Healthcare Reform Tennessee Association of School Wednesday, - - PowerPoint PPT Presentation

Wednesday, September 16, 2015

Tennessee Association of School Business Officials

Healthcare Reform

Health Care Reform

• Enacted in March 2010
• Makes significant changes to health care system
• Implemented over several years

Affordable Care Act

• Health care providers
• Government programs
• Health insurance issuers
• Employers/plan sponsors
• Individuals

Provisions that impact:

Most employers that offer health plans are impacted in some way

Key Elements

Key Elements of the Affordable Care Act

• Benefit Changes

– Preventive Care, Dependent child eligibility, lifetime maximum and other benefits were increased

• The Individual Mandate

– Each individual is responsible for purchasing health insurance coverage beginning

• 2014. For those who qualify, government premium subsidies are available.
• The Health Insurance Marketplace

– A new way to find quality health coverage – Can help if you don’t have coverage now or if you have it but want to look at other

• ptions
• The Affordable Care Act’s Patients’ Bill of Rights

– The ACA offers new rights and protections that make coverage fairer and easier to understand

The Individual Mandate

The Individual Mandate

• Requires most people to have “minimum essential coverage” health

insurance

• Beginning in 2014, most individuals must either have health

insurance that meets minimum standards of coverage or pay a penalty when filing tax returns

• Minimum essential coverage is defined as:

– Any Marketplace plan, or any individual insurance plan you already have – Medicaid – Medicare – The Children’s Health Insurance Program (CHIP) – TRICARE and other veterans health care programs – Peace Corps Volunteer plans

How Much is the Tax Penalty?

• The annual tax penalty for not having minimum essential coverage

depends on the age and number of dependents in your household.

• The penalty is the greater of a flat dollar amount per individual or a

percentage of the individual’s taxable income.

$695 per adult and $347.50 for each child (up to $2,085 for families), or 2.5% of income, which ever is greater $325 per adult and $162.50 for each child (up to $975 for families), or 2% of income, which ever is greater $95 per adult and $47.50 for each child (up to $285 for families), or 1% of income, which ever is greater

2014 2015 2016 & Beyond

The Affordable Care Act’s Patients’ Bill of Rights

• The Patients’ Bill of Rights is designed to summarize health

coverage protections embedded within the ACA. Protections include:

– No pre-existing condition exclusions – No arbitrary rescissions of insurance coverage – No lifetime dollar limits on coverage – Restricting annual dollar limits on coverage – Allowing participant choice of a health care provider – Granting access to emergency services

Employer Responsibility

Employer Shared Responsibility Rules (Pay or Play)

• No requirement to offer coverage
• Can get tax credits for providing coverage

Small Employers (fewer than 50 FT/ FTE employees)

• Must offer coverage to FT employees and

dependents to avoid penalties

• Coverage must be affordable and provide

minimum value

• Penalties were delayed until 2015; additional
• ne-year delay applied for ERs with 50-99 full-

time Ees – 1/1/16

Large Employers (50+ FT/FTE employees)

Employer penalties triggered if any full-time employee receives subsidized coverage in an Exchange

Avoiding Penalties

Offer coverage to FT employees and dependents that:

Is affordable

• Employee’s contribution for self-only

coverage does not exceed 9.5% of income

• Safe harbors for what income and

premium amount to use

Provides minimum value

• Plan covers at least 60% of costs on

average

• MV calculator or design-based

checklists

ACA – Penalties

• Employer Mandate – Pay or Play?
• Employers that fail to offer coverage to all FT employees…

Fine is $2,000 per ALL full-time employees (excludes first 30 employees)

• Employers that offer coverage to substantially all FT employees

(and dependents) but coverage is unaffordable does not meet minimum value… Fine is $3,000 for each employee who receives subsidized

2015

Employers with

• ver 100 FTE’s

must comply

2016

Employers with

• ver 50 FTE’s

must comply How many part-time employees can we have?

ACA – Additional Cost Impact

• Several New Taxes & Fees
• Shift to Self-funding to avoid some of the ACA taxes and fees:

Types of Coverage Impacted Reform Measure

Individual Fully Insured Self-Funded Stop Loss Transitional Reinsurance Contribution Fee X X Annual Health Insurance Tax X X Fee for Carrier Exchange Participation X Cadillac Tax (Starts in 2018) X X PCORI Fee X X X Risk Adjustment Program X X

Sources: HHS.gov; IRS.gov; 2016 Notice of Benefit and Payment Parameters, Final Rule

“Substantially All” Full-Time Employee Percentage

• Employers must offer coverage to at least 95% of full-time

employees to avoid largest penalties Proposed rule:

• Percentage requirement phased in over 2 years
• 2015: must offer coverage to 70% of full-time employees
• 2016 and beyond: offer coverage to 95% of full-time

employees Final rule: Employers still exposed to lesser penalties if coverage is not

• ffered to all full-time employees

Full-time vs. Full-time Equivalent

• Counted for large employer determination
• Must be offered coverage (along with dependents) to avoid

penalties Full-time employees

• Counted as a fraction for large employer determination
• Do not have to be offered coverage

Full-time equivalent employees

• Special rules apply for large employer determination
• Special rules apply for offering coverage (along with variable

hour employees) Seasonal employees

Full-Time Employee

With respect to a calendar month An employee who is employed on average at least 30 hours of service per week 130 hours of service in a calendar month = the monthly equivalent of 30 hours of service/week

Exceptions for Educational Organizations

• The proposed regs address teachers and other employees of

educational organizations separately

• In essence, if they are full-time during the active portions of the

academic year, they’ll be considered full-time

• Traditional breaks in the academic year, (holidays, spring breaks,

etc) are often periods of paid leave and the employee will be credited with hours of service accordingly

