MISSOURIELECTRICCOOPERATIVESMISSOURI ELECTRIC … WORKSHOP Dave Broeke… · section 6056 (i.e.,...

MISSOURI ELECTRIC COOPERATIVESMISSOURI ELECTRIC COOPERATIVES HUMAN RESOURCES ASSOCIATION

Presented by David K. Broeker, CEBS

NRECA Regional DirectorNRECA Regional Director

ACA UPDATENRECA MEDICARE CARVE OUT

ACA UPDATENRECA MEDICARE CARVE OUT

PLAN

Affordable Care Act: Key elements for employers

• Employers must distribute uniform benefit summaries to participants

• Employers must provide 60-day advance notice of material

• $2,500 health FSA contribution cap (indexed)

• Medical device manufacturers’ fees start• Higher Medicare payroll tax on wages

exceeding $200,000/ individual;

• Health insurance exchanges• Individual coverage mandate• Financial assistance for exchange

coverage of low-income individuals• Medicaid expansion

• Dependent coverage to age 26 for any covered employee’s child**

• No annual dollar limits**• No pre-existing condition limits**

**modifications (TBD)

• Form W-2 reporting for 2011 health coverage

$250,000/couples• New Medicare tax on net investment

income for taxpayers with incomes exceeding $200,000/ individual; $250,000/couples

• Research fees begin

• Medicaid expansion • New health plan regulations • HIPAA wellness limit increases• Shared responsibility penalties• Free-choice vouchers• Additional reporting and disclosure

• No waiting period over 90 days**• Additional new standards for new or

“non-grandfathered” health plans, including limited cost-sharing

• Health insurance industry fees begin

2012 2013 20142011 2015 2018

• Excise tax on “high cost” or Cadillac plans

• Dependent coverage to 26 (no other employer coverage available)*

• No lifetime dollar limits*• Restricted annual dollar limits*

• No health FSA/HRA/HSA reimbursement for non-prescribed drugs

• Increased penalties for non-qualified HSA distributionsV l t l t

• Code Section 6055-Individual responsibility requirement report information- type of coverage and period of coverage to the IRS and covered individuals.

• Code Section 6056 requires large l t id i f ti t• No pre-existing condition

limitations for children up to age 19*

• No rescissions*• Additional standards for new or

“non-grandfathered” health plans, including non-

• Voluntary long-term care “CLASS” program slated to start

• Pharmaceutical manufacturers’ fees start

• Medicare, Medicare Advantage benefit and payment reform

• Insurers subject to medical loss

employers to provide information to the IRS about whether minimum essential coverage is offered to their full-time employees and dependents. Determines if employer owes a shared responsibility payment under Code Section 4980H and whether anp , g

discrimination provisions for insured plans and mandatory preventive care with no cost-sharing

jratio rules*

Section 4980H and whether an employee is eligible for a premium tax credit on a Marketplace Exchange

• Streamlne Summary of Benefits and Coverage

Proposed updates to Summary of BenefitsProposed updates to Summary of Benefits and Coverage (SBC)

• Reduced from eight to five pages• Additional coverage example and revisions to g p

current pricing examples• Definitions of Minimum Essential Coverage and g

Minimum Value Coverage• Expanded glossary

4

W 2 reporting of value of benefitsW-2 reporting of value of benefits

Mandatory for employers issuing at least 250 W• Mandatory for employers issuing at least 250 W-2s per year

• Reporting optional for employers issuing < 250• Reporting optional for employers issuing < 250 W-2s

• Employer FSA contributions must be reported• Employer FSA contributions must be reported, not HRA or HSA contributions

• Benefit value information available from NRECABenefit value information available from NRECA upon request

5

Current ACA Taxes and FeesCurrent ACA Taxes and Fees• Health insurance tax

O l i t h lth i id– Only impacts health insurance providers– Does not apply to self-insured plans so

NRECA Trust participants exemptNRECA Trust participants exempt• Exchange reinsurance assessments

– Applies to fully and self-insured planspp y p– NRECA Trust exempt from 2015 forward

• PCORI (Patient-Centered Outcomes (Research Institute)– NRECA pays fee for NRECA health plans– Co-op pays for HRAs

