Healthcare Reform - Vision for 2014

Click to edit Master title style

Healthcare ReformVision For 2014

By:Joseph E. Ellis, Sr, Senior Vice President

CBIZ Benefits & Insurance Services610-862-2242

[email protected]

Click to edit Master title styleAgenda

1. Introduction2. Facts and Myths About Healthcare Reform3. Financial Impact4. Guidance for HR/Financial Professionals5. Totally Random Thoughts6. Questions


1. Introduction

Click to edit Master title styleHealthcare


2a. Facts about Healthcare Reform


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Current Environment is Complex

Affordable Care Act

Government

Employers

ConsumersProviders

Carriers


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Terms To Know

Essential Health Benefits Minimum Value Coverage Affordable Coverage Summary of Benefits and Coverage Full Time Employee Individual Mandate Employer Mandate Private Exchange Marketplace Subsidies Pay or Play


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What’s Happening in 2014? No Annual Limits

Pre-Existing condition limitations eliminated

New Employee waiting periods limited to 90 days

Medical Underwriting eliminated/Guaranteed issue

Adjusted Community Rating for Small Groups

Additional Taxes and Fees Implemented

Medicaid Coverage Expansion

Individual Mandate

Public Marketplace (State or Federal)

Premium Subsidies

SHOP

Private Exchange Options

Preparing for Employer Mandate in 2015

Click to edit Master title styleMedical Underwriting Eliminated/Guaranteed Issue

2013 Rating based on:

Age Geography Health Status Gender Wide Rate Bands Pre-Existing Conditions

2014 Adjusted Community Rating:

Age Geography Tobacco use Family size 3:1 Rate Band


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Additional Fees and Items Impacting Premium / 2014 Renewal

Annual Fee – Fee for health insurance companies to fund health insurance Marketplace subsidies. Estimated 2%-3% of fully insured premiums.

Premium Stabilization Fund / Transitional Reinsurance Fee – Fee for insurers to stabilize individual market for a 3 year period. Estimated $5.25 per covered LIFE per month ($63 per year).

Patient-Centered Outcome Research Fee – Fee to fund research that compares different medical treatments. $2 per member (includes dependents) per year.

http://www.moneysigns.net/wp-content/uploads/2013/02/dollar-signs-7.jpg

Click to edit Master title styleThe Individual Mandate

Beginning 1/1/14, all individuals residing in US required to maintain minimum essential health coverage for

themselves and their dependents. Options for coverage depends on household income as % of FPL

Federal Poverty Level Option

Under 133% Minimum essential coverage through Medicaid, if a state so

elects

Between 134%-400% Premium assistance or cost sharing possibilities via Marketplace

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Click to edit Master title styleThe Marketplace

Click to edit Master title styleSHOP – Delayed To 2015

Click to edit Master title stylePrivate Exchanges

• Offered by Insurance Carriers or Large Broker/Consultants

• Single Carrier vs. Multi-Carrier• Typically 8+ Plans offered• Creates Architecture for Defined Contribution by

Employer• Employees Choose Best-Fit Plan• Annual increases in Contribution based on budget, not

Carrier Increases• Ultimate in Cost Control• CBIZ Will Offer For 2015


2b. Myths About Healthcare Reform

Click to edit Master title styleMyths

• Walgreens Dropped Their Healthcare Plan and Sent All Employees To the “Exchange”.

• Go To The Marketplace and Compare Your Employer Plans To The Marketplace Plans.

• Enrollment Process is Easy.

• Ask A Fact/Myth Question, Please!


3. Financial Impact


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How do these changes impact cost of coverage?

Premium

Actuarial Value

Patient-Centered Outcomes Research

Fee ($2 PMPY)

Annual Insurer Fee (Approx. 2.5% of

Premium)

Transitional Reinsurance Fee

(Approx. $5.25 per covered life)

Elimination of Annual and Lifetime Limits

Ban on Pre-Existing Condition Limitations

Guaranteed Issue

Essential Health Benefits

Adjusted Community Rating (small group

only)


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How Are Employers Affected?

“Small Group” – Employers with fewer than 50 full time employees or equivalents.

“Large Group” – Employers with at least 50 full time employees or equivalents.


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Small Group Impact

Plan Design Limitations:

Limited to “Metallic” coverage levels defined by actuarial value

(i.e. Bronze at 60%, Silver at 70%, Gold at 80%, Platinum at 90%)

Pricing Impact:

Rates can no longer vary by gender, industry, or health status

Age factor limited to 3:1 ratio

Tobacco factor can apply but limited to 1.5:1 ratio

Pricing will include new taxes and fees


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MEC – For Small Groups

Must provide “Minimum Essential Coverage” (MEC): 10 required coverage categories

*Definition of “Small Group” will be defined at the State level; in most cases will be 2-50 eligible employees (including in Missouri) but could be up to 100 eligible employees in some States.

