2014 Fall Health Care Symposium Agenda ACA Whats Happening Now - - PowerPoint PPT Presentation

2014

Fall Health Care Symposium

Agenda

• ACA – What’s Happening Now
• Group

up vs. Individu vidual al Coverag erage

• Alternative

native Fundin nding Options ns

• Why Wellnes

lness Matters rs

• Trans

ansforming

• rming HR

HR Through rough Tech chnolog logy

Understanding Obamacare

• In order to insure the uninsured, we first have to un-

insure the insured.

• Next, we require the newly uninsured to be re-insured.
• To re-insure the newly uninsured, they are required to

pay extra charges to be re-insured.

• The extra charges are required so that the original

insured, who became uninsured, and then became re- insured, can pay enough extra so that the original uninsured can be insured, which will be free of charge to them.

The ACA Health Care Coverage Landscape - Changes in Effect Prior to 2014 2014

• Loss

ss of Medic icare are Part D D retiree ee subs bsidy idy deduction uction

• $25

2500 PY cap p on n FSA A salary lary reduct uction ions s (Not

• tic

ice e 201 012-40) 40)

• Amendment required by 12/31/2014
• Signif

gnific ican ant t Limit mitat atio ions on n HRAs As Annou nnounce nced d in 201 013

• January 2013 FAQ Guidance
• Transition (spend down) rule for some pre-existing HRAs
• Septemb

ptember er 13, 3, 201 013 - Notic ice e 201 013-54

• Curtails stand-alone HRAs, prohibits pre-tax individual

policies

• Carryo

yover ver Guidan idance ce for FSAs As - Notic ice e 201 013-71 71

• Up to $500
• Cannot be combined with FSA grace period changes

The ACA Health Care Coverage Landscape - Changes in Effect 2014 and Beyond

• Individu

dividual al manda andate e - no

• penalt

nalty impo posed sed due e to cov

• ver

erag age e gap if f indiv dividua idual l enroll rolls s by end d of f open en enroll rollme ment nt (March rch 31, , 2014 014)

• Emplo

ployer yer play y or pay requirem uiremen ent - NOW W DELAYE LAYED D UNTIL TIL 201 016 for emplo ployer yers s with th less than an 100 00 FTE TE emplo ployees.

• yees. Wit

ith h some me limited “Sledgehammer" " transition nsition relief ief for larger ger emplo ployers ers.

• Emplo

ployer yer Covera erage ge Report portin ing.

• g. DELAYED

LAYED UNTIL TIL 201 015

(Fin

inal al regs March ch 2014) 014)

• Required to report minimum essential coverage and

premium costs

• Applies to insurers and self funded plans

The ACA Health Care Coverage Landscape - Changes in Effect 2014 and Beyond

• Exchan

changes ges - First open en enrollm rollment nt for indiv dividu idual al covera erage ge comm

• mmen

enced ed October ber 201 013

• October 1st Exchange Notice Requirement; on-going for new

hires

• Change

hanges Gene nerall ally y Effectiv ective e First st Plan an Year On/ n/After ter Janua nuary ry 1, 201 014

• Emplo

ployer yer Quali uality of f Care re Coverage

• verage Repo

portin ing - Dela layed yed pendin nding g guidan idance

• Will require information on health care outcome, safety, and

wellness

• Must make available to enrollees and on internet

Court Decisions of Interest

• Ho

Hobby Lob

• bby Decision

sion

• Religious objections to providing contraceptives
• Supreme Court ruled in favor of for-profit employers

under Religious Freedom Restoration Act (RFRA)

• But state contraceptive equity laws may still apply
• Other

r challen llenges ges working ng their r way throug

• ugh

h the cou

• urt

rts

• Halbig and King - Availability of federal tax subsidies

in state run exchanges

Reforms Effective Plan Years On/After 2014

• (ALL)

LL) No No pre-ex exis istin ing condit

• nditio

ion exclusio clusions s or limit mitat atio ions are permitted mitted

• First wave of reforms applied only to persons under age 19
• (ALL)

LL) Prohibit hibitio ion on n excess cessiv ive e wait itin ing g periods iods- i.e.

