Affordable Care Act In Focus: Provisions Impacting Employer-Sponsored Health Coverage Through 2020 While many employers are wondering if self-funding is the right solution for their business, a number of factors must be weighed in making this decision. The Affordable Care Act introduced a number of new requirements for employer-sponsored health benefits, which are provided in the chart below. The chart also highlights the differences in how fully insured and self-funded health plans are impacted by these provisions. Provision Effective Date Description 2020 Cadillac tax Delayed until 2020 ACA imposes a 40 percent excise tax on the cost of coverage exceeding $10,200 for single coverage and $27,500 for family coverage. 2017 Cost sharing 2017 plan year In-network OOP maximum cannot exceed $7,150 for self-only coverage and $14,300 for family coverage. Health Insurance Provider Fee There is a one year moratorium in 2017 on this annual Fee collected from health insurers. Estimated to increase premiums in the insured market on average by 1.9% to 2.3% in and, by 2023, to increase premiums 2.8% to 3.7% 1. No. This fee will not be assessed against self-funded plans. *, ** Cost sharing Plan Year In-network OOP maximum may not exceed $6,850 for self-only coverage and $13,700 for family coverage. Employer mandate * Applies to employers with 50 or more full-time employees (FTEs) and equivalents. An employer with 50 or more full-time equivalent employees may be subject to a financial penalty 2 if it either does not provide minimum essential coverage to its employees, or if that coverage is unaffordable 3 or does not provide minimum value. Plans will meet minimum value if they cover 60 percent of allowed costs in and both inpatient hospital and physician services. Essential Health Benefits Package * coverage in the individual and small group markets (on and off the exchanges) must: Provide essential health benefits Cost-share no longer tied to qualified high deductible plan. Meet certain actuarial value 5 requirements. Self-funded employers are not required to provide essential health benefits or meet certain actuarial value requirements but are subject to out-ofpocket limits. If self-funded plans include essential health benefits, including habilitative services, then no annual or lifetime dollar maximums may be applied. 1
Continued Habilitative Services HHS adopted a uniform definition of habilitative services (an Essential Health Benefit) for when the state-selected benchmark plan does not include these services and the state has not enacted its own definition. Healthcare services that help a person keep, learn or improve skills and functioning for daily living. Examples include therapy for a child who is not walking or talking at the expected age. These services may include physical and occupational therapy, speech-language pathology and other services for people with disabilities in a variety of inpatient and/or outpatient settings. Self-funded employers are not required to provide essential health benefits or meet certain actuarial value requirements but are subject to out-of-pocket limits. If self-funded plans include essential health benefits, including habilitative services, then no annual or lifetime dollar maximums may be applied. Re Assessment Fee * Funds a three-year re program for carriers in the individual health market. $27.00 average covered life annually Amount subject to change thereafter. Reporting requirements * for the 2015 coverage period Regulations implementing minimum essential coverage reporting for Section 6055 and 6056 of the Internal Revenue Code require certain employers to provide detailed information about their health plan coverage and enrollees. year. $2.17 per average number of covered lives for plan years ending between October 1, 2015 and December 31, 2015. Filing date: July 31, $2.17 per average number of covered lives for plan years between January 1,, and September 30,. Filing date: July 31, 2017 The fee is based on increases in the projected per capita amount of the National Health Expenditures. The fee will not apply to policy or plan years that begin after Sept. 30, 2019., the, the plan sponsor pays 2
2015 *, ** Cost sharing Plan years on or after Jan. 1, 2015. In-network OOP maximum for essential health benefits may not exceed $6,600 for self-only coverage and $13,200 for family coverage. Employer mandate * 2015 Applies to employers with 100 or more FTEs and equivalents. Those groups with 50 FTEs and equivalents are exempt in 2015 provided they meet certain criteria. An employer with 50 or more full-time equivalent employees may be subject to a financial penalty 2 if it either does not provide minimum essential coverage to its employees, or if that coverage is unaffordable 3 or does not provide minimum value. Plans will meet minimum value if they cover 60 percent of allowed costs in 2015 and both inpatient hospital and physician services. Essential Health Benefits Package * coverage in the individual and small group markets (on and off the exchanges) must: Provide essential health benefits Deductibles were eliminated Cost-share no longer tied to qualified high deductible plan. Self-funded employers are not required to provide essential health benefits or meet certain actuarial value requirements but are subject to out-of-pocket limits. Meet certain actuarial value 5 requirements. Health Plan As of Oct. 31, Identifier (HPID) *, enforcement of the HPID regulations is delayed until further notice. Small health plans, those with annual receipts of $5 million or less, must obtain a HPID by Nov. 5, 2015. As of Oct. 31,, enforcement of the HPID regulations is delayed until further notice. Health plans, including small health plans, must obtain a HPID for use in HIPAA standard transactions if the health plan is identified in the HIPAA standard transaction, effective Nov. 7,. (Applies to Insurers) Re Assessment Fee * Funds a three-year re program for carriers in the individual health market. $44.00 per year for 2015 Amount subject to change thereafter. year. $2.08 per average number of covered lives for plan years ending between Jan. 1, 2015 and September 30, 2015. The fee is based on increases in the projected per capita amount of the National Health Expenditures. The fee will not apply to policy or plan years that begin after Sept. 30, 2019. Filing date: July 31,., the, the plan sponsor pays 3