6

Employer Mandate Application

2015• 2015– Exemption applies to employers with <100 full-time

(FT) or full-time equivalent (FTE) employees ( ) q ( ) p y• 2016

– Exemption drops to employers with <50 FT/FTE EEs or full-time equivalent (FTE) employees

• Employers with >100 FT/FTE EEs only required to cover at least 70% of employees for 2015 (95% in 2016)at least 70% of employees for 2015 (95% in 2016)

• Employers not permitted to reduce workforce to qualify for exemption

7

Less than 50-99 Full- 100+ Full-Less than

50 Employees

Total

Less than 50 Full-time or Full-Time Equivalent Employees

50 99 FullTime or

Full-Time Equivalent Employees

Time or Full-Time

Equivalent Employees

• Need to measure based on six-month consecutive

Employees Employees

period in 2014

• Employer Mandate will NOT apply to the co-op in 2015 ( d b d i i2015 (and beyond―assuming co-op remains under threshold)

• <50 status DOES NOT exempt co-op from all• <50 status DOES NOT exempt co-op from all reporting requirements

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50 Employees

Total


50 99 FullTime or


Time or Full-Time

Equivalent EmployeesEmployees Employees

• Based on 6-month consecutive period in 2014• Full-Time (FT) = At least 30 hours per week (130 hours

is the monthly equivalent)• Full Time Equivalent (FTE) = All hours worked in a• Full-Time Equivalent (FTE) = All hours worked in a

calendar month by non-FT employees, divided by 120 • Add up FTs and FTEs for each calendar month in 6-

month period• If less than 50 FT/FTE employees, the employer

mandate will NOT apply in 2015 or beyond

9

pp y y


50 Employees

Total


50 99 FullTime or


Time or Full-Time


Not subject to the employer mandate prior to J 1 2016 if t i i t tJanuary 1, 2016 if certain requirements are met:• Must not reduce number of hours or employees in

2014 unless for “bona fide” reasons• Must not materially reduce coverage in effect as of

February 9, 2014• Must engage in modified tax reporting under IRC

section 6056 (i.e., employer mandate reporting)

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50 Employees

Total


50 99 FullTime or


Time or Full-Time


• Must comply with employer shared responsibility d t 1/1/15mandate 1/1/15

• Must offer qualifying coverage to full-time employees (using 130-hour rule) or risk penalties“A-Penalty”: $2,000 per year, multiplied by all FT employees of the employer

“B P lt ” $3 000 f h FT l th t i t“B-Penalty”: $3,000 per year for each FT employee that is not offered qualified coverage and applies for and receives a premium tax credit for exchange individual insurance

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M b h l iMore about the penalties• To avoid “A” Penalty must offer minimum essential

coverage to at least 95% of FT employees (70% in 2015)

• To avoid “B” Penalty cost of individual coverage to the• To avoid B Penalty cost of individual coverage to the employee must not exceed 9.5% of the wages the employer pays the employee that year

− Affordability test applies to the lowest-cost option available that also meets the minimum essential value requirement; pays at least 60% of covered expenses

12

Tax Reporting Requirements: 6055Tax Reporting Requirements: 6055

• Who reports?– Employers in multiple-employer plans – Health insurers – Sponsors of self-insured plansSponsors of self insured plans

• Information about minimum essential coverage• Who receives info?

– IRS – Covered individuals (regardless of the number of full-time

employees)employees)

13

Tax Reporting Requirements: 6055Tax Reporting Requirements: 6055

• IRS will use information to determine – Compliance with the individual mandate – Premium tax credit eligibility

• Most filers will use forms:• Most filers will use forms:– 1094-B (transmittal to IRS) – 1095-B (return to covered individual)

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Tax Reporting Requirements: 6056p g q• Employers with 50 or more full-time or full-time

equivalent employees q p y• Report compliance with the employer shared

responsibility mandateU f 1094 C d 1095 C• Uses forms 1094-C and 1095-C

• Satisfies both 6055 and 6056 reporting requirementsrequirements

• Verifies employer-sponsored coverage• Used to administer shared responsibility y

provisions

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Tax Reporting Requirements – TimingTax Reporting Requirements Timing

• 2015 tax year reporting due in 2016• Filing deadlines for the Forms 1094:• Filing deadlines for the Forms 1094:

– February 29, 2016 (for paper filings) – March 31, 2016 (for electronic filings)