• e. no
• wait

itin ing g perio iod d in excess cess of f 90 days

• March 2013 Proposed Regulations substantially retained
• Final Regulations issued February 2014
• New 30 day "orientation period"
• Eliminates HIPAA Certificates after 12/31/14
• (NGF

GF) Fair ir Healt alth h Insu suran ance e Premium miums s (appli licable cable only ly to healt ealth h insurers surers of small all group up plans) ans)

• Limitations on premium setting (e.g. limitations on

premium setting based on age 3:1. tobacco use 1.5:1, geography)

• Final Regulations issued in February 2013

Reforms Effective Plan Years On/After 2014

• (NGF) No discri

rimi minat natio ion n based on health th status s is permitt itted ed

• Essentially, the same rules that currently exist under HIPAA
• The law raises maximum incentive amount for wellness

programs that provide the incentive based on achieving a health standard from 20 to 30 percent of the COBRA cost of coverage

• Also gives the Secretaries of Labor, HHS, and the Treasury leeway to

increase the percentage to 50 percent

• Final regulations published June 3, 2013
• Some new requirements for standard based wellness plans (activity
• nly vs. standard based distinction)
• 50% limited to tobacco cessation
• (All) Coverage

rage of dependent t childre ldren n to age 26 - end of

• f

special al rule e for GF plans

• Under transition rule, GF plans could exclude adult children if

the adult child is eligible to enroll in an eligible employer- sponsored health plan other than a group health plan of a parent This special rule for GF plans does not apply to plan years beginning on or after January 1, 2014

Reforms Effective Plan Years On/After 2014

• (NGF) Cost limi

mita tations tions

• ALL PLANS - Out-of-pocket expenses do not exceed the

amount applicable to coverage related to health savings accounts (HSAs) ($6350 single, $12700 family

• 2015 amounts $6600 and $13,200 differs from HSA amounts

($6450,$12900)

• ACA compliance does not mean HSA eligible
• Small Fully Insured Plans - Deductibles do not exceed $2,000

for single coverage and $4,000 for family coverage (as indexed)

• Februa

uary ry 2013 3 final al Regulations lations clari rify fy

• the deductible requirement only applied to fully insured plans in

small group market, but OOP applies to ALL

• Transition OOP relief allowed where separate PBM administrator
• nly for the 2014 plan year
• Medicare

are SGR Fix (Sec 213)

• Eliminates deductible (but not OOP) limit
• Reopens door for Integrated HRA arrangements coupled with

super high deductible coverage

Reforms Effective Plan Years On/After 2014

• (NGF

GF) Fully ully insured sured plans ans in small all grou

• up market

rket must ust provide ide essenti ential al heal ealth h benefi nefits ts (EHB) B) as determi termined ed by referen rence ce to a State te benc nchmark ark plan an

• Not applicable to fully insured plans in large group

market or self-funded plans

• For purposes of applying the prohibition on lifetime and

annual limits, large group and self-funded plans may use any single permissible benchmark plan

• Final regulations address Minimum Value for pay/play

purposes and IRS issues MV calculator

• (NGF

GF) Grou

• up

p and d individu dividual al plans ans required uired to cover er routin utine e costs sts of partic icipatio ipation in clini inical cal trials als by quali alifi fied ed individu dividual als

• Agency FAQ says good faith compliance standard applies

until guidance is issued

Reforms Effective Plan Years On/After 2014

• (NG

NGF) F) Addit itio ional al preven ventive ive care re requirem uirements nts fo for PY begin innin ing g on/af n/after er 9/24/1 /24/14

• In accordance with new guidelines Issued by the United

States Preventive Services Task Force (USPSTF), non- grandfathered plans will need to cover cancer medication preventive services without charge. The effective date Is based on when the USPSTF added the new requirement. http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and- FAQs/aca.Implementation.faqs18.html

Cadillac Plan Tax

Begin inni ning ng in 2018, 18, ACA imposes a 4 40 perce cent t exci cise tax on:

• "Covera

rage ge provider viders:" " for the sum um of month ths in wh which ich the e aggr greg egat ate value ue of employe loyer sponso sored ed health lth cover erag age for the employe loyee e exceed eeds: s:

• 1/12 of $10,200 for single coverage and $27,500 for family (i.e.,
• ther than single) coverage
• These amounts are to be adjusted automatically if health costs increase

by more than anticipated before 2018

• The thresholds are increased by Consumer Price Index + 1 in 2019, and

by CPI thereafter

• An employer may make an adjustment to reduce the cost of plans

when calculating the tax if the employer's age and gender demographics are not representative of a national average

• No adjustment for high cost states
• The

e annua nual limi mit for retir irees ees between een ages s 55 and 64, , indiv dividu idual als s engaged gaged in certain ain high gh-ris risk profess ssions

• ns (e.g

.g., ., law enfo forcem rcemen ent t profess ssiona ionals ls, EMTs.

