This document is subject to copyright and may not be transmitted or reproduced without express...

This document is subject to copyright and may not be transmitted or reproduced without express written permission from Gehring Group.

Presented by:Kate Grangard, CPA, CFO

June 25, 2013

Risk Management for Health Care Benefits

Including Health Care Reform By the Numbers


2

Overview of Health Care Reform

• PPACA Passed on 3/23/10• Goal: make coverage affordable, accessible,

and comprehensive– Estimated 32 million additional people covered by 2019– Florida one of six states that represents 50% of uninsured


3

Corralling Health Care Costs Through PPACA

$$$Health

Care Costs

Taxp

ayer

s1. Ind. Mandate2. MEC3. Subsidy-Exchange4. Age 265. Medicaid Expansion6. SBC

Empl

oyer

s

1. Pay or Play2. ERRP3. Tax Credit (Sm. Grp.)

4. Wellness Rewards5. Age 26/100 %

Preventive/Max. Ded. & Max OOP

6. PCORI & TRF Fees7. SBC8. Cadillac Tax9. Reporting Compliance

• W-2, Exchange, Mandatory discl., Avail Exchange, SBC, Monthly Coverage

Stat

eG

over

nmen

ts 1. Medicaid Expansion2. High Risk Pool3. Exchange4. Rate Review5. EHB

Prov

ider

s1. Risk based payment models

2. PCORI3. EHR4. ACO/PCMH5. Medicare Payment

Insu

ranc

e Co

mpa

nies

1. No Pre-ex2. Wellness3. Appeals

Process/Patients’ Bill4. MLR5. Rate Review6. SBC7. Max Ded/OOP8. PCORI9. Preventative10.EHB/QHP11.No Lifetime Max12. Health Ins. Ind. Fee

Fede

ral

Gov

ernm

ent

1. Medicaid Expansion2. Medicare Reform (Donut Hole,

PCMH, MSSP)3. ERRP4. High Risk Pool Funding5. Exchange Funding6. Credit/Subsidy Elig. – The Hub7. Legislative Interpretation8. FFE


4

Exploring the Risks of Health Care Reform

• Financial Risk• Audit Risk• Culture Risk• Legal Risk


5

Healthcare ReformPPACA Highlights Timeline

2010 2011 2012 2013 2014 2018

• Dependent coverage to age 26• Eliminate lifetime benefit

maximums on essential health benefits

• Restricted annual benefit maximums

• Non-grandfathered plans must cover preventive services at 100%

• Eliminate pre-existing condition exclusions for children under 19

• Employers must report health coverage costs on W-2

• OTC drugs are “qualified medical expenses” for HSA/FSA/HRA

• Plans must provide SBC with OE materials

• Plans must cover additional women’s preventive care at 100%

• Plans charged PCORI fee

• HCFSA contributions limited to $2,500

• Employers must provide notice to employees regarding Exchanges by Oct. 1, 2013

• Individual Mandate• Employers must offer coverage to

FT employees or pay a penalty• Health Insurance Exchanges

established• Insurers cannot discriminate based

on health status• Plans charged Transitional

Reinsurance Fee• Plan waiting periods cannot exceed

90 days• Eliminate annual benefit

maximums• Eliminate pre-existing condition

exclusions for all adults

• Employers begin to pay excise tax on “Cadillac Plans”

You are here


6

Exploring the Risks of Health Care Reform

• Financial Risk• Audit Risk• Culture Risk• Legal Risk


7

Financial Risk

• Employer Shared Responsibility Provision (ESRP)a.k.a. Pay or Play

The ESRP states that “large” employers must offer coverage that is “affordable”

and of “minimum value” to “full-time employees” and their “dependents”.


8

Financial RiskEmployer Shared Responsibility Provision

• ESRP is effective on the first day of the plan year beginning on or after January 1, 2014– Fiscal Year Plan Transition Relief available

1. Eligible employees in plan under currently eligibility terms as of 12/27/12 – no potential penalty payment until 1st day of fiscal plan year

2. No penalty payment for full time employees until month of fiscal plan start in 2014 if:

a) Employer offered plan to 1/3 of FT and PT employees at most recent open enrollment

b) Fiscal plan covered > ¼ of employees within specified period (point in time test on any day between 10/31/12 – 12/27/12)


9


• Penalties – Monthly Test1. No Coverage Penalty - $2,000 / Full-time employee

Margin of Error Rule: Offer coverage to substantially all full-time employees and deps., a.k.a., the 95% Rule (or 5 employees.)

