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1. A Brave New World: Getting Ready for Health Care Reform PACSTX Conference September 30, 2010 Suellen Galbraith ANCOR Senior Policy Analyst
2. Today’s Objectives General Overview of health care law.
Reforms to health insurance and long-term services & supports for people with disabilities.
Expansion of state Medicaid coverage.
Highlights of employer requirements and responsibilities.
3. Health Care Reform Law Patient Protection and Affordable Care Act (P.L. 111-148)
Health Care and Education Affordability Reconciliation Act (P.L. 111-152)
Now referred to as the Affordable Care Act--ACA What today’s webinar does not include:
FMAP Extension
All measures in 2,000 plus legislation– for example discussion of affects of law on self-insured, faith-based employer plans; all fraud and abuse; CMS changesWhat today’s webinar does not include:
FMAP Extension
All measures in 2,000 plus legislation– for example discussion of affects of law on self-insured, faith-based employer plans; all fraud and abuse; CMS changes
4. Purpose and Trends of New Law Expand coverage and make more affordable
Cost containment and slow growth in health care spending
Four Major Trends in Health Reforms
Change from treating the disease to treating the person;
Breaking down silos and increasing integration
Change from paying for items and services to paying for results; and
Reducing costs
5. Major Components of ACA Private market insurance reforms
Dramatic coverage expansion
Individual Mandate and federal subsidies.
Coverage expanded to additional 32 million people (94% insured)—includes 16 million due to expanded Medicaid.
“Pay or Play” employer requirements
Medicaid expansion & reforms
Significant LTSS reforms
Medicare Part D prescription drug (Part D) coverage (doughnut hole) closed
Reduces Medicare spending through reforms, physician & other provider payment reforms
6. Major Components of ACA Cont’d Strengthens fraud & abuse efforts
Expands commitment to wellness & prevention
Investments in provider workforce education. Comparative Effectiveness Research & HIT.
Financing mechanisms include taxes and cuts
Some changes take effect immediately – some within 6 months – some by 2014 – some not until 2018
7. Coverage Based on Existing and New Options Coverage guarantees rely on:
Employer-sponsored insurance (ESI) and insurance reforms
Public programs with new Medicaid/CHIP expansions & existing Medicare
New state health care exchanges and insurance reforms
8. Timeframes and Implementation Dates Enactment Date: March 23, 2010
Some Provisions begin in 2010
Reforms and Payment Reforms 2010-2018
Full Employer Requirements & Medicaid state expansions by 2014
Time to Begin Now to Consider Collecting Information, Demographics, and Strategic Planning
9. Source of Insurance Coverage Pre-Reform and Under Affordable Care Act, 2019 In terms of what the law is projected to accomplish on covering more people, CBO estimates that by 2019, the number of uninsured will fall from a projected 54 million to 23 million. Of the 32 million newly insured, 16 million will gain coverage through Medicaid, 16 million will gain coverage through the exchange or employer plans. Those in the exchange will be joined by 5 million shifting from individual market and another 3 million from employer coverage. Of those 23 remaining uninsured, about 1/3 or 7.6 million are undocumented immigrants. The remaining uninsured are, similar to current law, those who are eligible for Medicaid but not enrolled. Or those who chose the penalty under the mandate, or for whom the mandate does not apply.
Employer coverage declines by 3 million, but there are important shifts. About 6-7 million more people become enrolled in employer plans as a result of the individual mandate, about 8-9 million lose employer coverage (mostly in small low wage firms where many but not all employees could gain subsidized coverage thru exchanges) About 1-2 million covered by employer coverage would gain coverage through the exchanges mainly because they would have plans with either high prem/income (>9.5%) or low AV (<60%) that would qualify them to gain coverage thru the exchange.
In terms of what the law is projected to accomplish on covering more people, CBO estimates that by 2019, the number of uninsured will fall from a projected 54 million to 23 million. Of the 32 million newly insured, 16 million will gain coverage through Medicaid, 16 million will gain coverage through the exchange or employer plans. Those in the exchange will be joined by 5 million shifting from individual market and another 3 million from employer coverage. Of those 23 remaining uninsured, about 1/3 or 7.6 million are undocumented immigrants. The remaining uninsured are, similar to current law, those who are eligible for Medicaid but not enrolled. Or those who chose the penalty under the mandate, or for whom the mandate does not apply.
