Healthcare Reform Preparedness for Small Businesses

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1 Healthcare Reform Preparedness for Small Businesses

2 Blue KC on Wheels Community awareness initiative Health screenings Wellness information Seminars on healthcare reform, health insurance and wellness 2

3 Agenda Affordable Care Act Overview 6 Major Healthcare Reform Changes for Small Businesses What This Means for You Blue KC on Wheels Resources 3

4 Affordable Care Act Overview The law requires all U.S. citizens and legal residents to purchase health insurance or pay a penalty - Individual Mandate Approximately 300,000 people in Kansas City region are currently uninsured The Affordable Care Act (ACA) will guarantee everyone access to health insurance In addition, the ACA will provide financial assistance (subsidies) for low and moderate income families who qualify (less than or equal to 400% of the federal poverty level) The law requires all employers with 50 or more full-time employees, including full-time equivalents (FTEs), to offer a health insurance plan that is affordable and meets minimum value or pay a penalty Employer Mandate (Penalty delayed until 2015) 4

5 The Affordable Care Act 6 Major Healthcare Reform Changes for Small Businesses 1. Health Plan Design 2. Employer Mandate 3. Determining Company Size 4. Modified d Community Rating 5. New Taxes and Fees 6. Individual Health Insurance Marketplace (Exchange) and Small Business Health Options Program (SHOP) 5

6 Health Plan Design Essential Health Benefits (Individual & 1-49) All plans available on the Health Insurance Marketplace Exchange offer the same set of 10 essential health benefits and the same quality of care Ambulatory ypatient services Laboratory services Emergency services Hospitalization Maternity and newborn care Mental health and substance disorder services, including behavioral health treatment Prescription drugs Rehabilitative and habilitative services and devices Preventive and wellness services and chronic disease management Pediatric services, including oral and vision care 6

7 Health Plan Design (cont ) Out-of-Pocket Limits/Accumulators Deductibles for small employer plans cannot exceed $2,000 for individual coverage or $4,000 for family coverage (Flexibility provided to carriers to meet AV). Out of Pocket maximums must not exceed $6,350 for individual coverage or $12,700 for family coverage. All Copays (office visit/rx) count towards the Out of Pocket Max. Actuarial Value The ACA designates 4 tiers of health plans available for purchase/renewal in Each tier is defined by its actuarial value (AV) or metal level Bronze (60% AV), Silver ( 70% AV), Gold (80% AV) and Platinum (90% AV) Actuarial value is the amount of benefits the health plan pays out based on a standard population, in contrast to what the member pays in deductible, copays or coinsurance under the plan Waiting Period Limits Waiting periods for new employees cannot exceed 90 days Pre-existing Conditions Health insurance plans cannot exclude coverage for pre-existing conditions for employees, spouses or dependent children and No one can be denied. 7

8 Employer Mandate (Pay or Play Penalty) Delayed until January 1, 2015 Employers with 50 or more Full Time Equivalents (FTE s) are subject to this requirement. (FT + PT = FTE s)* Employers poye scan avoid aodthe penalty aty by offering group coverage that is: Affordable - Coverage for an employee under an employer-sponsored plan is affordable if the employee s required contribution for the least expensive available self-only coverage does not exceed 9.5% of the employee s household income for the taxable year. Box 1 W-2. Provides a minimum level of coverage to substantially all (95%)of their full-time (FT) employees and their dependents (excluding spouses) Employers with an average of 1-49 employees - FT and full-time equivalents (FTEs) - are exempt from this rule. 8 *Blue KC recommends employers consult their tax or legal advisor to answer detailed questions.

9 Employer Mandate (Pay or Play Penalty) Delayed until January 1, 2015 One of two penalties may apply ppy if at least one full-time employee receives financial assistance in the form of a subsidy on the Marketplace Exchange If a small employer does not offer coverage to substantially all of its FT employees (at least 95%) and their dependents, the employer may be subject to a payment of $2000 per FT employee per year (excluding the first 30 employees). If a small employer does offer coverage to substantially all of its FT employees (at least 95%) and their dependents (not including spouses), but the coverage doesn't meet affordability or minimum value standards, the employer may be subject to a payment of $3000 per FT employee who receives financial assistance on the Marketplace Exchange per year.