Note: If Employer offers coverage under the 95% Safe Harbor, Employer will still be subject to $3,000 penalty for those full-time employees who receive tax credits/subsidies from the Exchange.

Also applied if coverage not offered to dependents.2. Inadequate Coverage Penalty - $3,000 / Full-time employee

Coverage is unaffordable and employee obtains federally subsidized coverage through an Exchange, OR

Coverage does not meet “minimum value” requirements and employee obtains federally subsidized coverage through an Exchange.

3. Pay and Play penalty exposure

Penalty is calculated

monthly, not annually.


10


Sample Employer PAY AND PLAY PENALTY EXPOSURE CALCULATION

Employee Count and Plan Enrollment Summary

Total Full-time Employees Enrolled 1,000 Total Eligible Full-time Employees 1,000

Retirees Enrolled 50 PT, Seasonal and Variable EE's Not Offered Coverage but now benefit eligible

70

Total Plan Participants 1,050 Total EE’s Not Offered Coverage 70

Additional Enrolled Members 1,550 Pay and Play Penalty Calculation

Total Enrolled Lives (Belly Buttons) 2,600 Total Eligible Full-time Employees (1,000 + 70) (assuming all PT deemed eligible) 1,070

Margin of Error Breakeven Point

(5% of eligible employees) 54

Multiple employer plans may have to perform Total Eligible Under ESRP 1,070

Pay or Play calculation for multiple entities. Less ESRP Allowance -30

Total Subject to Penalty 1,040

Annual Penalty Amount per Employee $2,000

Total Annual Pay AND Play Penalty $2,080,000


11


Determining “Affordability”• Employers may be assessed a penalty for offering

coverage to full-time employees that is not “affordable”.

• Three Affordability Safe Harbors:1. Form W-2 Safe Harbor – Employee contribution for

lowest cost employee only coverage does not exceed 9.5% of employee’s Box 1 W-2 wages for the applicable calendar year.


12


Determining “Affordability”2. Rate of Pay Safe Harbor – Test using monthly salary at the

beginning of the plan year as base. Employee only cost cannot exceed 9.5% of earnings as of the first day of the plan year

3. “Federal Poverty Line” (FPL) Safe Harbor – Coverage will be “affordable” if self-only coverage does not exceed 9.5% of Federal Poverty Level for single individual. Current individual FPL is $11,170


13


Determining “Minimum Value”• 60% Actuarial Value• Out of pocket max - $6,350 single/$12,700 family• Essential Benefits – Large employers

– Physician and mid-level practitioner care– Hospital and emergency room services– Pharmacy benefits– Laboratory and imaging services

• Exchange (Marketplace) Bronze equivalent


14


Defining a “Dependent”• PPACA indicates coverage must be made available to

employees and their dependents. Dependents defined through this further guidance as: Child of an employee who has not attained age 26 Spouse coverage not necessary to be offered – if offered, not

necessary to be “affordable”

Maximum Waiting Period• Waiting period for coverage can be no greater than 90 days

(not three months)


15


Defining a “Full-Time Employee”• An employee who is employed on average at least 30 “hours

of service” per week or 130 hours per month– Include compensable hours – those worked, also hours

paid when no work is performed– Special periods of unpaid leave may not be counted

against to reduce average hours of service including: FMLA, Military Service, Leave of absence, Jury duty, Vacation, Sick, Personal, Holiday, Incapacity including disability

– Re-hired employees Breaks in service greater than 26 weeks Parity rule for breaks in services less than 26 weeks

• Qualifying part-time, seasonal and variable employees


16


Determining Eligibility of Part-TimeSeasonal, & Variable Hour EmployeesSafe Harbor Rule• Seasonal, Variable and Part-time employees

– Measurement, Administrative and Stability Periods to determine average hours of service

– All employees of all entities consistently assessed


17


• DefinitionsMeasurement PeriodA “standard” look-back period f 3-12 consecutive months used to determine employees’ full time status for purposes of determining benefits eligibility and employer penalty responsibility during subsequent Stability Period for variable/seasonal employees. For new hires, this “initial” period must start no later than the first day of the calendar month following employee start date.

