Health Care
Reform Update
The PPACA Timeline
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PPACA enacted
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2010
Summary of Benefits and Coverage
(SBC) and uniform glossary
Supreme Court ruling
PCORI Fee per person 2012-2018
(2013=$1)
2011
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2012
2013
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Individual mandate
Employer mandate – Note: penalties have been delayed
Public exchanges
Premium and cost-sharing subsidies
Medicaid eligibility expanded in participating states
Additional market reforms/group health plan mandates
Transitional Reinsurance Fee Assessment 2014-2016
(2014=$63)
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2014
2015
2016
W-2 issued (using 2012 information)
Additional Medicare tax and unearned income contribution
$2,500 cap on employee pretax contributions to health FSAs
Notice to employees of exchanged-based coverage options
Exchange development and certification
Initial open enrollment in exchanges
Sale of health insurance across
state borders permitted
2017
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States may open
exchanges to large
employers
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Adult child coverage to age 26
No lifetime dollar limits/restricted annual dollar limits on
essential health benefits
No pre-existing condition exclusions for enrollees under 19
First-dollar preventive care coverage
No rescissions
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Auto enrollment possibly?
(delayed from 2014)
Additional Reporting
Requirements – still
undefined
Pay or Play Penalties
(delayed from 2014)
2018
Excise tax on high-cost,
employer-sponsored health
coverage
Ongoing regulations, guidance and legislation — evolving interpretations — enforcement
Affordable Care Act — The Total Rewards Issue
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Affordable Care Act (ACA) is both an organizational issue and a benefits issue;
it will ultimately affect :
 Financial planning
 Benefits and compensation
 Workforce strategies
 Retiree health commitments
 Employee value proposition
 Administration and payroll
It’s for Real:
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The Supreme Court has upheld the
law
HCR requires proactive assessment
and planning
It’s Immediate:
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In early Fall 2013, required employee
communications on Exchanges and
subsidies, which is likely to include
comments on organization’s strategy
Every Individual is required to have Minimum Essential Coverage (MEC)
beginning January 1, 2014.
UM Cost Impact of PPACA
Year
2010-2011
Provisions
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•
•
•
2013
•
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2014
•
Cost impact
Adult child coverage to age 26
No lifetime dollar limits/restricted annual dollar limits
on essential health benefits
No pre-existing condition exclusions for enrollees
under 19
First-dollar preventive care coverage
•
•
$864,000
No impact
•
No impact
•
Minimal impact
W-2 issued (using 2012 information)
Additional Medicare tax & unearned income
contribution
$2,500 cap on pretax contributions to health FSAs
•
•
•
Minimal impact
No impact to UM
Minimal impact to UM
Revenue raisers
•
Transitional reinsurance fee (TRF)
•
PCORI tax
• $2.4 Million TRF
• $43,623 PCORI
2015-2017
• Employer mandate
• Automatic enrollment – required to enroll eligible
employees in a plan
• Non-compliance $39 million
• To be determined
2018
• Excise Tax
• To be determined
2015 Bottom Line: UM will offer coverage to all employees who average 30 hours or more per
week during a 12 month measurement period. Penalty of $39 million if not compliant.
Definition of Populations
# of employees
Benefit Eligible Ranked Faculty
3,611
Other Benefit Eligible (non-ranked faculty and staff)
15,489
Adjuncts
1,481
Other Non Benefit Eligible (other academics and staff)
4,075
Student
13,114
Total
37,770
University of Missouri Population
10%
Benefit Eligible Ranked Faculty
Other Benefit Eligible
34%
Adjunct
41%
11%
Other Non Benefit Eligible
Student
4%
Red denotes Variable Hour Employees
UM Revised Employment Status definitions
• Fully Benefit eligible (all benefits)
 Based on primary job AND,
 75% FTE or greater AND,
 9 month appointment
• New: Medical benefit eligible (VARIABLE HOUR EMPLOYEES)
 All concurrent jobs
 30 hours per week or more
 No minimum appointment period, but count average of total hours
during measurement period
Changes to prepare for Health Care Reform
• While employer penalties under PPACA (Health Care
Reform) will not be effective until 2015, the measurement
period will be October 4, 2013 through October 3, 2014
– Hours worked and recorded during this time will determine whether
a Variable Hour Employee will be offered medical coverage
• UM will implement revised business processes around the
30 hour rule beginning October 1, 2013
Rationale for Changes
• By not offering coverage to at least 95% of employees that
average 30 hours per week or more, the University could
face a penalty of $2,000 per benefit eligible employee
– Based on the University’s benefit eligible headcount this penalty
may be as much as $39,000,000
– Compliance reportable to the Department of Labor which could lead
to additional exposure
• Current reporting is inaccurate, creating exposure for the
university when standard hours/FTE do not reflect actual
time worked
• Delay of penalties allows time to implement consistent
processes
– Improves data quality which reduces risk of penalty
– Allows for more accurate assessment of financial impact
– Allows offer of medical coverage to those who qualify
Decisions Made to Date
Recording Time and determining medical eligibility
– VARIABLE HOUR EMPLOYEES
• Academic Appointments
– Teaching: Time worked for teaching employees will be taken from
the Standard Hours entered in PeopleSoft HR. The FTE should be
calculated using 3 1/3 hours worked per 1 credit hour taught. This
applies to classroom teaching, on-line teaching and classes taught
by graduate students.