Employer coverage declines by 3 million, but there are important shifts. About 6-7 million more people become enrolled in employer plans as a result of the individual mandate, about 8-9 million lose employer coverage (mostly in small low wage firms where many but not all employees could gain subsidized coverage thru exchanges) About 1-2 million covered by employer coverage would gain coverage through the exchanges mainly because they would have plans with either high prem/income (>9.5%) or low AV (<60%) that would qualify them to gain coverage thru the exchange.
10. Health Insurance Reforms: 2010 The major reforms that will have the most significant impact on reducing the unisured do not go in until 2014. But starting this year there are a number of important provisions that will serve as transitions for people who particularly struggle to gain coverage –those with pre-x conditions, young adults, small businesses. HHS will also begin to put in place new processes and requirements aimed at lowering premium growth. Details on these provisions are in your packet in the insurance provision timeline and I am happy to try and answer questions you may have. Some key questions on specific provisions, many of which have been raised by the media in its reporting on the law
Young adults: May young adults go on and off? Separate premiums or apply to all family policies? How many will come on to their parent’s policies? Will it reduce gaps and churning in this age group
High risk pools:Will premiums be affordable? Will coverage be equalized between existing and new pools? What will be demand?
Small biz tax credits: What is level of demand for the credits, do new small businesses come in, does it prevent erosion of those offering now
Will states move forward on expanding Medicaid for parents and childless adults given the fiscal environment?
Annual review of premium increases: HHS puts the process for coordinating with the states on this into place this year. What will the details be on this
Limits of share of premiums on non –medical costs. Seeing regs out this week defines medical costs to include quality improvement activities and instructs NAIC to define what those are .
The major reforms that will have the most significant impact on reducing the unisured do not go in until 2014. But starting this year there are a number of important provisions that will serve as transitions for people who particularly struggle to gain coverage –those with pre-x conditions, young adults, small businesses. HHS will also begin to put in place new processes and requirements aimed at lowering premium growth. Details on these provisions are in your packet in the insurance provision timeline and I am happy to try and answer questions you may have. Some key questions on specific provisions, many of which have been raised by the media in its reporting on the law
Young adults: May young adults go on and off? Separate premiums or apply to all family policies? How many will come on to their parent’s policies? Will it reduce gaps and churning in this age group
High risk pools:Will premiums be affordable? Will coverage be equalized between existing and new pools? What will be demand?
Small biz tax credits: What is level of demand for the credits, do new small businesses come in, does it prevent erosion of those offering now
Will states move forward on expanding Medicaid for parents and childless adults given the fiscal environment?
Annual review of premium increases: HHS puts the process for coordinating with the states on this into place this year. What will the details be on this
Limits of share of premiums on non –medical costs. Seeing regs out this week defines medical costs to include quality improvement activities and instructs NAIC to define what those are .
11. Health Insurance Reforms: 2011 - 2013 Additional reforms go into effect in 2011-2013. Beginning in 2011, health carriers will begin providing rebates to enrollees if their non-medical costs are less than 85% of premiums for large group plans and 80% for small and individual market plans (as long as this does not destabilized the individual market). There are also some changes to tax preferred FSAs and account based plans – HRA, HSAs, and MSAs. The donut hole continues to be narrowed over this period. Additional reforms go into effect in 2011-2013. Beginning in 2011, health carriers will begin providing rebates to enrollees if their non-medical costs are less than 85% of premiums for large group plans and 80% for small and individual market plans (as long as this does not destabilized the individual market). There are also some changes to tax preferred FSAs and account based plans – HRA, HSAs, and MSAs. The donut hole continues to be narrowed over this period.
12. Health Insurance Reforms: 2014-2018 The major coverage provisions in the law go into effect in 2014. Some key questions include:
Exchanges: surely the centerpiece of the reform effort, which states will move forward and which will allow the secretary to est exchange. Will multi-state exchanges be common? Will large states like CA establish multi-state exchanges? Will states?hhs carry thru on limiting participation of plans with high rates of premium growth? How they are implemented by fed/state governments and how they are received in the marketplace by insurance carriers, individuals, small biz, large groups –will determine whether they succeed on a number of critical dimensions central to reform including: creating broad and diverse risk pools, reducing plan administrative costs, increasing transparency in plan choice, regulating premium growth, encouraging innovation in benefit design, and providing a new foothold in the market for innovative plans.The major coverage provisions in the law go into effect in 2014. Some key questions include:
Exchanges: surely the centerpiece of the reform effort, which states will move forward and which will allow the secretary to est exchange. Will multi-state exchanges be common? Will large states like CA establish multi-state exchanges? Will states?hhs carry thru on limiting participation of plans with high rates of premium growth? How they are implemented by fed/state governments and how they are received in the marketplace by insurance carriers, individuals, small biz, large groups –will determine whether they succeed on a number of critical dimensions central to reform including: creating broad and diverse risk pools, reducing plan administrative costs, increasing transparency in plan choice, regulating premium growth, encouraging innovation in benefit design, and providing a new foothold in the market for innovative plans.
