ACA|Readiness
A Guide for California Employers
Broker Name
Agency
Contact Information
ACA|Readiness
The Patient Protection and Affordable Care Act
(ACA) was signed into law on March 23, 2010,
with the aim to improve the quality of health
care in America and increase access to care for
individuals and businesses.
ACA|Readiness – Budget Considerations
New 2014 Small Group Insurance Rating Structure
Beginning in 2014, the ACA only allows for rate variance by four factors:
age, family composition, geographic location, and tobacco use (California
AB 1083 prohibits tobacco use as a rating factor).
•
California’s current 9 Geographic Rating Regions expanded to 19
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Member Level Rating
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Each individual will be rated (cap of 3 on children under 21)
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3:1 ratio will limit rates charged to 64 year-old to 3x those charged to
21 year-olds
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Risk Adjustment Factors (RAF) are no longer used
•
Single-year age bands: no rate increases on birthday months, only
policy anniversaries
ACA|Readiness – Budget Considerations
Small Employer Health Care Tax Credit
Beginning in 2010, ACA provides tax credits to eligible small businesses
with no more than 25 employees and average annual wages of less
than $50,000, offsetting the employer cost of providing health
insurance to employees.
•
2010 to 2013: A tax credit up to 35% of employer costs.
•
2014 to 2016: A tax credit up to 50% of employer costs for those
businesses that qualify and purchase coverage from the Covered
California Small Business Health Options Program (SHOP).
ACA|Readiness – Budget Considerations
Early Renewal Options
With uncertainty in how 2014 Member Level Rating will affect group premium,
carriers have begun offering the ability to “Early Renew”an existing policy, so
application of the new structure will not take effect until December 2014.
Carrier
Basic Guidelines
Deadline
Aetna
Submit a request for early renewal.
10/15/2013
Anthem Blue Cross
Submit an Early Renewal Request Form.
11/15/2013
Blue Shield
Submit Early Renewal Option Form.
10/14/2013
CaliforniaChoice
Fax Early Renewal Form.
10/14/2013
Health Net
Prequalified groups, submit response.
12/31/2013
SeeChange
Prequalified groups, submit Early Renewal Election Form.
11/1/2013 (for pre-approved
groups)
UnitedHealthcare
Submit Notice of Termination and Employer Certification of Plan
Year Change.
11/30/2013
Sharp
Submit Intent to Renew Early Request Form
10/15/2013
Note: Only programs still open for submission at the time this document was created have been included.
ACA|Readiness – Budget Considerations
Taxes & Fees
The following fees, mandated by the ACA, will be assessed on health
insurance carriers. These are being integrated into the rates charged for
coverage in 2014.
•
PCORI – Patient Centered Outcomes Research Institute
Goal: Explore the effectiveness of medical treatment
•
Reinsurance Tax
Goal: To help reinsure the individual market insurers who cover
people with expensive claims
•
Health Insurer Tax
Goal: To help fund premium tax credits and cost-sharing subsidies for
lower income individuals and families
ACA|Readiness – Plan Administration
60-day Waiting Period Maximum
California AB 1083 sets a strict 60-day waiting period from the date of
hire to when coverage must be provided to an employee. Insurance
carriers are accommodating this requirement differently.
Common Waiting Periods:
• 1st of the month following the date of hire
• 1st of the month following 30 days after the date of hire
• The 60th day following the date of hire (not all carriers will accommodate
this!)
ACA|Readiness – Plan Administration
Spouse-Only (2-person) groups
Groups of two married individuals may be excluded from Small Group
insurance beginning in 2014.
•
Beware: Carriers may begin to automatically transition these 2person groups into individual coverage, and many carriers will only
be offering limited networks on IFP products.
ACA|Readiness – Plan Administration
Flexible Spending Account (FSA) Limits
In 2014, FSA contributions will be limited to $2,500.
•
FSA documents must reflect this change.
•
If a group is Early Renewed, the FSA must reflect the plan-year
change.
ACA|Readiness – Plan Administration
Participation Requirements
Carriers are finalizing Underwriting requirements, including
participation guidelines.
•
IFP policies purchased through Covered California (or elsewhere)
will continue to be counted against participation; they are not
eligible waivers.
•
Annual Open Enrollment (11/15 to 12/15 each year) will allow an
employer that cannot qualify due to participation or contribution to
enroll without meeting these requirements.
•
Whether the Open Enrollment begins with 2013 or 2014 is still
being debated.
ACA|Readiness – Plan Administration
Full-Time Employee Definition
Small Group:
Full-Time Employees are defined by California AB 1083 as those who
work an average of 30 hours per week.
•
This will be applied to all new policies purchased 1/1/14 and
beyond.