• Forms 1095 must be provided by employers to full-time employees by January 31, 2016

• Optional forms for 2014 have been finalized by the• Optional forms for 2014 have been finalized by the IRS

• Same forms expected to be used next yearp y• HIGHLY RECOMMEND PARTICIPATING IN ACA

WEBINAR ON 3/18 AT 1:00 PM (OUR TIME)

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2018 Excise or “Cadillac” tax2018 Excise or Cadillac tax

ACA will impose a 40% excise tax on employers, health i d/ l d i i t t if th t linsurers, and/or plan administrators if the aggregate value of employer-sponsored coverage for an employee, former employee, surviving spouse, or other primary insured p y g p p yindividual exceeds a threshold limit

17

Excise tax What we think we knowExcise tax – What we think we know

• 40% tax on value of coverage over $10,200 (single)40% tax on value of coverage over $10,200 (single) and $27,500 (family)

• Thresholds higher for “high-risk professions” $11,850 ( ) $ (f )(single) and $30,950 (family)

• For 2018 only: Health Cost Adjustment Percentage (HCAP) applied to thresholds(HCAP) applied to thresholds– If the Federal Employee Health Benefit Plan (FEHBP) premium

has increased >55% since 2010

COBRA l l h d t i i t f• COBRA rules apply when determining cost of applicable coverage

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Excise tax What we think we knowExcise tax – What we think we know

• Includes employer AND employee premium payments, pre or post tax

• Employer contributions and pre-tax employee• Employer contributions and pre-tax employee contributions to health FSAs, HRAs and HSAs

• Excludes standalone vision and dental

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Preparing for the Excise Tax: Next Stepsp g p

• Continue to seek clarity and guidance regarding outstanding questionsoutstanding questions

• Develop excise tax estimator/calculator tool • Add plan/product offerings to ensure options dd p a /p oduc o e gs o e su e op o s

and flexibility• Provide co-ops with guidance and assistance as

th k l d i d i ithey make plan design decisions• Provide comment and lobby for modification or

elimination of taxelimination of tax

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Excise Tax Estimation Tool

• Develop a tool that allows NRECA to estimate whether/which plans will cause theestimate whether/which plans will cause the Excise Tax to be incurred in 2018.

• Final regulations have not been written, and gmay not be before 2017.

• It appears that the total value of the co op’s plan will include FSAco-op s plan will include FSA and/or HSA contributions.

• If a co-op’s plan is expected to exceed the p p pthreshold for the tax, co-ops may want a multi-year strategy to alter their benefit designsdesigns.

21

Medical Plan UpdateNRECA MEDICARE CARVE OUT

Medical Plan UpdateNRECA MEDICARE CARVE OUT

PLAN

Pharmacy Benefit Enhancements

• Consolidate / Streamline Traditional Plans– Three choices: 2-tier, 3-tier and Copayment plan

• Preventive Drug List for HDHPs– Apply across-the-board at renewal for 2016Apply across the board at renewal for 2016– Allow co-ops to opt out

• Specialty Drugs– Medical Carve-out– Site of Care Alignment– Consistent Prior Authorization

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New Pharmacy Benefit Choices – Coinsurance Plans

Drug 2-Tier Copayment / Coinsurance Amount

Exclusive Choice $0

Drug 3- Tier Copayment / Coinsurance Amount

Exclusive Choice $0Exclusive ChoiceGenerics

$0

Retail Generics $5

Retail Brand 25% $50 max.

Generics$

Retail Generics $5

Retail Preferred 25% $50 max.Retail Brand 25% $50 max.

Mail Generics $0

Mail Brand 25% $100 max

Brand% $

Retail Non-Preferred Brand

30% $80 max.

Mail Brand 25% $100 max.Mail Generics $0

Mail Preferred Brand

25% $80 max.

Specialty Drugs $100

Out-of-Pocket (OOP)

ACA maximum OOPcombined with medical

Mail Non-Preferred Brand

30% $100 max.

