Doug Sheffer, Regional Manager Rhonda Giles, Director of Healthcare Reform Implementation [email protected] Revised August 16, 2013 Healthcare Reform.

Doug Sheffer, Regional ManagerRhonda Giles, Director of Healthcare Reform Implementation

[email protected] August 16, 2013

Healthcare Reform Information for Employers and Individual Policyholders

August 20, 2013

Helping people get

the healthcare they need.

Consumer Impact Varies

Individual & Sole Proprietor

Inside or Outside of the Exchange

Small Group

Inside or Outside of the Exchange

Large Group

Outside the Exchange Only

[email protected]

ACA Highlights: 2010 through 2014

Scholarships for primary care

Funding community health

Community health first choice option

Lower Medicare Advantage payments

ACOs

Hospital-based value payments

Increase primary care fees

Bundled paymentsQuality payments in Medicare Advantage

How

Delivere

d

2010 2011 2012 2013 2014

Dependents to 26

No pre-ex for kids

Preventive care 100%

Small group tax credit

High risk pools

Medicaid expansion

Subsidy for retiree

Crackdown on fraud

Prohibit overall lifetime $ limits

Phase out annual $ limits on EHB

Pediatrician as PCP

No referral on OB/GYN

ER considered in-network

Claims appeal process

Healthcare.gov

RX discounts

Preventive care in Medicare

MLR restrictions

No HSA, HRA, or FSA reimbursement for OTC unless prescribed

Penalty increase for non-qualified HSA withdrawal

Additional women’s preventive care 100%

Summary of Benefits and Coverage (SBC)

Medical loss ratio (MLR) rebates

Exchange open enrollment in Q4

Expand CHIP

Employers with 250 or more W-2s must report health plan on W-2

FSA contribution reduced

Employers notify employees on access to exchange

Threshold for federal deduction on medical expenses raised

0.9% Medicare surtax for high earners

Exchanges operational

“Play or pay” penalty if 50+ FTE

Metal plans for small group and individual

Subsidies for individuals

90-day max probation period

EHB with no annual dollar limits

No pre-ex for any age

Coverage for clinical trials

Small group deductible limited

Individual coverage mandate

Health plan rating restrictions

Stand-alone HRAs prohibited

Employers can increase wellness program incentives

Expand Medicaid

Access to

Coverag

e

Recent Changes: SBC

Summary of Benefits and Coverage (SBC) • Individual – Insurer creates and distributes in paper form or electronically

• Group – Insurer and employer obligation to create and distribute– Insurers create for their fully-insured employers– Employers distribute to plan participants and beneficiaries when receive from insurer– Paper form, or notify how to access electronically

• Upon request, insurers send paper SBC within 7 business days of request or Spanish

• Nationwide consistency between carriers

September 23, 2012

Recent Changes: FSA & W-2

Flexible Spending Arrangements (FSA)

• Health FSA contributions limited to $2,500 (indexed by CPI)

W-2 Health Plan Reporting

• Employers that produced 250 or more W-2s in 2012 (for the 2011 tax year) must begin W-2 health plan reporting

– Employers with fewer than 250 W-2s in the preceding year not required

• Include employer + employee portion of medical and pharmacy premium

– Dental and vision not required, unless built into medical plan

• $30 to $100 penalty per W-2, ranging from $250,000 to $1.5 million maximum

January 1, 2013

Upcoming Changes: Notice

Employer to Notify Employees About Exchange Marketplace• Information about the Exchange,

• The Employer and coverage offered, and

• Potential premium subsidy or a cost-sharing reduction available in Exchange

Distribution Requirements• To all employees by October 1, 2013 & new hires within 14 days of start date

• Must be given to all employees regardless of hours worked

• All employers must comply whether they offer a health plan or not

Two Model Notices from the DOL• Notice for employers without health plans

• Notice for employers with health plans

October 1, 2013

Big Market Changes in 2014

• Guaranteed issue– Health underwriting eliminated on Individual

• Expansion of coverage– Medicaid expansion

– Premium subsidies through the Exchange

– Large group “shared responsibility”(penalty delayed)