90-Day Waiting Period Limit Plans may not impose a waiting period of more than 90 days. Cost-Share Subsidy Sliding-scale financial assistance made available for certain individuals who make less than 251% of the federal poverty level and who purchase coverage on an exchange and meet certain other qualifications. Exchange coverage only No. Note: 250% of the FPL for a single-person household in was $29,175. Cost sharing ** In-network out-of-pocket maximums may not exceed the limits of $6,350 for self-only coverage and $12,700 for family for. Plan years on or after Jan. 1,. In addition, all member in-network costsharing, such as copayments, co and deductibles, must apply to the out-of-pocket maximum. Special rules apply for the plan year if the plan uses more than one service provider to administer benefits (such as pharmacy benefits manager for pharmacy benefits and a TPA for other medical benefits). Coverage Sold Through Exchanges Open enrollment for individual and small group coverage on the exchanges begins on Oct. 1, 2013. Carriers may offer qualified health plans in the individual and small group markets through exchanges. Exchanges may be operated by the federal government, by a state or in a state-federalgovernment partnership. No Employer Mandate * Penalties delayed until 2015 An employer with 50 or more full-time equivalent employees may be subject to a financial penalty 2 if it either does not provide minimal essential coverage to its employees, or if that coverage it does provide is unaffordable 3 or does not provide minimum value 4. Essential Health Benefits Package * coverage in the individual and small group markets (on and off the exchanges) must: Provide essential health benefits Cost-sharing limits apply to qualified highdeductible health plans (except small group plans may not have deductibles greater than $2,000 for individuals or $4,000 for family coverage); and Self-funded employers are not required to provide essential health benefits or meet certain actuarial value requirements but are subject to out-of-pocket limits. Meet certain actuarial value 5 requirements. 4
Continued Health Plan As of Oct. 31, Identifier (HPID) *, enforcement of the HPID regulations is delayed until further notice. Health plans, excluding small health plans, must obtain a HPID by Nov. 5,. As of Oct. 31,, enforcement of the HPID regulations is delayed until further notice. Health plans, including small health plans, must obtain a HPID for use in HIPAA standard transactions if the health plan is identified in the HIPAA standard transaction, effective Nov. 7,. (Applies to Insurers) Health Insurance Provider Fee 6,* Fee collected from health insurers. Estimated to increase premiums in the insured market on average by 1.9% to 2.3% in and, by 2023, to increase premiums 2.8% to 3.7% 1. No. This fee will not be assessed against self-funded plans. Individual Mandate Individuals who do not meet certain hardship exceptions will be required to have minimum essential coverage or pay a penalty 7. Individual Premium Tax Credit Sliding-scale financial assistance made available for certain individuals who make less than 401% of the federal poverty level (FPL), who purchase coverage on an exchange and meet certain other qualifications. Exchange coverage only No. Note: 400% of the FPL for a single-person household in was $46,680. Modified Community Rating Individual and small group health carriers may no longer consider health status, industry or gender when setting premium rates. No. Self-funded plans may consider health information to help determine cost expectations. No Pre-Existing Exclusions for Adults year. Health plans may no longer impose pre-existing condition exclusions. An annual fee of: $2 per average number of covered lives for plan years ending between Jan. 1,, and Sept. 30,. Filing date: July 31, 2013 $2.08 per average number of covered lives for plan years ending between October 1, and December 31,. Filing date: July 31,. The fee is based on increases in the projected per capita amount of the National Health Expenditures. The fee will not apply to policy or plan years that begin after Sept. 30, 2019., the, the plan sponsor pays Re Assessment Fee * Funds a three-year re program for carriers in the individual health market. $63 per year for Amount subject to change thereafter. 5
