HEALTH CARE REFORM IMPACTS IN 2014 AND

BEYONDPresented by Benefit Health Advisor and

Vantage FinancialSponsored by Hinton Burdick

• President signed Patient Protection and Affordable Care Act on March 23rd, 2010.

• Effective dates vary – many begin with the first plan year beginning on or after September 23rd, 2010.

• 2014 is a big year in terms of changes and many items of the law being implemented.

Introduction to Reform

Pay or Play Coverage Mandate

Managing Employee Hours

Minimum Essential Benefits

Affordable Employee Contributions

Steering Clear of Penalties

Employers with 50 or More Employees (or Full-Time Equivalents) Must Offer Coverage to all Full-Time Employees or Pay an Annual $2000/Employee Penalty

◦ Full-Time employment is defined as 30 hours per week.

◦ If an employer is subject to the Pay or Play Penalty, the penalty does not apply to the first 30 FT employees.

Pay or Play Coverage Mandate

Full-time employment is defined as 30 hours per week.

◦ Includes all compensated time such as vacation and sick leave.

◦ Seasonal employees working less than 120 days are not included.

Managing Employee Hours

IRS Lookback Safe Harbor

◦ Look-Back Period: The period of time an employer can use to average the hours of variable time employees to determine if they qualify for employer-sponsored health coverage. The look-back period cannot exceed 12 months.

◦ Administrative Period: A period of time between the look-back period and the stability period that an employer uses to calculate employee eligibility and to communicate those findings to employees. Cannot exceed 60 days.

◦ Stability Period: The period of time that employees can stay on the plan once qualified. Must be at least 6 months and must be at least as long as the look-back period. Once qualified, employees can remain on the plan during the stability period

regardless of the actual number of hours they work during the stability period. Employees that do not qualify for the plan are locked out of the plan for the

duration of the stability period regardless of the number of hours worked during the stability period.

Managing Employee Hours (Cont.)

For an employer to be considered offering qualified medical coverage, the medical plan must cover at least 60% of the cost of essential benefits as defined by the Department of Health and Human Services.

◦ HHS has developed a calculator to help determine if plan benefits meet the 60% threshold.

◦ States will also provide a baseline plan design that they consider a 60% plan for comparison.

◦ Plans may also hire an actuary to make a determination on whether a plan covers 60% of the cost of essential benefits.

Minimum Essential Benefits

To avoid a $3,000/year unaffordability penalty, employers must offer a plan to their full-time employees that covers at least 60% of the claims cost for Minimal Essential Benefits at employee premium contribution rates that are less than 9.5% of their W-2 wages.◦ 9.5% limit applies to the employee cost of the

single premium only. Family premiums can exceed that threshold.

Affordable Employee Contributions

This fee affects health insurers, starting in 2014 and increasing at a defined rate until 2018 at which point it will continue to increase with premium growth.◦ Impacted plans will be assessed approximately 2.2%

of premium in 2014. This will increase to approximately 3-4% of premium in future years.

◦ The fee only applies to fully insured plans and the carriers are required to pay this assessment on behalf of the groups.

◦ Employers should expect that these costs will be offset by carriers by additional load in their premiums.

Health Insurance Industry Fee

Between 2012 and 2019, self-funded medical plans will be assessed an annual fee to fund The Patient Centered Outcomes Research Institute (PCORI).◦ The fee is $1 multiplied by the average number of

covered lives for policy years ending between 10/01/12 and 9/30/13.

◦ The fee increases to $2 for plan years ending after 9/30/2013 and will increase with inflation for 2014-2019.

◦ Fee must be paid by July 31 following the last day of the applicable plan year.

The PCORI Fee

PPACA imposes an assessment to fund state non-profit reinsurance entities for the purpose of establishing a high-risk pool for the individual market.◦ Assessment is $63/year per plan participant in

2014.◦ All group plans (both fully-insured and self-

funded) of all sizes must pay the assessment.◦ Assessment will change in 2015 and 2016.◦ Assessment is scheduled to end after 2016.

Transitional Reinsurance Assessment Program

Pre-Existing Conditions: Plans will be prohibited from imposing pre-existing condition limitations on any enrollee, regardless of age.

90-Day Waiting Period: Plans will be prohibited from imposing waiting periods that exceed 90 days.

Automatic Enrollment: Employers with more than 200 full-time employees must automatically enroll new full-time employees in their plan. Employees must pro-actively opt-out of the coverage if they do not want to be covered by the employer’s plan.

Benefit Related Mandates

Items of Interest

Changes to Dependent Care Eligibility

Benefit Requirements including unlimited lifetime/annual maximums

Additional Items of Interest

Non-grandfathered plans must provide preventive services with no employee cost-sharing.

Women’s Preventive Services ◦ Well-Woman Visits◦ Screening for Gestational Diabetes◦ HPV Testing◦ Counseling for Sexually-Transmitted Infections◦ Contraceptive Methods and Counseling◦ Breastfeeding Support, Supplies and Counseling◦ Screening and Counseling for Domestic Violence

Preventive Services

Adult Preventive Services Include:◦ Abdominal Aortic Aneurysm◦ Alcohol Misuse Screening and Counseling◦ Aspirin (for certain ages)◦ Blood Pressure Screening◦ Cholesterol Screening◦ Colorectal Cancer Screening for Adults Over 50◦ Depression Screening◦ Type 2 Diabetes Screening◦ Diet Counseling for Adults at Higher Risk of Chronic Disease◦ HIV Screening◦ Immunizations◦ Obesity Screening and Counseling◦ STI Prevention Counseling◦ Tobacco Use Screening and Certain Cessation Interventions◦ Syphilis Screening

Preventive Services (Cont.)