13. Payment and System Reforms: 2010 - 2012
15. Major Components of ACA Private market insurance reforms
Dramatic coverage expansion
Individual Mandate and federal subsidies.
Coverage expanded to additional 32 million people (94% insured)—includes 16 million due to expanded Medicaid.
“Pay or Play” employer requirements
Medicaid expansion & reforms
Significant LTSS reforms
Medicare Part D prescription drug (Part D) coverage (doughnut hole) closed
Reduces Medicare spending through reforms, physician & other provider payment reforms
16. People with Disabilities Eliminates Insurance Company Discrimination: Mandatory coverage of pre-existing conditions (children in 2010 and adults in 2014)
Eliminates lifetime benefit caps and rec(2010) and annual caps (2014)
Prevents recessions (2010)
Coverage of dependents up to age 26 (2010)
Mandatory coverage of Habilitation and Rehabilitation as essential health care benefits (2014)
New LTSS opportunities
A minimum health benefits package refers to coverage that provides for 1) essential health benefits; 2) limits the cost sharing for such coverage; limits the deductible for small group plans, and provides benefits that are at least actuarially equivalent to 6% of the full actuarial value of the benefits provided under the plan.
Essential health benefits must be included as part of any qualified health plan offered by an employer or available through an exchange. The scope of the essential health benefits is intended to be equal to the scope of benefits provided under a typical employer plan.
A minimum health benefits package refers to coverage that provides for 1) essential health benefits; 2) limits the cost sharing for such coverage; limits the deductible for small group plans, and provides benefits that are at least actuarially equivalent to 6% of the full actuarial value of the benefits provided under the plan.
Essential health benefits must be included as part of any qualified health plan offered by an employer or available through an exchange. The scope of the essential health benefits is intended to be equal to the scope of benefits provided under a typical employer plan.
17. The CLASS Program (Jan. 2011) New national LTSS insurance program
Based on voluntary payment of premiums
Pay premiums through employer, when the employer is willing
Automatic enrollment with opt-out
Pay premiums directly, when employer chooses not to participate
Nominal premium ($5.00) for full-time students and people with income below poverty level
Vesting after 5 years of premium payments
There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.
18. The CLASS Program cont’d Eligibility to participate/enroll
Must be working to enroll
cannot enroll family members unless they are employed
No exclusions based on pre-existing conditions
Benefits eligibility is based on functional need
Need for assistance with activities of daily living or equivalent
There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.
19. The CLASS Program cont’d Cash benefits for maximum consumer and family control
At least two tiers of payment levels – minimum $50/day ($18,000/year)
No impact on federal benefits eligibility
No means-testing
No need for lifetime impoverishment
Individual can continue to work
There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.
20. CLASS Act Program Employer Responsibilities (2011) Community Living Assistance Services and Supports Act that creates a new national voluntary insurance program with premium payments by working individuals (students) for future cash benefits.
Voluntary employer & employee participation.
Employers are strongly urged to automatically enroll employees in a manner similar to 401(k).
Employers can provide automatic enrollment for employees. (2011) If employer participates, then employer responsible for making monthly payroll deductions for the premium to each enrolled employee.
Employers not required to provide any contribution.
If employer does not offer enrollment, law provides for alternate enrollment process for working individuals to make payroll contributions.
Employees may opt out of the program.
Employer requirement to provide notification and information on new CLASS program.
21. Community First Choice Medicaid State Option (Oct. 2011) New state Medicaid plan option included in health reform law
Comprehensive home and community based services for people eligible for an institutional level of care (nursing home, intermediate care facility (ICF), or IMD)
States receive 6 percent additional federal match for CFC services
Eligibility based on functional need (not age or diagnosis
Income eligibility: allows individuals with incomes up to 300% of SSI level
There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.
22. CFC Medicaid State Option cont’d Included services and supports:
Assistance with activities of daily living (ADLs)
Assistance with instrumental activities of daily living
Assistance with health-related tasks
Acquisition, maintenance, and enhancement of skills necessary for the individual to accomplish the above
Back-up systems or mechanisms (such as beepers, electronic devices)
Voluntary training on how to select, manage, and dismiss attendants Increase in floor for itemized medical deductions from 7.5% to 10% of AGI.
