An Employer’s Guide to
HEALTH CARE REFORM
WHAT YOU NEED TO
KNOW
BRAIDEN DARLEY, RHU
Employers Across America
Want to Know…
 What are the effects on me as an
employer?
 What are the effects on my employees?
 How much is this going to cost me?
 What do I have to do?
On The Horizon
 Guarantee issue with no pre-existing limitations
 Individual coverage mandate
 Insurance exchanges & subsidies
 Employer “Pay or Play”
 Required expanded benefits
 Taxes, fees and penalties
 New rating rules
 New employer obligations & reporting requirements
Beginning January 1, 2014
 New plan designs and rating guidelines
 All policies will be guarantee issue regardless of medical conditions
 Pre-Existing condition limitations will no longer apply
 Obtaining insurance through Exchanges will be available for
individuals and small groups <49
 Large/Small Groups
 Waiting
Periods: Max 90 Days
 Full –time employees working at least 30 hours/week
 Break time and room for nursing mothers
Individual Mandate
EVERY AMERICAN WILL HAVE
THREE CHOICES IN 2014:
1. Qualify for an exemption based on income, religion or
status (native American, undocumented immigrant, or
incarceration)
2. Obtain coverage through government program/Exchange,
employer or individual insurance
3. Go uninsured and pay a penalty
Subsidies & Penalties for Individuals
Individual Exchange subsidies are available if no other available
coverage is affordable or meets minimum value requirement
Penalties phase in beginning in 2014 as part of tax return:
2014: Greater of $95 (adult)/$47.50 (child) or 1% of taxable income
2015: Greater of $325 (adult)/$162.50 (child) or 2% of taxable
income
2016: Greater of $695 (adult)/$347.50 (child) or 2.5% of taxable
income
2017 and beyond: Annual adjustments
Large Employer Responsibilities
Offering Minimum Essential Coverage to at least 95%
of all full-time employees and their dependent children
1.

Coverage must be affordable.
2.


Minimum Essential Coverage is defined as providing value of at least
60%of the total allowed costs of benefits expected to be incurred
under the plan.
Employee’s share of the premium costs (for employee only coverage)
is no more than 9.5% of that employee’s annual household income.
SAFE HARBOR – Affordability in 2014 (longer?) can be measured by the wages the
employer pays the employee for that year, as reported in Box 1 of Form W-2. If an
employer offers multiple coverage options, the lowest-cost MEC option available to the
employee will apply.
Penalties for Large Employers
Minimum Essential
Coverage (MEC)
Not Affordable Coverage
 Employer doesn’t provide
 MEC offered to at least 95%
MEC OR MEC is offered to
less than 95% of the fulltime employees and their
dependent children
of full-time employees and
their dependent children.
BUT one or more full-time
employees receives a
premium tax credit.
 Penalty =Total number of
FTEs employed for the year
(minus 30) x $2,000 as long
as at least one full-time
employee receives the
premium tax credit
 Penalty is $3,000 per
employee receiving a
subsidy in Exchange.
(Monthly Calculation)
Plan Design Requirements In/Out of
Exchange
 New Plan Designs sold/renewed
Limited to “Metallic” coverage levels
 Essential Health Benefits
 10 required coverage categories-pediatric dental/vision
 Out of Pocket Maximum (all)
$6,350 single/$12,700 family
Rx may have a separate out of pocket max for 2014 if
separate contract
Subsidies for Individuals
For INDIVIDUAL exchange plans only

To be eligible, individuals
must:




Have incomes between133%
and 400% of federal poverty
level (FPL)
Not have access to minimum
essential coverage through
their employer or have access
to coverage, but it is not
affordable
Premium credits –
for any level plan
Cost-sharing subsidies –
silver plan only
•
Income ranges for
133% to 400% FPL

Individual:


$14,856 to $44,680
Family of four:

$30,656 to $92,200
Keep In Mind…
•Exchanges will not replace
the private health insurance market.
They’re simply another channel for qualified
individuals
and groups to obtain coverage
Taxes & Fees (FOR ALL)
Tax/Fee
Effective Date
Plan fees for
comparative
effectiveness
research
(PCORI)
Plan/policy years that
end after 9/30/2012 and
begin before 10/1/2019
Tax on high
earners and
unearned
income
Insurer fees
Responsible Party
Annual Tax/Fee Amount
Issuers of fully insured plans
Sponsors/administrators of
self-insured plans
$1 or $2 a year per person (adjusted annually for
inflation), based on average number of covered lives
0.9% Medicare surtax on wages in excess of
$200,000 single / $250,000 married couples
Tax years beginning
1/1/2013 and later
Tax years beginning
1/1/2014 and later
Reinsurance
assessments
Plan/policy years
beginning in the 3-year
period starting 1/1/2014
High-cost
insurance tax
Tax years beginning
1/1/2018 and later
Individual taxpayers
Issuers of fully insured plans
Issuers of fully insured plans
Sponsors/administrators of
self-insured plans
3.8% tax on unearned income for taxpayers with
modified adjusted gross income in excess of
$200,000 single / $250,000 married couples
Based on net health insurance premiums written in
the preceding calendar year as a percentage of all
health insurance premiums written in the preceding
calendar year
TBD – may be based on percentage of revenue of
each issuer and total costs of providing benefits to
enrollees in self-insured plans or on a specified
amount per enrollee
Issuers of fully insured plans
Sponsors/administrators of
self-insured plans
Annual excise tax of 40% on health plan costs that
exceed “Cadillac” plan thresholds
Important reasons to offer benefits
 Critical Piece of employee compensation
 Attract & retain quality employees
 Employee Loyalty
 Employee attitude
 Employee performance
 Employee health & higher absenteeism
THANK YOU.