Specialty Drugs $100(OOP) combined with medical

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Out-of-Pocket (OOP)

ACA maximum OOP combined with medical

New Pharmacy Benefit Designs – Copayment Plan

Drug 3- Tier Copayment Amount

Exclusive Choice $0Generics

$

Retail Generics $5

Retail Preferred $30Brand

$

Retail Non-Preferred Brand

$50

Mail Generics $0

Mail Preferred Brand

$60

Mail Non-Preferred Brand

$100


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Out-of-Pocket (OOP)

ACA maximum OOP combined with medical

Preventive Drug List applied for all HDHPs

• Apply Preventive Drug List feature to all High Deductible Health PlansDeductible Health Plans

• Initial additional cost to the plan is ~$800,000• Expected to result in increased adherenceExpected to result in increased adherence• Aligns with NRECA philosophy to encourage

participants to manage chronic diseases• Co-ops may opt out of this feature

26

Specialty Drug Enhancements / Changes

• Carve Specialty Drugs out of the medical plan p y g pand funnel them through pharmacy benefit

M it f f i lt d b• Manage site of care for specialty drugs by requiring prior authorization and engagement with CVS Caremark Specialty team

• Apply consistent prior authorization for all specialty medications (for both medical andspecialty medications (for both medical and pharmacy sites)

27

What is Telehealth?

• Telehealth is real time health care delivered over thecare delivered over the phone or intranet Kiosk, video or phone

• Telehealth typically includes telemedicine and includes additional tools to: Collect and monitor

clinical data and videoclinical data and video images

On going Patient Monitoring

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Monitoring Health apps and portals

Challenges Accessing Care

Patient Difficulty in Scheduling with Physician • Unable to get an appointment in time to address the issue• Unable to get an appointment in time to address the issue • Limited MD availability for after-hours appointments • Unable to contact doctor on the phone• Doctor too far awayAs a Result, Patients Visit ER for Non-Emergencies• ER more convenient than doctor’s office• Symptoms occurred after hours or on a weekend• Patient could not get timely MD appointmentTeleMedicine Can HelpTeleMedicine Can Help • 75% of primary care encounters could be treated by

telehealth• 50% of emergency room encounters could be treated by• 50% of emergency room encounters could be treated by

telehealth29

Trends in Telehealth

1 in 3 top-performing employers are planning to implement telehealth

Telehealth is rapidly becoming a part of health care delivery system 1 in 3 top performing employers are planning to implement telehealth by 2014

Telehealth market expected to grow as much as 55% annually through 2018

Patients using telehealth services increasing from <350,000 in 2013 t 7 illi i 2018to 7 million in 2018

Telehealth enables a reduced absentee rate

It’s a simple and easy way to manage acute illness

Telehealth creates savings in time/medical costs by re-directing non-

30 Source: Towers Watson/National Business Group on Health Employer Survey on purchasing Value in Health Care 2013

Telehealth creates savings in time/medical costs by re directing nonemergency care to on-line providers

Telemedicine for NRECA

• Core feature of the NRECA Medical Plan like WebMD, Health Coaches or the Centers of Excellence

• Copayment per service• Communication plan• Raise awareness• Goals: supplement access

in rural areas and improve appropriate use of urgent careT t d i l t ti 2016

31

• Targeted implementation 2016 or 2017

31

Medicare D Creditable Coverage

NRECA MEDICARE CARVE OUTCoverage

NRECA MEDICARE CARVE OUT PLAN

What is Medicare D “Creditable Coverage”?

Creditable CoverageCreditable CoverageThe expected reimbursement level for prescription drugs under the coverage being p p g g gevaluated is greater than or equal to what it would be under standard Medicare D coverage

33

How is creditable coverage determined?

Each year each NRECA plan providing prescription y p p g p pdrug coverage is put to a creditable coverage test

Individual coverage and family coverage plan designs t t d t lare tested separately

Plans are reviewed by an external actuary to determine if the amount likely to be paid by thedetermine if the amount likely to be paid by the NRECA plan is greater than or equal to the amount that a Medicare D standard plan would have paid If yes plan is “creditable” If yes, plan is “creditable” If no, plan is “non-creditable”

34

Why is this important?

High Deductible Health Plans (HDHPs) are g ( )vulnerable to failing the creditability test due to high up front out-of-pocket expenses

Th i i d l f HDHP There is an increased prevalence of HDHPs There are increasing numbers of active employees

over age 65over age 65 Affordable Care Act regulations are closing the

Medicare D coverage gap, enriching the standard M di D lMedicare D plan

35

What happens if a plan is deemed “non-creditable”?non-creditable ?