There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.
23. CFC Medicaid State Option cont’d Services provided in home or community setting
Manner of service provision:
Hands-on assistance
Supervision
Cueing
Other permissible services
transitions costs (rent and utility deposits, bedding, kitchen supplies, etc.)
needs identified in person-centered plan that would increase independence or substitute for human assistance (if the human assistance would have been paid for)
Excluded services: room and board, assistive technology devices (except emergency backup), home modifications, DME.
There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.
24. Removal of Barriers to HCBS 1915(i) Improvements (Oct. 2010) Existing Medicaid 1915(i) Option
States can provide services without a waiver
States must establish eligibility that is less strict than for institutional and HCBS waiver services – states serve people who are not eligible for the state’s HCBS waiver
Very few states have taken up this option to expand community-based services
A minimum health benefits package refers to coverage that provides for 1) essential health benefits; 2) limits the cost sharing for such coverage; limits the deductible for small group plans, and provides benefits that are at least actuarially equivalent to 6% of the full actuarial value of the benefits provided under the plan.
Essential health benefits must be included as part of any qualified health plan offered by an employer or available through an exchange. The scope of the essential health benefits is intended to be equal to the scope of benefits provided under a typical employer plan.
A minimum health benefits package refers to coverage that provides for 1) essential health benefits; 2) limits the cost sharing for such coverage; limits the deductible for small group plans, and provides benefits that are at least actuarially equivalent to 6% of the full actuarial value of the benefits provided under the plan.
Essential health benefits must be included as part of any qualified health plan offered by an employer or available through an exchange. The scope of the essential health benefits is intended to be equal to the scope of benefits provided under a typical employer plan.
25. Changes to 1915(i) Medicaid State Plan Option Cont’d New Law amends Section 1915(i) HCBS Medicaid Option:
Income eligibility criteria aligned with other HCBS programs – allows people with incomes up to 300 percent of the SSI level to be eligible
States may target certain populations in need for 5 years
States may offer all services that are allowed under the HCBS waiver
Repeals authority to cap the number of eligible people; to keep waiting lists; and to limit services to certain geographic areas
ANCOR distributed August 6, 2010 http://www.cms.gov/smdl/downloads/SMD10015.pdf
There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.
26. New State Balancing Incentives Payment Program (Oct. 2011-Sept. 1015)
Temporary increase in the federal Medicaid matching rate for HCBS for states that make structural reforms to increase community services (over coverage of nursing homes or intermediate care facilities)
Federal grants up to $3 billion total for that period
States must apply for funds; meet certain criteria; and be selected by the Secretary of Health and Human Services There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.
27. New State Balancing Incentives cont’d
Targeted to states that spend less that 50 percent of their LTSS funds on HCBS services
States spending less than 25 percent on LTSS will get a 5 percent increase in federal match
Goal: bring total LTSS spending up to 25 percent
States spending 26 to 50 percent on LTSS will get a 2 percent increase in federal match
Goal: bring total LTSS spending up to 50 percent
Within 6 months of application, states must adopt:
Single point of entry system
Conflict-free case management services
Standardized assessment for deciding eligibility
Data collection infrastructure
There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.
28. New Medicaid State Expansion (2014)New State Balancing Incentives cont’d
Expands Medicaid to individuals with incomes to 133% of the federal poverty level in 2014
Eligibility based on Modified Adjusted Gross Income for most groups
Provides state option to expand Medicaid coverage to childless adults with regular match starting April 1, 2010
Provides enhanced federal funding for newly eligible individuals
100% covered by federal funds for 2014-2016, phases down to 90% by 2020
Phases in increased federal matching payment for states that have already extended coverage for childless adults
Maintains Medicaid eligibility for adults > 133% FPL until 2014 and for children in Medicaid and CHIP until 2019
Simplifies enrollment processes and coordinate with exchanges
There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.
29. Key Medicaid Expansion Provisions
Mandatory and optional benefits
Changes prior to 2014
Requires coverage of smoking cessation programs (2010)
Establishes “Health Home” state plan option for persons with chronic conditions (2011)
Provides a 1 percentage point matching payment increase to states that cover recommended prevention services and eliminate cost sharing (2013)
In 2014, provides all newly-eligible adults with a benchmark benefit package that meets the minimum essential health benefits available in the Exchanges
States can define the benchmark to provide full Medicaid benefits to those who are newly eligible
There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.There is no enforcement mechanism associated with the mandate. The IRS cannot impose criminal or civil penalties for noncompliance. The Joint Committee on Taxation estimates individuals will pay $17 billion in penalties as a result of not purchasing qualified health coverage.
