Helping
people get
the healthcare
they need.
Healthcare Reform Information for
Employers and Individual Policyholders
August 20, 2013
Doug Sheffer, Regional Manager
Rhonda Giles, Director of Healthcare Reform Implementation
reform@pacificsource.com
Revised August 16, 2013
Consumer Impact Varies
Individual &
Sole Proprietor
Small Group
Large Group
Inside or Outside
of the Exchange
Inside or Outside
of the Exchange
Outside the
Exchange Only
www.HealthcareLawGuide.com
Reform@pacificsource.com
ACA Highlights: 2010 through 2014
ACOs
Lower Medicare
Advantage payments
Hospital-based value
payments
Increase primary care
fees
Scholarships for primary care
Funding community health
2010
2011
Dependents to 26
RX discounts
No pre-ex for kids
Preventive care in
Medicare
Preventive care 100%
2012
High risk pools
Exchange open
enrollment in Q4
Summary of Benefits
and Coverage (SBC)
Expand CHIP
Quality payments in Medicare
Advantage
2014
Exchanges operational
“Play or pay” penalty if 50+ FTE
Medical loss ratio
(MLR) rebates
Employers with 250 or
more W-2s must report
health plan on W-2
FSA contribution
reduced
Metal plans for small group and
individual
Subsidies for individuals
90-day max probation period
EHB with no annual dollar limits
Subsidy for retiree
Crackdown on fraud
Penalty increase for
non-qualified HSA
withdrawal
Employers notify
employees on access
to exchange
No pre-ex for any age
Coverage for clinical trials
Prohibit overall lifetime $ limits
Phase out annual $ limits on EHB
Threshold for federal
deduction on medical
expenses raised
Small group deductible limited
Individual coverage mandate
Pediatrician as PCP
0.9% Medicare surtax
for high earners
Health plan rating restrictions
No referral on OB/GYN
Stand-alone HRAs prohibited
ER considered in-network
Claims appeal process
Employers can increase
wellness program incentives
Healthcare.gov
Expand Medicaid
Access to Coverage
Medicaid expansion
No HSA, HRA, or
FSA reimbursement
for OTC unless
prescribed
2013
Additional women’s
preventive care 100%
MLR restrictions
Small group tax credit
Bundled payments
How
Delivered
Community health
first choice option
Recent Changes: SBC
September 23, 2012
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
Recent Changes: FSA & W-2
January 1, 2013
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
Upcoming Changes: Notice
October 1, 2013
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
Big Market Changes in 2014
January 1, 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
Guaranteed Availability of Insurance
January 1, 2014
• 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
Expansion of Coverage
January 1, 2014
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
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
January 1, 2014
Exchange is Open for Business
• State health insurance exchanges begin open enrollment
Eligible to
participate
in the
Exchange?
– 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
U.S.
Citizen
YES
Lawfully
present
noncitizen
YES
– Agents continue to provide guidance
• Marketplace: through exchange or direct with insurer
• Plan designs: options available in each marketplace
Illegal
Alien
NO
The Exchange Marketplace
January 1, 2014
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 enrollment
October 1, 2013 through March 31, 2014
•
Annual open enrollment for Individual Policies
October 15 – December 7, 2014 and beyond
•
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.
Rolling enrollment for Small Group (SHOP)
Can purchase coverage at any time and establish their own open enrollment periods
Market Reset: Small Group & Individual
January 1, 2014
• 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
Plan Changes – Individual & Small Group
January 1, 2014
Benefit requirements in/out of Exchange
• 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
Platinum
Plan 90%
Gold Plan
80%
Silver
Plan 70%
Bronze Plan
Actuarial
Value of
60%
• Dental plans
Actuarial Value: Percent of essential benefits covered in-network for a typical population.
Plan Changes: Essential Health Benefit
January 1, 2014
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 benefits
1. 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
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.
HSA, HRA, and the IRS
January 1, 2014
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
Encouraging Healthy Lifestyles
January 1, 2014
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
Eligibility Changes: Employers
January 1, 2014
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)
Eligibility Changes: Employers Continued
January 1, 2014
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%)
Grandfathered Plans
January 1, 2014
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
New Market: Large Group Plans
January 1, 2014
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
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 Informed
HealthcareLawGuide.com
•
PacificSource education resource for employers and consumers in Oregon, Idaho, and Montana
•
Will reflect updates and changes over time
•
reform@pacificsource.com
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.