If coverage is non-creditable, the affected individual will b d i dbe advised He/she is enrolled in a non-creditable plan Remaining in a “non creditable” plan will likely result Remaining in a non-creditable plan will likely result

in the person incurring a late enrollment premium penalty if and when he/she enrolls in Medicare D

36

How is this information communicated?

NRECA is required to notify individuals in writing whoNRECA is required to notify individuals in writing who are eligible for Medicare D* if the prescription drug plan that they are enrolled in is “creditable” or “non-

dit bl ” Thi l ti i l dcreditable” coverage. This population includes Active employees who are over 65 or disabled Directors who are over 65 or disabled Dependents who are over 65 or disabled

* Indi id als enrolled in Medicare A or B are eligible for Medicare D* Individuals enrolled in Medicare A or B are eligible for Medicare D

37

When are creditability notices issued?

Annual notices of creditability must be provided y pto all Medicare D eligible plan participants prior to November 15th each year

N ti id d i b i t Notices are provided on an ongoing basis to individuals who Turn 65 or otherwise become eligible for Medicare D Are Medicare D eligible and move to a plan that has

already been deemed non-creditable

38

How do the ongoing notices work?

NRECA runs a monthly report to identify y p yparticipants turning 65 within 90 days who are enrolled in a non-creditable plan

Aff t d d i d Affected co-ops are advised Persons still enrolled in the non-creditable

coverage when turning 65 are notified they havecoverage when turning 65 are notified they have 63 days to move to a creditable plan (or enroll in Medicare D) to avoid future premium penalty

39

What Can You Do to Help?

• As an employee, please notify your p y , p y yBenefits Administrator if your spouse goes on SS Disability/Medicare

• As a Benefits Administrator, please notify CBA if you are notified that a spouse has gone on SS Disability/Medicare

40

When Can I Sign Up for Medicare?

Initial – at age 65

Medicare Enrollment Periods:

Initial – at age 65

Special – if still working

General – January‐March

What options are available to a cooperative with a plan design that fails the creditability test?p g y

Offer an alternate (non-HDHP) plan design to ( ) p gparticipants who carry a Medicare D eligible person on their coverage NRECA ill i 5 i i if ll i NRECA will waive 5 person minimum if enrollees in

the traditional plan are limited to Medicare D eligible persons or persons with a spouse who is Medicare D eligibleeligible

Advise affected participants of their alternatives if they are enrolled in a non-creditable plan

42

What options are available to an affected individual?an affected individual?

Who does this affect? Anyone who is ENROLLEDENROLLED in Medicare Those who are eligible, but notnot enrolled are notnot affected

Delay receipt of Social Security which will delay enrollment in Medicare and thus delay Medicare D eligibilityMedicare and thus delay Medicare D eligibility Delaying Social Security also allows an over 65 active employee to

continue participation in an HSA

E ll i M di D l h k Enroll in a Medicare D plan on the open market Only retirees are eligible to enroll in NRECA’s Medicare D plan, so an

active employee and/or Director is not eligible to join the NRECA Medicare D plan

Stay enrolled in the non-creditable plan and absorb the penalty if/when the individual enrolls in Medicare Dif/when the individual enrolls in Medicare D

43

Can an employee with a Medicare D eligible dependent remain in a non-creditable HDHP?p

Yes, but the dependent will have to decide what , paction to take relative to Medicare D creditable coverage (see options on prior slide)

NRECA l l i th t th l d NRECA plan rules require that the employee and spouse be enrolled in the same plan, so if the employee wishes to have his/her spouse move to the traditional PPO to avoid the Medicare D penalty, the employee must move as well

44

Does an over 65 spouse preclude an HDHP-enrolled employee from maintaining a familyenrolled employee from maintaining a family

HSA?No, HSA rules apply to the account holder*, pp y If the employee is not Medicare eligible

he/she can still maintain an HSA Purchasing an outside Medicare D plan for

the Medicare eligible dependent may be a good optiongood option

* While a Medicare eligible person cannot make or accept contributions to an HSA, he/she may use existing funds

45

What is the penalty for late enrollment in Medicare D?in Medicare D?

