Newark New York Trenton Philadelphia Wilmington GNJSHFA Affordable Care Act – Its Here to Stay Christine A. Stearns Counsel, Government Affairs November.

Newark New York Trenton Philadelphia Wilmington

GNJSHFAAffordable Care Act – Its Here to Stay

Christine A. Stearns

Counsel, Government Affairs

November 19, 2015


Note: 2015 data is for Q1 and Q2 only. Source: CDC/NCHS, National Health Interview Survey, reported in http://www.cdc.gov/nchs/health_policy/trends_hc_1968_2011.htm#table01 and http://www.cdc.gov/nchs/data/nhis/earlyrelease/insur201511.pdf.

Uninsured Rate Among the Nonelderly Population,

1972-2015Share of population uninsured:

Average Annual Worker and Employer Contributions to Premiums and Total Premiums for Family Coverage, 1999-2015

* Estimate is statistically different from estimate for the previous year shown (p<.05).

SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2015.

$5,791

$6,438*

$7,061*

$8,003*

$9,068*

$9,950*

$10,880*

$11,480*

$12,106*

$12,680*

$13,375*

$13,770*

$15,073*

$15,745*

$16,351*

$16,834*

$17,545*

Cumulative Increases in Health Insurance Premiums, Workers’ Contributions to Premiums, Inflation, and

Workers’ Earnings, 1999-2015

SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2015. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2015; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2015 (April to April).

* Estimate is statistically different between All Large Firms and All Small Firms estimate (p<.05).

SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2015.

Average Annual Worker and Employer Contributions to Premiums and Total Premiums for Single and Family

Coverage, by Firm Size, 2015

$6,163 $6,289 $6,251

Single Coverage Family Coverage

NOTE: Information was not obtained for POS plans in 1988. A portion of the change in plan type enrollment for 2005 is likely attributable to incorporating more recent Census Bureau estimates of the number of state and local government workers and removing federal workers from the weights. See the Survey Design and Methods section from the 2005 Kaiser/HRET Survey of Employer-Sponsored Health Benefits for additional information.

SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2015; KPMG Survey of Employer-Sponsored Health Benefits, 1993, 1996; The Health Insurance Association of America (HIAA), 1988.

Distribution of Health Plan Enrollment for Covered Workers, by

Plan Type, 1988-2015

SOURCE: Kaiser Family Foundation analysis of National Health Expenditure (NHE) data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group.

U.S. health care spending per capita has risen at historically low rates recently, but is expected to pick up

Average annual growth rate of health spending per capita for 1970’s – 1990’s;Annual change in actual health spending per capita 2000 – 2013 and projected health spending per capita (2014 – 2024)


The Individual Mandate

Requires most U.S. citizens and legal residents to purchase health coverage or incur a tax penalty of $695 (or 2.5% of adjusted gross income), whichever is greater for 2016.

The fee is calculated monthly for each month with “minimum essential coverage”


Penalty Calculation

The flat dollar amount was phased in over three years ($95 for 2014; $325 for 2015; and $695 for 2016 and then indexed for inflation).

The applicable percentage is 1% for 2014; 2% for 2015; and 2.5% for 2016 but cannot exceed the premium for the “bronze” level plan offered thru the exchange.


Effects of the Individual Mandate

Gives all taxpayers, including employees, an incentive to obtain coverage:

• Information sought from employers

• Pressure on employers to provide coverage

• Employees seeking a premium tax credit which may trigger IRS assessments against employers



Small Employer Tax Credit

Beginning in 2014, the credit refunds up to 50% of health insurance expenses for eligible employers purchasing thru exchange and is available for any two consecutive years (credit was 35% for 2010 – 2013).

The credit is fully available to companies with 10 or fewer full-time employees and average wages below $25,000. The credit phases out as the number of employees increases to 25 and wages grow to $50,000. Tax-exempt organization of maximum credit of 35%.


Federal Marketplace: The Basics

Each plan’s actuarial value (AV) must fall within the metallic tier (Bronze – 60%, Silver- 70%, Gold – 80% and Platinum – 90%). AV=% of total average costs for covered benefits that a plan will cover.

Rating is now to the member level so a rate is paid for each individual and each member of their family.

In 2015 about 194,000 New Jersey residents chose to enroll in the Marketplace with about 83% receiving a subsidy.


Marketplace: The Basics

Other rating changes:

No gender rating.

Tobacco use is not a permitted rating factor in NJ, but is permitted in other states.

Plans available “on the exchange” are also available “off the exchange”.

Employers with 1-49 employees: Considered a “small employer”. This is a “new” definition. New Jersey formerly defined small employer as having 2-49 employees.


The Employer Mandate“Large employers” must offer their workers “affordable” and “minimum essential” health care coverage that has “minimum value” or pay a penalty.

What is minimum essential coverage? No definition yet but we know the broad categories that

What is affordable coverage? An employees contribution may not exceed 9.5 percent of the employees income.

What is “minimum value”? Generally, the plan’s share of total allowed cost of benefits is not less than 60%.


Who is a large employer?

The mandate applies to employers with 50 or more full-time employees during the previous calendar year.

The law considers an employee who works at least 30 hours a week a full-time employee, as well as two employees who each work 15-hours per week to count as one full-time employee.

The mandate does not apply to employers that exceed 50 employees for 120 days or less, and whose extra employees are considered seasonal workers.


What is the penalty?

The company could be subject to an annual penalty of $2,000 for each full-time employee that 1) doesn’t offer health coverage and 2) at least one employees receives government subsidized insurance through the marketplace, minus the first 30 employees.

Employers whose coverage is deemed unaffordable or low value could be subjected to a penalty of $3,000 for full-time employees that receives government subsidized insurance through the government insurance exchange.