•
This will be applied to all current policies renewed in 2014.
Large Group:
ACA defines Full-Time status Federally as employees who work an average of
30 hours per week (130 hours per month)
ACA|Readiness – Plan Administration
Group Size Determination - The Large Employer Mandate (it’s still coming!)
Though delayed, the Large Employer Mandate will require employers to
determine group size to ensure coverage is offered as mandated, and in
2014 to prepare for compliance with the mandate effective in 2015.
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Large Employer = 50+ Full-Time Equivalent Employees (FTE)
•
In 2015 Large Employers must offer “affordable” coverage or face
penalties.
•
The Standard Measurement Period will begin in 2014; employers
should begin tracking employee hours and group size now.
•
The Standard Measurement Period used will determine the Stability
Period and review cycle needed to maintain compliance.
•
Small Employers = no penalty and no mandate
ACA|Readiness – Plan Administration
Controlled Group / Common Ownership & Group Size
Two or more companies that have a common owner are combined for
the purpose of calculating group size. The combined FTE calculation
will render mandated responsibility or not on each individual
organization regardless of the individual organization’s group size.
•
Beginning 1/1/15, employers not offering “affordable” coverage
with minimum value will be assessed a $2,000 annual fine
multiplied by the number of full-time employees (minus the first
30), if at least one employee receives subsidized coverage on a
State (or a Federally Facilitated) Exchange.
ACA|Readiness – Plan Administration
Common Law Employee
Under common law rules, anyone who performs services for you is
your employee if you control what will be done and how it will be
done.
•
Changing an employee’s status to 1099 from W-2 will not change
the IRS’consideration of the employee’s status when this principle
is applied.
ACA|Readiness – Plan Administration
Employee Notices & Documents
All employers subject to the Fair Labor Standards Act (FLSA) should
provide notice to current employees and new hires regarding the
Health Insurance Marketplace (Covered California) and its offer of
subsidized coverage.
•
Though there is no penalty for non-compliance, delivery of these
notices by 10/1/13 and then within 14 days of hire is law.
•
Some small employers may not be subject to FLSA if they are not
involved in interstate commerce, but these businesses are a
minority.
ACA|Readiness – Plan Administration
Summary of Benefits & Coverage (SBC)
ACA requires individual and group health plans to provide a uniform
Summary of Benefits & Coverage (SBC) to all applicants and enrollees.
•
The SBC is not the same as the carrier’s Summary of Benefits.
•
The SBC must be provided in threshold languages in areas where a
minority group has attained a sufficient percentage of the populace.
•
Carriers offer SBCs in all required languages on their websites.
ACA|Readiness – Plan Administration
60-Day Notice of Modification
ACA requires an employer offering group health coverage to provide a
notice of plan modification to enrollees at least 60 days prior to the
effective date of any modification
•
This requirement does not pertain to carrier-issued renewal
modifications.
ACA|Readiness – Plan Design Changes
Metal Level Plans (Bronze, Silver, Gold & Platinum)
Beginning in 2014, all individual and small group health plans must designate
their actuarial value (percent of cost paid by the plan for covered benefits innetwork) by Metal Tier.
Bronze
Plan pays 60% of the costs for
covered benefits in-network
Silver
Plan pays 70% of the costs for
covered benefits in-network
Gold
Plan pays 80% of the costs for
covered benefits in-network
Platinum
Plan pays 90% of the costs for
covered benefits in-network
ACA|Readiness – Plan Design Changes
Essential Health Benefits (EHB)
Individual and small group insurers must offer plans in 2014 and beyond that
deliver minimum EHB. There are 10 categories:
• Ambulatory Services
• Emergency Services
• Hospitalization
• Maternity & Newborn Care
• Mental Health & Substance Abuse Services
• Prescription Drugs
• Rehabilitative and Habilitative Services and Devices
• Laboratory Services
• Preventative and Wellness Services
• Pediatric Dental & Vision
ACA|Readiness – Plan Design Changes
Deductible Maximums
Deductible maximums were also introduced as a part of ACA; plans will
now be limited to $2,000 single and $4,000 family deductibles (with
exceptions).
•
Higher deductible health plans will no longer be available.
•
Deductible maximums do not apply to middle-market and largegroup carrier products.
ACA|Readiness – General Compliance
Non-discrimination
The ACA prohibits fully-insured employer groups from offering
discriminatory coverage to their employees, officers, and shareholders.
•
Highly-compensated employees cannot be offered coverage
options that are not offered to all employees.
•
This mandate does not apply to self-funded employer groups.
•
Although this mandate went into effect on 9/23/2010, federal
regulators have suspended enforcement until final guidelines are
provided.