Administration PeriodA period of up to 90 days between the Standard Measurement Period and the associated Stability Period to determine eligibility, notification and enrollment.

Stability PeriodA period of time following a Measurement Period in which a variable or seasonal employee is/is not considered a full time employee for purposes of determining benefits eligibility and accordingly, pay or play penalty, regardless of hours worked during this period as long as still employed.


18


• RulesONGOING EMPLOYEE NEW EMPLOYEEStandard Measurement Period Must be 3 – 12 consecutive monthsAdministration Period Up to 90 days (not 3 months) Must overlap prior stability period (no lapse

for FT EE’s both years)Stability Period Must be 6 – 12 consecutive months, but Not shorter than Measurement Period If not full-time employee, Stability Period

cannot be longer than Measurement Period

Initial Measurement PeriodMust be 3 – 12 consecutive monthsMust start no later than the first day of the

calendar month following employee start date.

Administration PeriodA period of up to 90 days Administration Period plus Initial

Measurement Period cannot exceed last day of first calendar month beginning on/after one year anniversary of employee start date. (13 + fraction month)

Stability PeriodMust be 6-12 consecutive monthsPeriod must be as long as Stability Period for

ongoing employees.


19

Ongoing variable, part-time and seasonal employee assessment cycle:

EMPLOYER: Plan Year 10/1/14 Cycle 1

12 months

10/1/14 9/30/15

Stability Period (Plan Year)

Testing a Variable EmployeeOngoing Employee

Cycle 2

61 days

AdminPeriod

8/1 - 9/30/14

61 days

AdminPeriod

8/1 – 9/30/15

12 months


10/1/15 thru 9/30/16

8/1/13 7/31/14

12 months

Standard Measurement Period

12 months


8/1/14 7/31/15

Measure Period

Must be 3 – 12 consecutive months Uniform and consistent basis for all

employees in same category

Admin. Period

Up to 90 days (not 3 months) Must overlap prior stability period (no

lapse for FT EE’s both years)

Stability Period

Must be 6 – 12 consecutive months, but Not shorter than Measurement Period If not full-time employee, Stability

Period cannot be longer than Measurement Period


20

New variable, part-time and seasonal employee assessment cycle:

Employee Start Date: 11/18/14New Employee: Hillary Clinton – Year of Hire

12 months

1/1/16 12/31/16


Defining a Variable EmployeeNew Employee

1mo+13days(44 days)

AdminPeriod

12/1-12/31/1512/1/14 11/30/15

12 months

Initial Measurement Period

13 + fraction months


Must be 3 – 12 consecutive months Uniform and consistent basis for all employees in same category

Administration Period Up to 90 days (not 3 months) Combined with Initial Measurement Period, cannot exceed 13 + fraction month (last day of 1st calendar month beginning on

or after one year anniversary of EE start date.)

Stability Period Must be same length as ongoing employees’ > 6 consecutive calendar months > measurement period FT during Measurement Per. Benefits thru end of Stability Period If not a FT employee, Stability Period cannot be greater than initial measurement period + 1 month

AND cannot exceed remainder of standard measurement period in which initial measurement period ends


21

EXAMPLE: Transition from New to Ongoing Employee Employee Start Date: 11/18/14 (Employer A – 10/1 Fiscal Plan)New Employee:

12 months

1/1/16 12/31/16


1mo+13days(44 days)

AdminPeriod

12/1-12/31/1512/1/14 11/30/15

12 months


13 + fraction months

61 days

AdminPeriod

8/1-9/30/15

12 months


10/1/15 9/30/16

12 months


8/1/14 7/31/15

61 days

AdminPeriod

8/1-9/30/16

12 months


10/1/16 9/30/17

12 months


8/1/15 7/31/16

Transition to Ongoing Employee:

Scenario 1 – FT during Initial & Standard Measurement Periods:Full time employee from 1/1/16-9/30/17

Scenario 2 – FT during Initial but NOT FT during Standard Measurement Period:Full time employee from 1/1/16-12/31/16


22


Penalty Assessment Process• IRS will notify employer of potential liability and provide

opportunity to respond• Notification will be given after:

– Employees’ individual tax returns are due– Employer has filed an informational report (more info to come)

identifying full-time employees and describing coverage offered

• If penalty deemed assessable, IRS to bill and expect immediate payment

• Penalty to employers will not be paid on any tax return


23

Financial RiskCadillac Tax

• 40% excise tax on “Cadillac Plans” $10,200 for single coverage (High Risk Employees: $11,850)

$27,500 for family coverage (High Risk Employees: $30,950)

Excludes dental and vision

Includes health plan, FSA, HSA, HRA and supplemental

Employers must calculate and report excess value and tax

PENDING GUIDANCE


24

Financial RiskNon-Compliance Penalties

• Reporting– Form W-2– Form 720

• Notifications– Plan amendments– Grandfather Plan– Exchange Availability– Updated COBRA notice– SBC


25



26



27


Summary of Benefits & Coverage (SBC)• 2012 Culturally and Linguistically Appropriate Services (CLAS) Florida

County Data http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/clas-data.html

http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/clas-data.html


28


Summary of Benefits & CoverageCompliance/Logistics: Triggers, Timing and to Whom

*If policy not issued by renewal date, SBC must be issued within 7 business days after the either of: a) the date the policy is issued, or b) receipt of written confirmation of intent to renew.


29

W-2 Reporting of Employer Sponsored Health CoverageGeneral Rules

1. Reportable cost is ER contribution + EE contribution of group health coverage for entire family – including adult dependents and domestic partners. If group health plan includes dental & vision – report entire premium.

2. Do not report clinics, Wellness or EAP plans unless separate COBRA premium is charged.

3. Do not include HRA, Employee contributions to FSA, HSA or Archer MSA’s.4. Calendar year calculation5. Three methods to calculate value:

a) Premium charged method – Fully insuredb) COBRA applicable premium method – Self-insured, HDHP, Minimum Premiumc) Modified COBRA premium method – where employer subsidizes cost of COBRA

6. CONSISTENCY7. Keep documentation8. Further guidance with Q&A Notices 2012-9 and 2011-28.



30

Coverage Type Report on form W-2 Do Not Report on Form W-2

OptionalReporting

Major medical X Dental or vision plan not integrated into another medical or health plan XDental or vision plan which gives the choice of declining or electing and paying an additional premium XHealth Flexible Spending Arrangement (FSA) funded solely by salary-reduction amounts X Health FSA value for the plan year in excess of employee’s cafeteria plan salary reductions for all qualified benefits X Health Reimbursement Arrangement (HRA) contributions XHealth Savings Arrangement (HSA) contributions (employer or employee) X Archer Medical Savings Account (Archer MSA) contributions (employer or employee) X Hospital indemnity or specified illness (insured or self-funded), paid on after-tax basis X Hospital indemnity or specified illness (insured or self-funded), paid through salary reduction (pre-tax) or by employer X Employee Assistance Plan (EAP) providing applicable employer-sponsored healthcare coverage Required if employer

charges a COBRA premium Optional if employer

does not charge a COBRA premium

On-site medical clinics providing applicable employer-sponsored healthcare coverage Required if employer charges a COBRA premium

Optional if employer does not charge a COBRA premium

Wellness programs providing applicable employer-sponsored healthcare coverage Required if employer charges a COBRA premium

Optional if employer does not charge a COBRA premium

Multi-employer plans XDomestic partner coverage included in gross income X Military plan provided by a governmental entity X Federally recognized Indian tribal government plans and plans of tribally charted corporations wholly owned by a federally recognized Indian tribal government X Self-funded plans not subject to Federal COBRA XAccident or disability income X Long-term care X Liability insurance X Supplemental liability insurance X Workers' compensation X Automobile medical payment insurance X Credit-only insurance X Excess reimbursement to highly compensated individual, included in gross income X Payment/reimbursement of health insurance premiums for 2% shareholder-employee, included in gross income X

Other Situations Report Do Not Report OptionalEmployers required to file fewer than 250 Forms W-2 for the preceding calendar year XForms W-2 furnished to employees who terminate before the end of a calendar year and request, in writing, a Form W-2 before the end of that year XForms W-2 provided by third-party sick-pay provider to employees of other employers X

http://www.irs.gov/uac/Form-W-2-Informational-Reporting-of-the-Cost-of-Employer-Sponsored-Group-Health-Plan-Coverage




31


• Benefit Plan Design– No annual max – No lifetime max– Max waiting period– Wellness HIPAA violation– Medical FSA– HRA – Discrimination


32

Financial RiskBudget Exposure

Industry Related Fees• PCORI Fee• Health Insurance Industry Fee• Transitional Reinsurance Program


33


PCORI Fee• $1 PMPY in year 1; $2 PMPY in years 2-7 (indexed for medical inflation)• Fee applies to policy or plan years ending on or after 10/1/12 and before

10/1/2019.• Fee is due in July of the calendar year that follows the end of applicable

plan or policy year for self-funded plans on Form 720. (Expect fee built into rates of fully insured plan.)