The Phase-in: Employers with 50-99 Employees

Required to provide a minimum level of affordable coverage

2015: Must provide information on the number of employees

2016: Penalties are assessed


The Phase-in: Employers with 100+ Employees

Required to provide a minimum level of affordable coverage

2015: Must cover 70% of employees

2016 (and beyond): Must cover 95% of employees. Penalties are assessed.

NOTES: Current status for each state is based on KCMU tracking and analysis of state executive activity. *AR, IA, IN, MI, MT, NH and PA have approved Section 1115 waivers. Coverage under the PA waiver went into effect 1/1/15, but it has transitioned coverage to a state plan amendment. Coverage under the MT waiver will be effective January 1, 2016. WI covers adults up to 100% FPL in Medicaid, but did not adopt the ACA expansion.SOURCE: “Status of State Action on the Medicaid Expansion Decision,” KFF State Health Facts, updated November 2, 2015.http://kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/

Current Status of State Medicaid Expansion Decisions

WY

WI*

WV

WA

VA

VT

UT

TX

TN

SD

SC

RI PA*

OR

OK

OH

ND

NC

NY

NM

NJ

NH*

NV NE

MT*

MO

MS

MN

MI*MA

MD

ME

LA

KY KS

IA*

IN* IL

ID

HI

GA

FL

DC

DE

CT

CO CA

AR*AZ

AK

AL

Adopted (31 States including DC)

Adoption Under Discussion (1 State)

Not Adopting At This Time (19 States)

NOTE: The June 2012 Supreme Court decision in National Federation of Independent Business v. Sebelius maintained the Medicaid expansion, but limited the Secretary's authority to enforce it, effectively making the expansion optional for states. 138% FPL = $16,242 for an individual and $27,724 for a family of three in 2015.

The ACA Medicaid expansion fills current gaps in coverage.

Adults

Elderly & Persons with Disabilities

Parents

PregnantWomen

Children

Extends to Adults ≤138% FPL*

Medicaid Eligibility TodayMedicaid Eligibility

in 2014Limited to Specific Low-Income Groups Extends to Adults ≤138% FPL*


How is the ACA paid for? New taxes …

Health Insurance Tax: Taxes health insurance (not self-funded coverage) and is paid by the carrier.

Generates $8B in 2014 and more then $100B over the next 10 years.

Transitional Reinsurance Fee: A fee of $63 for each covered person which will be collected for three years. The purpose is to offset cost of coverage for people with preexisting conditions.

Cadillac Tax in 2018.


Cadillac Tax

Permanent annual tax beginning in 2018 on employers that provide “high-cost” benefits through an employer-sponsored group health plan

It is expected to generate $80 billion in revenue over 10 years

The tax is a 40% tax on health care costs that exceed a predetermined threshold ($10,200* individual/$27,500 family)

*Adjusted for inflation


Key ACA Dates: 2014

Marketplace coverage began

Individual mandate for health coverage

Medicaid expansion

New taxes and fees:

Reinsurance fee: $63 per covered life

Health insurer fee: 2-3% to collect $8 billion

Medicare withholding for high wage earners: individual over $200,000/joint over $250,000 FICA increases from 1.45% to 2.35%


Key ACA Dates: 2014

Maximum 90-day waiting period

Maximum-out-of-pocket $6,350/$12,700 (all non-grandfathered plans) for 2014. Increases to $6,600 in 2015

No annual dollar limits on essential benefits

Pre-existing condition exclusions are prohibited

(all plans)

Dependent to age 26 (applies to all plans now)

Provider discrimination: All non-grandfathered plans cannot discriminate on covered services based on the provider


Key ACA Dates: 2015-2018

2015

Employer "play or pay" mandate (delayed from 2014)

Employer information reporting to the IRS on employee coverage

2016

All SHOP exchanges must open to employers with up to 100 FTEs

2017

States may open exchanges to businesses with more than 100 employees

2018

Cadillac Tax – 40% excise tax on high-cost health plans


Where Are We Headed?

Exchanges: Watch the trend toward private exchanges

Value Based purchasing

Workplace wellness

Self-funding of health benefits (100+)

Changing benefit design (co-pays, reference based pricing)

Consumerism: High-deductible health plans

New Networks: tiered/narrow

Mergers

Among Large Firms Offering Incentives for Workers Who Participate In or Complete Wellness Programs, Maximum Annual Value of the Reward for Wellness and Health Promotion Programs, Including Incentives for Health Risk Assessment and Biometric Screening, 2015

NOTE: Firms with at least one of the listed wellness programs were asked to report the maximum reward or penalty an employee could earn for all of the firm's health promotion activities combined. For some employers, the maximum incentive may include rewards or penalties for activities related to health risk assessments and biometric screening. Listed programs include: “Programs to Help Employees Stop Smoking”, “Programs to Help Employees Lose Weight”, or “Other Lifestyle or Behavioral Coaching”.


* Estimate is statistically different between All Small Firms and All Large Firms (p<.05).

NOTE: “Other Lifestyle or Behavioral Coaching” can include health education classes, stress management, or substance abuse counseling.


Among Firms Offering Health Benefits, Percentage of Firms Offering Specific Wellness Program to Their Employees, by

Firm Size, 2015


Thank You!

Christine A. Stearns

Counsel, Government Affairs

[email protected]

(609) 858-2443

Newark New York Trenton Philadelphia Wilmington GNJSHFA Affordable Care Act – Its Here to Stay Christine A. Stearns Counsel, Government Affairs November.

Documents

health insurance premiums

sponsored health benefits

kaiserhret survey of

workers contributions

kpmg survey of employer

survey design

covered workers

federal workers