9 23 Hc Reform Presentation Mini

Health Care Reform:Understanding your most expensive new hire…

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(HR 3590: The Patient Protection and Affordable Care Act of 2010)

Bill HammettPresident

Hammett Health Insurance Services

San Diego Assoc. of Health Underwriters

How did we get here?

„Health Care‟ cost increases

„Health Insurance‟ rate increases

Un-Insured/Under Insured

Scott Brown #41

Anthem Blue Cross +40%

Reconciliation

Severance Clause

email a question now to: [email protected]

The New Law

The Patient Protection and

Affordable Care Act of

2010


•Mandates

•W-2 Changes

•Exchanges

•Taxes & Tax Credits

•Premium Increases

•Medicare Taxes

•FSA/HSA Changes

•Grandfathered Plans

•Compliance Issues

•Pre-Existing Coverage

•Dependants up to 26

•Subsidies

Reform Timeline Highlights

March 23rd-Bill Signed into Law-Grandfathered Plans -Tax Credits

September 23rd-Bill Enacted-Kids up to 26 -Preventative Care Free

January 1st 2011-W-2 Changes -CLASS Act -FSA/HSA Changes

January 1st , 2013-Medicare Tax -Passive Income Tax

January 1st, 2014-Exchanges -Subsidies -No Pre-Ex Exclusions- Auto-Enroll -Mandates -Guarantee Issue-Minimum Benefit Levels -Modified Community Rating


Grandfathered Plans

Plans in place on March 23, 2010

Some new rules do not apply to GF plans

Adding employees or dependants do not affect GF Status

Simple changes to health plans lose GF status-Increase employee contribution -Change plans -Decrease benefits

Discrimination & Executive Carve-Outs


Small Business Tax Credits

Begins with the 2010 Tax Year

Credit on Business‟ Annual Tax Return

Retro tax credit to January 2010

Less than 25 Full Time Employees (FTE‟s)

Income „average‟ less than $50K per FTE

More from Sheldon…


Expansion of Child Coverage

All Group & Individual Plans, including Self Insured

Through age 25 up to age 26

Dependents may be Married and even live elsewhere

Covers only the Dependent, not Spouse or Children

No Pre-ex exclusion for children under 19 -But does that mean guarantee issue?


Maximum Benefit Limits For both GF and non-GF

Lifetime Benefit Limits will be prohibited


Maximum Annual Limits For both GF and non-GF

Annual Benefit Limits will be limited almost to the point of prohibited

Emergency Services covered as ‘In-Network’

Preventative Care

All non-GF plans must cover preventative at no cost to the employee


Adults Children

Type 2 Diabetes Autism

Osteoperosis Behavioral Assessments

Blood Pressure Hearing Screening

Cholesterol Immunizations

Colorectal Cancer Oral Health

Breast Cancer Vision Screening

2011 Provisions

Employer sponsored premiums on W-2

Prohibits „OTC‟ drug reimbursements from FSA‟s, HSA, HRA

Penalties for HSA non-qualified withdrawals increase from 10% to 20%

New Public LTC Program- “CLASS Act”


2013 Provisions

New cap on „Medical‟ FSA contributions of $2,500 annually

MediCare Hospital Tax:◦ 1.45% to 2.35% for high income earners◦ New 3.8% Tax on net investment income

Both: $200k Indiv. / $250K Joint


Exchanges

All states will be required to establish insurance exchanges

What are they?-Regulatory bodies-Subsidy administrators-Enrollment Portals-Information Portals

Small employers (under 100) will be allowed to purchase through the exchange


Market Reforms

Guarantee Issue in all markets No Pre-Ex No Annual Benefit Limits Waiting Periods may not exceed 90 days Low income subsidies begin – Affordability

Credits up to 400% of FPL Redefines Small Group as 1-100 Modified Community Rating


Sheldon BlumlingEmployee Benefits/ERISA Specialist

(949) [email protected]

Introduction

• Healthcare Reform is complex…

• 2 bills totaling just under 1,000 pages of statutes

• Patient Protection and Affordable Care Act (signed into law on March 23, 2010)

• Health Care and Education Reconciliation Act of 2010 (signed into law on March 30, 2010)

