2013 Healthcare Reform Checklist Kristin Kahle
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2013 Healthcare Reform Checklist
Kristin Kahle
Questions
• If you have questions during the presentation, please submit them using the “Questions” feature
• Questions will be answered at the end of the webinar
Understanding the Patient Protection Affordability Care Act
PPACA
Kristin Kahle, SVP & Compliance Manager
John Gregory, Vice President and Principal
AGENDA
• Definition of Small & Large employers
• Understanding the Rule of 50
• Pay or Play and Penalties associated
• Compliance Timeline…what’s left to do
• Monitoring PPACA …use a Pencil
• Questions
How do I classify an employee?
• Full Time: Work 30 or more hours per week• Part Time: Work fewer than 30 hours per week• Full Time Equivalent of Part Timers(FTEPT): Total
hours of all part time employees for a month divided by 120 monthly hours– 40 part timers average 21 hours/week– (40 * 21*4wks)/120– # of FTEPT = 28
• Seasonal: Work fewer than 120 days per calendar year
What size employer am I?
• Under PPACA, all employers fall into one of two categories– Large: 50 or more FT & FTEPT employees– Small: Fewer than 50 FT & FTEPT employees
• Under PPACA, the calculation of determining the number of Full Time Equivalent Employees is:
FT + FTEPT=FTEE
• Using our prior example, our company would be a large group employer if they had 22 or more FT workers: 50FTEE - 28FTEPT = 22 FT
How Much is the Penalty?
• First, you must have 50 FTEE or greater to be subject to any penalties(excludes plan compliance)
• Second, the penalty is either Type A or Type B:Type A: Health care is NOT offered AND employee goes to exchange to purchase coverage Penalty is $2,000 per FT after you reach 30 FT employees
Type B: Health care is offered, AND employee goes to exchange to purchase coverage, penalty is the LESSER of the two:1. Penalty is $2,000 per FT after you reach 30 FT employees2. Penalty is $3,000 per FT employee that receives a credit for
going to an exchange for coverage– Penalty amounts are to be divided by 12 and assessed monthly
Am I subject to a Penalty?
Employee category
How is this category of employee used to determine “large
employer”?
Once an employer is determined to be a
large employer, could the employer be
subject to a penalty if this type of employee received a premium
credit?
Full-timeCounted as one employee,
based on a 30-hour or more work week
Yes
Part-time
Pro-rated (calculated by taking the hours worked by part-time employees in a month divided by 120)
No
SeasonalNot counted, for those
working less than 120 days in a year
Yes, for the month in which the seasonal worker is full-time
Temporary Agency
Generally, counted as working for the temporary agency
(except for those workers who are independent contractors)
Yes, for those counted as working for the temporary
agency
Part Timer employees are NOT considered when calculating a penalty
Small Employer:
less than 50 full-time
equivalent employees
Large employer: 50 or more full-time equivalent employees
Does not offer coverage Offers coverage
ANo full-time
employees get credits for exchange
coverage
B1 or more full-time
employees get credits for exchange
coverage
CNo full-time
employees get credits for exchange
coverage
D1 or more full-time
employees get credits for exchange
coverage
No penalty No penalty
Number of full-time employees minus 30 multiplied by $2,000
(Penalty is $0 if employer has 30 or fewer full-time employees)
No penalty
Lesser of:
Number of full-time employees minus 30, multiplied by $2,000.
Number of full-time employees who get credits for exchange coverage, multiplied by $3,000.
(Penalty is $0 if employer has 30 or fewer full-time employees)
What Box do I Belong in?
Penalty Decision Tree
Administrative Challenges… keep your pencil sharp and your aspirins
close!
