The Affordable Care Act is Here!
Are You Ready?
expertise.
Presented by:
Lisa Wilcox, SPHR, CEBS, CCP, THRP
Principal, REDW LLC
Corrine Wilson, CPA
Principal, REDW LLC
The information provided herein is for informational
purposes only and should not be construed as financial,
investment, tax, accounting or legal advice.
The information provided herein is for informational purposes only and should not be construed as financial, investment, tax, accounting or legal advice.
disclaimer.
• The materials contained within are current as of the
date of this presentation; however, new developments
and regulations continue to be issued which may later
supersede the information presented.
• REDW is unaffiliated with any political party. The
purpose of this presentation is solely to provide
factual, useful information. No part of this presentation
is intended to express any political views.
major areas of PPACA.
• Insurance
Reform
Measures
• Cost Sharing
Payments
and Penalties
• “Pay-or-Play”
Provisions
Qualifying
Coverage
Mandates
Employer and
Individual
Mandates
Revenue
Generating
Rules /
Regulations
Reporting
Requirements
• Reporting
ACA timeline.
2014
• Individual mandate – individuals required to have
health coverage
• Health insurance premium credit and cost sharing
subsidies available on new public exchanges (for
individuals below specified income levels)
• Health Insurance Exchanges up and running
2015
• Large employer mandate – those who fail to offer
affordable, minimum value coverage are subject to
penalty (large employers with more than 50 FTEs,
but those with fewer than 100 have until 2016)
• Auto enrollment for eligible employees (employers
with more than 200 FTEs that offer health
coverage)
• Large employer reporting (expected to be an
annual report due by January 31 each year)
individual mandate.
• Most individuals are required to have qualifying health
coverage. If you don’t, you may be subject to a penalty.
• No penalty if:
– AI/ANs who are eligible for services from IHS (must complete form to
apply for exemption)
– Individuals/families who do not have access to coverage that costs
less than 8% of household income (must complete form to apply for
exemption)
– Individuals who are uninsured for less than 3 months during the year
– Individuals who do not have to file an income tax return because of
income level
– Certain other exemptions (religious orders, incarcerated, etc.)
individual mandate.
• Individual mandate begins in 2014.
• Annual penalty is imposed on certain uninsured
individuals (calculated on a monthly basis). Tribal
members may be exempt from the penalty.
• Penalty is the greater of a fixed amount or percentage of
household income.
Greater of...
2014
2015
2016...
Fixed amount
$95/adult
$47.50/child
$285 family cap
$325/adult
$162.50/child
$975 family cap
$695/adult
$347.50/child
$2,085 family cap
1%
2%
2.5%
--- OR --% of household income
options available to individuals.
• Individuals have four options:
– Take insurance offered by employer
– Participate in a government program (Medicaid, Tricare, CHIP,
Veterans Health, etc.)
– Purchase insurance on the Exchange (also known as Health
Insurance Marketplace)
– Choose not to have health insurance coverage (and be
subject to penalty, if not exempt)
health insurance exchange.
• Health Insurance Exchange (a.k.a. Health Insurance
Marketplace) opened for business October 1, 2013.
– Who can use the Exchange?
• Qualified individuals:
– must be a US citizen
– in the country as a legal immigrant
– cannot be incarcerated.
• Small Business Health Options Program (SHOP) exchanges are
available for small businesses with up to 50 full-time
employees. Beginning in 2016, businesses with up to 100
employees will be allowed to use the SHOP Exchange.
Note: Some states allowing access to employers with 100 FTEs now.
who must receive notice and when?
• All employees must receive the Exchange notice
– Including those not eligible to participate in your plan
– Including those eligible but not participating in your health plan
– Including part time employees
• Separate notices are not required to be sent to
spouses or dependents
• All employees should have received notice by
October 1, 2013
• New employees hired after October 1, 2013 should
receive notice within 14 days of date of hire
exchange notice.
• Informs employees of existence of marketplace,
provides description of its services, and who they can
contact for assistance.
• Informs employees that they may be able to receive a
premium tax credit if they purchase a qualified plan in
the marketplace.
• If an employee purchases a qualified plan in the
marketplace, they may lose their employer
contribution (if any) to a health benefit plan offered by
employer.
applicable ACA provisions.
Number of FTEs
ACA Provisions
1 to 24
Small Business Health Care
Tax Credit
Small •Business Health Options
Program (SHOP)
25 to 49
50 to 99
X
X
100 to 200
More than
200
X
X
Note: limited to employers with
50 FTEs; limit increased to 100 FTEs
in 2016
Automatic enrollment of FTEs
in employer health plan
Employer Mandate
X
X
(extension
until 2016)
X
X
large employer.
• The ‘employer mandate’ is the requirement that large
employers offer health insurance to their employees.