• First payment due by 07/31/2013 for calendar year plans or those with plan years ending in October, November or December of 2012.

• Plans with policy years ending after 12/31/2012, will make first payment in July, 2014.

• Plan sponsor is responsible to file report on behalf of all participating employer groups in plan.

• Recommend payment not made from plan assets


34


PCORI Fee• Form 720


35


PCORI Fee• What plans are subject to the PCORI Fee?

FEE APPLIES TO: Employer Sponsored FEE DOES NOT APPLY TO:• Fully insured medical plans, including

minimum premium plans• Self-insured group medical plans• Individual/family plans• Stand-alone behavioral health plans• Individuals on a temporary U.S. Visa who live in

the U.S.• Medicare Surround and Medicare Expand

policies• Retiree-only plans• Health Reimbursement Accounts (HRAs)• Flexible Spending Accounts (FSAs) if the

employer contribution is > $500 and it is more than the employee contribution

• Health Savings Accounts (HSAs)• Stand-alone dental plans• Stand-alone vision plans• Employee Assistance Plans (EAPs) • Exempt FSA plans• Medicare Parts A-D coverage• Medicaid coverage• Expatriate coverage provided primarily for

employees who work and reside outside the U.S.

• U.S.-based “trailing dependents” of expatriate employees who live overseas


36


PCORI Fee• Special rules for multiple plans:

– For multiple plans running on same plan year:

If major medical is fully insured and fee is paid by insurance carrier, the plan sponsor (employer) is responsible for payment of fee for all covered lives in the HRA, thus double counting the participants

If two or more self-insured plans cover the same individuals and have the same plan year, do not pay the fee twice.

All Plans Self Insured:

(i.e. Medical & Rx, or Medical & HRA)

Mixed Fully Insured and Self Insured:

(i.e. Medical & HRA)


37


PCORI Fee• Three methods for determining the average number of

covered lives based on entire plan year:

The plan sponsor counts the number of individuals covered by the plan on one or more dates during each quarter of the plan year and divides by the number of dates on which the count was made. (Dates must be within three days of the date used in the first quarter.)

The plan sponsor counts the number of individuals covered by the plan each day of the plan year and divides by the number of days in the plan year.

Actual Count Method

Snapshot Method

The plan sponsor uses the plan’s annual Form 5500 filed for the plan year – adding the count of participants at the beginning of the year and at year end to arrive at the average number of covered lives.

Form 5500 Method

Allows employer to count all “self only” participants, and use a factor of 2.35 for any employee with other than “self only” coverage.

Snapshot Factor Method


38


Health Insurance Industry Fee• Fee to assist the government in subsidizing coverage for lower

income individuals and families• Paid by the carrier providing fully insured plans• Fee is ongoing (no planned end)

• Result = premium increase of 2.3 – 3.5% for 2014

Year Fee2014 $8 billion2015 & 2016 $11.3 billion2017 $13.9 billion2018 $14.3 billionYears after 2018 Prior year amount indexed by rate of annual

premium growth


39


Transitional Reinsurance Program• Temporary program intended to stabilize premiums in the

individual market from 2014 – 2016. • Protects insurers from uncertainty in rate setting. (PCIP and

other high risk pools to flow into Exchange(s))• Applies to:

– Fully insured grandfathered and non-grandfathered plans Insurance carrier pays fee

– Self insured grandfathered and non-grandfathered plans TPA’s may make payment on behalf of plan sponsor or plans may

pay directly, although plan liable for the fee.


40


Transitional Reinsurance Program • How much is the fee?

*State has option to add an additional a state-level fee.**To be confirmed through HHS Notice of Benefit and Payment Parameters 2014-2015

Year Total Fee to be Collected*

Fully Insured Self Insured

2014 $12 billion Built in premium or direct pass-through at rate of $63 PMPY or $5.25 PMPM for 2014. **Estimates expected to decrease to $42.00 and $26.25 in years 2015 and 2016 respectively.

