1 Agenda ACA Timeline • Willis Health Care Reform Survey Results Guidance on Health Care Reform Strategies for Consideration Leveraging your ALFA Membership • Opportunities for Group Leveraging and Purchasing • Benefit Administration • Record Keeping
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Affordable Care Act and Its Impact on Senior Living: Compliance and Solutions
Willis Senior Living Practice Group will cover the most recent health-care reform legislative updates. Highlights of this session will include a review of the Affordable Care Act compliance requirements and specific strategies for the senior living industry. The panelists will discuss administration requirements and solutions, innovative benefit designs, enrollment solutions, and group purchasing opportunities. >> Faculty: Michael Pokora, Managing Director, Willis Senior Living Practice || Michael Taggert, President, Empyrean || Gregory J. Martens, EVP Managing Director, Willis Human Capital Practice
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Transcript
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Agenda ACA Timeline • Willis Health Care Reform Survey Results
Guidance on Health Care Reform
Strategies for Consideration
Leveraging your ALFA Membership • Opportunities for Group Leveraging and Purchasing • Benefit Administration • Record Keeping
• FSA $2,500 Limit • 2.3% Medical Device Tax • .9% FICA – Med Surtax on High Earners • Itemize Medical at 10@ AGI (up from 7.5%) • PCORI fee Increase • Notice of State Exchanges and Subsidies • Elimination of Medicare Part D Tax Deduction
• Individual Mandate • Employer Mandate – Essential, Affordable • State Exchanges – Taxpayer – paid Credits • Annual Dollar Limit on EHB Lift • 90 Day Wait Maximum • Adult Child Grandfather Ends • Cafeteria Plans Permitted for Exchange Coverage • Pre-ex Ends For All • Medicaid Expansion • New Tax on Health Insurers • Reinsurance Fee • Enhanced Wellness Financial Incentives • OOPM Limit = HSA Limit
• Delayed Provisions • Auto Enrollment (> 200) • Insured Non Discrimination
Testing
• State Exchanges – Potential Expansion to Large Employers
• “Cadillac Excise Tax”
• All State Exchanges Open to <100
• Part D “Donut Hole” Phase Out Complete
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Willis National Health Care Reform Survey – What We Have Learned Employers will continue many existing strategies • Expansion of Wellness Offering • Redesign of benefit options and eligibility provisions
Most employers plan to “play” under the “play or pay” mandate • Continuation of the “compliance as we go” approach as opposed
to adopting a Total Rewards strategy Employers are concerned with cost, but underestimate the cost of
compliance • 60% of employers say that avoiding cost increases is the most
important consideration for their businesses • Over half of surveyed employers have not determined the cost of
Health Care Reform compliance
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Federal exchange for 32 states o Initial open enrollment to start
10/1/13 19 states/DC establish
exchanges 7 partnership exchanges 25 states default to federal
exchange Question about tax credits and
penalties for coverage on federal exchange
Federal Healthcare Reform Public Exchanges
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Guidance on Health Reform
Pay or Play” rules - Large employers must offer affordable health coverage (meeting MEC rules) to substantially all FTEs
Case study • Happy Village – 1000 employees (930 salaried; 70 hourly) • Health coverage offered only to salaried employees
Issue 1 – Offering coverage to substantially all FTEs • Regulations provide a 5% allowance for offering coverage • Happy Village fails the 95% test • Penalty is $2,000 for each FTE (less 30) prorated monthly • Happy Village penalty is $1,940,000 annually
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Guidance on Health Reform
Issue 2 - Determining FTEs • Ongoing Employees vs. New Hires ‒ Standard Measurement Period ‒ Stability Period ‒ Administrative Period
• Nuanced rules for ‒ Different categories of employees ‒ Seasonal employees ‒ Mid year employment status changes ‒ Rehires
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Guidance on Health Reform
SMP “Lookback Period” 6 months AP 2014
Stability Period = Calendar Year
Case Study for Ongoing FTE Calculation
10/1/13 4/1/13
1/1/2014 1/1/2015
Managing the Variable Hourly EE Eligibility Requirements
SMP “Lookback Period” 12 months AP 2015 Stability Period
10/1/14
SMP “Look Back” Period 12 Months
Transition Year
SMP – Standard Measurement Period AP – Administration Period SP – Stability Period
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Guidance on Health Reform
2015 Stability Period = Calendar Year
1/1/2015 1/1/2016
Managing the Variable Hour EE Eligibility Requirements – New Hires
SMP “Lookback Period” 12 months AP
2016 Stability Period
10/1/14
SMP “Look Back” Period 12 Months
New Hire “Initial Lookback Period” 12 months
1/1/2014
6/1/14 6/1/15
10/1/14 9/30/15
Initial Stability Period
10/1/15
2016 Stability Period
Federal Healthcare Reform Public Exchanges
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Guidance on Health Reform
Pay or Play” rules - Large employers must offer affordable health coverage (meeting MEC rules) to substantially all FTEs
Issue 3 - Affordable health coverage – cost of single coverage is not more than 9.5% of household income
• Safe harbor rule – single coverage cost not more than 9.5% of
employee pay (Box 1 of W-2)
• Penalty - $3,000 for each employee who obtains coverage and premium assistance through a state exchange (prorated monthly)
Meet all PPACA requirements
Continue employer sponsored healthcare model
Plan remains affordable for all employees
Tweak/Adjust existing coverage, contributions, reporting, etc.
