What Does PPACA M ean F or Y our Business? Presented by: Joey Janssen, Employee Benefit Specialist May 21, 2013

What Does PPACAMean For Your Business?

Presented by: Joey Janssen, Employee Benefit SpecialistMay 21, 2013

“We Make Benefits Work”

Today’s Agenda

• PPACA Highlights• Small Employer Defined• Small Group Deductible Ceiling• Group Rating Factors – Rate Limitations• Pricing Changes & Adjusted Community Rating• Notification of Exchanges


Agenda Continued

• What is a Large Employer?• Full Time Equivalents• Common Ownership• Measurement Periods• Pay or Play Mentality• Employer Mandate• “Actuarial” Review – New industry buzzword• Waiting Period Limitations


New Benefit & Coverage RulesEmployer Impacts Description Individual Small Group

Fully InsuredLarge Group Fully Insured

Self-Funded

1 Essential Health Benefits (EHB)

• Health Plans must provide Essential Health Benefits for individual and small group

Yes Yes No No

2OOP Max • OOP limits must comply with OOP

limits for HSA plans• All cost sharing (including copays) for

EHB services must count toward OOPM

Yes Yes Yes Yes

3DeductibleLimits

• Beginning 2014 plan design deductibles may not exceed a $2,000 (self-only) or $4,000 (other than self-only) annual limitation

No Yes No No

4Metallic Levels • Four tiers of coverage for EHB

packages: Bronze, Silver, Gold, and Platinum and catastrophic coverage (under 30-year-olds only)

• Requirement to meet actuarial value of one of four plans

• Requirement in and out of Exchange

Yes Yes No No

5 Pre-existing Condition Exclusion (All Ages)

• Beginning in 2014, pre-existing condition exclusions must be removed for all members, not just those under age 19

Yes Yes Yes Yes


Small Employer

• In Florida, a small group will continue to be defined as under 50 employees for 2014 and 2015

• In 2016 small groups will be defined as employers with 2-100 employees


Deductible Ceiling

• $2,000 single / $4,000 Family• What does this mean?• Is this attainable?• Will there be any exceptions?

– Bronze level plans, 60% actuarial value• Example from Connecticut


Example of a Changing Law

• The Board of Access Health CT, the state’s health benefits exchange, adopted the staff’s recommendations for standard plan designs. Specifically, the board approved plans with a $3,000 hospital deductible and $400 prescription drug deductible, reduced from $500. They also approved allowing two non-standard plans per tier, and they created an additional Bronze standard plan, which is a catastrophic plan.


Adjusted Community Rating• Adjusted Community Rating will apply to individual and fully

insured small group health insurance• Pricing Restrictions will begin on or after January 1, 2014


Pricing Today and Beginning 2014Additional Rating Factors Being Eliminated or Changed

• Size Factors (eliminated)• Gender differentiation (eliminated)• Typically 10-1 Age slope (changed/reduced)

9

Healthiest or Newest groups and Lowest Rate

Less Healthy or Longest Duration groups and Highest Rate

Current StateHigh

MRRF

Future State MRRF

1.0

Current StateLow

MRRF


Rating Factors & Premium Restrictions

• Geographic Area• Age (3:1 limit)• Tobacco Use (1.5:1 limit)

Group Rate Factors are limited to

• Gender• Health Status• Claims History• Medical Underwriting• Group Size• Industry

Rates may not vary by


Notification of Exchanges*• Employers must notify employees of the “Health Insurance Marketplace”

by no later than October 1, 2013

– Informing the employee of the existence of the Marketplace (referred to in the statute as the Exchange) including a description of the services provided by the Marketplace, and the manner in which the employee may contact the Marketplace to request assistance;

– If the employer plan's share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code (the Code) if the employee purchases a qualified health plan through the Marketplace; and

– If the employee purchases a qualified health plan through the Marketplace, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.


Notification of Exchanges Continued

• Employers must provide a notice of coverage options to each employee, regardless of plan enrollment status (if applicable) or of part-time or full-time status. Employers are not required to provide a separate notice to dependents or other individuals who are or may become eligible for coverage under the plan but who are not employees

• Employers are required to provide the notice to each new employee at the time of hiring beginning October 1, 2013. For 2014, the Department will consider a notice to be provided at the time of hiring if the notice is provided within 14 days of an employee’s start date.

• With respect to employees who are current employees before October 1, 2013, employers are required to provide the notice not later than October 1, 2013. The notice is required to be provided automatically, free of charge.

*Department of Labor (2013, May 8) Technical Release No. 2013-02. Dol.gov. Retrieved May 20, 2013 from www.dol.gov.