• Expect significant future regulatory guidance

• ~1,000 pages of statutes are just the beginning…

• Many details need to be worked out and/or clarified


Introduction (cont.)• In addition to complexity…

• Broad impact• Individuals

• Insurance companies

• Healthcare industry

• Government

• Employers (regardless of type or size)

• Significantly expands Federal regulation of healthcare plans and insurance• Compare ERISA

• Historic State regulation of insurance


Four Pillars• Four “pillars” of Healthcare Reform

• Individual coverage mandate

• Employer “play or pay” mandate

• Insurance reforms

• Coverage mandates

• Cost controls

• Creation of “insurance exchanges”

• Financing

• Subsidies for lower-income individuals and small employers

• New taxes


‚Plan Year‛

• Basis for some of Healthcare Reform‟s effective dates

• For example, several provisions become effective for plan years beginning on or after September 23, 2010 (6 months after the March 23, 2010 enactment date)

• Fiscal / tax year for a group health plan

• Check summary plan description and Forms 5500

• Effect of insurance renewal dates and open enrollment dates


Small Employer Tax Credits

Tax Credits for Small Businesses

◦ Effective in 2010 for both grandfathered and non-grandfathered plans

◦ Available to employers with fewer than 25 FTEs and average annual wages of less than $50,000 per FTE

◦ Employer must subsidize at least 50% of employee-only coverage

◦ Initial credit is up to 35% of employer premium costs, subject to certain caps

◦ Potential credit increases to up to 50% of employer premium costs in 2014 (subject to certain caps)


W-2 Changes

• Reporting Cost of Employer-Sponsored Group Health Plan Coverage on Forms W-2

• Effective January 1, 2011 for both grandfathered and non-grandfathered plans

• Reporting the “aggregate cost” of coverage using rules similar to the rules for calculating the principal amount of COBRA premiums

• Applies to 2011 Forms W-2 distributed in 2012

• Does not make amounts taxable


Employer Play or Pay Effective January 1, 2014

Applies to “large employers”

◦ 50 or more “full-time” employees (including full-time equivalents)

◦ “Full-time” means 30 or more hours per week

In order to “play” and avoid the possibility of “paying,” an employer must offer adequate group health plan coverage to all full-time employees and their dependents

◦ Plan provides minimum essential benefits

◦ Plan covers at least 60% of the cost of benefits

◦ Employee premium cost does not exceed 9.5% of “household income”


Employer Play or Pay (cont.)

• If an employer fails to “play” by not offering coverage to ALL full-time employees and their dependents AND at least one full-time employee receives Federal premium assistance for purchasing coverage through an insurance exchange, then the employer will “pay” $2,000 per full-time employee, excluding the first 30 full-time employees.

• An employee may qualify for Federal premium assistance if his or her income is less than 400% of the Federal poverty level (currently $88,200 for a family of 4)


Auto-Enrollment of Large Groups

• Automatic Enrollment for Employees of Large Employers

• Technically, statutory effective date is immediate. However, statutory language indicates that actual effective date will be dictated by future regulations.

• Applies to employers with more than 200 full-time employees

• Similar to existing concept for 401(k) plans


Uniform Explanation of Coverage Plans Must Provide Uniform Explanation of Coverage

◦ Deadline is no later than March 23, 2012 (24 months after March 23, 2010 enactment date)

◦ Applies to both grandfathered and non-grandfathered plans

◦ Standards will be developed in regulations to be issued no later than March 23, 2011 (12 months after March 23, 2010 enactment date)

◦ Any “material” change in a plan not reflected in the most recent uniform explanation of coverage must be communicated at least 60 days IN ADVANCE of the effective date of the change

Compare existing SMM and SPD requirements


Miscellaneous New Mandates

• Miscellaneous New Coverage Mandates Effective on January 1, 2014

• Coverage of minimum essential benefits

• Cost sharing limits

• Employer reporting requirements relating to the provision of minimum essential benefits

• “Free choice” vouchers

• Wellness discounts of up to 30% may be offered


Cadillac Tax

◦ Effective date is January 1, 2018

◦ 40% excise tax imposed for employer-provided coverage valued in excess of $10,200 for single coverage or $27,500 for family coverage

◦ Values will be indexed for inflation

◦ Certain exceptions apply

◦ Will this generate tax revenue?