• s. longsho

ngshorem emen, en, const struction ruction workers ers, , and mine iners rs), ), and those se employe loyed to inst stall all elect ectric rical al or telecommun ecommunicatio ication n lines nes is incr crea ease sed d to $11 11,850 ,850 for indiv ividu dual al cover erag age and $30,9 0,950 0 for family mily cover erag age

Cadillac Plan Tax

Determin rmined ed by the employe

• yer

r and assessed d agains inst t "coverage providers”

• "Cover
• verage

age providers" iders" are define ined to includ clude e the e follo lowin ing: g:

• In the case of fully insured plans, the health Insurer
• In the case of HSA or medical savings account (MSA)
• contributions. the employer making the contributions
• In the case of a self-insured plan or flexible spending account

(FSA), the person that administers the plan (e.g., the TPA)

• In many

any cases, ses, emplo ployer yer-spo sponsored sored cover

• verage

age will ll inc nclu lude de both th full lly insured sured and d self-in insured sured con

• ntribu

tributio ions (it may also so includ clude e HSA A con

• ntribu

tributio ions) s)

Cadillac Plan Tax

• The

he covera erage ge subject ject to the e excise cise tax rule le includ cludes: es:

• The applicable premium (determined in accordance with

COBRA rules) for all accident and health coverage provided by the employer, even if paid for with after-tax dollars by the employee (except vision only insurance, dental insurance, accident and disability insurance, long term care insurance, and after-tax funded hospital indemnity and/or specified disease coverage)

• Both non-elective and salary reduction contributions to a

health FSA

• Employer contributions (presumably including salary

reductions) to an HSA

2014 Fall Health Care Symposium

Group vs. Individual Coverage- Pros & Cons

Keep ep Group roup Plan an

• Pros
• Emplo

ployees yees can n contr

• ntribu

ibute te on a pre-ta tax x basis! s!

• Pre-tax contributions reduce taxable income to the employee and

the employer

• The “net” cost of the employees portion is more favorable when

paying with pre-tax contributions

• Grou
• up

p plans ans typically ically have e low

• wer

er out ut-of

• f-po

pock cket cost sts

• Most group plans pay 100% after the deductible has been met
• Co-pays for Office Visits, Prescriptions etc. are typically lower vs.

individual coverage

• Emplo

ployee yee retentio ention

• Employees appreciate a comprehensive benefits package
• Recruit

ecruitin ing

• Benefits are one of the first things prospective employees will ask

about

Group vs. Individual Coverage- Pros & Cons

Keep ep Group up Plan an (Co Cont. nt.)

• Cons
• Indiv

dividual idual Ra Rating

• *Groups in the 2-50 market that renew 6/1/14 or later have the

ability to keep their “old” plan and composite rating methodology

• Individual rates are based on age, geographic location (by

county) & tobacco use

• PPACA plans are individually rated which makes cost-sharing

more challenging

• Employers have typically paid a flat percentage or dollar amount

towards premiums

• Individual premiums make this more difficult:
• Take an average of all the individual rates and create a composite rate?
• Provide a flat-dollar amount to each person and have them pay the actual

difference based on their rate?

• Provide a flat percentage to each person and have them pay the actual

difference based on their rate?

Group vs. Individual Coverage- Pros & Cons

Keep ep Group roup Plan an (Cont.) nt.)

• Cons
• Rates have increa

reased sed signific nificantly antly for many group

• ups
• December renewals have average increases of 35% with many

groups receiving 50% increases

• Subsid

ides s – By offeri ring ng a group up plan you u essentially “lock-

• ut” employees from Marketplace subsidie

dies

• Subsides are income dependent and wont apply to all

employees

Group vs. Individual Coverage- Pros & Cons

Convert vert To Individ dividual ual Plans ans

• Pros
• Emplo

ployees yees can n pick ck from m a va variety iety of plans ans

• Carriers offer multiple plan designs within the 4 “metal-levels” of

Bronze, Silver, Gold & Platinum

• Some
• me emplo

ployees yees may receive ceive subs bsidi idies es

• Subsides are based on household income as it relates to the

Federal Poverty Level (FPL)

• Households that are between 100%-400% of FPL will qualify for a

subsidy

• Emplo

ployer yer is remo moved ved from

• m the decis

cisio ion making king proc

• ces

ess

• Employees make their own decisions based on individual needs

Group vs. Individual Coverage- Pros & Cons

Convert vert To Individ dividual ual Plans ans

• Cons
• Emplo

ployees yees must st pay for premiu miums s with th a post-ta tax x doll llar ar

• A $300 premium may require an employee to “gross” $400 in
• rder to “net” $300
• Out

ut-of

• f-Pocket

Pocket Cos

• sts

ts

• Plans range from $1650 per person up to $6350 per person for

deductibles, co-insurance and co-pays

• Out-of-Pocket will increase to $6550 per person for 2015
• Emplo

ployer yer Con

• ntribu

tributio ions Towar

• wards

s Premiu iums s

• Technically not legal – Could be done through a “merit” raise but

should not be explicitly for individual health insurance

• Additional taxes for the Employer
• Additional taxes for the employee
• May eliminate subsidy based on increased compensation

Group vs. Individual Coverage- Pros & Cons

Convert vert To Individu ividual al Plans ans- “On” or “Off” Marketplace

• Plans

ns Are The Same! e!

