What Does PPACA
Mean For Your Business?
Presented by: Joey Janssen, Employee Benefit Specialist
May 21, 2013
“We Make Benefits Work”
Today’s Agenda
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PPACA Highlights
Small Employer Defined
Small Group Deductible Ceiling
Group Rating Factors – Rate Limitations
Pricing Changes & Adjusted Community Rating
Notification of Exchanges
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Agenda Continued
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What is a Large Employer?
Full Time Equivalents
Common Ownership
Measurement Periods
Pay or Play Mentality
Employer Mandate
“Actuarial” Review – New industry buzzword
Waiting Period Limitations
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New Benefit & Coverage Rules
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Employer Impacts
Description
Individual
Small Group
Fully Insured
Large Group
Fully Insured
Self-Funded
Essential Health Benefits
(EHB)
• Health Plans must provide Essential
Health Benefits for individual and small
group
Yes
Yes
No
No
OOP Max
• OOP limits must comply with OOP
limits for HSA plans
Yes
Yes
Yes
Yes
• All cost sharing (including copays) for
EHB services must count toward OOPM
Deductible
Limits
• Beginning 2014 plan design deductibles
may not exceed a $2,000 (self-only) or
$4,000 (other than self-only) annual
limitation
No
Yes
No
No
Metallic Levels
• Four tiers of coverage for EHB
packages: Bronze, Silver, Gold, and
Platinum and catastrophic coverage
(under 30-year-olds only)
• Requirement to meet actuarial value of
one of four plans
• Requirement in and out of Exchange
Yes
Yes
No
No
Pre-existing Condition
Exclusion
(All Ages)
• Beginning in 2014, pre-existing
condition exclusions must be removed
for all members, not just those under
age 19
Yes
Yes
Yes
Yes
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Small Employer
• In Florida, a small group will continue to be
defined as under 50 employees for 2014 and
2015
• In 2016 small groups will be defined as
employers with 2-100 employees
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Deductible Ceiling
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$2,000 single / $4,000 Family
What does this mean?
Is this attainable?
Will there be any exceptions?
– Bronze level plans, 60% actuarial value
• Example from Connecticut
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Example of a Changing Law
• The Board of Access Health CT, the state’s health
benefits exchange, adopted the staff’s
recommendations for standard plan designs.
Specifically, the board approved plans with a $3,000
hospital deductible and $400 prescription drug
deductible, reduced from $500. They also approved
allowing two non-standard plans per tier, and they
created an additional Bronze standard plan, which is
a catastrophic plan.
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Adjusted Community Rating
• Adjusted Community Rating will apply to individual and fully
insured small group health insurance
• Pricing Restrictions will begin on or after January 1, 2014
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Pricing Today and Beginning 2014
Additional Rating Factors Being Eliminated or Changed
• Size Factors (eliminated)
• Gender differentiation (eliminated)
• Typically 10-1 Age slope (changed/reduced)
Future
State
MRRF
1.0
Current
State
High
MRRF
Less Healthy or
Longest Duration
groups and
Highest Rate
Healthiest or Newest
groups and Lowest Rate
Current
State
Low
MRRF
9
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Rating Factors & Premium Restrictions
Group Rate Factors are limited to
• Geographic Area
• Age (3:1 limit)
• Tobacco Use (1.5:1 limit)
Rates may not vary by
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Gender
Health Status
Claims History
Medical Underwriting
Group Size
Industry
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Notification of Exchanges*
• Employers must notify employees of the “Health Insurance Marketplace”
by no later than October 1, 2013
– Informing the employee of the existence of the Marketplace (referred to in the statute as the
Exchange) including a description of the services provided by the Marketplace, and the
manner in which the employee may contact the Marketplace to request assistance;
– If the employer plan's share of the total allowed costs of benefits provided under the plan is
less than 60 percent of such costs, that the employee may be eligible for a premium tax credit
under section 36B of the Internal Revenue Code (the Code) if the employee purchases a
qualified health plan through the Marketplace; and
– If the employee purchases a qualified health plan through the Marketplace, the employee
may lose the employer contribution (if any) to any health benefits plan offered by the
employer and that all or a portion of such contribution may be excludable from income for
Federal income tax purposes.
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Notification of Exchanges Continued
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Employers must provide a notice of coverage options to each employee, regardless of plan
enrollment status (if applicable) or of part-time or full-time status. Employers are not
required to provide a separate notice to dependents or other individuals who are or may
become eligible for coverage under the plan but who are not employees
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Employers are required to provide the notice to each new employee at the time of hiring
beginning October 1, 2013. For 2014, the Department will consider a notice to be provided at
the time of hiring if the notice is provided within 14 days of an employee’s start date.
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With respect to employees who are current employees before October 1, 2013, employers
are required to provide the notice not later than October 1, 2013. The notice is required to
be provided automatically, free of charge.
*Department of Labor (2013, May 8) Technical Release No. 2013-02.
Dol.gov. Retrieved May 20, 2013 from www.dol.gov.