Child Preventive Services Include:◦ Alcohol and Drug Use Assessments◦ Autism Screening◦ Cervical Dysplasia Screening for Sexually Active Females◦ Congenital Hypothyroidism Screening◦ Developmental Screening for Children Under 3◦ Dyslipidemia Screening◦ Fluoride Chemoprevention Supplements◦ Newborn Hearing Screening◦ Height, Weight BMI Measurements◦ Hematocrit or Hemoglobin Screening◦ Sickle Cell Screening◦ HIV Screening for at risk Adolescents

Preventive Services (Cont.)

Child Preventive Services Include (cont.):◦ Immunizations◦ Iron Supplements (6 to 12 months of age)◦ Lead Screening◦ Medical History◦ Obesity Screening and Counseling◦ Oral Health Risk Assessment ◦ PKU Screening for Newborns◦ STI Prevention Counseling for Adolescents◦ TB Testing◦ Vision Screening for all children

Preventive Services (Cont.)

Beginning in 2014, individuals must have health insurance or potentially pay a penalty for noncompliance. ◦ Individuals must maintain “Minimum Essential Coverage” which

does not necessarily include the minimum essential benefits mandated for employer-sponsored plans.

◦ Qualified health insurance plans include: employer-sponsored plans, individual plans, Medicare/Medicaid, other government plans including state-sponsored high risk plans.

◦ 2014 Penalty: Greater of $95/person or 1% of household income.◦ 2015 Penalty: Greater of $325/person or 2% of household

income◦ 2016+ Penalty: Greater of $695/person or 2.5% of household

income.

Individual Mandate

Exchanges are online marketplaces where consumers can go to shop for health insurance. Exchanges also administer the federal subsidies available to consumers.◦ State-run exchanges: 18 States have elected to operate

their own exchange instead of relying on the federal exchange.

◦ Federally-run exchanges Exchanges open 10-1-2013 for individuals and

small employers. Employers will be required to notify their

employees of the existence of the exchanges.

Exchanges

4 Benefit Levels:

◦ Bronze: Covers at least 60% of aggregate claims.◦ Silver: Covers at least 70% of aggregate claims.◦ Gold: Covers at least 80% of aggregate claims.◦ Platinum: Covers at least 90% of aggregate

claims.

Exchanges (cont.)

2013◦ Plan Years Beginning on or After 8/1/12

Preventive health benefits for women paid at 100%◦ Plan Years Beginning on or after 9/23/12

Restricted Annual Limits of no less than $2 million. New Standardized Summary Explanation of Benefits

and Coverage (SBC) 60 Day notice of material changes to SBC

◦ January 1, 2013 Health FSA limit of $2,500 W-2 Reporting of cost of health insurance

Timeline

2013 (Cont.)◦ Late Summer/Fall 2013

Employers must notify employees of Health Care Exchanges◦ Plan years ending on or after 10/1/2013

Patient Centered Outcome Research (PCOR) fee imposed on plan sponsors ($1 multiplied by average number of covered lives for prior plan year)

◦ October 1, 2013 through February 28, 2014 Initial enrollment period for State Health Benefit Exchanges

◦ December 31, 2013 Health plans must certify compliance with certain Electronic

Data Interchange (EDI) requirements surrounding eligibility, claims status, electronic funds transfer and remittance advice.

Timeline (Cont.)

2014◦ January 1, 2014

Individual coverage mandate Expansion of wellness incentives from 20% to 30% with an

extra 20% to prevent tobacco use.◦ First day of plan year beginning in 2014

No annual lifetime dollar limits allowed No pre-existing condition exclusions allowed No waiting periods in excess of 90 for FT employees Automatic enrollment for new employees for employers with

200+ employees Cover routine medical costs of clinical trial Allow all dependents up to age 26 coverage regardless of

other group coverage

Timeline (Cont.)

2014 (Cont.)◦ Plan years ending on or after October 1, 2013 to

2019 PCOR fee imposed on plan sponsors ($2 multiplied

by average number of covered lives for prior plan year)

Plans must report number of covered lives for Temporary Reinsurance Fee. Fee is estimated at $5.25 per covered life for 2014

◦ November 5, 2014 Large health plans must obtain a Health Plan

Identifier (small plans – November 5, 2015)

Timeline (Cont.)

2015◦ Employer Shared Responsibility applies (“Pay or

Play rule”) to employers with 50 or more full-time equivalent employees.

◦ Health coverage reporting requirements to IRS and covered individuals (awaiting guidance)

2018 ◦ Excise Tax begins for “Cadillac Plans” (awaiting

guidance)

Timeline (Cont.)

Questions?

For more information, contact -

Chris HillierBenefit Health Advisor303-913-0045ChrisHillier@Benefithealthadvisor.com

Daniel KempVantage Financial435-773-3681Daniel@Vantage-financial.com