Agenda

• Solution oriented and hopefully political free• Individual Mandate– Winners & Losers, Rules & Exchanges

• Rules for Employers with less than 50 lives– Mandates, Taxes and Fees

• Rules for Employers with more than 50 lives– Mandates, Taxes and Fees

• Solutions

Misinformation

Misinformation

Winners & Losers

Winners• Poorer• Sicker• Older

Losers• Richer• Healthier• Younger

Exchange – Plan Requirements2014

EXCHANGES / MARKETPLACES

• Must offer “essential health benefits package”

• 10 essential health benefit categories

• Limited deductibles ($2000 / $4000)• Fair health insurance premiums

• Age (3:1) • Geographic area• Tobacco use (1.5:1) • Coverage tier

• 5 plan levels: • Platinum (90%), • Silver (70%)• Gold (80%), • Bronze (60%)

• Catastrophic plan for those under age 30

Individual Mandate• Beginning in 2014, the Affordable Care Act includes a mandate

for most individuals to have health insurance or potentially pay a penalty for noncompliance.

• Some individuals will be exempt from the mandate or the penalty, while others may be given financial assistance to help them pay for the cost of health insurance.

• Individuals will be required to maintain minimum coverage levels for themselves and their dependents.

• Tax credits will be available to help offset cost if household income is less than 400% of the Federal Poverty Limit.

IN SHORT – HAVE COVERAGE THAT MEETS THE MANDATE OR PAY A TAX PENALTY.

Penalty for Noncompliance2014 - Penalty for not maintaining minimum essential coverage– Greater of (capped at the national average of annual cost for Bronze plan

in the Exchange for # of individuals who would have purchased coverage): – A flat annual dollar amount or a percentage of annual family income as

follows:

Exchanges

• Online marketplace for Individual coverage– Carriers compete for business

• Employers must notify members of the existence of the marketplace, the adequacy of the current plan and potential loss of employer contribution by October 1, 2013

• Not all exchanges are government sponsored– Only the government exchange has TAX CREDITS

Exchange Overview• Exchange must offer “essential health benefits package”

• 4 plan levels: • Platinum (90%), • Gold (80%),• Silver (70%)* • Bronze (60%)

• Exchange also sells catastrophic plan for individuals < age 30 *Premium tax credits are available only in the government sponsored Exchange and are based on the silver plan cost

* Cost sharing reductions are only available with the silver plan in the Exchange

• Percentages reflect the richness of the plan (platinum pays 90% of costs)• Network will also vary widely from bronze to platinum

Subsidy Examples

• 1 person; non-smoker; SILVER plan

AGE200%

$22,980Cost per

YearSubsidy Amount

AGE300%

$34,470Cost per

YearSubsidy Amount

AGE400%

$45960Cost per

YearSubsidy Amount

25 $2,312 $1,448 $864 25 $2,312 $2,312 $0 25 $2,312 $2,312 $0 35 $2,814 $1,448 $1,366 35 $2,814 $2,814 $0 35 $2,814 $2,814 $0 45 $3,325 $1,448 $1,877 45 $3,325 $3,275 $50 45 $3,325 $3,325 $0 55 $5,135 $1,448 $3,687 55 $5,135 $3,275 $1,860 55 $5,135 $4,366 $769

Source: Kaiser Family Foundation

Subsidy Examples

• Family of 4; non-smoker; silver plan

AGE100%

$23,550Cost per

YearSubsidy Amount

AGE133%

$31,322Cost per

YearSubsidy Amount

AGE150%

$35,325Cost per

YearSubsidy Amount

25 $7,549 $471 $7,078 25 $7,549 $940 $6,609 25 $7,549 $1,413 $6,136 35 $8,553 $471 $8,082 35 $8,553 $940 $7,613 35 $8,553 $1,413 $7,140 45 $9,575 $471 $9,104 45 $9,575 $940 $8,635 45 $9,575 $1,413 $8,162 55 $13,195 $471 $12,724 55 $13,195 $940 $12,255 55 $13,195 $1,413 $11,782

AGE200%

$47,100Cost per

YearSubsidy Amount

AGE300%

$70,650Cost per

YearSubsidy Amount

AGE400%

$94,200Cost per

YearSubsidy Amount

25 $7,549 $2,967 $4,582 25 $7,549 $6,712 $837 25 $7,549 $7,549 $0 35 $8,553 $2,967 $5,586 35 $8,553 $6,712 $1,841 35 $8,553 $8,553 $0 45 $9,575 $2,967 $6,608 45 $9,575 $6,712 $2,863 45 $9,575 $8,949 $626 55 $13,195 $2,967 $10,228 55 $13,195 $6,712 $6,483 55 $13,195 $4,246 $8,949

Source: Kaiser Family Foundation

Exchange Notification

• Census with audit trial– Email participants with receipts– Hand delivery with signature– First class mail with returned addresses

– Proof of additional contact

• Going extra step of providing concierge so no exchange questions were answered

• Amended Sec 125• New hires have notice in the enrollment guide and sign for it or

electronically enroll

• May not be 100%, but it will be far more compliant than most

Mandates pre-2014

• Summary of Benefits and Coverage• 60 day notice of plan changes• Statement of Grandfathered Status• Notice of Rescission• Notice of Patient Protections & Provider Selection*• Preventive Care Services for Women*• $2,500 Contribution Limit for Health FSA’s• Marketplace Notice

