Healthcare Reform Update. as of February 15, 2013

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1 Healthcare Reform Update as of February 15, 2013

2 March 23, 2010: Patient Protection and Affordable Care Act (PPACA aka ACA) signed into law Underlying goals of PPACA: Expand access to healthcare Make healthcare more affordable Improve the quality of care Promote preventive care and wellness Increase transparency Shift the burden of rising healthcare costs away from the consumer

3 We need everyone in the insurance pool!

4 2010 thru 2012: PPACA Provisions - already implemented Dependent children covered to age 26 under parents plan No pre-ex for children Restrictions on annual/lifetime limits Small business tax credit Medical loss ratio requirements Grandfathered plan requirements (allows a plan to be exempt from certain PPACA regulations until 2014 such as no charge preventive visits) Summary of Benefits & Coverage (SBC) requirement for all plan years beginning after 9/23/12

5 2013: PPACA Provisions being implemented this year Flexible Spending Account (FSA) contributions capped at $2,500 W2 Reporting on total cost of health insurance. Currently only required for employer s who issue more than 250 W2 s. Comparative effectiveness research funding tax Exchange notification requirement for all employers (originally due by 3/1/13; now delayed until fall of 2013)

6 2014: PPACA Provisions Individual Mandate & Penalties Health Insurance Exchange with tax credits/subsidies for individuals & families with incomes up to 400% of FPL Medicaid eligibility expansion Insurance market reforms: Guaranteed issue, 3 to 1 age banding, no more gender based rating New coverage standards - Essential Health Benefits (EHB) Employer responsibility/minimum value (MV) requirements for groups with more than 50 Full Time Equivalent (FTE) employees National premium tax on fully insured plans

7 Access Health CT Connecticut s Health Insurance Exchange Open enrollment begins October 1, 2013 for a January 1, 2014 effective date Exchange portal will take individuals basic information, pull info from other government agencies, & provide the individual s medical plan cost & options; including tax credit or Medicaid eligibility Individuals are eligible for a tax credit if: Their household income is below 400% of the FPL and they do not have an offer of affordable, minimum value coverage from their employer. SHOP Exchange for small employers, no tax credits available

8 Large Employers 50 or more Full Time Equivalents (FTE) New definition of Full Time (FT) is 30 hours/week Part Time employee s count on a pro-rata basis to determine size, but do not need to be offered coverage IRS Controlled Group Rules apply Must offer FT employee s affordable (9.5% of employee s household income [safe harbor: can use EE s W2 income and single rate for lowest tier plan]) and minimum value (60% actuarial value) coverage or penalties apply Mandatory IRS reporting due in 2015 on details of health plan offered and costs associated with it. More regulations to follow on this

9 START Does the employer offer coverage to all full-time employees? Endnote B Employer Pay or Play Flowchart for 2014 Yes Yes Does the employer have at least 50 full-time employees? Endnote A No Did at least one full-time employee receive a premium tax credit or cost-sharing subsidy through an Exchange? Endnote C No No Yes No Penalty Applies A Penalty Applies The penalty is $2,000 annually times the number of full-time employees minus 30. Endnote D Affordability Test Is the employee s required premium contribution for single coverage for the employer s lowest cost plan 9.5% or less of the employee s household income? Endnote E Yes Minimum Value Test Does the employer-sponsored plan provide minimum value? Endnote H No No Exchange Subsidy Do any employees purchase coverage in an Exchange and receive premium tax credit or cost-sharing subsidy? Endnote F Yes No A Penalty Applies The penalty is the lesser of $3,000 times the number of full-time employees receiving premium tax credits, or $2,000 times the number of full-time employee minus 30. Endnote G Yes No Penalty Applies Note: Penalties are not tax deductible to Employer No Penalty Applies

10 Financial Calculators There are a number of online calculators that can tabulate potential penalties and individual exchange tax credits. NRF maintains a Health Mandate Cost Calculator at which can model the penalty effect on your business The Kaiser Family Foundation maintains the most accurate subsidy calculator available, although it has its limitations

11 Beyond 2014: PPACA Provisions Automatic enrollment for groups over 200 (effective date unclear, but most likely 2015 January 1, 2016: Small Group market definition become : Cadillac Tax on all high value group health plans

12 Thoughts & Comments Consumers need the ability to comparison shop for health services like we do other services. This begins with the cost of healthcare being more transparent. Fee for service have proven unsuccessful at holding down healthcare costs. Health insurance carriers are developing programs/systems with the provider community to direct members to providers who deliver good outcomes at affordable cost.

13 For more information contact 30 Mill Street, Unionville, CT North Main Street Extension, Wallingford, CT