W-2 Reporting
• Employers (issue 250+ W-2’s) must report aggregate cost of group health plan coverage on each employee’s Form W-2
• Does not change the tax rules for health coverage – coverage is still not taxable
• Mandatory for 2012 tax year
• BUT compliance delayed indefinitely for small employers (filed fewer than 250 W-2 Forms last year)
Coverage to Report on W-2
YES NO OPTIONAL
Major medical Health FSA salary reduction amounts
Self-funded benefits not subject to COBRA(Church plans)
Health FSA contributions (other than salary reductions)
HSA/Archer MSA contributions (reported separately)
Separate dental/vision
EAP/on-site medical clinics/wellness programs that provide medical care
Excepted benefits HRA contributions
Hospital indemnity or specified illness (pre-tax or employer contributions only)
Military coverage or Indiantribal government plans
Multiemployer plans
Summary of Benefits and Coverage
• Simple, concise explanation of benefits and costs– 4 double-sided pages, 12-point font– Model template and guidance available– Document is CREATED by the carrier. You or the carrier need to
distribute to employees
• Issuers to health plans effective on/after: Sept. 23, 2012• Health plans to enrollees:
– Open enrollment: 1st day of the 1st open enrollment period that begins on or after Sept. 23, 2012 or
– Other enrollment: 1st day of the 1st plan year that begins on or after Sept. 23, 2012
– No duplication required: if issuer provides to enrollees, plan doesn’t have to
• Special rules specify when SBC must be provided
Providing the SBC
• To health plans from Carriers– Upon application for health coverage
– By the first day of coverage, if there was any change in information
– When policy is renewed or reissued
– Upon request
• To participants and beneficiaries– As part of any written application or enrollment materials
– If no written application or enrollment materials, by the first date of eligibility
– By the first day of coverage, if there was any change in information
– To special enrollees, by the deadline for providing the summary plan description (SPD) (within 90 days of enrollment)
– Upon renewal, if renewal required to maintain coverage
– Upon request
60-Day Notice Rule
• Material modifications not in connection with renewal must be described in a summary of material modifications (SMM) or an updated SBC
• Material modification:– Enhancement of covered benefits or services– Material reduction in covered benefits or services– More stringent requirements for receipt of benefits
• Must be provided at least 60 days BEFORE modification becomes effective
• If you ONLY make plan changes during renewal process, this should NOT impact you.
Preventive Care for Women
• New guidelines for preventive care for women effective for PY on or after Aug. 1, 2012
• Non-GF plans must provide coverage for women’s preventive health services without any cost-sharing – Applies to non-GF plans– No deductible, copayment or coinsurance
• Includes contraceptives and contraceptive counseling– Legal challenges by some religious institutions and
private employers
Health FSA Limits
• Current limits– No limit on salary reductions– Many employers impose limit
• Beginning in 2013, limit is $2500/year– Limit is indexed for CPI for later years
• Applies to plan years beginning on or after 1/1/13– This is a change from initial effective date
• Does not apply to dependent care FSAs which has a $5,000/year limit
Notice of Exchange
• Employers must notify new and current employees of Exchange information – Effective March 1, 2013
• Notice must include information about 2014 changes:– Existence of health benefit exchange and services provided
– Potential eligibility for subsidy under exchange if employer’s share of benefit cost is less than 60 percent
– Risk of losing employer contribution if employee buys coverage through an exchange
• More guidance
• Model notice to be issued
Increased Medicare Tax
• Medicare tax rate to increase for high-earners– 0.9 percent increase (from 1.45 percent to 2.35
percent)
• High-earner threshold – Single: $200,000– Married : $250,000
• Employer responsibilities– Withhold additional amounts from wages in excess of
$200,000– No requirement to match additional tax– No requirement to notify employees
Health Plan Fees
• Comparative Effectiveness Research Fees(expect this fee to be passed on to the employer)– PCOR/PCORI fees to fund research– 2012-2018 plan years – Issuers and self-funded plans sponsors– 2012: $1 per covered life per year; 2013: $2 per covered life per year; beyond
2013: based on health expenditures
• Transitional Reinsurance Program Fees (expect this fee to be passed on to the employer)– To help stabilize individual market premiums– Effective 2014-2016– Issuers and self-funded plan sponsors– $63 per covered life per year ($5.25 per month)
• Insurer Fee– Effective in 2014– Based on market share
2014 Plan Design Changes
Do you have your pencil handy?