Meet some PPACA requirements
Allow low wage workers to qualify for government subsidies/ Medicaid
Pay $3,000 penalty for those ee’s who leave plan and receive subsidy
Increase cost sharing for dependents, and/or eliminating spouses coverage
Option 1
Maintain Status Quo
Option 2
Mostly Play
Option 3
Compliant Creative Strategy
Meet all PPACA requirements
Offer minimum possible coverage that would avoid penalties
60% plan design with no coverage for spouses
Contributions set at 9.5% of wages for self-only coverage, and 100% cost for child coverage
Strategies for Consideration
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Strategies for Consideration: Example of a “Redesign” Offer a multi plan offering to meet minimum compliance guidelines while
offering affordable options to all employees
Plan A
Current Medical
Option(s)
Estimate: $850 PEPM
Plan B
“Bronze Option” for
ACA Compliance
Estimate: $400 PEPM
Plan C
Fixed Indemnity, Hospital
Confinement, Critical Illness,
and Accident
Estimate: $250 PEPM
Cost may vary based on plan designs offered
Tradition Plan(s)
Minimum Compliance
Plan
Alternative Reimbursement
Plans
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Strategies for Consideration: “Defined Contribution” Provide all employees
equal amount to spend on healthcare and ancillary benefits with a wide range of choices and allow employees to select coverage based on their risk preferences
TECHNOLOGY & SERVICES CONSULTING & DESIGN
Integrated Benefit Administrator and ACA Compliance Technology
Plan Design Management (Design) • Health & Welfare Plan Design • Financial Budgeting/Underwriting • Employee Communication
Benefit Exchanges (Design) • Total Benefit Marketplace • Supports Legacy Plans • Supports Defined Contribution
Traditional Administration (Define) • Highly Flexible Implementation • Employee Benefit Portal • Call Center
Regulatory Compliance (Deploy) • Compliance Testing Process • Integration with HRIS • Record Keeping
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ACA Total Solution Delivery
- Solution Spectrum +
Benefit Administration
Only
Maintain Existing “Core Benefits”
and offer Alternative
Reimbursement Plans
Maintain Existing “Medical Benefits” and offer
Ancillary Plans
Adopt Full ALFA Group
Purchasing Strategy
Defined Contribution Marketplace
• Employee Benefit Portal
• Online Enrollment • Call Center • Improved Employee
Communication • Eligibility
Management • ACA Record Keeping • Reduce HR Team
workload
• Benefit Administration
• Continue current Medical, Dental, Life and Disability carriers
• Offer Alternative Reimbursement Plans
o Fixed Indemnity
o Hospital Confinement
o Critical Illness o Accident
• Benefit Administration
• Continue current Medical and Dental carriers
• Offer Ancillary Plans o Life o Disability o Fixed
Indemnity o Hospital
Confinement o Critical Illness o Accident
• Benefit Administration
• Offer Choice of Plans o Medical o Dental o Life o Disability o Fixed
Indemnity o Hospital
Confinement o Critical Illness o Accident
• Benefit Administration
• Provide all employees equal amount to spend on healthcare and ancillary benefits with a wide range of choices and allow employees to select coverage based on their risk preferences
+ Cost of Benefit Administration -
ALFA Solution - Group Leveraging Strategy Preferred Pricing from Carriers