Impact of Healthcare Reform (PPACA)
March 2014
The Impact of
Healthcare Reform (PPACA)
on City Employees
Presented by:
Lisa Ghotbi - Deputy Director, Health Service System
Susan Gard - Chief of Policy, Department of Human Resources
March 3, 2014
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Impact of Healthcare Reform (PPACA)
March 2014
Today We Will Cover…
• PPACA Summary
• Impact on Healthcare Benefits
• Impact on Healthcare Cost
• Impact on Benefit-Eligible Employees
• Intersection with our current Benefit Rules
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Impact of Healthcare Reform (PPACA)
March 2014
PPACA – Healthcare Reform
On March 23, 2010, President Obama signed the health care reform
bill, Patient Protection and Affordable Care Act (PPACA), into law.
PPACA makes sweeping changes to the U.S. health care system
including new requirements in five key areas:
• Expanded & Consistent Coverage – “Essential Benefits”
• Insurance Reform & Exchange Marketplaces
• Health Plan Administration Requirements
• Fees/Taxes
• Individual & Employer Coverage Mandates
PPACA has an eight (8) year implementation timeline: 2010 to 2018.
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Impact of Healthcare Reform (PPACA)
March 2014
Complex set of changes required:
Exchanges
and
Subsidies
Expand
coverage for
un-insured &
underinsured
Taxes
and Fees
Employer and
Individual
Mandate
PPACA regulations are designed to standardize healthcare
coverage for all Americans
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Impact of Healthcare Reform (PPACA)
March 2014
Impact on Employee Healthcare Benefits
Expanded Coverage
• Dependent children must be offered coverage up to age 26.
 HSS coverage expanded from age 25 to age 26 in 2011.
• Elimination of Pre-existing Condition Exclusions (no impact on HSS)
• Minimum set of ‘Essential Benefits’ that plans must cover (no impact on HSS)
• Elimination of Lifetime and Annual Maximums on ‘Essential Benefits’
 HSS eliminated $2Mil lifetime maximum in the UHC City Plan in 2011.
As healthcare coverage standardized, pre-tax Healthcare Flexible Spending
Accounts (FSAs) were reduced to a maximum of $2,500 (from $5,000) in 2013.
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Impact of Healthcare Reform (PPACA)
March 2014
Impact on Employee Healthcare Benefits
Access to Preventative Health Care
• Zero employee cost-share for Prevention Services
 HSS coverage changed from $15 copay to a $0 copay for preventive
care and routine office visits in 2011.
• Zero employee cost-share for an expanded list of Woman’s Preventative
Services (including oral contraception)
 HSS coverage changed to a $0 copay for all contraception 2013.
HSS has seen an increase in members obtaining their recommended screening
and prevention services since this coverage change went into effect.
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Impact of Healthcare Reform (PPACA)
March 2014
Impact on Employee Healthcare Benefits
Standardized “Essential Benefits” in the individual
and small group insurance markets in 2014.
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Ambulatory patient services
Emergency services
Hospitalization
Laboratory services
Maternity and newborn care
Mental health and substance abuse services, including behavioral health treatment
Prescription drugs
Rehabilitative and habilitative services and devices
Preventive and wellness services and chronic disease management
Pediatric services, including oral and vision care
For comparability to the plans on the Exchanges.
Set State-by-State and includes all State mandates
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Impact of Healthcare Reform (PPACA)
March 2014
Impact on Employee Healthcare Benefits
Large group and self-insured plans are required to
meet similar standards for benefit generosity and
plan affordability.
•
Minimum Value Standard: employers with 51 or more full-time employees must offer at
least one plan with an actuarial value of at least 60% or face potential penalties. This
means employees will be exposed to no more than 40% of the cost of care.
•
Large firms that offer ‘minimum value standard’ coverage cannot have the employee-only
premium in the employer’s lowest-cost plan exceeds 9.5% of family income for any single
employee or face penalties.
•
Group health plans may not impose annual deductibles greater than $2,000 single/$4,000
family for plan years starting on or after January 1, 2014,
Penalties are $2,000 per full-time employee monthly 8
Impact of Healthcare Reform (PPACA)
March 2014
Impact on Employee Healthcare Cost
New Fees & Taxes & Other Added Cost
2.29% of the 2.43% 2014 premium increase is attributable to
ACA fees and taxes.
Additional ACA pharmaceutical and medical device excises taxes will be
paid by plan vendors and passed on in future premium increases.
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Impact of Healthcare Reform (PPACA)
March 2014
Impact on Employee Healthcare Cost
The expanded coverage requirements, access to preventative care at zero
copay, and standard essential benefits also add cost to the annual premium
renewals which are paid by the employer and the employee.
2018 Cadillac Tax – 40% excise tax on all plans with a high aggregate value
PPACA has additional cost reporting and innovation projects that are believed
to be the cause of lower healthcare trends in the last few years…
“Health care spending growth is the lowest on record (1.3%)” ….“Health
care price inflation is at its lowest rate in 50 years (1%).” …“The ACA is
contributing to the recent slow growth in health care prices and spending
and is improving quality of care.” Trends in Health Care Cost Growth and the Role of
the Affordable Care Act. Office of the President, November 2013.
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Impact of Healthcare Reform (PPACA)
March 2014
Employer Mandate
• Full-time employees (FTEs) entitled to health benefits for a limited
cost
• Statute defines “full-time” as working an average of at least 30 hours
per week or 130 hours per month
• Applies to temporary and permanent employees
• Employees who work less than 30 hours and who do not receive
employer benefits must have their hours tracked and reported to the
IRS
• Automatic enrollment: Large employers must automatically enroll
new employees in coverage.
The Employer Mandate is delayed until 1/1/2015
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Impact of Healthcare Reform (PPACA)
March 2014
City Review of PPACA Impacts on Employees
• DHR team
• HSS
• Continuously vetting all issues to determine what, if any, changes
the City needs to make to be compliant.
The Employer Mandate is delayed until 1/1/2015
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Impact of Healthcare Reform (PPACA)
March 2014
City Review of PPACA Impacts on Employees
ACA
City
Provide health coverage to all fulltime employees
• Those reasonably expected to
work on average 30 or more
hours per week over a defined
measurement period
 One year
Provides health coverage to
employees with regular work
schedule of 20 or more hours per
week
• Health insurance upon
appointment except for some
temporary appointments
If cannot determine whether
employee is reasonably expected
to work on average 30 or more
hours a week, do a look-back over
a defined measurement period
Temporary, as-needed employees
provided health insurance if they
work 1,040 or more hours within a
rolling 12-month period
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Impact of Healthcare Reform (PPACA)
March 2014
Summary
PPACA is standardizing healthcare coverage and this is
having a positive impact on City employees:
• Expanded coverage and free preventative services
• Lower healthcare trends even with new taxes and fees
• The employer mandate standardizes the definition of
‘Benefited FTE’ and includes a broader group of
employees
• City team continuously analyzing requirements to ensure
compliance
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