Eligibility and Benefits
• Waiting periods
– Waiting periods limited to 90 days
– Safe harbor for employer penalty
• Annual limits
• Essential health benefits
– According to state benchmark plan- about 10 items
Pre-existing Condition Exclusions
• Exclusion of benefits related to a condition present before enrollment
– Permitted under HIPAA with restrictions
• Health care reform changes
– In 2014, prohibited for everyone
– Applies to GF and non-GF group health plans
• HIPAA certificate of creditable coverage
Wellness Program Changes
• Wellness programs:– Participation-only– Standard-based
• Existing nondiscrimination rules apply to standard-based programs that provide rewards– Reward must be no more than 20% of the cost of coverage – Program must be designed to promote health/prevent disease– Opportunity to qualify for those with health issues (and notice)
• Health care reform changes:– Reward increased to 30%– Reward up to 50% for programs to reduce/prevent tobacco use– Small business grants to establish new wellness programs
Limits on Out-of-Pocket Expenses and Cost-Sharing
• Non-GF group health plans subject to limits on cost-sharing and out-of-pocket costs
• Out-of-pocket expenses may not exceed HDHP limits– 2012: $6,050/$12,100
– 2013: $6,250/$12,500
• Deductibles may not exceed $2,000 (single coverage) or $4,000 (family coverage)
• Limits indexed for inflation
• Proposed regs: Limits apply only to insured plans in small group market
2014 Plan Coverage Requirements
Individual Mandate
• Jan. 1, 2014: Individuals must enroll in coverage or pay a penalty
• Penalty amount: Greater of $ amount or a % of income– 2014 = $95 or 1%
– 2015 = $325 or 2%
– 2016 = $695 or 2.5%
• Family penalty capped at 300% of the adult flat dollar penalty or low level premium
Health Insurance Exchanges
• State options:– Establish state Exchange– Establish Partnership Exchange with HHS– Do nothing (HHS will set up federally-facilitated
Exchange)
• Deadlines – Intention and blueprint due: 12/14/12 (extended)– Determine whether will be operational: 1/1/13– Open enrollment: 10/1/13– Fully operational: 1/1/14
• Many states have not taken action
Qualified Health Plans
• Must offer essential health benefits package
– Provide essential benefits
– Limit cost-sharing
– Provides bronze, silver, gold or platinum coverage or catastrophic plan
• Metal levels
– 60-90% of benefits
– Allow consumers to compare plans
Employer Reporting
• Employers will have to report certain information about health coverage to the government and individuals
• Applies to:– “Applicable large employers”
– “Offering employers” – employers that provide coverage if employee cost exceeds 8% of income
• Applies to coverage offered after Jan. 1, 2014
• First returns to be filed in 2015
Information Required
• Employer identifying information
• Whether employer offers health coverage to FT employees and dependents
• Number of FT employees for each month
• Length of any waiting period
• Monthly premium for lowest-cost option in each enrollment category
• Employer’s share of cost of benefits
• Names and contact info of employees and months covered by employer’s health plan
SUMMARY
• PPACA is real and being implemented• Understand EE classification, determine if you
could be subject to expanding health care coverage for additional employees
• Carriers have a lot of the “compliance” responsibility for plans. Employers have the responsibility and accountability for executing
• 2014 will be here sooner than you think…prepare now and demand more from your benefits broker. Look at conducting an audit of your benefits.
How We Can Help
• Benefits Exchange Alliance is partnered with KPA to execute PPACA for/with you
• BXA services include KPA HR Hotlink and Compliance Services at no additional cost
• Reach out to BXA at:
– John Gregory: [email protected] 888-736-2361
– Kristin Kahle: [email protected] 855-212-4224
Contact Information
The recorded webinar and presentation slides will be emailed to you today.
www.kpaonline.com
866-356-1735
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