– A large employer is an employer who has 50 or more fulltime equivalent employees (FTEEs).
– Large employers are required to offer health insurance to
FTEEs beginning in 2015.
• However, large employers who have 50 – 99 FTEEs have been
given an additional year to comply. Therefore, they are required
to offer coverage beginning in 2016.
who is a “large employer”?
• You are a large employer if you have, on average,
50 or more full time employees (FTEs) during the prior
calendar year.
– Step #1 – calculate who is an FTE (“full time employee”) – an
employee who works 30+ hours per week
– Step #2 – calculate FTEE (“full time employee equivalent”) – Special
calculation for part time employees who work more than 120 days
per year
• Take # of part time employees X total hours per month worked by all of
those employees / 120.
• Result is the number of FTEEs.
– Add Step #1 and #2 to get total. If there are 50 or more, you are a
large employer
calculating FTEs and FTEEs.
(A)
(B)
Full Time
Employees
Part Time
Employees
(A) + (B)
= Avg. 30+
hrs./week
or 130+
hrs./month
Total
combined
monthly
hrs./120
= Full Time
Equivalent
Employees
(FTEEs)
measurement periods.
Standard Measurement
Period
• 3 to 12 months
• Must be same for all EEs
in same category
• New period begins
immediately following last
Administration Period
Stability Period
• Immediately follows Standard
Measurement Period
• Immediately precedes Stability
Period
• Allows time to determine FTEs,
notify employees of eligibility,
enroll/dis-enroll employees, etc.
• This period will typically
coincide with open enrollment
• Cannot exceed 90 days
• This period will overlap prior
stability period to prevent
gaps in coverage
• Immediately follows Standard
Measurement Period and
Administration Period (if any)
• Full time or part time status is
locked in based on hours
worked during Standard
Measurement Period.
• Change in employment status
during Stability Period has no
impact on FT status. Current
hours worked will not impact
status until next measurement
period.
who is a “large employer”?
• Tribes must look at all enterprises and divisions to
determine large employer status.
– Determine size by adding up all employees from all enterprises,
divisions, etc.
– Rare that a Tribe would not be considered a large employer.
– Once you determine the status, that status applies to all enterprises
regardless of the number of employees at that particular
enterprise.
– Although clarification of this ruling is pending, it is important to
note that Tribes and their enterprises are NOT exempt from the
employer mandate.
small employer vs. large employer.
Small Employer
Large Employer
Tax credits available for health insurance premiums
paid for employee coverage
Yes
No
Employer Mandate – penalties for not offering
affordable essential coverage
No
Yes
•
Can purchase
insurance on SHOP
Yes
No
Health plans offered must have essential health
benefits (EHB)
Yes
Health plans offered must cover spouses
No
No
Health plans offered must cover dependents
No
Yes
Employer must pay portion of premiums for
dependents
No
No
Yes (grandfathered plans and
self-insured plans are exempt)
what is the employer mandate?
• The ‘employer mandate’ is the requirement that
employers with more than 50 full-time equivalent
employees offer health insurance to their employees.
– Those who do not offer insurance coverage, and have at least one
full-time employee (FTE) that receives a premium tax credit or costsharing subsidy would be subject to a penalty of $2,000 times the
number of FTEs.
(Note: For 2015 only, you can exclude the first 80 FTEs do not count.
Beginning in 2016, you can exclude the first 30 FTEs.)
– Those who do offer coverage but have at least one FTE that enrolls
in the Exchange and receives a premium tax credit will pay a
penalty of $3,000 per employee receiving a premium tax credit.
large employer mandate #1.
• The “A” Penalty [Section 4980H(a)] - Employers will
offer 95% of FTEs and their dependents minimum
essential coverage.
Or, if no coverage offered:
– Penalty = $2K/year per full time employee
– Penalty applied on monthly basis ($167/month)
– Exemption for first 30 employees = All FTEs (less 30) x
$166.67 per month ($2,000 annually)
• Note: for 2015 only, you can exclude the first 80 FTEs
large employer mandate #2.
• The “B” Penalty [Section 4980H(b)] – If offering
coverage, plan must be considered a “minimum value
plan” that is “affordable.”
Employer must offer coverage that is:
– Affordable – Employee premium for the lowest-cost plan for
self-only coverage cannot exceed 9.5% of the employee’s
household income for the year. Can use employee W-2
income as safe harbor for calculation; and
– Provides minimum value – must cover at least 60% of plan’s
entire cost, leaving 40% to be paid by the employee.
large employer mandate #2 (continued).
• The “B” Penalty (continued): If plan is not affordable
and/or does not provide minimum value, Employer
may be subject to a penalty:
Penalty = $3K/year per FTE receiving premium assistance
credit/subsidy (penalty applied on monthly basis $250/month)
– No penalty if that FTE makes more than 400% of FPL
– No penalty if that FTE did not purchase insurance through the
Exchange and receive a premium tax credit
large employer reporting.
