Behind the Health Insurance Benefit Card and the Affordable Care Act (ACA) What is the Impact on Fire Fighter Health Care Plans
Insurance Card Focused
Defini@ons Allowable Charge Usual and Customary, Reasonable, Maximum Allowable Balance Billing Amount you could be responsible for aier deduc@bles, co- pays, and coinsurance If you use out of network providers Benefits Level Maximum amount insurance will pay Claim Bill for medical services submined to an insurance company
Defini@ons Co Insurance Amount you pay aier you have sa@sfied deduc@ble and copay Co Payment A specific cost required to pay at doctors visit, prescrip@on drug, or medical device Cost Sharing Copays, Coinsurance and Deduc@bles Contribu@ons Premiums in a self insured arrangement
Defini@ons Deduc@ble Payment required before insurance kicks in, HMO s do not usually include, Indemnity Plans and Point of Service Plans do Open Enrollment Period of @me to make changes to your coverage Qualifying Event Marriage, birth, death or termina@on U@liza@on How frequently a group uses it health insurance
The Alphabet Soup of Health Insurance EOB Explana@on of Benefits COB Coordina@on of Benefits OTC Over the Counter PCP Primary Care Physician POS Point of Service FFS Fee for Service ASA Administra@ve Services Agreement HMO Health Maintenance Organiza@on HSA Health Savings Account HRA Health Reimbursement Account MSA Medical Savings Account EPO Exclusive Provider Organiza@on PPO Preferred Provider Organiza@on IPA Individual Prac@ce Associa@on
Extra Credit ERISA The Alphabet Soup of Health Insurance Employee Re@rement Income Security Act of 1974 COBRA Consolidated Omnibus Budget Reconcilia@on Act of 1985 IBNR Incurred But Not Reported
Glossary
Defini@ons: Healthcare Payers One way to dis<nguish health plans is to iden<fy Who carries the risk: Fully- Insured Plans Tradi@onal - insurance companies assume the risk Administered and controlled by insurers which collect premiums and pay out claims For Profit or Not for Profit Self- funded plans Municipal self- insured Employer takes the place of the insurer by paying any medical claims filed by employees Assuming some of the Risk Self- administered plans Union Sponsored self- insured plans, the union receives a finite sum of money from the employer and the union itself bears the risk of paying for its members claims Third- party administrator (TPA) Claims administra@on and processing, but the employer or union assumes the risk of paying on claims
Defini@ons: Tax Status VEBA Voluntary Employees' Beneficiary Associa<on Internal Revenue Code 501(c)(9) Associa@on organized to pay life, sick, accident, or similar benefits to members or their dependents. Voluntary associa@on of employees Provide for payment of life, sick, accident or other similar benefits to members or their dependents or designated beneficiaries and substan@ally all of its opera@ons are for this purpose Earnings may not inure to the benefit of any private individual or shareholder other than through the payment of benefits Consists of individuals with an employment- related common bond such as a common employer, coverage under one or more CBAs, or membership in a labor union.
Addi@onal Defini@ons Stop- loss Insurance that takes effect aier a certain amount has been paid out in claims. Self- insured health plans oien buy such policies to protect against catastrophic claims. Intergovernmental risk pools (IRPs) Are made up of public en@@es Form a Risk Pool, which can provide protec@on to the individual agencies against catastrophic risks. Mul<- Employer Plan Maintained for more than one employer
Defini@ons: Affordable Care Act Pa<ent Protec<on and Affordable Care Act PPACA, or ACA, or Obama Care Passed into law in 2010 intended to reform healthcare and the health insurance system. ACA Requires Employer Mandate 50+ FTEs (Full Time Employees) to offer health insurance to its workers Public and Private Sectors Individual Mandate Individuals not covered by an employer or a government insurance program must provide their own health insurance Most controversial provision of the ACA
Defini@ons: Affordable Care Act The ACA also requires: Insurers to spend a certain percentage of the revenue they receive from premiums on healthcare services. This figure is oien called the medical loss ra<o, and the minimum is 80% in the individual and small group market and 85% in the large group market. Guaranteed issue this provision restricts the way insurance companies can price the policies they sell, including prohibi@ng the denial of coverage for pre- exis@ng condi@ons, and allowing the underwri@ng of customers based on community ra@ng and age.
