Mitchell`s PowerPoint

The Affordable Care Act:
Small Business Forum
Mitchell Stein
Health Policy Consulting
Part 1
ACA Overview
Universal access to health coverage – two pronged
 Expansions to public programs (Medicaid): state
decision, so far not in Maine
 Expansion of private programs: options for
individuals and small businesses
Insurance Reform at the Federal Level
 Patients’ Bill of Rights
 Holding Insurance Companies Accountable
Workforce Expansion and Quality Improvement
ACA Overview (cont.)
“One of the greatest defects of the ACA is its complexity.
That complexity has required the Obama administration
to exercise considerable creativity in implementing the
law. But the law’s complexity simply follows from the
fact that the drafters of the ACA attempted to build on,
rather than to radically change, our current, impossibly
complex, health care system.”
Tim Jost, Health Affairs 9/2/14
What’s Happening Now
Effective now
 Minimum Credible Coverage Requirement: Mandate for
Individuals to Have Health Coverage
 Marketplace Coverage and Subsidies
 Plan reforms including Essential Health Benefits and no
cost sharing preventative services
 Risk Adjustment Programs
Employer Mandate/Play-or-pay
2014: No employer requirements
2015: Employers with 100+ FTEs must offer to at least
70% of full-time employees
2016: Employers with 50+ FTEs must offer to at least
95% of full-time employees
Time uncertain pending final regulations: Employers with
200+ FTEs must auto-enroll eligible employees
Plan Reforms
These apply to insured plans for individuals and small
groups, sold on or off the Marketplace
 No cancellations due to illness
 No lifetime limits
 No pre-existing condition exclusions
 No-cost preventive services
 Out-of-pocket maximum of $6,350 per individual
($12,700 per family) (applies to in-network services only)
Marketplaces (Exchanges)
An Exchange is a Marketplace that is an easier way to
shop for health insurance (now referred to as the
Two Marketplaces: Individual and the Small Business
Health Options Program (SHOP)
The Marketplace provides a way to compare and review
choices in a consumer-friendly “apples to apples” format
Standardized plan levels
Note sole-proprietors use the Individual Marketplace
Marketplaces (cont.)
Individual enrollment annually or at “qualifying event”
The initial individual open-enrollment period has now
ended. Next individual open-enrollment begins November
15, 2014
Auto re-enrollment for many already enrolled (some
potential issues)
Small Groups are not subject to the annual openenrollment period
(Small Business Health Options Program)
SHOP offers:
A choice of qualified health plans from different private health insurers
Meaningful comparison between plans
Ability to take advantage of Small Business Health Care Tax Credits
Who’s eligible
Employers with 50 or fewer Full-time Equivalent (FTE) employees
Starting in 2016, employers with up to 100 FTEs will be eligible
Once an employer enrolls, it can grow and still remain in SHOP
Sole-proprietors are not eligible for the SHOP, they use the Individual
Employers are not subject to open-enrollment period,
can start plans at any time
Minimum participation requirements are waived annually
between 11/15 and 12/15
Employees are subject to an open enrollment period
unless they experience a qualifying event
For 2014 “Direct Enrollment” using broker or insurer
For 2015 (planned November 2014 availability)
Enroll through broker, insurer or directly on the SHOP
For 2016 (due to state decision to delay an additional
Option to offer employees a choice among qualified health plans
across multiple health insurance companies
What Insurers Are Participating in
2015 (Individual and Small Group)?
On Marketplace
Anthem Health Plans of Maine
Harvard Pilgrim Health Care Inc.
Maine Community Health Options
Multi-state plan (for individuals)
 An additional plan will be offered by the Blue Cross/Blue Shield (BC/BS)
Association, however it will be virtually identical to the Anthem plan (the
BC/BS affiliate in Maine)
Off Marketplace
All marketplace insurers
Aetna Health Inc
United Healthcare (small group plans only)
Note Mega is exiting the market and non-renewing its current customers as their
plans expire
What Dental Insurers Are
Individual On Marketplace
All medical insurers offering plans with integrated pediatric dental
Anthem, Delta and Dentegra offering stand-alone dental
Individual Off Marketplace
All of the above plus Renaissance
Small Group On Marketplace
All medical insurers offering plans with integrated pediatric dental
Anthem, Delta and Dentegra and Guardian Life offering stand-alone dental
Small Group Off Marketplace
Part 2
Employer Specifics
Notice of Marketplace Options (samples available on
DoL website:
For new employees and annually for existing staff
Summary of Benefits and Coverage (SBC)
 For insured plans should be created by insurer and
given to the employer to distribute
 Applies to all individual and group plans (no exception
for grandfathered plans)
 New model notice now includes notification of
marketplace options. Often with available subsidies
Marketplace plans are a better option than COBRA
Employer Specifics
Additional Items (cont.)
New hire waiting period cannot exceed 90 days (all
plans, grandfathered or not)
W2 disclosure of benefit costs began January 2013 (for
2012 year)
 If issued less than 250 W2s in January 2012, exempt
until final regulations issued
 Note this is NOT taxable income. For informational
purposes only similar to the 401k box on current
Employer Specifics
Additional Items (cont.)
