Click to edit Master title styleHealth Care ReformPlay or Pay?

Presented by: Jim Casadaban, MBAEmployee Benefit SpecialistHUB International Gulf SouthApril 2, 2013

Navigating PPACA

As we move through 2013, employers are navigating a “perfect storm” of challenges.  Four key elements exist today that have not existed to this extent in the past. 

•Employer requirements

•New taxes and fees

•Cost shifting due to changes in Medicare/Medicaid reimbursements

•Employee health and accountability

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All Plans Must Comply• No Lifetime Limits (PY > 10/1/10)

• Dependent age 26 (PY > 10/1/10)

• Guarantee issue under 19 years old (PY > 10/1/10)

• No rescissions of Coverage (PY > 10/1/10)

• Small business tax credit (2010 tax year)

• FSA Max deferral $2,500 (PY>1/1/13)

• No reimbursement for over the counter drugs (gone in flex plans) (1/1/11)

• No annual limits (PY > 10/1/10)

• Minimum Loss Ratios (1/1/11)

Additional Requirements if Ungrandfathered • No higher out of network cost-share for ER Services (PY > 10/1/10)

• Discrimination Rules (delayed)

• Preventive Services – first dollar coverage (PY> 10/1/10)

• Coverage of Clinical Trials3

• Employers have less than one year to prepare for the arrival of the core of the PPACA

• Requires employers with 50 or more FT (or equivalent) employees to offer affordable medical coverage or pay a penalty

• While the “pay” option might be worth considering, there are strong reasons why you should look carefully at all of your options

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The Employer Responsibility RequirementPay or Play Basics

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Employer Mandate

Source: Kaiser Family Foundation, 2012

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Individual Mandate

• Employer tax breaks lost (as will their employees). 

• Employer contributions for health care coverage are not considered taxable income to the employee. 

• Section 125 plan for medical premiums lost (employer and employee).

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Play or Pay1. Lost Tax Advantages

• Employers that don’t offer health care coverage will still face federal reporting requirements, in part so the penalty amount can be determined.

• Employees who are not offered coverage are likely to go to the exchanges for coverage.

– These exchanges will require a variety of employee data from employers, particularly for employees who may be eligible for the premium tax credit

– Employers may have to deal with a significant number of inquiries from exchanges (staff time, effort, costs).

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Play or Pay2. Reporting Burdens Remain

• Exchange: Online marketplace for health insurance

• Employees Qualify for Subsidy Based on Income Level 100% - 400% of FPL

• Groups under 100 in Louisiana

• Other Options – Private Exchanges

Exchange Marketplace

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• Employers who opt not to offer health care coverage could be doing long-term damage to their employment brands, making it difficult to attract top talent in the future.

• And the damage to the brand could be even greater for employers that once offered coverage but elect to eliminate it in favor of paying penalties.

• Employees who are forced to use exchanges — especially untested or insufficiently staffed exchanges — could feel undervalued or abandoned by their employers.

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Play or Pay3. Recruitment and Retention Challenges

• What constitutes a FT employee? 

• Answering this question can be tricky; in late August 2012 the IRS issued 18 pages of rules that only partly answer the question.

• Employers that believe they won't face penalties for dropping or not offering coverage because they have fewer than 50 employees may have calculated incorrectly. If that happens, the results could be costly.

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Play or Pay4. Counting Employees Can Be Complex

• While employers may have to cover more people, they do have options for reducing the costs of this coverage.

• For example, employers could reduce their lowest-cost coverage to stay just above the 60% minimum value threshold; they could reduce workers’ hours below the “FT employee” level; and they could consider paying targeted penalties.

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Play or Pay5. Cost of Coverage Can Be Adjusted

• Employees may demand additional compensation from employers that elect to drop coverage to cover the cost of health care they must now purchase with their own, after-tax dollars.

• Employers who haven't properly budgeted for nondeductible penalties may compound their financial burdens, especially if they don't make long-term plans for penalty increases.

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Play or Pay6. Other Financial Implications

• Insurance carriers will become experts on coverage requirements out of sheer necessity, so the myriad of plan design criteria won't likely be a burden on many employers.

• In addition, carriers will implement a variety of tools to communicate with employees, helping to keep business disruptions to a minimum.

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Play or Pay7. Carriers Will Address Plan Designs

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Actions to Take NOW Sample to do List (non-exhaustive)

1. Determine whether subject to law (over 50 FT EEs in 2013)

2. Decision on maintaining EEs in FT versus part-time roles

3. Determine whether you will use the maximum 90-day waiting period as well as new measurement period and stability period

4. Track all hours worked, especially for any EE at less than 30 hours per week on average in a month or with variable hours

5. Modeling of participant contributions for affordability (9.5% rule)

6. Coordination with vendors/carriers for delegation of admin tasks

7. Make required 2013 EE exchange disclosures

8. Be prepared to file reports with federal agency on who is covered

9. Assess grandfather status value

10.Determine “value” of current plan (CMS.gov website)

11.Evaluate Wellness stance

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Employee Health and Accountability

Embrace Wellness as a Business Strategy•Attack like you would workplace injuries and illnesses

•25-35% of medical claims are preventable or delayable

•Increased risk = increased premium

•Take advantage of PPACA provisions

•Leadership must first “get it” and then embrace

•Develop 3-5 year plan

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Plan Ahead

1. Analysis• Penalty Projections• Affordability Compliance of your

plan today• What actions to take to ensure the

basic level of insurance is offered• Maintain group plan

or go to exchange• Contribution options

2. Cost Projections• Cadillac Tax Projections• 3-5 Year Strategic Plan

3. Wellness Coordination Services

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Jim Casadaban, MBA

Employee Benefit Specialist

HUB International Gulf South

jim.casadaban@hubinternational.com

www.hubinternational.com

504-620-4473

Thank You!Thank You!