◦ Will high-cost groups (due to experience and/or geography) be disadvantaged?

◦ Perhaps more to come on this provision…


Other Miscellaneous Tax Provisions• Effective January 1, 2013, an additional 0.9% Medicare tax on

wages exceeding $200,000 for individuals and $250,000 for joint filers.

• Effective January 1, 2013, a new 3.8% Medicare tax on investment income exceeding $200,000 for individuals and $250,000 for joint filers.

• Effective January 1, 2013, elimination of certain deductions for employers who receive Medicare Part D subsidies for providing qualifying prescription drug coverage to retirees.

• Effective January 1, 2011, the excise tax for unqualified distributions from an HSA is increased to 20%.


What Employers Should Do Now…Near Term• Determine plan year and related effective date for near-term new

coverage mandates

• Evaluate importance of grandfathered plan status and take steps to preserve status, if applicable

• Minimize changes

• Preserve plan documentation

• Keep an eye out for further guidance

• Amend cafeteria and/or healthcare FSA documents for coverage of new adult tax dependents and 2011 limits on over-the-counter drug reimbursements


What Employers Should Do Now…Near Term (cont.)• Determine whether any existing taxable coverage of employee

dependents should be nontaxable on and after March 30, 2010 as a result of the new exclusion for adult tax dependents

• Amend plan documents, communication materials and open enrollment materials to account for near-term changes.

• Incorporate applicable DOL model notices into open enrollment materials

• Ensure that 2011 open enrollment satisfies 30-day enrollment period for adult dependents and those previously affected by lifetime maximum

• Prepare payroll system to capture 2011 data necessary to report the cost of group health plan coverage on Forms W-2.


What Employers Should Do Now…Near Term (cont.)• Self-Insured Plans:

• Review plan documents for amendments required by near-term changes

• Evaluate continued utility of maintaining a self-insured plan

• Collectively-Bargained Plans:

• Determine effective date for near-term new coverage mandates by reviewing applicable CBAs

• Evaluate whether mid-CBA plan amendments are necessary and/or permitted by applicable CBAs and plan documents

• Evaluate whether new Healthcare Reform requirements (including longer-term requirements) may affect healthcare costs to an extent that would impact future bargaining strategies


What Employers Should Do…Long Term• Keep an eye out for periodic future regulatory guidance

• Evaluate whether the employer “play or pay” mandate will apply

• If the employer “play or pay” mandates will apply, evaluate the projected impact on employee healthcare costs

• Be prepared for ongoing changes and uncertainty

• Be prepared for higher employee healthcare costs

• Be prepared for more employer administrative burdens relating to group health plans


Now What?Key Issues & Considerations on

Health Care ‚Reform‛from a Regional Perspective

Nick Macchione, FACHE

Director, Health & Human Services Agency

County of San Diego, CA


Last year we were asking…


This year I ask…


Key Points

• Environmental Realities

• Emerging Ideas and Best Practices Influencing the Industry

• Future Implications of a Changing Healthcare Landscape


National Realities


2010 Commonwealth Fund Ranking of US Healthcare


Country Rankings

1.00–2.33

2.34–4.66

4.67–7.00

Realities of State and Local Governments

Surviving an economic recession

Historic levels of unemployment, home foreclosures, and personal bankruptcies

Highest level of people on public welfare

Inverse proportion between funding & human need

Chronic diseases leading to chronic costs


Dilemma of Healthcare Reform


The Current:

•Cardiovascular•Diabetes•Malignancy•Metabolic•Pulmonary

(Diseases that are behavior based, lifestyle induced and environmentally impacted)

The Past:

•Accidents•Births•Contagions•Genetics

(Diseases that were random, infrequent, catastrophic)

Ironic Realities of the US Healthcare System

Pros

One of the BEST systems in the world with technology and state-of-the-art facilities

Cons

Fragmented and inefficient

Spends more than any other country

Massive uninsured, uneven quality and

Administrative waste


Realities of Regional System Capacity

Complex, co-optition service delivery system

Siloed, Fragile & Overburdened

Parity issues

Inefficiencies with wide variations of care

Uneven supply/demand

Chronic Disease Chronic Costs



Prevention Pays Off…Healthy Choices Wins All the Time!