• Individual mandate for coverage / tax

• Exchange up and running

January 1, 2014

Guaranteed Availability of Insurance

• Guaranteed issue and renewable– No medical underwriting

– No rescissions except for fraud, intentional misrepresentation, or nonpayment of premium

• Pre-existing condition exclusions no longer apply– All ages

– Individual, small group, large group

– No applicant denials

– No pre-existing waiting periods

January 1, 2014

Expansion of Coverage

Medicaid expansion in Oregon• If not eligible for Medicare, under age 65, & income up to 138% FPL

Premium & cost-sharing subsidies and tax credits through exchange• Individual premium subsidies for incomes between 138-400% of FPL

• Individual cost sharing subsidies on silver plans for incomes up to 250% of FPL

• Small group tax credits if 25 or fewer employees and meet wage and contribution criteria

Individual “mandate” is a tax penalty• Mandated for US residents without qualifying health coverage, unless exempt

• > of $95 per person or 1% of household income; $325 or 2% in 2015; $695 or 2.5% in 2016

Groups with 50+ FTE must offer coverage (tax penalty delayed)• http://healthreform.kff.org/the-basics/Requirement-to-buy-coverage-flowchart

January 1, 2014

How People Without Employer Sponsored Health Insurance Get Covered

FPL % Individual Family of Four With Medicaid Expansion

Up -138% $15,856.20 $32,499.00 Medicaid (OHP)

138% - 250% $28,725.00 $58,875.00 Exchange Premium Subsidy & Cost Share limits

138% - 400% $45,960.00 $94,200.00 Exchange Premium Subsidy

Over 400% Over $45,960.00 Over $94,200.00 Unsubsidized

NOTES: 2013 Poverty Level is $11,490 for a single person and $23,550 for a family of four

*Medicaid eligibility cut off is 133% FPL. 5% of income is disregarded, making the threshold 138% FPL

SOURCE: Kaiser Family Foundation and CMS

The Exchange Marketplace

Exchange is Open for Business

• State health insurance exchanges begin open enrollment

– Initial open enrollment starts October 1, 2013

– For January 2014 effective dates

– Evaluate eligibility: Medicaid, individual subsidies, & small group tax credit

• Exchanges and insurers to train agents and navigators

– Agents continue to provide guidance

• Marketplace: through exchange or direct with insurer

• Plan designs: options available in each marketplace

January 1, 2014

Eligible to participate

in the Exchange?

U.S. Citizen

YES

Lawfully present

noncitizen

YES

Illegal

Alien

NO

The Exchange Marketplace

Additional Marketplace – Exchanges Operational

• Insurance exchange Government-regulated marketplace where individuals and small groups can shop for health insurance, compare plans, and access federal subsidies and tax credits (if qualified)

• State based exchange Cover Oregon

• Initial open enrollmentOctober 1, 2013 through March 31, 2014

• Annual open enrollment for Individual PoliciesOctober 15 – December 7, 2014 and beyond

• Rolling enrollment for Small Group (SHOP) Can purchase coverage at any time and establish their own open enrollment periods

January 1, 2014

An exchange is not intended to compete with the existing insurance marketplace. Insurers can sell policies directly; consumers & employers can obtain coverage outside the exchange.

Market Reset: Small Group & Individual

• Current Plan Designs Discontinued – Small Group: As employers renew in 2014– Individual: December 31, 2013

• Annual Renewal Month – Small Group: Keep same renewal month as now– Individual: January 1, regardless of month enrolled

• New Plan Designs – Available inside and outside the exchange marketplace

• Remain with Current Carrier Outside the Exchange– Keep current member ID number and claims links to allow for continuity of care

• Re-apply through the Exchange (with same or different carrier)– Change in member ID number; new enrollment application; need to update providers– Small Group: Check to see if you are eligible for a tax credit if 25 or fewer employees– Individual: Check to see if you are eligible for a tax credit subsidy or cost sharing subsidy

January 1, 2014

Plan Changes – Individual & Small Group

• Four benefit tiers for small group and individual plans – bronze, silver, gold, platinum – plus catastrophic for individual

• Essential health benefits (EHB)

• Maximum deductible, small group

• Maximum out-of-pocket (MOOP)

• Minimum bronze level

• Dental plans

Platinum Plan 90%

Gold Plan 80%

Silver Plan 70%

Bronze Plan Actuarial Value of

60%

Actuarial Value: Percent of essential benefits covered in-network for a typical population.

