AA: Developments, Observations &… The...
Transcript of AA: Developments, Observations &… The...
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Peter Marathas [email protected] 617.830.5456
ACA: Developments, Observations &…
The Election
Slides are current as of September 30, 2016. © 2016. Marathas Barrow Weatherhead Lent LLP. All rights reserved.
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Agenda
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The Election: November 2016—Musings Recent Developments 6 for 16—Some Observations
Agenda
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November 2016: Musings
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Trump: 164 174 Clinton: 200
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270 Needed to Win
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The Senate of the 114th Congress
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46 Democrats* 54 Republicans 5 Seats Shift Control
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Michael Bennet (Colorado) Richard Blumenthal (Connecticut) Barbara Boxer (California) retiring in 2016 Patrick Leahy (Vermont) Barbara Mikulski (Maryland) retiring in 2016 Patty Murray (Washington) Harry Reid (Nevada) retiring in 2016 Brian Schatz (Hawaii) Charles Schumer (New York) Ron Wyden (Oregon)
Kelly Ayotte (New Hampshire) Roy Blunt (Missouri) John Boozman (Arkansas) Richard Burr (North Carolina) Dan Coats (Indiana) ret. Mike Crapo (Idaho) Chuck Grassley (Iowa) John Hoeven (North Dakota) Johnny Isakson (Georgia) Ron Johnson (Wisconsin) Mark Kirk (Illinois) James Lankford (Oklahoma)
Mike Lee (Utah) John McCain (Arizona) Jerry Moran (Kansas) Lisa Murkowski (Alaska) Rand Paul (Kentucky) Rob Portman (Ohio) Marco Rubio (Florida) Tim Scott (South Carolina) Richard Shelby (Alabama) John Thune (South Dakota) Pat Toomey (Pennsylvania) David Vitter ret. (Louisiana)
DEMOCRATS (10) REPUBLICANS (24)
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Recent Developments
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More reporting
More exposure to liability
This means bad news for employers
$12 billion to $30 billion provided to ineligibles
Average subsidy value: $3,000 to $5,000 per person
Estimated 4 million to 6 million (40% to 60%) were ineligible
Approximately 10 million received subsidies for coverage in 2015
Epic Fail & HHS Subsidy Notifications
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In a waiting period/unable to enroll in coverage
Offer, but not affordable or did not provide minimum value; or
No offer of health care coverage;
Cryptic: noting only that individual said he/she worked for the employer and either:
Inform employer that employee certified eligible for a premium subsidy
June 21: HHS Sends Thousands of Subsidy Letters to Employers
HHS Subsidy Notification Letters to Employers
Epic Fail & HHS Subsidy Notifications
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Government says: No need for appeal part-time, terminated while in a waiting period for coverage, or notifications naming spouses or family members as recipients of a subsidy
Bears & Woods
Should employers appeal?
Penalty notices will come from the IRS after ACA reporting is processed
Subsidy notification letters are not penalty notifications!
HHS Subsidy Notification Letters to Employers
Epic Fail & HHS Subsidy Notifications
Subsidy notification letters are not penalty notifications!
Penalty notices will come from the IRS after ACA reporting is processed
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Summary of Benefits & Coverage (SBC)
HHS has updated its SBC templates for first open enrollment beginning on or after 4/1/17
Existing 8 page SBCs to be slimmed down to 5 pages in most cases
Many requirements remain the same: Plans must use 12-point font and replicate all symbols, formatting, bolding
and shading However, plans and issuers may use different fonts and adjust margins as necessary to maintain the
page limit
Definitions added to the Uniform Glossary, which plans may link to: https://www.healthcare.gov/sbc-glossary/
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Summary of Benefits & Coverage (SBC)
Examples of changes include: Explanation of the SBC and how to obtain more information
Certain language for embedded vs. non-embedded deductibles
Changing “person” to “individual”
Disclosing if copays for certain services may not be included in OOP limit
Expanding “Limitations & Exceptions” column to disclose other info: If all or a substantial portion of a particular service category is excluded;
When in-network cost sharing does not factor into the OOP limit;
Visit or dollar limits; and
When services require prior authorization
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SBC Distribution Reminder
Employers must provide an SBC at specified times at no charge, such as: With enrollment materials; By the first day of coverage, if there are any changes to the initial SBC; Within 90 days from enrollment for any special enrollee after a special enrollment
event (i.e. marriage, etc.); and Within 7 business days after receipt of request
60-day advance notice of material modifications required, unless changes are being made in connection with the plan’s renewal of coverage
Electronic delivery of SBCs is permitted for those enrolling online or who are notified that it’s available online (e.g., via postcard or email)
Failure to comply may result in $1,000 fine per occurrence Recently increased to $1,087
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EHB Benchmark for Self-Insured Plans
Employers that sponsor self-insured plans should identify which benefits are Essential Health Benefits (EHBs) if they wish to impose annual or lifetime limits on non-EHBs, or excluded non-EHBs from the ACA’s out-of-pocket limit
Large group and self-insured plans are not required to offer any particular category of EHB under the ACA; however, once a plan covers EHBs then the annual limit and OOP rules apply to those benefits
A self-insured plan can adopt any HHS-approved EHB package for purposes of determining which benefits offered under the self-insured plan are EHBs