• Beginning in 2015 (2016 if you have 50 – 99 FTEEs), Large
Employers will be required to file report that includes:
– Name, address, EIN of Employer
– Whether employer offers health coverage to FTEs and dependents.
– Number of FTEs for each month and for each FTE the number of
months for which coverage was available
– Length of any waiting period
– Monthly premium for lowest cost option in each enrollment
category
– Employer’s share of the “employee-only” premium for the minimum
value plan offered, by month
– Names and contact info of employees and months covered by
employer’s health plan
large employer action items.
• Make sure your benefit plans and payroll processes clearly
segregate:
– Tribal government employees, and
– Commercial enterprise employees
• If your system can accommodate it, include a flag for Tribal
members.
• Begin analyzing employee census data and tracking hours to
determine who must be offered coverage.
• Determine what measurement period you will use.
• Make sure your benefit plans do not have a waiting period longer
than 90 days. Can no longer use first day of month following ... if
it means waiting period is longer than 90 days from date of hire.
large employer – action items.
• Identify full time employees – even if you are not
“playing”
• Provide Exchange Notice to new hires
• Become familiar with Employer Coverage Tool
• Determine if health coverage will be offered.
Do financial analysis. If offering coverage, determine
type of plan.
• Develop communication strategy
“pay or play” – know the numbers.
• Important to understand financial implications of ACA
alternatives
• Consider performing a customized financial analysis
assessing the:
– Cost of providing health coverage under the ACA
– The cost of not offering coverage and paying penalties
– The cost of modifying your plan, and offering a 60% value
plan (meeting minimum essential coverage requirements)
provisions impacting tribal members.
• No out of pocket costs if a member of a federally recognized tribe
chooses Indian Health Services as their provider in an insurance
marketplace network.
• Break on Costs for Certain Income Levels: federally recognized
tribal members earning less than 300% of federal poverty level
will not pay any out of pocket costs for health services anywhere.
• Special Monthly Enrollment: Members of federally recognized
tribes can change their enrollment status in any plan through the
marketplace once a month (vs. annual enrollment).
• No Requirement to have Insurance: Exempt AI/ANs who are
eligible for IHS are exempt from the requirement to have
coverage (individual mandate).
implementation for tribal members.
• Through 2014 – Enrollment in Exchanges and Medicaid
Expanded Program
– Health Insurance Exchanges (CMS) – Ensure Tribal
Health/Indian Health facility is recognized as Provider in the
Federal Marketplace as a Qualified Health Plan (QHP) for
revenue reimbursements
• CMS Model QHP Addendum for Indian Health Care
– Analyze if right for Tribal facilities
implementation for tribal members.
• Through 2014 – Enrollment in Exchanges and Medicaid
Expanded Program (continued)
– Exchanges – Insurance Affordability Programs to enroll in 4
different programs:
• AHCCCS
• Kids Care
• QHP with Tax Credits
• QHP with Cost Reductions
– American Indians with income between 100% and 300% of
FPL are eligible for cost sharing reductions.
implementation for tribal members.
• Through 2014 – Enrollment in Exchanges and Medicaid
Expanded Program (continued)
– Medicaid – Expanded to cover all individuals with incomes up
to 133% of FPL—$15,415 for individual and $26,344 for a
family of 3—and will now also include childless adults.
– 5% of income is disregarded, therefore it is effectively 138%
of FPL.
medicaid & HIS.
• Indian Country Effects
– Today, the median income of American Indian and Alaska
Native households is $35,000 compared with $50,000 for the
nation as a whole (US Census 2012).
• Starting in 2014, more AI/ANs will qualify for Medicaid based
on income alone, including childless adults.
• No premiums or deductibles for AI/ANs who are eligible to
receive IHS or tribal 638 services, and no copays for services
received from an Indian health care provider or through referral
under contract health services.
implementation for tribal members.
• 1/1/2015 – Employer Mandated Programs to Be
Implemented
– Planning with Tribal employers, government and enterprises
(required coverage for Tribe as a whole, total employees
greater than 50 FTEs).
– Preventative services now covered by employers, prior
ineligible persons that had pre-existing conditions, etc.
– Tribal option of acquiring coverage through Federal Employee
Health Benefit (FEHB) Plan (option is available now).
tribal employer FEHB option.
• Who Can Access FEHB?
– Indian Tribes, tribal organizations, and urban Indian
organizations that decide to purchase health insurance for
their employees
– Participation—must be “all in”—the total Tribal organization,
government, all enterprises, etc.
– Access to large health networks
– Tribes pay the employer portion of premiums, including an
administrative fee to cover operating expenses
– Tribes assist with employee premium collection
(payroll deductions)
tribal employer plans.