TPA to bill/collect/remit or plan sponsor direct pay at rate of $63 PMPY or $5.25 PMPM for 2014. **Estimates expected to decrease to $42.00 and $26.25 in years 2015 and 2016 respectively.

2015 $8 billion

2016 $5 billion


41


Transitional Reinsurance Program • Budget Calculation Example

– 10/1 Fiscal plan year / 2600 Total Members

2013 / 2014 Impact (Applies for 9 months)

Transitional Reinsurance Fee (Per Member per Month) $5.25

January 1, 2014 – September 30, 2014 Expense $122,850

2014 / 2015 Impact (Applies for 12 months)

Transitional Reinsurance Fee (PMPM) – 3 Months $5.25

Transitional Reinsurance Fee (PMPM) – 9 Months $3.50

Annual Expense $122,850


42


Transitional Reinsurance Program • When is it due and how is it paid?

– Fee is a calendar year fee– Fully insured: pay in/with monthly premiums starting plan years that

extend into 2014– Self insured: likely remit to TPA monthly or annually– Enrollment count submitted to HHS by November 15th of years 2014,

2015, and 2016– HHS issued invoice expected by December 15th

– Payment due within 30 days of invoiceNOTE: Fee is tax deductible expense.


43


Transitional Reinsurance Program • What plans are subject to the fee?

FEE APPLIES TO: FEE DOES NOT APPLY TO:• All insured individual and group medical plans

(HMO, Network, PPO and OAP) regardless of funding type (i.e., Guaranteed Cost or Shared Returns including Minimum Premium)

• TPAs/plan sponsor on behalf of self-insured group medical plans

• Taft-Hartley Plans to the extent the plans meet the other criteria for inclusion

• Stand-alone pharmacy and behavioral health

• Stand-alone dental and vision plans• Hospital indemnity and specified disease plans• Private Medicare, Medicaid, CHIP, state and

federal high-risk pools and basic health plans• Health Reimbursement Accounts (HRAs)

integrated with a group health plan• Health Savings Accounts (HSAs)• Flexible Spending Accounts (FSAs)• Employee assistance programs, disease

management programs and wellness programs• Stop-loss and indemnity reinsurance policies• Military health benefits• Indian Health Service coverage


44


Transitional Reinsurance Program • Special rules for multiple plans:

– For multiple plans running on same plan year:

If integrated major medical is fully insured and HRA or Rx plan self-insured – treat as a single group health plan to calculate fee.

If two or more self-insured plans cover the same individuals and have the same plan year, do not pay the fee twice.

All Plans Self Insured:

(i.e. Medical & Rx, or Medical & HRA)

Mixed Fully Insured and Self Insured:

(i.e. Medical & HRA)


45


Transitional Reinsurance Program • Three methods for determining the average number of covered lives

based on entire plan year:

The plan sponsor counts the number of individuals covered by the plan on one or more dates during the first three quarters of the plan year and divides by the number of dates on which the count was made. (Dates must be within three days of the date used in the first quarter.)

The plan sponsor counts the number of individuals covered by the plan each day of the first 9 months of the applicable year and divides by the number of days in the first 9 months of the year.

Actual Count Method

Snapshot Method

Add the total count of participants at the beginning of the year and at year end, as reported on 5500, and divide by two. (May not be used if plan sponsor has multiple self insured plans or both fully insured and self insured plans.)

Form 5500 Method

Allows employer to count all “self only” participants, and use a factor of 2.35 for any employee with other than “self only” coverage during first three quarters of the year. (Not available for groups with both fully insured and self insured options)

Snapshot Factor Method


46


Trend and Plan Design Impact• “Too good to be true” renewals• Under 100 market manual rate increases

– Guaranteed issue, guaranteed renewability, but no credible experience

• Small group composite rate elimination• Specialty drug rising costs / Clinical trials• Medical trend• Max out of pocket limits• Elimination of lifetime/annual maximums• Smoker surcharge/Wellness rewards• Adverse risk entering small group market• Special change in election/marketplace enrollment


47


Trend and Plan Design Impact• Special Change in Election Amendment – Section 1.125-4

– Availability of Exchange is NOT a change in status– Transition Relief

Large Employers Fiscal Plan Years Starting in 2013

– Section 125 Plan doc amendment Accident & Health plans only Allows 1 change prospectively to

o Revoke, change current election (go to exchange)o Make salary reduction election for fiscal plan that began in 2013 (go in ER plan)

– Must incorporate rules into Section 125 plan doc by 12/31/14 and must be retro to first day of fiscal plan year started in 2013.