Those who are eligible for Medicare D Individuals enrolled in Medicare A or B are eligible for Individuals enrolled in Medicare A or B are eligible for

Medicare D

Will incur a 1% per month penalty for each month h / h i i thi t t IFhe/she remains in this status – IF Do not enroll in Medicare D or Are not enrolled in a “creditable” plan

46

Example of how the penalty will be applied

A person does not enroll in Medicare D or enroll in a “creditable” plan for two years after becoming eligible forcreditable plan for two years after becoming eligible for Medicare D, then decides to enroll in Medicare D A 24% premium penalty (1% per month) will applyp p y ( p ) pp y The penalty will apply for the duration of the time that

he/she is enrolled in a Medicare Part D plan A th i f th t d d M di D l As the premium for the standard Medicare D plan

increases, the penalty will also index upward, remaining equal to 24% of the prevailing premiumq p g p

47

What materials are available to assist co-ops dealing with this issue?co-ops dealing with this issue?

“Protect Medicare Benefits for Older Workers” brochures for Benefit Administrators Active employees

Eligible for Medicare Part D or Have dependents who are eligible for Medicare Part D Have dependents who are eligible for Medicare Part D

48

QUASI RETIREMENTNRECA MEDICARE CARVE OUT

QUASI RETIREMENTNRECA MEDICARE CARVE OUT

PLAN

Quasi-retirement

• A participant in the R&S Program may quasi-retire on any day of a month coincident with or following hi h N l R ti t D t P ti i this or her Normal Retirement Date. Participants can also quasi-retire again on or after age 70½.

50

Quasi-retirement

• Plan option allowing access to retirement benefits• Plan option allowing access to retirement benefits – On or after normal retirement date– Participant stays actively employed

All di t ib ti ti il bl• All distribution options available• Lump Sum• Annuity

S lit O ti• Split Option

51

Quasi Considerations

• Mortality (pre-retirement death benefit)• Plan changes• Lump sum factor interest rate changes• Anticipated salary changes

52

Quasi Considerations continued

• Advantages• Advantages– Mortality (Pre-Retirement Death Benefit)– Economic Gains (Interest Rate Changes)

• Disadvantages– Plan Upgradespg– Lump Sum Factor (Interest Rate Changes)– Anticipated Salary Changes

• Disability

53

Should I Retire This Year or Next?

• Consider lump sum interest rate change• New high-five average salaryg g y• Additional year of credited service*• Flexibility regarding termination date

*once o ha e reached NRD

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*once you have reached NRD

RS Plan for Active Employees

• Benefit Level = 2 0%• Benefit Level = 2.0%• Waiting Period = 1 year• Pre-retirement Death Benefit = 50%Pre retirement Death Benefit 50%• Employee Contribution = 0.0%• Normal Retirement Date (NRD) = Age 62 • Calculated on = Base pay

55

With Quasi Retirement

• Quasi At Age 62Q g– 2.0% x 30yrs = 60% x $41,250 =

$24,750 x 13.66 (lump sum factor*) =$338,085

f ( )• Transfer To 401(k)– If earnings are 7% for 3 years = $ 414,169

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* Illustrative factor

With Quasi Retirement

• New Pension AccruesNew Pension Accrues– 2.0% x 3yrs = 6.0% x $45,075 = $2,705– $2 705 x 12 62 (lump sum factor*) = $34 137$2,705 x 12.62 (lump sum factor ) = $34,137

• Total Payable At Age 65• Total Payable At Age 65– $414,169 + $34,137 = $448,306

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Without Quasi Retirement

• Normal Retirement At 65Normal Retirement At 65– 2.0% x 33yrs = 66% x $45,075 = $29,750– $29 750 x 12 62 (lump sum factor*) = $375 445$29,750 x 12.62 (lump sum factor ) = $375,445

• With Quasi $448 306 (at 7% interest)• With Quasi $448,306 (at 7% interest)

• Without Quasi $375 445• Without Quasi $375,445

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RS Projection

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RS Annual Statement

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MISSOURIELECTRICCOOPERATIVESMISSOURI ELECTRIC … WORKSHOP Dave Broeke… · section 6056 (i.e.,...

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Transcript of MISSOURIELECTRICCOOPERATIVESMISSOURI ELECTRIC … WORKSHOP Dave Broeke… · section 6056 (i.e.,...