• Plans purchased directly from the insurance carrier (i.e.

Highmark, Capital etc.) are the exact ct same plans you can purchase through the Marketplace (www.healthcare.gov)

• Pricing for the plans are identical unless you qualify for a

subsidy

• If you qualify for a subsidy & you want to apply that subsidy

towards your premium you must purchase your individual plan through the Marketplace (web-site, phone or mail)

• Subsides are based on household income & household size

Who’s Eligible?

• Tax Credits
• $11,490 to $45,960 for individuals
• $15,510 to $62,040 for a family of two
• $19,530 to $78,120 for a family of three
• $23,550 to $94,200 for a family of four
• $27,570 to $110,280 for a family of five
• Reduced out-of-pocket costs
• $11,490 to $28,725 for individuals
• $15,510 to $38,775 for a family of two
• $19,530 to $48,825 for a family of three
• $23,550 to $58,875 for a family of four
• $27,570 to $68,925 for a family of five

Income Level Premium as a Percent of Income

Up to 133% FPL 2% of income 133-150% FPL 3 – 4% of income 150-200% FPL 4 – 6.3% of income 200-250% FPL 6.3 – 8.05% of income 250-300% FPL 8.05 – 9.5% of income 300-400% FPL 9.5% of income

What are employers doing?

• Few Group

ups Ha Have e Dropped ed Coverag erage

• Small

ll group market ket

• Most renewing “as is” in pre-PPACA plans
• Carriers interpretation of “if you like your plan”
• Large

e group p mark rket et

• Carriers providing offers “not to shop”
• Carriers concerned about groups moving to self-funded
• Small

ll & L Large ge Group ups

• QHDHPs & HSAs
• Self Funding

2014 Fall Health Care Symposium

Self Funding vs. Fully Insured

• Employer assumes all or a portion of the risk for health

benefits.

• Administrative Services Only (ASO) – an arrangement in

which an organization funds its own benefit plan

• Administrative options available to employers choosing

self-funding:

• Payment Arrangements
• Paying at the maximum funding level
• Pay claims as you go

Self Funded Terms

• Admin

minis istrativ trative e Fee: e:

• Fee charged for claims adjudication, billing, eligibility,

customer service, plan document maintenance, access fees, managed care fees

• Setup

tup Fee: e:

• One-time charge for the input of eligibility and benefits in
• rder for the plan to be administered
• Expec

ected ted Claim aims: s:

• Total claims underwriter expects you to have in one policy

year, actuarially determined from your past claims experience

Self Funded Terms

• Laser:

r:

• A provision within the stop loss contract that excludes a

member from the stop-loss insurance. All claims for that individual would be the responsibility of the employer

• Sho

hock k Clai aim: m:

• A shock loss may be defined as an abnormally large and

unexpected claim.

• Could be the result of severe accident or serious illness
• Stop
• p-Lo

Loss ss Insu suran ance: e:

• Insurance purchased to protect the employer from a shock claim

and/or unexpectedly high utilization

• Specific
• Aggregate

Self Funding Advantages

• Flex

exibi ibili lity ty in Plan n Desig ign

• Self-funded plan not bound by state mandates
• Risk

sk Managem anagemen ent t effect ectiv iven eness ess through

• ugh Stop

p Loss ss Insuran surance ce

• Employer may choose the amount of risk to retain and the

amount to be covered under stop loss protection. Under an insured arrangement, insurance company sets the pooling level.

Self Funding Advantages

• Tax

x Savin vings gs

• No premium tax for the self-funded claim fund
• Transpar

ansparency ency

• Know what you are paying for
• Margin

gin

• Insurance companies typically charge 3-10% for margin (for

fluctuations in claims)

• Under self-funded arrangement, this component is eliminated

Self Funding Disadvantages

• Risk

sk Assum sumptio ion

• Employer assumes risk between the normally anticipated

claim level and Stop Loss Coverage level

• Laser

sers

• Under fully insured arrangement, this component is

eliminated

• Fiduci

duciar ary y Respo ponsibi sibili lity

• Employer assumes risk

Self Funding Options

• ASO

SO Plans ns

• Potential for lasers
• Negotiating on a small premium
• Should have 300 employees or more
• Carrier

ier Optio ions for Small all Grou

• ups

ps

• Down to 20 enrolled (underwriting required)
• Level premiums
• No lasers

Self Funding Options

• Con
• nso

sorti tium um Model del

• Level premiums
• No lasers
• Stop Loss Purchasing Power
• Medical Loss Ratio
• Captive

ptive Model del

• Potential cash advantage
• Collateral required up-front
• Commitment to wellness

Questions?