016: $695 per adult ($ per child) with a maximum of $2,085; 2.5% of household income in excess of income tax filing threshold; or Cost of national average Bronze Plan 26

27 Key Provisions Employer Shared Responsibility Large Employers: 50+ F-T Employees (FTE) and F-T Equivalent Employees (FTEEs) during measurement period 2016: offer coverage to at least 95% of full-time employees and dependents (Note: not required to cover spouse) Coverage must provide minimum value: 60% of covered healthcare expenses Coverage must be affordable: employees pay no more than 9.66% of household income for single coverage in 2016 Subject to reporting requirements 27

28 Key Provisions Employer Shared Responsibility (cont d) Large Employer Penalty: Does not provide coverage If one FTE receives a premium tax credit, employer pays penalty Monthly penalty: $2, x number of FTEs (minus first 30) Does not provide minimum value OR affordable coverage If one FTE receives a premium tax credit, employer pays penalty Monthly penalty: $3, x number of FTEs receiving premium tax credit that month up to max of $2, x number of FTEs (minus 30) Small Employers: Fewer than 50 FTEs and FTEEs No penalties for not providing coverage 28

29 Key Provisions Reporting Requirements The Affordable Care Act (ACA) imposes new reporting requirements on employers and plan sponsors The Employer Mandate the requirement for large employers to offer health coverage to their full-time employees (Forms 1094-C/1095-C) The Individual Mandate the requirement for individuals to obtain minimum essential health coverage (Forms 1094-B/1095-B) 29

30 What is the Purpose? To assist the Internal Revenue Service (IRS) in determining compliance with mandates 30

31 What is the Impact to Employers? Mandate Employer Size Action Steps The Individual Mandate Small Employers Fewer than 50 full-time employees and full-time equivalent employees Large Employers 50 or more full-time and full-time equivalent employees The fully insured plan will provide required reporting for medical plans on Forms 1094-B and 1095-B Employers who sponsor Health Reimbursement Arrangement (HRA) may also need to prepare separate Forms 1094-B and 1095-B The fully insured plan will provide required reporting for medical plans on Forms 1094-B and 1095-B 31

32 What is the Impact to Employers? Mandate Employer Size Action Steps The Employer Mandate Small Employers Fewer than 50 full-time employees and full-time equivalent employees Large Employers 50 or more full-time and full-time equivalent employees No reporting requirement Complete required reporting for Forms 1094-C and 1095-C. Also, if the employer sponsors an HRA for their employees, employer must complete Part III of Form 1095-C 32

33 Due Dates Similar to Form W-2 Reporting Dates January 31 of following year for furnishing statements to individuals February 28 for filing transmittals to IRS (but have until March 31 if filed electronically) All reporting done based on calendar year, even if plan itself operates on a non-calendar year (e.g., July 1 June 30) For 2016: March 31 for forms to individuals May 31 for paper June 30 for electronic transmittal to IRS (additional relief announced) 33

34 Penalties May be assessed significant penalties for failing to file or failing to provide correct statements or returns Penalties can increase if intentional disregard Some waivers and relief available Forms filed in 2016 (relating to 2015 coverage) no penalty if good faith efforts to comply Must file something, though (ignoring filing requirements is not good faith) 34

35 What Does the Form 1095-B Look Like? 35

36 What Does the Form 1095-C Look Like? 36

37 Small Group Discussion minutes Break into small groups Designate Spokesperson Discuss how you managed or are managing these issues Best Practices Member confusion GHP vs. Marketplace Cadillac Tax 1094/1095 Reporting Spokesperson reports to larger group 37

38 Impact on Health Reimbursement Arrangements and Employer Payment Plans

39 IRS Notice Further guidance on: Health reimbursement arrangements (HRA) Employer payment plans (EPP) Continuing guidance on ACA market reforms application to employer plans that cover fewer than two current participants HRAs and EPPs are of interest to small church employers 39

40 HRA and ACA Market Reforms An HRA is an employer funded account plan An HRA is a health plan and must satisfy the ACA market reforms (e.g., preventive services and no lifetime limits etc.) To satisfy ACA, beginning January 1, 2014, an HRA must be integrated with a group health plan that complies with the market reforms Plans with fewer than two current employees (e.g., retiree only plans) are exempt from the ACA market reforms 40

41 HRA and Church Employers Current Employee HRA HRA covering more than one current employee Group Health Plan (GHP) subject to market reforms Must be integrated with other qualified coverage to satisfy ACA HRA funds cannot be used to purchase individual coverage Amounts previously contributed to an HRA while integrated with another plan cannot be used to purchase individual coverage after participant no longer covered by integrated GHP 41