– Exempt non-teaching (e.g. Research Asst., Research Scientist):
Beginning in October, these individuals must track worked time
using a non-pay earn code in Time and Labor. Campus HR can
provide training.
– Hourly: These employees are already entering their worked time
into standard hours/FTE and should continue to do so.
Recording Time and determining medical eligibility
– VARIABLE HOUR EMPLOYEES
• Administrative Service and Support Staff
– Exempt variable hour employees: Beginning in October, these
individuals must track worked time using a non-pay earn code in
standard hours/FTE. Campus HR can provide training.
– Hourly: These employees are already entering their worked time
into Time and Labor and should continue to do so.
Unit Pay – VARIABLE HOUR EMPLOYEES
• Whenever possible, fixed pay for a task (unit pay) is being
eliminated
– UMSL and Missouri S&T do not use unit pay
– MU and UMKC are currently working to convert unit pay to
appointments in which worked hours can be tracked
– If a job is approved for unit pay a methodology must be
developed to equate the unit to hours worked (standard
hours/FTE).
– The same methodology must be used for the same job on all
campuses.
“Combination” VARIABLE HOUR EMPLOYEES
• Some employees may have concurrent jobs that are in two
separate tracking categories
– A separate job record should be used for an employee that
tracks time using different methods
– Time should be tracked as described on previous slides
– For employees with both teaching and non-teaching
concurrent jobs, the information will be combined to
determine an overall standard hours/FTE (or hours worked)
for the purpose of determining medical eligibility
Work Breaks
• General Rule: Employees who are placed on leave (i.e.
short work break) should be terminated after 26 weeks
without pay (military leave or FMLA time excluded)
– This is needed to identify whether employees return to a current
measurement/coverage period or begin a new measurement period
– Further analysis is being done to identify how many employees
exceed a 26 week break and return to work within the following 12
months
• Summer break – Academic Institutions
– Any one summer month (June, July or August) with zero hours
worked, will be excluded from the calculation of average hours
worked
– This only applies to summer months and does not apply to holiday
breaks (i.e. December holiday break) even if it is more than 4
weeks
Graduate Students
• While many students and faculty view the entire research
assistantship as part of the student educational
experience, the IRS and as a result the University of
Missouri, now must consider the portion of the
assistantship for which the student is paid, as employment.
– Students assist in and contribute to faculty “work”, and thus
university “work” in many uncountable ways over the lifetime of
their graduate education (publications, grants, and university
prestige)
– Clearly, components of this "work", such as publications, also are
part of the educational experience.
– Advisors and students are encouraged to discuss the role of the
graduate student in University and faculty contributions.
Tracking Hours for Graduate Students: UM Approach
• Student workers should always be given a student title
(see HR policy 204)
– Those in student titles should not average more than 28 worked
hours per week over the 12 month measurement period as their
primary role is for educational purposes
– Employees who average greater than 28 hours per week should be
placed in a staff title as their primary role is employment
• Graduate student work generally entails an average of 1020 hours of work per week per semester or academic year
• For the 2013 Fall Semester, the FTE listed in the payroll
system will be used to identify worked hours for graduate
students; no additional tracking is necessary
• UM is continuing to analyze the work being done by
graduate students and further guidance will be forthcoming
Other reminders
•
All concurrent appointments for Variable Hour
Employees will be retroactively tracked and reported.
•
Working retirees will be limited to less than 0.70 FTE so
as not to jeopardize pension payments.
•
Consideration of a different flat rate for variable hour
employees is still under consideration
•
Employee will be asked to enter a reason code when
declining coverage beginning with annual enrollment
2014 (begins with annual enrollment on 10/21/13)
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Other coverage
Unaffordable
Religious reasons
Not interested
Next Steps
• Each department is responsible for accurately tracking the
hours worked by Variable Hour Employees and making
sure that information recorded in PeopleSoft is accurate
• Campus HR representatives have been trained to assist
you as needed; UM System will generate reports to assist
you
• Although benefits are managed as a centralized service,
full compliance with PPACA will require significant campus
involvement in tracking and monitoring eligibility of part
time (variable) employees
– Campus departments will manage workforce needs, staffing and
tracking of hours worked
– UM System will identify eligible employees and offer medical
insurance as outlined under PPACA