Small Business Options

Today• Offer Employer Sponsored

Health Insurance • Don’t Offer Employer

Sponsored Insurance ( No Penalty)

January 1, 2014• Offer Employer Sponsored

Health Insurance • Don’t Offer Employer

Sponsored Insurance ( No Penalty)

Offering Employer sponsored benefits may look different than it does today but will still be a viable

way to provide value to your employees


Adapting to the New World of Healthcare

• How do you think insurance companies will respond?– Innovation?– New Concepts?– Creativity?

• Plan Designs• Plan Functionality


Creativity & Change

• United Healthcare– Renewal Dates– Plan Designs– “Private” Exchanges

• Aetna– New Business– Existing Business– Private Exchanges


Large Group Discussion

• What is a Large Employer?• Full Time Equivalents• Common Ownership• Measurement Periods• Pay or Play Mentality• Employer Mandate• Waiting Period Limitations


What is a Large Employer?

• A large employer is defined as a company that has greater than 50 full time equivalents.


Full-Time Equivalents

• Why are FTE’s important?– This is used to determine whether or not an

employer is qualified as a large employer.– Full Time Employees: 30 hours or more

• How do you calculate FTE’s?– Add together the total # of FTE’s for the month,

plus a number that is equal to the total number hours worked in a month by part time employees, divided by 120


Full Time Equivalent ExampleLarge or Small Employer?

• 46 Full Time Employees• 20 Part Time Employees• # Hours Worked Per PT Employee: 30• Total Number of Hours Worked by PT EE: 600• How many full time employees will this

company have? 51


Common Ownership- Used to determine is you are a large employer- 0-20% ownership

- Rarely found to have common ownership

- 20-50% ownership- Assumed to have no common ownership but the burden to report and show

that it does exist lies with the employer

- 50-80% ownership- Common ownership assumed and the employer must show that it doesn’t

exist

- 80-100% ownership- Common ownership assumed


Why is Common Ownership Important?

• Business 1: 20 Employees• Business 2: 40 Employees• Business 3: 5 Employees• Total Number of Employees: 65


Measurement Periods• We have more than 50 full-time employees so we are subject to the

employer mandate penalties. How do we know which of our employees is considered “full-time” requiring us to pay a penalty if they qualify for premium tax credits at an exchange (if the employee has a variable work schedule or is seasonal)?

• Through the end of 2014, for purposes of the employer mandate penalties, the guidance permits you to use a “look-back measurement period/stability period” safe harbor to determine which of your employees are considered full-time employees. You may use a standard measurement/stability period for ongoing employees, while using a different


Measurement Periods

• Variable Hour Employees – “Reasonably Determine”• Look back period

– 2013 Deadline• Standard Measurement Periods

– Ongoing Employees

• Initial Measurement Periods– 3, 6, 9 or 12 months

• Stability Periods– Equals the IMP

• Administrative Periods


Pay or Play Mentality

Will I be Subject to Penalties?• Do I have > 50 Full Time

(FTE) Employees?• Is my health plan deemed

affordable? (9.5% threshold)

• Does my health plan meet the minimum 60% actuarial value?– This is related to self insured

plans more than fully insured

How will Penalties be Assessed?

• Do I offer coverage? (Play)– $3,000 penalty per employee

receiving government subsidy.

• Do I cancel all health benefits? (Pay)– $2,000 penalty per employee

(minus 30)


Tax Penalties Continued

$2,000 Penalty• $2,000 will be assessed if

employer sponsor coverage is not offered

• How is this penalty assessed if an employee only works 9 months?

$3,000 Penalty• What is the trigger?• Coverage is deemed

unaffordable – over 9.5% gross

• Employee goes to exchange


W2 Safe Harbor• Under the Form W-2 safe harbor, an employer could

determine affordability by referring to an employee’s wages from that employer. Wages for this purpose would be the amount required to be reported in box 1 of Form W-2

• This rule can help an employer determine their contribution strategy amount.


Contribution Strategy Idea

• 75 Employees• Require employees to pay $250 per month towards

premium or $3,000 annually• ER would only pay penalty on those employees

making under $31,250 AND receiving a subsidy• What about those under $31,250?


October 1, 2014 Renewal

• When does the employer mandate go in force in regards to the mandate?– Upon renewal a compliant plan must be chosen– If a calendar year deductible is in place penalties

MAY be retroactive back to Jan. 1, 2014*– If a policy year deductible is in place penalties are

enforced at the renewal.*if a compliant plan is not put in place and employee receives a subsidy


New Waiting Period Guidelines

• Waiting periods for Full Time employees cannot exceed 90 days– 90 Days first of month no longer a compliant

option.


What Should You Do Now?

• Create a plan

• Call me for an appointment

• Evaluate ALL of your options

• Make a decision that is best for YOUR business


Questions??


Documents

What Does PPACA M ean F or Y our Business? Presented by: Joey Janssen, Employee Benefit Specialist May 21, 2013