• 10 Essential Health Benefits Required
–
–
–
–
–
–
–
–
–
–
Ambulatory Patient Services
Emergency Services
Hospitalization
Maternity and Newborn Care
Mental Health and Substance Abuse Disorder Services, including
Behavioral Health Treatment
Prescription Drugs
Rehabilitative and Habilitative Services and Devices
Laboratory Services
Preventative and Wellness Services and Chronic Disease
Management
Pediatric Services, including Oral and Vision Care
tribal employer plans.
• Tribal Health Management Considerations
– Tribal employer plans should include Tribal/IHS facility as part
of provider network.
– Consideration of health services to tribal employees,
including non-Indians, on a fee for service basis.
– Consideration of services now to be covered by plans, such as
preventative services, mental and behavioral health, etc.
planning.
• Federal Financial Picture
– IHS Appropriations
• FY2013 – $4.1 billion, down from $4.3 billion in FY2012
• FY2014 – $4.5 billion, about half for contract support
– Tribal and IHS facilities rely on third party resources,
Medicare, Medicaid and private insurance to meet federal
funding shortfalls.
– Nationally, CHS non-Priority 1 costs are at or below 50%.
planning.
• Indian Health Financial Resources
– Nationally, about 25-30% of Indian population served at
Tribal/IHS facilities have no insurance/resource coverage.
– Many of those may likely qualify for expanded Medicaid,
or QHPs.
– For all Medicaid reimbursements made for AI in Albuquerque
Area IHS ($107M), about 25% ($27M) went to Tribal/IHS
facilities (2004 statistics).
planning.
• Financial Planning – CHS
– Project the costs of covering those patients who are CHS
eligible through QHPs.
– Project Revenues for those now covered (average patient
visits per year X average reimbursement for visit), which
could offset the costs.
– Compare to total CHS costs.
– Analyze if any of those services could be provided by your
facility with projected revenues from covered patients.
planning.
• Financial Planning Revenues
– Project revenues for the 25-30% of service population that
will likely obtain coverage per expanded Medicaid or
exchange QHPs for current direct services.
– Project revenues and costs for expanded services that will
now be covered, e.g., preventative services.
planning.
• Financial Planning Services
– Consider what other services are paid by Medicaid to nonIndian providers for AI’s that your facility might be able to
offer; project potential revenues & project costs.
– Federal regulations require M&M reimbursements to be used
for facility improvements, accreditation, and to meet the
health needs of the service population.
planning.
• Revenue Cycle Considerations
– Prepare to bill the insurances on the Exchange.
– Meet with insurance carriers that may participate in the
Exchange and Tribe’s insurer.
– Dialogue about contracts with potential qualified
health plans:
• Sovereign language
• Contracting terms
• Covered benefits
• Network providers
• Reimbursement cost structure
implementation tasks.
– Tribal leaders, Tribal management and HR benefits staff
• Understand new requirements
• Consider optional coverage of FEHB
• Effects to Tribal Health Centers
– Tribal Health management and patient benefit staff continue
to understand
• Expanded benefits available to Tribal members/patient
population
• Eligibility and various coverage of ACA plans
• Revenue compliance
– Strategic Planning for changes
• Revenue effect of previously uninsured individuals
• CHS affects and options to pay insurance premiums
• Effects and costs for Tribal employers
resources.
• Assistance for Tribes
– State Medicaid Expansion Plan should include provisions for
AI/Tribes in state.
– CMS has a Tribal Advisory Group:
http://www.cms.gov/Outreach-and-Education/American-Indian-AlaskaNative/AIAN/index.html
Report: Health Care Reform, Tracking Tribal, Federal and State Implementation,
5.20.2011 by Tribal Advisory Group, CMS
– NCAI/NIHB has a Tribal Health Organization Group:
http://tribalhealthcare.org/blog/new-informational-psa-available-for-your-waitingroom-or-office/
– FEHB has a Tribal Technical Work Group:
http://www.opm.gov/healthcare-insurance/indian-tribes/health-insurance/
questions?
contacts.
Lisa Wilcox, SPHR, CEBS, CCP, THRP
Principal
lwilcox@redw.com
505.998.3296
Lisa has 30+ years experience in benefits and compensation planning, and is a Certified
Tribal Human Resources Professional (THRP), having received special training from the
National Native American Human Resources Association in HR topics, issues, laws and
regulations unique to tribal organizations and enterprises.
Corrine Wilson, CPA
Principal
cwilson@redw.com
602.730.3609
Corrine provides a wide range of financial consulting and training services to tribes,
having served 14 years as a tribal CFO and over 15 years as a CPA providing audit
and consulting services to tribes and their enterprises. She is a member of the Ft.
McDermitt Paiute-Shoshone Tribe of Nevada.