Defini@ons: Affordable Care Act Essen<al Health Benefits (EHB) Ambulatory services Emergency Care Hospitaliza@on Maternity & Newborn Care Prescrip@on Drugs Mental Health Substance Abuse Services Rehabilita@ve Services Devices Labs Chronic Disease Management Oral & Vision care for children Non- grandfathered fully insured plans 1/1/14 Required EHB s in all small group market No other plans are required to provide EHBs.
Find more useful defini@ons at: www.healthcare.gov/glossary/
THE AFFORDABLE CARE ACT Impact on IAFF Members
Types of Plans Fully- insured (tradi@onal plans): Aetna, Blue Cross/Blue Shield, etc. Self- funded (local government- run plan) Self- administered (union- run plan) Exchanges
Exchanges Also known as Health Insurance Marketplaces Internet shopping for health insurance Different levels of coverage offered to uninsured Ø Bronze- 60/40; Silver- 70/30; Gold- 80/20; Pla@num- 90/10 Ø Catastrophic - under 30, high- deduc@ble Ø All must have EHBs (defined state- by- state) Ø Plans sold on Exchange must be cer@fied
Exchanges 3 Types of Exchanges Ø 27 states with federally- facilitated Exchanges Ø 16 states and the District of Columbia with state Exchanges Ø 7 states with federal partnership Exchanges between the state and federal governments
Exchanges Premium Assistance Tax Credits Ø Federal subsidies available to individuals with household income 100-400% of Federal Poverty Line (phased out as household income increases) Ø Only available for individual market coverage on the Exchange; Obama administra@on said in September 2013 that TaI- Hartley funds will not be eligible for subsidies Ø Required personal contribu@on to premiums can be substan@al even with subsidy Ø Individuals will pay a max of between 2% and 9.5% of household income based on cost of silver coverage (70/30)
Impact on Benefits 1 Loss of Grandfathered Status Occurs When Plan: Ø Eliminates all (or substan@ally all) benefits to diagnose or treat a par@cular condi@on Ø Increases a percentage cost- sharing requirement above the level at which it was set on March 23, 2010 Ø Increases a fixed- amount cost- sharing requirement* Ø Increases a fixed- amount copayment for any service* Ø Decreases employer contribu@on rate by more than 5% below the contribu@on rate for March 23, 2010 There is no expira'on date for grandfathered status
Impact on Benefits 2 Preven@ve care at 100% Emergency room treatment out- of- network same as in- network Coverage for children under age 26 New appeals process No life@me dollar limits (stop- loss coverage) No annual dollar limits on EHBs No preexis@ng condi@on exclusion
Impact on Benefits 3 Women s preventa@ve services added to preven@ve care benefits Wai@ng periods not longer than 90 days Cannot discriminate against providers New Summary of Benefits and Coverage (SBC) Document No retroac@ve material plan changes (60- day no@ce required)
Impact on plan cost Premiums Pa@ent- Centered Outcomes Research Ins@tute (PCORI) Fees o For plan year ending in 2013, PCORI fee is $1 x average number of covered lives o For future plan years, fee is $2 x average number of covered lives o Fee adjusted annually for plan years ending aier September 30, 2014
Impact on plan cost: Reinsurance Transi<onal Reinsurance Program requires contribu<ons in years 2014-2016 Ø Fee designed to stabilize premiums for high- risk individuals in individual market on Exchanges for 3 years Ø Under final rules, in 2014 Fee is $5.25/month ($63/ year) for each covered life Ø Fees applies to group health plans including MEPs Ø Calculated based on average number of covered lives, including dependents (children under age 26) Ø Excludes re@rees enrolled in Medicare Ø Should calculate cost impact of all ACA- imposed fees
Impact on plan cost: HIT Health Insurance Tax (HIT) Ø Star@ng in 2014, ACA imposes an HIT on the fully- insured market (includes medical, dental and vision) Ø $8 billion in 2014, $11 billion in 2015-2016, $13.9 billion in 2017, and $14.3 billion in 2018 Ø HIT obliga@on is divided among insures according to a formula based on each insurer s net premiums Ø Businesses and benefit funds that drop coverage or switch from fully- insured to self- insured increase HIT obliga@on to those remaining fully- insured Ø A cascading tax: premiums will increase to pay HIT; new tax assessed on increased premiums
Impact on plan cost: clinical trials Clinical Trial Coverage Plan must cover rou@ne pa@ent costs when the pa@ent is in an approved trial for life- threatening condi@on Rou@ne pa@ent costs include costs typically covered under the plan for a par@cipant who is not enrolled in a clinical trail (e.g. lab services) but they do not include the cost of the trial itself Plans should be revised to affirm compliance with this requirement
