Welcome to:The Affordable Care Act

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Jim Hill and Ken Jim Hill and Ken McGeeMcGee

Affordable Care Affordable Care Act : Act : Are you prepared?Are you prepared?

• Will I have to buy it

• Can I still get it though my Employer

• I own a small business. Will I have to buy health insurance for my workers?

The Affordable Care Act is back on a fast track.

Health Reform Implementation Timeline

What is the ACA:Promoting Health Coverage

Medicaid Coverage

(up to 133% FPL)

Employer-Sponsored Coverage

Exchanges(subsidies 133-

400% FPL)

IndividualMandate

Health Insurance

Market Reforms

Universal Coverage

2012-2013 Compliance Deadlines

W-2 Reporting

• Employers must report aggregate cost of group health plan coverage on each employee’s Form W-2

• Does not change the tax rules for health coverage – coverage is still not taxable

Effective Date

• Then:−Originally effective for the 2011 tax year (W-2 Forms

provided in Jan. 2012)− IRS later made 2011 reporting optional for all employers

• Now:−Mandatory for 2012 tax year (W-2 Forms provided in Jan.

2013) −For small employers (those that file fewer than 250 W-2

Forms), reporting requirement is delayed until further guidance issued

−Covered employers need to be compiling data

Summary of Benefits and Coverage

• Simple and concise explanation of benefits−Applies to GF and non-GF plans

• Model template and guidance available− Instructions−Sample language−Uniform glossary of terms

• Final guidance specifies compliance deadlines−Original deadline was March 23, 2012

SBC Compliance Deadlines

• Issuers to health plans: Sept. 23, 2012

• Health plans:−Open enrollment: 1st day of the 1st open enrollment

period that begins on or after Sept. 23, 2012 or−Other enrollment: 1st day of the 1st plan year that

begins on or after Sept. 23, 2012

• Special rules specify when SBC must be provided

Providing the SBC to Enrollees

• Plans must provide SBC to enrollees:

−For each benefit package offered or which they are eligible

−Annually at renewal (or 30 days before new plan year if automatic renewal)

−With enrollment application materials (if no written enrollment materials, when the participant is first eligible to enroll)

−Before the first day of coverage (if there have been changes to the SBC)

−To special enrollees within SPD timeframe

−Upon request

SBC Standards

• Appearance−Cannot be longer than 4 double-sided pages−12-point or larger font−May be color or black and white−Paper or electronic form−Template available

• Language:−Easily understood language−“Culturally and linguistically appropriate manner” –

interpretive services and written translations upon request−Translations will be available

60-Day Notice Rule

• Material modifications not in connection with renewal must be described in a summary of material modifications (SMM) or an updated SBC

• Material modification:−Enhancement of covered benefits or services−Material reduction in covered benefits or services−More stringent requirements for receipt of benefits

• Must be provided at least 60 days BEFORE modification becomes effective

Health FSA Limits

• Current limits−No limit on salary reductions−Many employers impose limit

• Beginning in 2013, limit is $2500/year−Limit is indexed for CPI for later years

• Applies to plan years beginning on or after 1/1/13−This is a change from initial effective date

• Does not apply to dependent care FSAs

New Notice Requirement

• Employers must notify new employees regarding health care coverage−At time of hiring

• Notice must include information about 2014 changes:−Existence of health benefit exchange−Potential eligibility for subsidy under exchange if

employer’s share of benefit cost is less than 60 percent−Risk of losing employer contribution if employee buys

coverage through an exchange

2014 Compliance Deadlines

Individual Mandate

• Individuals will be required to have health coverage that meets minimum standards in 2014

• Individual mandate spreads costs among whole population

• Mandate enforced through the tax system

• Penalty for not having insurance: greater of $695 (up to $2085 for family) or 2.5% of family income

• Exemptions for certain groups and if people cannot find affordable health insurance

The big picture for individualsAmericans not covered under a government plan will have three options for health insurance in 2014:

1. Get coverage through their employer if available

2. Buy an individual market plan through either:

• The individual market exchange – Purchaser may be eligible for subsidy

• The off-exchange market

3. Go uninsured (will pay penalty unless they qualify for anindividual exemption)

Penalties for individualsOutside

exchange – Fully insured Large Group

and self-insured

Outside exchange – Fully

insured Small Group and Individual

2014:Greater of $95 or 1% of taxable income

2015:Greater of $325 or 2% of taxable income

2016:Greater of $695 or 2.5% of taxable income

2017 and beyond:Annual adjustments

Health plan requirements: Product tiers

All will include Essential Health

Benefits

Platinum 90%

actuarial value

Gold 80%

actuarial value

Bronze60%

actuarial value

Silver70%

actuarial value

Actuarial Value** =

Total Expected Payments by Health Plans for EHBs

Total Costs of EHBs for the Standard Population

•Plus catastrophic plan offering for individuals younger than 30/ financial hardship

Health plan requirements continued

* The health care reform law does not require carriers to offer plans with at least a 60% actuarial value, nor does it require employers to provide health coverage. However, it imposes penalties on 50+ employers that do not provide minimum coverage.

Outside exchange –

Fully insured Large Group

and self-insured

Inside exchange

Outside exchange – Fully

insured Small Group and Individual

Include essential health benefits

Provide 60% actuarial value minimum

Adhere to deductible and out-of-pocket maximum limits

Comply with “metal levels” – benefit tiers with specified actuarial values (60% 70% 80% 90%)

Be certified by the exchange through which the plan is offered (certification requirements to be determined)

*

Health Insurance Exchanges

• States will receive funding to establish health insurance exchanges

• Individuals and small employers can purchase coverage through an exchange (Qualified Health Plans)− In 2017, states can allow employers of any size to

purchase coverage through exchange

• Individuals can be eligible for tax credits−Limits on income and government program eligibility−Employer plan is unaffordable or not of minimum value

Health Insurance Exchanges

• What will they look like

• How many options will we have

• Actual Value out of Pocket levels− Platinum− Gold− Silver− Bronze

Employer Responsibility

• Large employers subject to “Pay or Play” rule

• Applies to employers with 50 or more full-time equivalent employees in prior calendar year

• Penalties apply if:

−Employer does not provide coverage to all FT employees and any FT employee gets subsidized coverage through exchange OR

−Employer does provide coverage and any FT employee still gets subsidized coverage through exchange

Employer Penalty Amounts

• Employers that do not offer coverage to all full-time employees:

−$2,000 per full-time employee

−Excludes first 30 employees

• Employers that offer coverage:

−$3,000 for each employee that receives subsidized coverage through an exchange

−Capped at $2,000 per full-time employee (excluding first 30 employees)

More 2014 Changes

• No pre-existing condition exclusions or limitations

−Applies to everyone and all plans

• Wellness program changes

• Limits on out-of-pocket expenses and cost-sharing

• No waiting periods over 90 days

Contact information

Linkedin-www.linkedin.com/in/thejimhill/Facebook- http://www.facebook.com/jimhillcma

Linkedin-www.linkedin.com/in/kmcgeeFacebook: http://www.facebook.com/KennethMcGeeII

Thank you!