Employers should consider how the election of a particular EHB package as a benchmark should be documented (e.g., plan document, SPD, administrative policy)
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Opt-Out Benefits
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Opt Outs in 2017 under Proposed Regulations Released in July
Opt Out Must be “Conditional” or it will Increase Employee Cost of Coverage
To be conditional, employees must attest that their “tax family” will have Minimum
Essential Coverage (MEC) other than through the individual market
Tax family: Anyone for whom the employee reasonably expects to claim a
personal deduction that year
Other acceptable forms of MEC can include:
Employer-sponsored coverage
Medicare
Medicaid
Tricare
Be cautious of Medicare/Tricare Secondary Payer rules – they generally require opt-
outs to be offered to all employees as part of a nondiscriminatory cafeteria plan
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For example, a plan subject to these requirements must cover a hysterectomy that is considered medically necessary to treat gender dysphoria if the plan otherwise covers hysterectomies
Excluding all services related to gender dysphoria or gender transition will be prohibited
Rules prohibit discrimination on the basis of race, color, national origin, sex, age or disability under a health program or activity receiving federal funds
Generally effective for Plan Years beginning on or after January 1, 2017
ACA Section 1557 Final Regulations
Gender Nondiscrimination Regulations
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Think Before You Act & Be A Tiger
Refusal to dismiss the claim does not mean success
The court found sufficient evidence that a store manager and assistant manager at the company’s Times Square location announced at a staff meeting that work hours were cut because the employer determined that, without limiting the work schedules of its staff, the ACA could impose as much as $2 million of new expense in 2015
Feb. 9, 2016: The court in Marin denied a defense motion to dismiss under ERISA
Employees allege that the reduction violates ERISA section 510
Class action involving potentially 10,000 employees whose hours were involuntarily reduced, resulting in a loss of health coverage
Marin v. Dave & Buster’s, Inc.
Cases Worth Watching
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Court found government’s arguments to be “most curious and convoluted”—its “mother was undoubtedly necessity”
May 12, 2016: Judge Collyer Rules in Favor of House
House alleges Executive Branch acted unconstitutionally Challenges billions of dollars in payments to health insurance
carriers
House of Representatives Sues Administration Over Insurer Payments Historic lawsuit
House v. Burwell
Cases Worth Watching
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6 for ‘16
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Tax is paid by insurer or administrator, not by participant
Proposed FY2017 Federal Budget modifies the threshold to equal the average premium for a gold Exchange plan in each State
Tax based on total cost of coverage, plus employer and pre-tax employee contributions to HRAs/FSAs/HSAs
Thresholds are $10,200 Single, $27,500 Family
40% tax on the cost of health coverage exceeding certain thresholds
PATH also makes payment of the Cadillac Tax a deductible business expense
Intended to be effective in 2018, delayed until 2020 under PATH Act
It’s Big, It’s Bloated, and It’s Headed Your Way
The Cadillac Tax 6
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75% of the revenue will come from employers who shift compensation from an employer sponsored plan to taxable wages
Only 25% of the revenue is estimated to come from this tax
The Congressional Budget Office originally estimated this tax will generate $149 billion in revenue between 2018 – 2025 (Revised Estimate: $80 billion)
Cadillac Tax Policy: Revenue Generation and Backdoor Reduction of Tax Preference for Health Insurance
It’s Big, It’s Bloated, and It’s Headed Your Way
The Cadillac Tax
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Increase use of wellness incentives
Eliminate pre-tax benefits programs
Reference pricing
Narrow provider networks
Eliminate spousal coverage
Private exchanges for active employees (?)
Eliminate or implement private exchange options for pre- and post-65 retirees
Higher out-of-pocket costs
Reduce richness of plan design
Getting Out of the Way of The Cadillac Tax!
The Cadillac Tax
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“Some people would choose to work fewer hours; others would leave the labor force entirely or remain unemployed for longer than they otherwise would.”
“The reason for the reduction in the supply of labor is that the provisions of the ACA reduce the incentive to work for certain subsets of the population.”
2 million fewer workers over the next 10 years.
CBO Has Bad News
Future Hiring
CBO estimates “ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor.” will choose to supply less labor
almost entirely because workers
2 million fewer workers over the next 10 years.
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Is this the opportunity for re-alignment?
Do you have a back-up plan?
Have you performed modeling for the future?
Available
Inexpensive &
Does your business depend on labor being:
Plan for the Future
Future Hiring
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Risk for “A” and “B” Penalties Leased Employees: Contractual Protections
1099 Employees—An Oxy Moron
Does your business use independent contractors?
Independent Contractors
Independent Contractors 4
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Opt Outs Push Outs Pay Outs
Beware Easy Fixes
Caveat Emptor 3
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Work with Trusted Advisors Hire Well
Caveat Emptor
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Reporting Eligibility Coverage
Be Compliant & Prove It
Focus on ACA Compliance 2
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Reporting Documentation Testing & Don’t Forget HIPAA
Best Offense is a Good Defense
Focus on ERISA Compliance 1
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Questions?