Hospitalization

Ambulatory Services

Emergency Services

Laboratory Services

Maternity & Newborn Care

Mental Health & Substance Abuse

Prescription Drug

Rehabilitative Services & Devices

Preventive & Wellness Services and Chronic Disease Management

Pediatric Services (including oral and vision care)


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Large Group Impact – Delayed Until 2015

Full Time - Hired to work 30+ hours per week

Part Time - Hired to work <30 hours per week

Seasonal – Hired for less than 120 days

Variable – Hours unknown at time of hire


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Large Group Impact (continued)Shared Responsibility: Calculating the Penalty

Minimal essential coverage not offered to at least 95% of full time employees and at least one employee goes to Marketplace and receives premium tax credit– $2,000 per year per FTE (less first 30)

Coverage not minimum value (60% actuarial value) or not affordable (i.e., employee’s premium exceeds 9.5% of household income) and at least one employee goes to Marketplace and receives premium tax credit– Lesser of

• $3,000 per year for each FTE using Marketplace and

qualifying for premium credit, or• $2,000 per year per FTE (less first 30)

Penalties are indexed on the cost of health care

Transitional Relief for Non-Calendar Year Plans: if, for example, plan year runs July 1 to June 30, the plan will not risk being subject to penalties until 1st day of the plan year beginning 2015 (i.e. July 1 in this example)


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Large Group Impact (continued)Who Must Be Offered Coverage?

Employers must offer minimum essential coverage (MEC) to at least 95% of its full time employees– If MEC offered to 95% of full time employees, then “no coverage”

penalty would not be triggered

Full time Employee is defined as averaging at least 30 hours per week. An employee working 130 hours of service per calendar month is deemed to meet this requirement of 30 hours of service per week.

Note: Insured group health plans must comply with the nondiscrimination rules (IRC 105 (h)) currently applicable to self-funded plans. Plans cannot discriminate in favor of highly compensated individuals as to the eligibility and benefits. This provision is not applicable to grandfathered plans. The IRS has delayed the effective date of this provision – no penalties imposed until after implementing regulations are issued.


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Large Group Impact (continued)Employees with Variable Hours

"Look-back/stability safe harbor method" 3 to 12 consecutive calendar months -- the "measurement period“.

If the employee averaged at least 30 hours/week during measurement period, the employee is treated as a full time employee during a subsequent "stability period" so long as he or she remains an employee (regardless of actual hours worked).

For an employee determined not to be a full time employee during the measurement

period, the employer may treat the employee as not a full time employee during the stability period, but the stability period cannot exceed the measurement period.

New variable hour employees must be tracked separately.


4. Guidance for HR/Financial Professionals


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Higher Risk – Employer Characteristics

• High percentage of potentially full time, low pay workforce

• Provide no medical benefits to a large employee base working 30 + hours per week

• Have a significant number of “temporary” or “seasonal” workers

• Cost of health benefits to employees is “very high”• Manage enrollment using “long” waiting periods (more

than 90 days before employee is eligible)


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Variables

• Some Variables to Consider Adjusting for Employer Shared Responsibility

– Migration Assumptions: To the Marketplace or the Employer’s Plan

– Employer Contributions (Example: Raise Employee Contributions and Lower Dependent Contributions, etc.)

– Plan Value (Lower “value” of Plan). Must exceed actuarial value of 60%.

– Medical Trend– Pay Increases – Family Size


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Health Care Reform Organizational Assessment Key Questions - Population

How many full time equivalent employees do you have?

Is your company part of a “controlled group”?

Do you currently offer any differing benefits by class of employees?

Do you currently offer any differing contributions by class of employees?

Do you have any classes of employees that are currently not eligible for benefits?

Do you have any employees that work variable hours?

Do you employ seasonal employees?


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Are you able to track the number of hours worked for the currently non-eligible population?

Do you have any employees who are currently not eligible for a health care plan that average more than 130 hours of service per calendar month over the past three months, six months, twelve months?

What is the monthly cost to the employee for single coverage for your lowest premium plan option?

What is the lowest monthly salary/hourly wage for your employee population (for those averaging 30+ hours a week)?

Of the current plan offerings available to each group, which plan options meet the 60% actuarial value requirement?

What is your current waiting period for new employees for each group?

Health Care Reform Organizational Assessment Key Questions - Population


5. Totally Random Thoughts

Click to edit Master title styleTotally Random Thoughts• Should I Drop Health Coverage?• Does My Approach to Benchmarking Change Now?• How Far Can I Go In Cutting My Health Plan• Be Careful Of 3 Tier Plans (e.g.. IBC Proactive)• Where Is Wellness/ Health Risk Management in this

World• What are the Connections Between Employee Health

Risks and Workers Comp Claims?• We Gave “Notices” to Employees About the Marketplace.

What More Should We Tell Them?


5. Questions?


Joseph E. Ellis, Sr, Senior Vice PresidentCBIZ Benefits & Insurance Services

[email protected]

Health & Medicine

Healthcare Reform - Vision for 2014