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Small Business Options
Today
• Offer Employer Sponsored
Health Insurance
• Don’t Offer Employer
Sponsored Insurance ( No
Penalty)
January 1, 2014
• Offer Employer Sponsored
Health Insurance
• Don’t Offer Employer
Sponsored Insurance ( No
Penalty)
Offering Employer sponsored benefits may look
different than it does today but will still be a viable
way to provide value to your employees
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Adapting to the New World of
Healthcare
• How do you think insurance companies will
respond?
– Innovation?
– New Concepts?
– Creativity?
• Plan Designs
• Plan Functionality
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Creativity & Change
• United Healthcare
– Renewal Dates
– Plan Designs
– “Private” Exchanges
• Aetna
– New Business
– Existing Business
– Private Exchanges
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Large Group Discussion
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What is a Large Employer?
Full Time Equivalents
Common Ownership
Measurement Periods
Pay or Play Mentality
Employer Mandate
Waiting Period Limitations
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What is a Large Employer?
• A large employer is defined as a company that
has greater than 50 full time equivalents.
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Full-Time Equivalents
• Why are FTE’s important?
– This is used to determine whether or not an
employer is qualified as a large employer.
– Full Time Employees: 30 hours or more
• How do you calculate FTE’s?
– Add together the total # of FTE’s for the month,
plus a number that is equal to the total number
hours worked in a month by part time employees,
divided by 120
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Full Time Equivalent Example
Large or Small Employer?
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46 Full Time Employees
20 Part Time Employees
# Hours Worked Per PT Employee: 30
Total Number of Hours Worked by PT EE: 600
How many full time employees will this
company have? 51
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Common Ownership
- Used to determine is you are a large employer
- 0-20% ownership
- Rarely found to have common ownership
- 20-50% ownership
- Assumed to have no common ownership but the burden to report and
show that it does exist lies with the employer
- 50-80% ownership
- Common ownership assumed and the employer must show that it
doesn’t exist
- 80-100% ownership
- Common ownership assumed
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Why is Common Ownership
Important?
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Business 1: 20 Employees
Business 2: 40 Employees
Business 3: 5 Employees
Total Number of Employees: 65
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Measurement Periods
• We have more than 50 full-time employees so we are subject to the
employer mandate penalties. How do we know which of our employees
is considered “full-time” requiring us to pay a penalty if they qualify for
premium tax credits at an exchange (if the employee has a variable work
schedule or is seasonal)?
• Through the end of 2014, for purposes of the employer mandate
penalties, the guidance permits you to use a “look-back measurement
period/stability period” safe harbor to determine which of your
employees are considered full-time employees. You may use a standard
measurement/stability period for ongoing employees, while using a
different
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Measurement Periods
• Variable Hour Employees – “Reasonably Determine”
• Look back period
– 2013 Deadline
• Standard Measurement Periods
– Ongoing Employees
• Initial Measurement Periods
– 3, 6, 9 or 12 months
• Stability Periods
– Equals the IMP
• Administrative Periods
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Pay or Play Mentality
Will I be Subject to Penalties?
• Do I have > 50 Full Time
(FTE) Employees?
• Is my health plan deemed
affordable? (9.5%
threshold)
• Does my health plan meet
the minimum 60% actuarial
value?
How will Penalties be Assessed?
• Do I offer coverage? (Play)
– $3,000 penalty per employee
receiving government
subsidy.
• Do I cancel all health
benefits? (Pay)
– $2,000 penalty per employee
(minus 30)
– This is related to self insured
plans more than fully insured
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Tax Penalties Continued
$2,000 Penalty
• $2,000 will be assessed if
employer sponsor coverage
is not offered
• How is this penalty assessed
if an employee only works 9
months?
$3,000 Penalty
• What is the trigger?
• Coverage is deemed
unaffordable – over 9.5%
gross
• Employee goes to exchange
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W2 Safe Harbor
• Under the Form W-2 safe harbor, an employer could
determine affordability by referring to an employee’s wages
from that employer. Wages for this purpose would be the
amount required to be reported in box 1 of Form W-2
• This rule can help an employer determine their contribution
strategy amount.
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Contribution Strategy Idea
• 75 Employees
• Require employees to pay $250 per month towards
premium or $3,000 annually
• ER would only pay penalty on those employees
making under $31,250 AND receiving a subsidy
• What about those under $31,250?
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October 1, 2014 Renewal
• When does the employer mandate go in force
in regards to the mandate?
– Upon renewal a compliant plan must be chosen
– If a calendar year deductible is in place penalties
MAY be retroactive back to Jan. 1, 2014*
– If a policy year deductible is in place penalties are
enforced at the renewal.
*if a compliant plan is not put in place and employee receives a subsidy
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New Waiting Period Guidelines
• Waiting periods for Full Time employees
cannot exceed 90 days
– 90 Days first of month no longer a compliant
option.
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What Should You Do Now?
• Create a plan
• Call me for an appointment
• Evaluate ALL of your options
• Make a decision that is best for YOUR business
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Questions??
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