Size Matters. How different size employer groups might adjust under the Affordable Care Act (ACA) 04/24/15

Transcription

1 Size Matters How different size employer groups might adjust under the Affordable Care Act (ACA) 04/24/15

2 Agenda FTE (Full Time Equivalent) Individual coverage What is a large group? Who says? Pay or Play FTEs Size Matters group size influences: Sizes 1-100, 2-50, 2-25, 2-9 Self-funding W Main St, Lewisville, TX or

3 Enrollment issues CMS Enterprise Portal Health Insurance Marketplace Certification Setting up a user account at Getting set up with the carriers Three way calls with you, HealthCare.gov and the applicant Subsidized apps not working for brokers paper apps?

4 Medicaid Expansion, Medicare Reductions Medicare reimbursement levels will go down between 1-3% for hospital readmissions within 30 days Medicaid reimbursement went to Medicare reimbursement levels starting The Arkansas Approach Arkansas is taking their Federal funds to expand Medicaid and enrolling this population into ACA compliant health insurance plans

5 Some of the ACA Delays Pay or Play moves to 2015 Employer penalties delayed to 2015 Reporting will not be mandatory until 2015 SHOP Small Business Health Options Program Was to be a multiple carrier choice Now one carrier choice per employer in 2014 In Texas, you get BCBSTX or BCBSTX as your option Self-reporting to the IRS about status of your QHP in 2014 IRS may still audit You must still prove you had coverage

6 People should know the ACA is still in place On January 1, 2014, every American is required by law to own a QHP with the EHBs or they will be penalized. If they cannot afford it, they will be subsidized. Subsidies are based on the 70% Actuarial Value Plan a.k.a. The Silver Plan CSR Cost Sharing Reduction applies at <250% FPL Must own a 70% AV plan to qualify for CSR

7 What is a FTE = Full Time Equivalent? Can we all just quit counting and worrying about FTEs for a year? The generally accepted HR meaning for the "E" in FTE is "equivalent FTE is often used to indicate a direct, as opposed to contract, fulltime employee Example: Jane is a regular employee, a Full Time Equivalent, W2 wage earner Ralph works only under contract (1099) The term WYE (Work Year Equivalent) is often used instead of FTE when describing the contractor work

8 FTE U.S. federal government, FTE is defined by the GAO as: # of total hours worked divided by the maximum # of compensable hours in a full-time schedule as defined by law For example: The normal schedule for a quarter is defined as hours 35 hours per week (52 weeks per year - 5 weeks regulatory vacation) divided by 4 Someone working 100 hours during that quarter represents 100/ = 0.24 FTE 2 employees working in total 400 hours during that same quarterly period represent 0.97 FTE

9 So what constitutes an individual? Could be several unique situations to consider: Sole proprietor A dependent child or spouse An employee that is not offered an affordable QHP How about a retiree not yet age 65?

10 Individual or family coverage Individual mandate The IRS will monitor compliance with the individual mandate through selfcertification on each individual s tax return starting in Health insurance exchanges 2016 OEP is scheduled to begin on , for all state-based, partnership and federally facilitated marketplaces.

11 What is a Large Group Depends on who you ask Aetna 2-10 is small group, 101-3,000 is mid-market and 3,000 or more is public and labor BCBSTX is small group, with 2-50 being regulated and being non-regulated is mid-market is Nat l Accts CIGNA 51 + Humana - UHC is small group, 101+ is large group

12 50+ life groups Will be subject to pay or play in 2016, not 2014 as originally proposed W-2 reporting requirements Still apply for employers that issue more than 250 W-2s. Reporting by: employers and health insurers regarding: employer-sponsored coverage relative to the individual mandate pay-or-play reporting mandatory in 2015

13 Pay or Play delayed until 2015 "Pay or Play" won't go away Now that the administration has postponed the implementation, they have 12 more months to strengthen their resolve, plug all the loopholes and prepare for more stringent enforcement in The individual mandate to have coverage in 2014 or pay a tax penalty is still in place

14 SHOP Small Business Health Options Program Designed for groups of FTEs Intended to offer multiple carriers to one employer group Example: Employee 1 chooses an Aetna plan Employee 2 chooses a Cigna plan Employee 3 chooses a UNC plan The choice part of SHOP has been delayed until 2015 Example: Employees 1, 2 and 3 all have a BCBSTX plan

15 1-100 life groups The ACA defines a small group as Is 1 life a group? But in Texas, we are still 2-50 SB 1322 preserved the 2-50 size definition of FTEs Maintains compliance with the ACA Expires in 2016?

16 2-50 life groups Texas HB 2055 & Texas HB 369 For 2-50 size employers in Texas, nothing has changed Texas SB 1322 Businesses with fewer than 50 FTE employees will still have access to the SHOP Exchanges Approximately 55% of 2-50 size groups in Texas do not offer health insurance today

17 2-25 life groups Health Insurance Tax Credits (HITCs) apply 1-9 lives = 50% in lives = shrinking tax credit HITCs present a great opportunity to work with local CPAs to help their clients qualify How do you know if an employer group qualifies?

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19 The Small Business Health Care Tax Credit

20 Enter info on the employer

21 Enter info about the group health plan

22 Results

23 To claim the credit IRS Form 8941

24 2-9 life groups Your traditional Ma and Pa market Your bread and butter You are their HR department How do we maximize this demographic? BCBSTX has 36,000 groups between 2-50 lives Average case size is 9 lives

25 Case Example of a 2-25 size group 1976 started group with one employee Grew and grew Now has 18 FTEs The two owners ( Ma and Pa ) are now ages 65 and 72 Max rated due to pre-ex How much does it help to have 65+ year olds on the plan? Recommend the owners take Medicare? Will they qualify for HITCs?

26 Self-funded plans Could be as small as 5 FTEs in today s world New health insurance premium tax does not apply to self funded plans immediate 3% savings over fully insured plans Employers have more say in the design of their health plan to fit to fit their specific group health insurance needs Improves cash flow Eliminates carrier profits and risk charges

27 Self funded plans ERISA preemption of state action ACA does not subject self insured plans to state jurisdiction, eliminating many state mandates in the process Specific stop loss Separate deductible for any individual Aggregate stop loss Protects against an excessive amount of claims expenditures for the entire plan

28 Comparison of fully insured vs. self funded Company A Fully insured, $1,500,000 total premium $1,000,000 in claims = $500,000 profit for carrier Company B Self insured Worst case scenario is $1,650,000 exposure Pays $240,000 in projected costs Reserves $1,360,000 in potential claims If claims are at $1,000,000, Company B keeps the $360,000 remaining in reserve Saves $260,000

29 Questions & comments Please complete the sign in sheet and complete your Evaluation Form. We will update your continuing education credit of one hour within a few days. No Certificate of Completion will be distributed.

30 Reality Check! Nearly two-thirds of U.S. households earn less than 400% of the federal poverty level, the cutoff point for the subsidies

31 Chronic conditions are costly 1% of the people battling multiple chronic conditions account for 21% of the $1.3T total health care expenses, at an average of $88,000 per person 5% accounted for 50% of the total The bottom 50% = 2.8% of the total