Flexible Spending Account (FSA) limit of $2,500
including Health and Dependent Care FSAs. HRA and
HSA not impacted by new limit (begins in 2013) but are
impacted by new regulations
Medicare Tax Increase for income over $200,000 for
individuals and $250,000 for joint filers
Patient Centered Outcomes Research Institute Fee (First
annual fee payable by July 2013 )
 First year, $1 per covered life, second year $2 per
covered life, thereafter the $2 is indexed for Medical
Employer Specifics
Additional Items (cont.)
Simple Cafeteria Plans (2014 plan year)
 Congress amended the Internal Revenue Code to
allow eligible employers' cafeteria plans to qualify as
simple cafeteria plans. Simple cafeteria plans are
treated as meeting certain nondiscrimination
requirements and benefits for cafeteria plans making
the process simpler.
Medical Loss Ratio (MLR) Rebates
 Distribution depends on who pays the premium
(employer or employee)
Premium Calculations
Before the ACA the common practice was to provide your broker (or insurer) a census of your
employees. They would then respond with a single per-employee rate. What you may not have
realized is that the rate they quoted was created by calculating a rate for each employee
individually and using those to create a single composite rate.
In the interest of transparency, the ACA required that the broker and insurer provided individual
rates for each employee. While the theory may be sound, in practice this introduced some
As a result of the issues experienced by employers, new regulations have now been issued and
as of January 1, 2015 composite premiums are once again permitted.
Composite Premiums are calculated based on the total group premium (average derived from permember rating) at the time of enrollment at the beginning of the plan year.
The use of Composite Premiums is at each insurer's discretions. While the process is somewhat
different than the pre-ACA process, it returns a key benefit for employers. It allows for the single
per employee rate to be used during the entire plan year, meaning that if an employee leaves and
is replaced with one of a significantly different age, the employer's costs will not be dramatically
impacted mid-year. This adds back a level of certainty to the employer's planning process.
As of now, no marketplace insurers are planning on offering composite premiums.
Health Insurance Marketplace:
Who can get an individual subsidy?
 If NO access to employer coverage:
Household income between 100 and 400% FPL (under 100% FPL legally
present non-citizens)
If YES access to employer coverage:
Income between 100 and 400% FPL (under 100% FPL legally present noncitizens) AND
 Employer plan coverage less than 60% of average expenses or
 Employer plan for employee costs more than 9.5% of income
Sample 2013 FPLs:
100% Single - $11,490, Family of 4 - $23,550
400% Single - $45,960, Family of 4 - $94,200
Advanced Premium Tax Credits by Income
Other Financial Help
Cost-sharing subsidies (only if Silver plan
Income Level
100-150% FPL
150-200% FPL
200-250% FPL
Actuarial Value* increased to…
*Actuarial Value is percent of average individual’s medical costs covered by the plan
Out-of-pocket spending limits
For insured plans sold on or off the Exchange, maximum
individual out-of-pocket is $6,350 (will adjust each year)
Note OOP Max does not include premium costs and does
not apply to out-of-network charges
Affordability Issues:
The Family Glitch
If an INDIVIDUAL has access to affordable coverage at
work (defined as costing less than 9.5% of household
income for employee-only coverage), and the FAMILY is
offered coverage from the employer (even if there is no
employer contribution) then the FAMILY cannot access
subsidies in the Marketplace
However, if the cost of FAMILY coverage for the spouse
and dependents of a covered employee exceeds 8% of
the household income, they are exempt from the
penalty (but still not eligible for subsidies)
Affordability Issues:
Employee Coverage
Subsidies are not available for employees as long as the
employer’s coverage is deemed affordable (less than
9.5% of household income) and credible (60% actuarial
Unlike individual coverage in the Marketplace, where
subsidies vary be income level, employee premiums do
not vary by income nor does the definition of
Employer-sponsored Coverage:
Common Issues/Questions (cont.)
Employer Contributions to Individual Coverage
There may be a way for employees to buy coverage outside the
Marketplace using a 125 salary reduction agreement. Recent
guidance seems to indicate that employers can supplement this
to a certain extent under certain circumstances. (See your
broker/tax professional for details.)
However, there is no way for the employer to structure the plan
so that the employee can use pre-tax contributions (from either
the employer or employee) to purchase plans on the
Marketplace and be eligible for individual subsidies
To offer or partially offer or not to
offer, that is the question
Three options:
 Offer to Employee and Dependents
 Offer to Employees Only (only if not
subject to pay-or-play)
 Do Not Offer
To offer or partially offer or not to
offer, that is the question
Variables to consider
Employer’s cost
 The coverage offered is tax deductible to the employer
 Potential need to increase salary to compensate for the reduction in total
compensation (if eliminating existing coverage)
Employee’s cost
 The cost of individual coverage is NOT tax deductible to the employee (as
opposed to their contribution to employer coverage which is tax deductible)
 Coverage might be more expensive than their employer coverage is now,
especially if they are not eligible for subsidies
 If an INDIVIDUAL has access to affordable coverage at work (defined as costing
less than 9.5% of income for individual coverage), then the FAMILY cannot
access subsidies in the Marketplace
What is the competition doing
 Impact of decision in attracting and retaining employees
Businesses Specific Resources
Government (business focused):
 Department of Labor FAQs:
 IRS:
Businesses Specific Resources tax credit estimator:
 Full-time Equivalent Employee (FTE)
 U C Berkeley Summary of Provisions Affecting
Employer-Sponsored Insurance