48



49

Audit Risk

Regulatory Agencies• Internal Revenue Service

– Pay or Play Penalty / ESRP– FSA; $2,500 max– Form W-2 reporting of

employer sponsored health coverage

– Form 720 – Elimination of stand alone

HRA– Imputed Income


50

Audit Risk

Regulatory Agencies• Department of Labor - Compliance

– Mandatory disclosures– MLR rebate distribution– Max waiting period– Summary of Benefits and Coverage (SBC)

Content and distribution– Amended plan documents

FSA, $2,500 max Special change in election amendment


51

Audit Risk

Regulatory Agencies• Department of Labor - Compliance

– Non-discrimination Eligibility & benefits Wellness rewards

– Pay or play transitional guidance requirements met– Anti-abuse rules– Notice of Exchange availability


52

Audit Risk• Model Exchange Notice

Due to employees by October 1, 2013


53

Culture Risk

Align Expectations• Management

– Staffing– Ownership of timekeeping

• Employee – Marketplace media blitz– Medicaid expansion– Access to care– Wellness programs– Special change election / 2 deductibles & 2 OOP– Private exchanges / Defined contribution


54

Culture Risk

Align Expectations• Managing authority

– Position recommendation– Comparative entity survey

• Collective bargaining units– Representation among leadership– Clear communication and education for buy-in– Balancing benefits expectations & potential wage

suppression


55

Legal Risk

• Wellness plan discrimination• Benefits classification and eligibility• ERISA / Reduction in hours / Anti-abuse


56

Legal Risk

Other Looming Legislation & Guidance• DOMA legislation• Lawsuit - Exchange subsidy from FFE• Non-discrimination rules• Final ESRP guidance• Medicaid expansion• The Hub Federal Hub


57

Emerging Trends

• ACO’s• Local hospital/physician group issuers• Innovative product offerings & plan design strategies

– Smaller “designated” networks– Telemedicine– Specialty procedures at “centers of excellence”– Outcome-based Wellness programs – 30%/50%– Planning around “substantially all” eligible employees– 60% actuarial value with buy-up– Stratified plans w/in discrimination – Culture/reporting/economics– Non/limited offering of spousal coverage– Early renewals– HDHP with Gap plan– Skinny plans (MEC but not Minimum Value)


58

Emerging Trends

• Clinics– Employee health and wellness center– Urgent Care– Primary Care– Prescription dispensing

• Access to care– Telemedicine– Interlocal agreements– Concierge – Minute clinics and similar


59

Emerging Trends

• Private Exchanges– Florida Health Choices

4-50 employees Single Carrier Minimum employer contribution – 50%

– Single Carrier exchange– Multiple Carrier exchange

• Public Exchange– Notification requirement– Subsidy qualification– Florida FFE– Essential Health Benefits – QHP– Metal Levels: Bronze – Platinum– The Hub


60

Emerging Trends• Exchange Applications

Individual Short Form Family Application Individual Without Financial Assistance


61

Balancing Risks, Costs & Rewards

I don’t know if you know this, but I’m kind of a big freaking deal.


62


• Budget for fees and, mitigate exposure through safe harbors, assess and update processes and systems, and be forward thinking in planning.

• Stay abreast of emerging compliance and reporting mandates and legislation and document, document, and maintain those documents.

• Collaborate and communicate to organizational decision makers, leaders, and employees.


63


• Beware of HIPAA and ERISA that does apply including forthcoming discrimination rules – as well as in house practices and pending legislation that may impact your plan

• Stay updated on emerging products and trends and consider them in relation to your dynamics, industry, and culture.

• Ask questions.


64

Questions


Contact Information:

Copy of presentation: [email protected]

Questions: Kate Grangard, CPA, [email protected]

(561) 626-6797

mailto:[email protected]

This document is subject to copyright and may not be transmitted or reproduced without express...

Documents

Transcript of This document is subject to copyright and may not be transmitted or reproduced without express...