Affordable Care Act
Update
May 2014
Donna Lively
Director of Insurance Plans
GuideStone Financial Resources
Agenda
• Individual Mandate
• Employer Mandate
• Reporting and Taxes
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Background
• Core of law is an attempt to reduce number of
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uninsured
Requires most in U.S. to have health insurance
Creates state-based Exchanges (federal as well)
Large employers required to offer coverage or pay
penalties
Expands Medicaid to 138% of the federal poverty level
◦ 26 states have expanded Medicaid
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Happening Now
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23 delays to the law
50 regulations in process of being written right now
Recent changes to HRA/EPP/FSA
Recent changes to Employer Mandate
Congress in a deadlock
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Individual Shared Responsibility
— Individual Mandate
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2014 Impact:
Individuals and Families
• Individual Shared Responsibility provision began
January 1, 2014
• Everyone with income above the poverty level must
have “minimum essential coverage”
• Some exemptions to individual mandate do apply
◦ Hardship
◦ Indian Tribe
◦ Religious Objection
◦ Incarcerated/Not in U.S. legally
◦ Coverage under health care sharing ministry —
such as Medi-Share or Samaritan’s Trust –
considered MEC
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2014 Impact:
Individuals and Families
• Penalty is $95 or 1% of Household income in 2014
◦ There are penalty maximums
• 2014 penalty collected with 2015 tax refund
◦ If you aren’t owed a refund, you don’t pay the
penalty
 Penalty never goes away
 If you ever have a refund the penalty will be
deducted
• Penalty increases year over year
◦ $325 or 2% in 2015
◦ $695 or 3% in 2016
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2014 Impact:
Exchanges/Marketplaces
• Exchanges opened as an alternative for people with:
◦ No other available coverage
◦ Lower to moderate income
◦ Pre-existing medical conditions
• Open enrollment period:
◦ Annual time to enroll for coverage
◦ October 01, 2013 – March 31, 2014 (extended for
2014)
◦ HIPAA Qualifying Event for off-annual-enrollment
◦ Non-HIPPA QE for short term coverage would
include medical underwriting
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2014 Impact:
Exchanges/Marketplaces
Who will be offering coverage in the exchanges?
• Fully insured, state-regulated insurance companies
• Participating carriers (varies by state)
• No church plans or unions are allowed to offer benefits
in the Exchanges and their participants are not eligible
for a subsidy
What networks and benefits will be available?
• Majority are more narrow provider networks
• High-tech, sub-specialty providers probably not
available through the exchanges
• Variety of benefit options
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2014 Impact:
Exchanges/Marketplaces
Would the exchanges save me money?
• Premium tax credit (subsidy)
◦ Tax credit offered to Americans
who earn less than 400% of poverty level.
◦ Note: Clergy housing allowance is not included
in household income calculation.
• Cost-sharing reductions (subsidy)
◦ Lower deductible and higher co-insurance level for
persons earning less than 300% of poverty level.
◦ Claims paid at the “higher” level regardless of
chosen plan.
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Eligibility for Premium
Tax Credit
FPL* 2014
Individual
Family of four
100%
$11,850
$24,450
400%
$47,400
$97,800
*Federal Poverty Level (FPL)
The premium tax credit is not available to employees of employers that adopt the
Small Business Health Options Program (SHOP).
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2014 Impact:
Exchanges/Marketplaces
and SMALL GROUP
Rating rules?
• Guaranteed issue and renewability
• Restrictions on rate flexibility — rates can vary by:
◦ Community rating
◦ Age — 1:3 slope from younger to older
◦ Family size
 Larger the family the higher the rate
◦ Geography
◦ Smoking habits — 1:1.5 upcharge
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2014 Impact:
Exchanges/Marketplaces
and SMALL GROUP
What will the plans look like?