January 1, 2014

Benefit requirements in/out of Exchange

Essential health benefits (EHB)• Small group and individual policies must cover EHB• In and outside the exchange• No annual or lifetime dollar limits• Applies to the annual out-of-pocket maximum (MOOP)

Categories of essential health benefits1. Ambulatory patient services

2. Emergency services

3. Hospitalization

4. Maternity and newborn care

5. Mental health, substance use, & behavioral health

6. Prescription drugs

7. Rehabilitative and habilitative services and devices

8. Laboratory services

9. Preventive, wellness, & chronic disease management

10. Pediatric services, including oral and vision exams

Plan Changes: Essential Health Benefit

Large group plans are not required to cover EHBs, but if they do cover them, they can’t have an annual or lifetime dollar limit and must apply to MOOP.

January 1, 2014

HSA, HRA, and the IRS

IRS Guidelines for HSA in 2014• Maximum Out-of-Pocket Amount: $6,350 individual / $12,700 family

• Minimum Deductible Amount: $1,250 individual / $2,500 family

• HSA Maximum Contribution Amount: $3,300 individual / $6,550 family

HSA and HRA Still Available in 2014• Carriers can offer HSA-qualified health plans and integrated HRA’s

• Small groups allowed if carrier offers a plan that meets the metal tier requirements

• Large groups allowed if it is “integrated” and the AV meets the minimum value of 60%

New Rules for HRAs?• HRA is integrated only if employee is enrolled in employer’s health plan

• “Stand-alone” no longer be allowed; an HRA must be “integrated” with a group health plan

• Employer-sponsored stand-alone HRA combined with an individual plan is not integrated

• Amounts credited prior to 1/1/13 may be used after 12/31 to reimburse medical expenses

January 1, 2014

Encouraging Healthy Lifestyles

Wellness Programs and Incentives for Employers

• Incentive for participation in a wellness program­ HIPAA permits incentives of up to 20% of premium if program meets criteria and not based on health.

­ ACA increases allowed incentive to 30% of premium for employee participation in program or meeting certain health standards. Plus an additional 20% to prevent or reduce tobacco use.

­ Example: Group pays 70% of premium. To incent their employees to live a healthier lifestyle, group pays 100% of the premium if the member participates in their Wellness program and meets criteria.

• Criteria­ Offer an alternative standard for those employees whom it is unreasonably difficult or inadvisable.

­ Allow a person at least once-per-year reward

­ Reasonable alternative standards to receive reward

­ Not overly burdensome

­ Not discriminatory based on a health factor.

• Potential implications– Effect on 9.5% of coverage affordability standard

– Discuss with CPA, Attorney, or Broker

January 1, 2014

Eligibility Changes: Employers

Probationary waiting period, regardless of group size

• Limited to 90 calendar days (must be enrolled by 91st day)

• First of month following 1, 30, or 60 calendar days both in and outside exchange

• Some carriers allowing premium prorating for 90 calendar day waiting periods (enroll on 91st calendar day)

Hours per week

• Fewer than 50 FT+FTE: 17.5 to 40 hours

• 50 or more FT+FTE: May face penalty if set higher than 30 hours per week (130 hours per calendar month)

Determining eligibility

• Fewer than 50 FT+FTE: No change; employee eligible once meets probationary period and hours

• 50 or more FT+FTE: Employee eligible based on look-back period

­ Standard measurement: look-back period to establish employee’s historic level of work (3-12 months)

­ Administrative: period to compute data and enroll an employee if the test is met (3 months or less)

­ Stability: period when employee to be full-time is treated as full-time (equal to measurement period)

January 1, 2014

Eligibility Changes: Employers Continued

Employee Only Contracts

• Small group can exclude spouse and dependent children from contracts

• Large group can exclude spouse, but must allow employees to enroll children

• If not eligible for coverage under a group policy, may be eligible for a subsidy in individual exchange