42 HRA and Church Employers, cont. Exempt HRA An exempt HRA is a plan funded by an employer with fewer than two current employees Not subject to the ACA market reforms Not required to offer integrated qualified health care plan HRA funds may be used to purchase individual market coverage Employee not eligible for premium tax credit for any month during which he/she can access funds in an HRA (including post-termination) 42

43 Church Plan Clarification Act

44 Church Plan Clarification Act Enacted on Dec. 18, 2015 as part of the PATH Act Primary purpose was to clarify retirement plan issues E.g., automatic enrollment in defined contribution plan While the non-discrimination rules applicable to the various types of plans (e.g., pension, defined contribution and health plans) differ, the controlled group rules apply to all church plans uniformly in determining the group of employees subject to the tests Important to ACA large employer classification 44

45 Controlled Group Rules Church employers are classified into three categories: A church, which is a place of worship (or steeple ) A qualified church controlled organization or QCCO is a church agency or governing body, church agencies, mid council or synod, as well as a seminary, elementary or secondary school A non-qualified church controlled organization or non-qcco is a church-affiliated organization such as religious hospital, nursing home or university that receives more than 25% of its support from the government or the public 45

46 Church Controlled Group Rules Churches and QCCOs are NOT aggregated unless: One of the organizations provides (directly or indirectly) 80% of the operating funds for the other organization during the preceding tax year AND There is common management or supervision such that the organization providing the funding is involved in the day to day operations of the other organization Non-QCCOs are aggregated if 80% of directors of another non- QCCO or for-profit entity are controlled (directly or indirectly) by the other non-qcco 46

47 Church Controlled Group Rules (cont d) Church employers may also elect: To be treated as a controlled group (permissive aggregation) or To treat churches separately from other entities that are not churches (permissive disaggregation) Anti-abuse rule applies. IRS can challenge an arrangement if it considers the arrangement an abusive manipulation of the rule Effective Date is before, on and after the effective date of PATH 47

48 Church Alliance Healthcare Reform Initiatives

49 The Church Health Plan Act of 2016 First introduced in June 2013; simplified to address input from sponsors Issues: Employers and employees covered by church plans do not have access to: Small employer tax credits Premium tax credits Access to subsidies provided for small group employee enrolled in church plan eligible for subsidy if individual eligible under Sec. 36B and large employer employee who is not offered MEC Small employers are eligible for tax credit 49

50 Proposed Legislation (S. 3060/H.R. 5447) Small Business Healthcare Relief Act Small employers (less than 50 FT and FTEES) can provide standalone HRAs to reimburse employees for health expenses, including premiums for individual market and Medicare supplement policies Pretax coverage, without violating ACA preventive services and annual cost sharing requirements Employer must provide certain notices to employees receiving HRA contribution 50

51 Things to Keep in Mind A lot can happen going forward Continued evolution of healthcare exchanges Additional Cadillac Tax clarification and guidance Uncertainty of future state of ACA 2016 government elections Regulatory requirements 51

52 Thank You!

53 Important Notice The Church Pension Group Services Corporation ( CPGSC ), doing business as the Episcopal Church Medical Trust (the Medical Trust ) maintains a series of benefit plans (the Plans ) for employees (and their dependents) of the Protestant Episcopal Church in the United States of America (hereinafter referred to as the Church ). The Medical Trust serves only ecclesiastical societies, dioceses, missionary districts, or other bodies subject to the authority of the Church. The Plans that are self-funded are funded by the Episcopal Church Clergy and Employees Benefit Trust ( ECCEBT ), a voluntary employees beneficiary association within the meaning of section 501(c)(9) of the Internal Revenue Code. This presentation contains only a partial description of the Plans intended for informational purposes only. It should be not be viewed as a contract, an offer of coverage, or investment, tax, medical, or other advice. In the event of a conflict between this information contained in this presentation and the official Plan documents (schedule of benefits, Summary Plan Description, booklet, booklet-certificate), the official Plan documents will govern. The Church Pension Fund and its affiliates, including but not limited to the Medical Trust, CPGSC, and ECCEBT (collectively, CPG ), retain the right to amend, terminate, or modify the terms of the Plans, as well as any post-retirement health subsidy, at any time, with or without notice, for any reason. The Plans are church plans within the meaning of section 3(33) of the Employee Retirement Income Security Act and section 414(e) of the Internal Revenue Code. Not all Plans are available in all areas of the United States, and not all Plans are available on both a selffunded and fully insured basis. The Plans do not cover all health care expenses, and Members should read the official Plan documents carefully to determine which benefits are covered, as well as any applicable exclusions, limitations, and procedures. CPG does not provide any health care services and therefore cannot guarantee any results or outcomes. Health care providers and vendors are independent contractors in private practice and are neither employees nor agents of CPG. The availability of any particular provider cannot be guaranteed, and provider network composition is subject to change. 53