10 Determining Company Size Group size classifications drive applicability and definitions of provisions in the ACA Market Reform Compliance Groups with 1-50 total employees (FT or PT) Coverage of Essential Health Benefits, Actuarial Values, Modified Community Ratings, (3:1) Groups with 51 or more employees (FT or PT) NOT subject to Market Reform laws until 2016 Employer Mandate / Pay or Play Penalty Groups with 1-49 FT employees, including FTEs, are exempt from this ACA provision Groups with 50 or more FT employees including FTEs, are subject to this ACA provision 10 Blue KC recommends employers consult their tax or legal advisor to answer detailed questions.

11 Determining Company Size Step 1 1 Determine Full-Time Employees: Calculate the number of employees who work at least 30 hours/week or 130 hours in a given month Step 2 1 Determine Full-Time Equivalents: Add up the total hours worked during a given month for every non full-time employee and divide by 120 Step 3 Add together the results of Steps 1 and 2 1 Remember to include actual hours worked and paid time off for FT and FTE calculations. Step 4 Repeat steps 1, 2 and 3 for EVERY month of the preceding calendar year Add up the total for the year Step 5 Divide the total for the year from Step 4by12 12, & round down If the result is 50 or greater, your company is a large employer for purposes of the Employer/Pay or Play Mandate Seasonal exception: if your company exceeds the threshold of 50 employees for 120 days or less during the calendar year solely due to seasonal employees, your company is not a large employer for purposes of this rule. 11 Blue KC recommends employers consult their tax or legal advisor to answer detailed questions.

12 Modified Community Rating Beginning g in 2014, a new formula called Modified Community Rating (MCR) will be used to set premiums Under MCR, all members pay the same premium regardless of their personal health no underwriting. Rates can be adjusted only on the basis of family size, location, tobacco use and age TOBACCO USE FAMILY SIZE 12

13 New Taxes and Fees Beginning g in 2014, several new taxes and fees will apply to small employer health plan coverage HealthInsuranceExciseTax Comparative Effectiveness Fee Reinsurer Fee Your insurance carrier is responsible for paying these fees 13

14 SHOP Marketplace Exchange Small Business Health Options Program (SHOP) Exchange is an online way for small employers, 1-50, to purchase health insurance Small employers may start offering health insurance coverage to their employees through the SHOP at any time during the year Open Enrollment for the SHOP began October 1, 2013 for coverage starting January 1, 2014 Beginning i in 2014, some small employers may be eligible ibl to receive a premium tax credit (only if they purchase coverage through the SHOP) 14 * Full time employees, generally are those working an average of 30 or more hours per week

15 What Does This Mean for You?

16 If you re covered under a Small Employer s Group Plan today You re coverage is likely to be more comprehensive EHB s, No lifetime limits, Accumulators ACA changes may mean increased premiums for many employer groups MCR, No Pre-X, EHB s, No Lifetime limits, Accumulators Everyone in the group will have rates based on age. Age Bands (effective dates of January 1, 2014 and later) Newborn - 20 years: all the same rate years: all the same rate years: different rate for each age (varies by 0.5% - 2% increases) 65+ years: all the same rate Family Rating Each family member 21 years of age and older is rated separately. Children Newborn-20 are also rated separately for the first three children in a family. If more than three children 20 and under are covered under a family policy, no additional rate increments are added after the third child. 16

17 If you have Individual Coverage today Your plan will include broader benefits, unless you have a grandfathered d plan (same plan - effective before March 23, 2010) If you are young and healthy, your rates may be higher than existing market rates If you are older and/or have existing medical conditions, your rates may be lower than existing market rates Financial i Assistance (subsidies) may be available if you have a low or moderate income $45,960 - $94,200 (for a family of 4)* 17 * Income based on the 2013 federal poverty level. for advocates/guides/federal poverty guidelines.html

18 Financial Assistance Get an estimate of the financial assistance you may qualify for at KCHealthcareReform.orgorg 18

19 ACA Guide for Small Employers KCHealthcareReform.org 19

20 Blue KC on Wheels For the most up to date schedule, KCHealthcareReform.org (Scroll down to the bottom of the page and click on Blue KC on Wheels) 20

21 Resources Review the I.R.S. s Affordable Care Act Tax Provisions for employers at IRS.gov/uac/Affordable-Care-Act-Tax-Provisions-for-Employers Act for Find more information about the Affordable Care Act at KCHealthcareReform.org To learn more about Blue KC health insurance options contact Mike Daleo at

22 Thank You 22