2013 Exchange Notice Oct. 1, 2013 Employer to provide all employees notice about exchanges: Model notices available on the U.S. Dept. of Labor website. Health Flexible Spending Account (FSA) limits 2013 Plan years beginning on or after Jan. 1, 2013 Limits annual employee salary reduction contributions to an FSA to $2,500. year. The first fee was due by July 31, 2013. An annual fee of: $1 per average number of covered lives for plan years ending between Jan. 1, 2013, and Sept. 30, 2013. Filing date: July 31, $2 per average number of covered lives for plan years ending between Oct. 1, 2013, and Dec. 31, 2013. Filing date: July 31, The fee is based on increases in the projected per capita amount of the National Health Expenditures. The fee will not apply to policy or plan years that begin after Sept. 30, 2019., the, the plan sponsor pays Risk Adjustment Individual and small group fully-insured plans sold on and off exchanges will be assessed if their actuarial risk is less than, and credited if their actuarial risk is more than, the average actuarial risk for all plans in the state. No. Self-funded plans will not be required to subsidize one another. Risk Corridor A system using revenue from qualified health plans to subsidize one another from - to limit the gains and losses of those plans. Only carriers selling plans on the exchanges No. Self-funded plans will not be required to subsidize one another. W-2 Reporting 2013 2012 W-2 Forms (usually provided by Jan. 31, 2013) Employers filing 250 or more W-2s in the preceding year must report the total cost of each employee s employer-sponsored coverage on each employee s W-2. 2012 year. The first fee was due by July 31, 2013. An annual fee of: $1 per average number of covered lives for plan years ending between Oct. 1, 2012, and Dec. 31, 2012. Filing date: July 31, 2013 The fee is based on increases in the projected per capita amount of the National Health Expenditures. The fee will not apply to policy or plan years that begin after Sept. 30, 2019., the, the plan sponsor pays Rate Increase Review 2011 Rate increases of 10% or more on fully insured health plans must be submitted to the U.S. Department of Health and Human Services. No 6
2012 Continued Summary of Benefits and Coverage Document Plan years on or after Sept. 23, 2012 Standardized summary of health plan coverage that insurers and employers must make available to enrollees. Women s preventive *, ** health services Plan years on or after Aug. 1, 2012 Coverage for contraceptive services for women without cost-sharing. (Exceptions have been made for some employers.) 2011 Medical Loss Ratio (MLR) 2011 For small and large groups, respectively, health insurers must spend at least 80% or 85% of every premium dollar on claims and quality improvement activities or rebate the difference to customers. No. Federal regulations do not dictate how plan dollars are spent. 2010 Mandated Benefit Provisions Removal of annual and lifetime dollar limits Coverage for dependents to age 26 Plan years on or after Sept. 23, 2010 No pre-existing condition exclusions for person younger than 19 Increased parity for out-of-network emergency services 100% coverage for certain preventive services ** Additional claim and appeal rights ** 7
1 Estimated Premium Impact of Annual Fees Assessed on Health Insurance Plans; study by Oliver Wyman; Oct. 31, 2011 2 If no health plan is offered, and one full-time employee (FTE) receives a premium tax credit or cost-share subsidy through an exchange, the annual penalty is $2,000 ($2,080 for calendar year 2015 and $2,160 for calendar year ) per full-time employee, and the first 30 full-time employees (first 80 FTEs for 2015) are discounted for purposes of calculating the penalty. If a health plan is offered, but that plan does not provide minimum value or is unaffordable, and one full-time employee receives a premium tax credit or cost-share subsidy through an exchange, the annual penalty is the lesser of: (a) $3,000 ($3,120 for calendar year 2015 and $3,240 for calendar year ) per FTE who is eligible for the tax credit or subsidy or (b) $2,000 ($2,080 for calendar year 2015 and $2,160 for calendar year ) per FTE, and the first 30 FTEs (first 80 FTEs for 2015) are discounted for purposes of calculating the penalty. 3 An employer s health plan is unaffordable if the employee s contribution to the cost of employee-only coverage (in the lowest cost plan option) is more than 9.5% (9.56% for 2015 and 9.66% for plan years beginning in ) of the employee s household income. An employer also can use safe harbors identified by the IRS to determine if its health plan is affordable. 4 An employer s health plan provides minimum value if the plan s share of an enrollee s overall medical expenses is at least 60% and covers inpatient hospital and physician services. 5 Actuarial value is a measure of a health plan s share of an enrollee s overall medical expenses, expressed as a percentage. 6 The Health Insurance Industry Fee is also known as the Health Insurance Tax (HIT). 7 Penalties are the greater of a set dollar amount or percentage of taxable income as follows: : $95 or 1%; 2015: $325 or 2%; : $695 or 2.5% and adjusted to the cost of living thereafter. * See separate brochure providing more detail, available in the Healthcare Reform Tool Kit ** Does not apply to grandfathered plan PLEASE NOTE: This document is designed to provide a high-level overview of aspects of the Affordable Care Act (ACA), as modified by the Health Care and Education Reconciliation Act and various regulation and regulatory guidelines. It is not comprehensive and does not constitute legal or tax advice for healthcare reform implementation. Please consult a professional benefit adviser or legal counsel regarding how the law may impact your specific benefit plan. Last Updated: April 6, For more information on ACA, visit http://trustmarkhcr.wordpress.com, the Trustmark Healthcare Reform blog. The Trustmark Companies and operating divisions include Trustmark Life Insurance Company, Trustmark Life Insurance Company of New York, Trustmark Insurance Company, CoreSource, HealthFitness, Starmark and Trustmark Voluntary Benefit Solutions. 400 Field Drive Lake Forest, Illinois 60045 847-615-1500 www.trustmarkcompanies.com T500-169 (4-16) 8