• This section currently only addresses employees of educational
• rganizations, yet comments are invited on whether there are other

similar industries that also need special consideration

Problems for Educational Organizations

ACA presents a series of unique problems for educational

• rganizations in several classifications of employees. Below are just

a few of the employees who may require the organization to address in their plan offerings addressing both minimum value and affordability of coverage:

• Substitute Teachers
• Cafeteria Workers
• Staff Employees

Look-back Measurement Method

• May be used for new variable hour and seasonal employees if used

for ongoing employees

• Employers may not use the look-back measurement method for

variable hour/seasonal employees and use monthly measurement method for employees with predictable schedules

• Rules protect full-time status for employees transferring between

positions using different methods

Measurement Period Administrative Period Stability Period

Section 6055 and 6056 Reporting

Repor&ng rules apply to:

• Providers of minimum

essen&al coverage (6055)

• Applicable large

employers (6056)

• Rules do not apply to

small employers with insured coverage Repor&ng en&&es must:

• File informa&on returns

with the IRS

• Provide statements to

either full-&me employees (6056) or

• Provide statements to

covered individuals (6055) Purpose of repor&ng:

• Help IRS administer

employer and individual shared responsibility rules

• Determine whether an

employee is eligible for a premium tax credit for Exchange coverage

• Show compliance with

the individual mandate

Self-funded plan sponsors that are ALEs must report under both sections, but will use a combined reporting method

Deadlines

• Rules effective for 2015 coverage

– 2015 coverage information will be reported in 2016 – Employers must collect information during 2015

• Annual deadlines:

– Individual statements due by Jan. 31 – IRS returns due by Feb. 28 (March 31 if filed electronically)

Section 6055 & 6056 Reporting

ALEs sponsoring self- insured plans

Form 1095-C: Part I, Part II and Part III Form 1094-C

ALEs sponsoring insured plans

Form 1095-C: Part I and Part II only Form 1094-C

Non-ALEs sponsoring self-insured plans

Form 1094-B Form 1095-B

Non-ALEs sponsoring insured plans are not required to report under either Sec&on 6055 or Sec&on 6056

Penalties

• Penalties for violations of reporting requirements

− $100 per violation, up to $1.5M per year − May be increased or decreased, depending on circumstances

• Short-term relief from penalties

− Available for reporting related to 2015 coverage − IF reporting entity shows good faith effort to comply − Applies to incorrect/incomplete information reported or other failures due to

reasonable cause

Start early

• n your

renewals Use the best Consultant Invest in systems to provide necessary reports Go Cautiously in to Self- Funding Prepare for network “noise” 1 2 3 4 5

Future Considerations

Form 1095- C

Form 1095-B

Into the Weeds

One School System’s Response Metro Nashville Public Schools

Determine who are full-time and full-time employees

• Issue – We classify employees as benefit or non-benefit eligible

– Benefit Eligible: Regularly scheduled employees who work over 20 hours per week (better than ACA 30 hour requirement) – Non-Eligible: Temporary (substitutes) regardless of number of hours worked. Some of these employees will be considered eligible if average over 30 hours per week

Tracking employees for availability of coverage

• Dropping all payroll files into our online enrollment vendor – Benefit

Express (BE).

• Using a 12-month measurement period
• Crediting 10-month employees with summer service
• Determine how many employees in the non-benefit class meets the

30-hour ACA definition of full-time employee, combine with benefit eligible population.

• Determine the percentage of all employees (per ACA definition) are

provided coverage. If > 95% for 2016, continue business as usual. Potential penalty for failure - > $20 million

Keeping up with our substitutes

• We will keep on ongoing tally on the number of employees offered

healthcare & the number of substitutes who meet ACA requirement that are not being offered coverage – Updated per payroll period (every 2 weeks) – BE will track when substitutes reach eligibility status and lose eligibility status – If our % reaches close to 5%, MNPS will have to decide to either:

• Limit substitute weekly hours to less than 30 hours per week

(we already have a sub shortage)

• Provide coverage to those who are eligible
• Outsource sub’s to a third party

Confirm plans meet minimum coverage, value and affordability definitions

• Utilized actuary and TPA (Cigna) to insure plan meets minimum

coverage.

• Used consultant to determine that based on existing premiums, any

employee with a household income of less than $19,700 annually would be below the affordability threshold

• Looked at our payroll files and determined that 1375 support

employees may be below threshold (primarily cafeteria workers).

• Requested lower cost option, but didn’t get one – waiting to find out

the impact of the penalty. $3,000 for each employee who purchased subsidized coverage on the exchange.

Preparing for IRS Reporting

• Provided online enrollment vendor with eligibility data weekly via

census file

• BE controlled and stored enrollment data
• Addend it with support staff eligibility and enrollment data – annual

file to show coverage and eligibility per month for employees and dependents

• BE to aggregate data then complete the 1095 and 1094 forms on
• ur behalf and send to individuals and IRS

Who Are You Responsible to Report?

• for each employee who was a full-time employee for any month of

the calendar year

• If you sponsor a self-insured plan, you must file Form 1095-C for

each employee who enrolls in the self-insured health coverage or enrolls a family member in the coverage, regardless of whether the employee is a full-time employee for any month of the calendar year.

• For a self-insured group health plan maintained by a single

employer, the plan sponsor is the employer. For a plan maintained by more than one employer that is not a multiemployer plan (as defined in ERISA) the plan sponsor is each participating employer.

• If you are part of a self-funded plan – you report employee and

dependent coverage. If you have fully-insured coverage – you only have to report the employee.

Some Notes From the State

Are You Ready for the Questions?

Thank you!