• Creation of standard metallic benefit plans
• Essential health benefits required
◦ No coverage dollar limit for the 10 identified categories
of services
• Maximum out-of-pocket spending (MOOP) limits:
◦ No more co-insurance maximums
◦ MOOP are an aggregate of all eligible, in-network
medical and RX including co-pays, deductibles, coinsurance,
 $6,350 — Individual (2014)
 $12,700 — Family (2014)
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Premium Tax Credit is
NOT available if you are…
• Offered an employer sponsored health plan that is
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affordable and of minimum value
Enrolled in an employer plan
Are covered by Medicare or Medicaid
Are covered by another government coverage
Have income above 400% of poverty level
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Small Group Insurance
• 96% of all organizations are less than 50 FTE
• Small group has no mandate to offer coverage
• Small group defined as:
◦ <50 in 2014 and 2015
◦ <100 in 2016
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Applicable Large Employer and
the Pay-or-Play Penalty
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2014 Impact:
Large Employer
Large Employer Mandate Delayed until 2016 for
• Employers with 50 to 99 full-time equivalent
employees (FTEE)
◦ IF they meet transitional relief rules
Transitional Relief Rules for 50-99 Size Groups
• No reduction in size of work force or overall hours of
services to qualify for the transition relief
• Employer does not eliminate or materially reduce any
health coverage offered on February 9th, 2014
• Employer certifies that it satisfies these requirements
(on Section 6056 report)
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2014 Impact:
Large Employer
Effective 2015
• Employers with 100+ FTEE are defined Applicable
Large Employers
◦ Applicable Large Employers must :
 (a) Offer coverage to at least 70% of
employees working 30 hours or greater
» Moves back to 95% in 2016
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(b) Coverage must be affordable and of
minimum value
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2014 Impact:
Large Employer
• Affordable – Contribution limits for Employee Only
coverage
◦ 9.5% is maximum contribution an employee can
make to the “employee only” coverage
◦ Determined by:
 W-2 wages
 Employee’s hourly rate
 Federal poverty level
• Adequate - Plan provides Minimum Value, meaning
plan pays an actuarially equivalent 60% of required
health care expenses
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2014 Impact:
Large Employer
• No Offering Penalty (a): $2,000 penalty
assessed for all FT employees if not offering
coverage to all 30-hour workers and one receives
a subsidy
◦ In 2015 first 80 workers will not count toward
penalty calculation
◦ In 2016 first 30 workers do not count toward
penalty calculation
• Affordable/Adequacy Penalty (b): $3,000 per
employee who receives a subsidy because
coverage is not affordable and not of minimum
value
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Additional Taxes, Rules, Reporting
and Regulations 2014–2018
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2014 Impact:
All Employers
January 1, 2014
• 90-day waiting period limitation
◦ Eligible employees will wait no more than 90
calendar days for coverage to begin
• End of pre-existing coverage limitations
◦ Certificate of Credible Coverage is no
longer required
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2015 Impact:
Employers
IRC Section 6055 – All size employers
• Information to IRS, employer, employees
substantiating the plans’ provision of Minimum
Essential Coverage
• IRS Form 1095-B for all employers regardless of size
IRC Section 6056 – Greater than 50 FTEE
• Report health plan information to the IRS and to
employees
• IRS Forms 1095-C for employers with 50 or more
employees
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2014 Impact:
Taxes
• PCORI – 2014 - $2 per covered life
• Transitional Reinsurance –
◦ 2014 - $63 per covered life
◦ 2015 - $44 per covered life
• Health Insurance Industry Fee – 2.3% of premium
• Federal Exchange User Fee - 3.5% of premium
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In the wings…
• W-2 reporting of health benefits
◦ Less than 250 employees — not required to
report
◦ If the organization is not required to provide
COBRA benefits — reporting is optional
• Nondiscrimination rules for fully insured health
plans
• Automatic enrollment for employers with
>200 employees
• Cadillac tax on high-cost health plans -2018
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Keep Informed
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Count your employees
Watch and wait
More delays and modifications to come
Watch for subsidy to be reduced
Watch for non-coverage penalty to be increased
Election year will continue conversation about “keep
or repeal” ACA
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Website Bookmarks
• http://www.guidestoneinsurance.org/HealthcareRefor
m2/ReimbursementVehicles
• http://www.guidestoneinsurance.org/HealthcareR
eform2
• http://www.guidestoneinsurance.org/HealthcareR
eform2/EmployerMandate
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The preceding information is general in nature and is
intended to keep you apprised of certain important
developments.
This information may be subject to interpretation or
clarification over time, so we cannot guarantee its
accuracy or how it might be determined to apply in
certain situations.
However, we hope it will provide you a useful frame of
reference as you endeavor to carry out your
responsibilities and serve your employees.
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