Impact on plan cost: OOP max Annual Limita<ons on Out- Of- Pocket Maximums Plans may NOT impose an annual out- of- pocket on EHBs in excess of a max ($6350 for an individual and $12,700 for a family in 2014) All in- network pa@ent costs sharing deduc@bles, co- pays, and coinsurance on EHBs must be subject to one integrated out- of pocket Dollar amount is subject to change each year based on a medical COLA This applies to medical, dental, and vision; in 2015, Rx drugs will be included
Impact plan cost: Cadillac tax Star<ng in 2018, there is a 40% excise tax on value of health insurance benefits exceeding threshold Ø Es@mated threshold is $10,200 for self- only coverage and $27,500 for family coverage; thresholds may be higher based on actual medical infla@on between 2010 and 2018 Ø MEPs considered only at $27,500 level Ø Threshold adjusted upwards for re@rees and plans with a majority of employees in high- risk professions (including construc@on) and may also be increased on age and gender Ø Plan administrator responsible for tax for self- insured plans; insurer responsible in case of fully- insured plans
Re@ree Healthcare: Vested? While pension benefits are generally vested for employees at a certain point, health and welfare benefits for re@rees are generally not An employer may contract with employees or a union to provide vested health benefits Burden of proof is on re@rees to show ves@ng of re@ree health benefits was intended If this burden is not carried, plan sponsors may be able to terminate re@ree health benefits
Re@ree Healthcare: Adverse Selec@on Older popula@on Sicker, injury associated with higher medical costs Higher Rx use Easy target to get rid of costs to plans
Re@ree Healthcare: Tax Penalty Where Does This Leave Re<rees? Re@rees are s@ll individuals subject to the individual mandate to maintain minimum essen@al coverage 2014: Greater of $95 per person up to three @mes that amount per family or 1% of household income 2015: Greater of $325 per person up to three @mes that amount per family or 2% of household income 2016: Greater of $695 per person up to three @mes that amount per family or 2.5% of household income
Re@ree Healthcare: Dangers Expecta<ons for re<rees in the future Higher costs Reduced Benefits Elimina@ons of Coverage
Re@ree Healthcare: Changes ACA effects on re<rees Re@rees enrolled in Medicare meet the minimum essen@al coverage requirement Re@rees under 65 have previously relied on employer or union coverage for early re@rees or had to purchase coverage on the individual market if available ACA changes could provide early re@rees with more op@ons to purchase individual insurance, but could cause fewer employers and funds to offer early re@ree health coverage
Re@ree Healthcare: Op@ons Savings plan for new hires (HSA, HRA) 403(a) plans, 403(b) annui@es and 457(b) deferred compensa@on plans (HELPS $3000 per year) Exchange in your state might be a viable op@on (but not all re@rees will qualify for subsidies) Medicare Advantage plans Re@ree- only plans
More ACA Requirements Summary of Benefits and Coverage (SBC) Ø Under healthcare reform, health insurers and self- funded employers must provide a uniform SBC to people who apply for and enroll in health plans Ø 4- page overview of plan benefits, cost sharing and limita@ons Ø Required set of examples of how the plan works Ø Phone number and internet address for obtaining copies of plan documents A standard glossary of medical and insurance terms must also be available The penalty for "willful" non- compliance is $1000 for each plan enrollee hnp://www.cms.gov/cciio/resources/forms- Reports- and- Other- Resources/Downloads/sample- completed- sbc- accessible.pdf
Other Legal Changes 1 HIPPA Omnibus final rules issued earlier this year made some noteworthy changes to HIPAA requirements An expanded defini@on of Business Associate that may require trust to enter into addi@onal Business Associate Agreements (BAAs) A requirement that a Business Associate enter into wrinen agreement with its subcontractors commivng them to safeguard Protected Health Informa@on (PHI) A revised defini@on of Breach to include a documented, mul@- factored risk assessment on whether there is a low probability that the PHI has been compromised
Other Legal Changes 2 COBRA Elec<on No<ces Ø Group health plans are required to provide a par@cipant a COBRA elec@on no@ce no more than 14 days aier receiving no@ce of a qualifying event that will cause a loss of plan coverage Ø Model no@ce is available on the DOL website www.dol.gov/ebsa/ modelelec@onno@ceredline.doc.