Top 10 Local Health Issues


Source: Community Health Improvement Partners, 2007 Needs Assessment

True ‚Healthcare‛ or ‚Sick Care‛ Janitorial Services?


Top 5 Things Driving The Industry

• Cost: Price Competitiveness and National Deficit w/HCF

• Demographics: Aging, Diversity, Growth

• Epidemiology: Acute to Chronic

• Technology: IT + Biotech = Care Management Tech

• Consumer Value = Price + Outcome + Experience

• And possibly Globalization: Emerging markets


Emerging Best Practices and Key Considerations

1. Elevated Roles for Nurses: Nurses as Care Integrators

2. Migration to Interdisciplinary Care: Team Approach

3. Bridging the Continuum of Care

4. Pushing the Boundaries: Home as Setting of Care

5. Targeting High Users of Health Care: Elderly Plus

6. Sharpened Focus on the Patient

7. Leveraging Technology in Care Delivery

8. Driven by Results: Accounted Care

9. Prevention will become national key strategy…and

10. Personal responsibility will need to follow.


US Health Delivery System: In Major Transition


1. Acute treatment

2. Cost unaware

3. Professional prerogative

4. In-patient

5. Individual profession

6. Traditional practice

7. Information as record

8. Patient passivity

9. Provider passivity

10. Secondary Prevention

1. Chronic prevention/mgmt

2. Price competitive

3. Consumer responsive

4. Ambulatory: Home/Community

5. Team approach

6. Evidence based practice

7. Information as tool

8. Consumer engagement

9. Accountable care

10. Primary Prevention

Regional Implications:What Can Be Expected?

No pain, No gain No margin, no mission Commitment at all levels essential Delivery will come from the edge of delivery Best practices, but modified to be owned Spreading to the house is a big chasm Leadership skills at all levels Innovative solutions will come from bold new non-

traditional approaches! Standardization and elimination of variation Accountable Care…Are we really ready?


Accountable Care Organizations:Balancing Quality-Cost-Access…Reality or Myth?


The Changing Healthcare Landscape



FRAMEWORK forBuilding Better Health

Service Delivery System

Healthy Choices

Policy & Environmental Change

Culture Change

So, Now What The Health Do We Do?


•Proactive accountable “well” care

•“Right incentives” “right outcomes” Value versus volume.

•Improve patient safety, including health literacy for all.

•Leverage mHealth and genomic medicine.

•Prevention & early intervention focus

Vision of The Future…


Continuum of Care System Driven by Wellness, Self-Reliance and Health System Collaboration



Percentage of employers who agree their organizations will continue to offer healthcare benefits because they are critical to employee

recruitment, retention and remaining competitive

Source: “Health Care Reform: What Employers Are Considering” conducted by the International Foundation of Employee Benefit Plans

Percentage of employers in America expect to revisit their healthcare benefit strategy this year,

following the passage of healthcare reform legislation

Source: “Health Care Reform: What Employers Are Considering” conducted by the International Foundation of Employee Benefit Plans

How are

Employers

Planning to

Communicate

and educate

Their

Employees

on the new

Legislation?

E-Mail

Special Written Communication

Company Web Site

Already Communicated w/ Employees

Planning Communication

Will Employers take advantage of a new provision that will offer financial incentives to employees participating in

wellness programs?

Health Plans most attractive to large employers (500+) moving forward

Takeaways• With Legislative change comes strategy change

• Who‟s your resource?

• Are they earning their money? Ask for references.

• Reform will add cost to premium

• Efficiency with service providers will be key

• Think outside the box (HRA‟s, Kaiser/Sharp Wraps)

• Workers Comp, Liability, 401k, Payroll, HR Management

• Communication

• Control the reform message with your employees

• Show them the worth of their benefits

• Engage them in the insurance process

• Reward healthy behaviors

• Take advantage of new age wellness programs

• Reduce the risk


Questions?

Contact information:

[email protected]

(858) 309-8801 office

(619) 252-3735 cell

mailto:[email protected]

Documents

9 23 Hc Reform Presentation Mini