Employer Contribution Toward Employee Premium

• Small Group: Medical: 50% both inside and outside the exchange

• Small Group Dental: $20 inside exchange; varies by carrier outside exchange (PacificSource 50%)

• Large Group: Determined by each carrier (PacificSource 75%)

Participation

• Small Group Medical: 75% inside exchange; determined by carrier outside exchange (PacificSource 75%)

• Small Group Dental: 50% inside exchange; determined by carrier outside exchange (PacificSource 50%)

• Large Group: Determined by each carrier (PacificSource 75%)

January 1, 2014

Grandfathered Plans

WILL apply as they renew in 2014

• Pre-existing condition waiting periods eliminated

• 90 calendar day maximum

• No lifetime or annual limit on EHB

• Can’t exclude dependents under age 26 that are eligible for coverage through own/spouse’s employer

Will NOT apply in 2014, unless the group requests to do so

• EHB (including pharmacy) limited to $6,350 medical out-of-pocket maximum (MOOP)

• Deductible, copayment, and coinsurance apply to MOOP

• Preventive care covered at 100%in-network

• Changes to the way age is used in premium calculation & elimination of gender in premium calculation

Grandfathered plans likely to dwindle away; to keep their grandfathered status

• Cannot significantly cut or reduce benefits

• Cannot raise coinsurance, significantly raise copayment, or significantly raise deductibles

• Cannot significantly lower employer contributions

• Cannot add or tighten an annual limit on what the insurer pays

January 1, 2014

New Market: Large Group Plans

Large Employer Mandate – Shared Responsibility

• Employers with at least 50 full-time equivalent employees in prior year– Must offer coverage to those working 30 or more hours per week or face penalty

• If plan doesn’t meet 60% minimum value (MV) and is “unaffordable”– If employee receives subsidy in Individual Exchange, the employer may be penalized

• “Play or pay” penalty for groups with 50 or more FTE– Transition Relief: Penalty delayed until 2015. Notice encourages groups to comply in 2014.

– $2,000 ($166.67 per month) per full-time employee; first 30 exempt from penalty

– $3,000 ($250 per month) for each employee who receives a federal subsidy

– Not deductible on taxes

• Unaffordable: Employee premium share exceeds 9.5% household income

January 1, 2014

2015 and Beyond

January 2015• Nondiscrimination rules penalty enforced

• Play or pay penalty enforced

• Auto enrollment of eligible employees for groups with 200+ employees, unless employee declines coverage

January 2016 or sooner• Group size definitions (small 1-100 & large 101+)

January 2017 or sooner• Large groups 101+ allowed in Exchange

Updates: Stay InformedHealthcareLawGuide.com

• PacificSource education resource for employers and consumers in Oregon, Idaho, and Montana

• Will reflect updates and changes over time

• [email protected]

Full Text of the Acts

• The Library of Congress Thomas - legislative information, bill summaries and status, and searchable full bill text:

– Patient Protection and Affordable Care Act (H.R.3590)

– Health Care and Education Reconciliation Act of 2010 (H.R.4872)

Helpful Links

• Healthcare.gov - a federal government site managed by the U.S. Dept. of Health & Human Services (HHS)

• Implementation Timeline - from the Henry J. Kaiser Family Foundation

• National Association of Insurance Commissioners

• Penalties for Employers Not Offering Affordable Coverage Under the ACA - Henry J. Kaiser Family Foundation

• U.S. Department of Labor

Tax Information

• While PacificSource cannot provide advice on tax issues, the following resources may be helpful:

– Informational site: "Small Business Health Care Tax Credit for Small Employers"

– IRS notice describing the tax credits: http://www.irs.gov/pub/irs-drop/n-10-44.pdf

While every attempt has been made to ensure the accuracy of all information as of the publication date, information herein is subject to change and is based on our interpretation of the published federal and state laws as of April 22, 2013. Federal and state rules and interpretations of the ACA continue to evolve, and every employer’s circumstances are unique. Consult with your own legal and tax advisors for advice specific to your business.