Misc. Topics Addi<onal background and effects of ACA IAFF fought to preserve tax exclusion for employer- sponsored health insurance Private exchanges employer offers products from mul@ple insurance companies EMS more people covered; new penal@es for preventable re- admissions; 2.3% medical device tax IAFF affiliates should consider a benefits audit
Resources Obama Care Survival Guide (Nick Tate) www.ifebp.org www.healthcare.gov www.dol.gov www.cms.gov
IAFF Resources hnp://www.iaff.org/healthcare/
Ques@ons
Health Care Next Steps for the Ci@es and Towns
Government Finance Officers Associa@on Partnership with Colonial Life Paper found here www.hnp://gfoa.org/ downloads/ GFOAContainingHealthC arecosts.pdf
Introduc@on (page 1) Health insurance premiums Between 1999 and 2010 Cumula@vely have grown 138% Salary over the same period only 42% They predict costs to con@nue to grow Average Health Care Trend up to 8.5% in 2011, up from 8% in 2010 Reason for trend increases Expensive medical technology and an aging popula@on Decreased Compe@@on Cost ShiIing Medicare and Medicaid to Private Insurers
Leverage Points Change the level of the benefit provided. Modify how many and what type of benefits the plan provides and who they provide them to. Manage par<cipants choice of providers. Direct or even limit health plan par@cipants choices to lower cost providers. Share cost with employees. Structure the health plan so that employees bear part of the burden of benefit costs. Reduce use of health care services by employees. Address the economic incen@ves and actual need for health care services. Right- source health benefit services. Use the right combina@on of outsourced service providers and providers within a network to deliver health benefits. Maximize the value received for the health care dollar. Rather than just minimizing costs, consider the benefit received per dollar spent on health benefits.
The ROI All- Stars Onsite Clinic Visits Variable Premium Contribu@ons High Deduc@ble Health Plan and Health Savings Account Wellness Programs Self- Insurance Coopera@ve Purchasing Value Based Disease Management
High Deduc@ble Insurance Plans Are there any savings when you fund the deduc<ble?
Consumer Driven Health Care HSA= Health Savings Account FSA = Flexible Savings Account HRA = Health Reimbursement Account CDHP = Consumer Driven Health Plan HDHP = High Deduc@ble Health Plan
Consumer Driven Health Care
High Deduc@ble Health Plan $5,000 per year deduc@ble Employer Supplies Credit Card Credit Card used for the $5,000 End of Year Employer keeps the balance No Networks No Coinsurance Plan pays 100% aier deduc@ble
IAFF Local Family Plan $45,000.00 $40,000.00 $35,000.00 $30,000.00 $25,000.00 $20,000.00 $15,000.00 $10,000.00 $5,000.00 $- 2011 2012 2013 2014 POS 3T 5K Ded PPO
IAFF Local Family Plan with Deductable $45,000.00 $40,000.00 $35,000.00 $30,000.00 $25,000.00 $20,000.00 $15,000.00 $10,000.00 $5,000.00 $- 2011 2012 2013 2014 POS 3T HDIP + 5k
$35,000.00 IAFF LocaI Family Plan w/ded. & % Change 30.00% $30,000.00 20.00% $25,000.00 10.00% $20,000.00 0.00% $15,000.00-10.00% $10,000.00-20.00% $5,000.00-30.00% $- 1 2 3 4-40.00% HDIP + 5k Percentage
High Deduc@ble Health Plan High deduc@ble meant to lower u@liza@on Removes employee skin in the game Could prove more costly years down the rode Consumer driven product removes the decision for the consumer Removes incen@ves meant to alter behavior thus lower costs Creates a Fee for Service Indemnity Plan
Ques@ons