*Non-grandfathered plans only

Mandates Effective Plan Year 2014• Coverage must be effective by the 91st day of eligibility

– Variable Hour Safe Harbor (Measurement Period)• Guarantee Issue / Renewable for fully-insured plans*• Elimination of Pre-Existing Condition Exclusion• Coverage for Clinical Trials*• Limits on Cost Sharing*

– Out of Pocket limit of $6,350 / $12,500– Deductible, coinsurance and copay all accrue to limit– Premium is NOT part of Cost Sharing

• Optional Wellness Incentives of 30% or 50% for tobacco cessation

*Non-grandfathered plans only

Mandates Effective Plan Year 2014

• No dollar limits on Essential Health Benefits– Large Employer does not have to offer– If offered, no limit can apply

Mandates – No Date Set• Section 105(h) Non-Discrimination*

– Rules currently define a highly compensated individual as someone in the top 25% of earnings

• Fully Insured plans – Delayed– Grandfathered fully insured plans are exempt– Non-grandfathered fully insured plans – rules are pending

• Applies today to Self-Funded Plans– No delay of the rules– Fully insured rules (when released) may affect self-funded plans too

• Automatic Enrollment for FLSA Employers – Delayed– 200+ full-time employees– Rules are pending

Current Taxes / Fees

• Additional Medicare Tax – January 2013– Employer collects 0.9% tax, does not match it– All employers

• Patient Centered Outcomes Research Institute Fee (PCORI) – 2012/2013– $1-2 per covered member fee, indexes annually– Paid with general assets only– 6 year fee– All plans

The Tax Man Cometh (2014)

• Transitional Reinsurance Fee – January 2014– $63 per covered member fee in 2014– Paid with general or plan assets– 3 year fee (2014 – 2016)– Fee estimated to decrease each year– All plans

• Health Insurance Carrier Tax – January 2014– Annual fee based on carrier’s market share– Fully insured plans only

• Including dental & vision

– No end date

Large Group / Small Group

• For PPACA 50 Full-Time Equivalents– Include part-time on a pro-rata basis

• For coverage, the state uses Average Number of Full Time Employees– Average over a period of time

• You CAN be large group for one and small group for the other.– Which set of rules do you follow?

Small Group Considerations

• Provide the 10 Essential Health Benefits• “Fair” Health Insurance Premiums– Age, tobacco, area, tier– 3:1 Ratio of lowest rate to highest rate

• Meet certain Actuarial Values (metal plans)– HSA contributions do not count toward the AV

• Cost Sharing Limits (premium does not count)– $2,000 / $4,000 deducible– $6,250 / $12,000 out of pocket

Small Group Considerations

• No penalty for not providing coverage• Employees can enter the exchange• Winners and losers– Older, sicker groups benefit. – Younger healthier groups do not.– Networks will be important

Large Employer Considerations

• As of 2015, Large employers must offer affordable coverage that meets minimum value requirements or incur a penalty.– Minimum value = 60% or greater– Affordable = at least 9.5% of lowest paid employee

wages• $89.54 / mo. for employees making $7.25 / hr.• Working 30+ hours / week

– Available at least once a year

Large Group Considerations• Pay or Play – Applicable to All Large Employers

• Full-time = 30 hours + per week• Penalty assessed if one or more full-time employees receives the

premium tax credit• Penalty is an excise tax

Pay or Play Employee Types

Solutions

• Manage Part Time Status– Part-time employees move to exchange coverage– Manage to less than 30 hours per week– Helps participation

• Skinny – Minimum Essential Coverage (MEC) – El Fenix– $70 - $90 pepm– Provides the minimum required by law– Have a plan B

Solutions

• New plans– Network – HMO • Range from $99.99 at age 20 to $472.38 at age 64+

• Self-fund– Avoid mandates– Lower cost– Flexibility• Surcharge or exclude spouses

Solutions

• Have an Exchange Concierge– Invaluable for anyone not covered by employer

Mandates pre-2014

• Summary of Benefits and Coverage• 60 day notice of plan changes• Statement of Grandfathered Status• Notice of Rescission• Notice of Patient Protections & Provider Selection*• Preventive Care Services for Women*• $2,500 Contribution Limit for Health FSA’s• Marketplace Notice

*Non-grandfathered plans only

Solutions

• Get compliant by March 2014.– Cannot unscramble eggs– Do not take brokers word for it– Treat it like an accounting relationship• Documentation• Deliverables

Mandates Effective Plan Year 2014• Coverage must be effective by the 91st day of eligibility

– Variable Hour Safe Harbor (Measurement Period)• Guarantee Issue / Renewable for fully-insured plans*• Elimination of Pre-Existing Condition Exclusion• Coverage for Clinical Trials*• Limits on Cost Sharing*

– Out of Pocket limit of $6,350 / $12,500– Deductible, coinsurance and copay all accrue to limit– Premium is NOT part of Cost Sharing

• Optional Wellness Incentives of 30% or 50% for tobacco cessation

*Non-grandfathered plans only

Mandates Effective Plan Year 2014

• No dollar limits on Essential Health Benefits– Large Employer does not have to offer– If offered, no limit can apply