30. Changes in Coverage from Medicaid Expansion in ACA PPACA in 2019 (in millions) An estimated 16 million additional enrollees (over baseline estimates without health reform) are expected to enroll in Medicaid by 2019 when the law is fully implemented. This is expected to contribute to a reduction in the uninsured of 11.2 million. An estimated 16 million additional enrollees (over baseline estimates without health reform) are expected to enroll in Medicaid by 2019 when the law is fully implemented. This is expected to contribute to a reduction in the uninsured of 11.2 million.
31. Estimated Changes in State and Federal Costs from Medicaid Expansion in Health Reform 2014-2019 The vast majority of the costs (about 95%) for new Medicaid enrollees will be paid for by the federal government over the 2014 to 2019 period due to the very high federal match rates for individuals who become newly eligible for coverage. This al means that for very relatively small increases in state spending, states will see large increases in the share of their residents with insurance coverage and large increases in new federal revenues.
The vast majority of the costs (about 95%) for new Medicaid enrollees will be paid for by the federal government over the 2014 to 2019 period due to the very high federal match rates for individuals who become newly eligible for coverage. This al means that for very relatively small increases in state spending, states will see large increases in the share of their residents with insurance coverage and large increases in new federal revenues.
32. Employer Requirements, Assessments, & Assistance
33. Key Definitions Eligible Employer-Sponsored Health Plan: A group health plan offered by an employer.
Employer-Based Plan: A group health plan offered by current or former employer.
Large Employer: In connection with a group health plan, an employer who employed an average of at least 50 plus employees on business days during the preceding calendar year and who employees at least 1 employee on the first day of the plan year.
Exchange: A governmental or a nonprofit entity designated by states for making qualified health plans available to qualified individuals and qualified employers.
34. Key Definitions Cont’d Essential Health Benefits: Benefits required in any qualified health plan (to be determined by HHS).
Essential Health Benefits Package: A group health plan that
Provides essential health benefits;
Limits out-of-pocket spending by participants on health savings accounts indexed after 2014; and
Limits the deductible to $2,000 (single), $4,000 for family coverage
35. Key Definitions Cont’d Grandfathered Plan: A group health plan, including self-insured plans, or individual insurance coverage an individual was enrolled on March 23, 2010.
Grandfathered plans retain grandfathered status even if:
Family members of a participant enrolled on March 23, 2010, enroll in the plan after March 23, 2010; and
New employees and their families enroll in the plan after March 23, 2010.
Much ambiguity and confusion to definition.
HHS Interim Regulation Issued June 17,2010 Not clear when grandfathered plans will no longer be considered exempt from law’s requirements on new plans. For example, change in benefits covered or changes to cost sharing obligations???? Would that trigger “new health plan requirements”?Not clear when grandfathered plans will no longer be considered exempt from law’s requirements on new plans. For example, change in benefits covered or changes to cost sharing obligations???? Would that trigger “new health plan requirements”?
36. “Grandfathered” Health Plan Group health plans, including self-insured plans, or individual health insurance coverage which an individual was enrolled on March 23, 2010. market insurance reforms
Plans that maintain grandfathered health plan status are only required to comply with some of the group market reform
Permissible for grandfathered plans (will not result in loss of grandfathered status)
Re-enrollment of formerly covered individuals or family members
New enrollment of individuals or family members
Additional dependents of already enrolled individuals
37. Grandfathered Interim Final Regulation HHS, IRS, & Labor issued on June 14, 2010
Your plan will lose grandfathered status if you:
Change insurance carriers (even if plan benefits don’t change)
Eliminate all or substantially all benefits to diagnose or treat a particular condition Not clear when grandfathered plans will no longer be considered exempt from law’s requirements on new plans. For example, change in benefits covered or changes to cost sharing obligations???? Would that trigger “new health plan requirements”?Not clear when grandfathered plans will no longer be considered exempt from law’s requirements on new plans. For example, change in benefits covered or changes to cost sharing obligations???? Would that trigger “new health plan requirements”?
38. Grandfathered Interim Final Reg cont’d Increase the percentage of cost-sharing requirements by any amount
Increase a fixed amount cost-sharing requirement other than a co-pay (deductible or out-of-pocket maximum) that exceeds medical inflation (since March 2010), expressed as a percentage, plus 15 percentage points
Decrease employer contribution rate towards the cost of coverage by more than 5 percentage points in any tier of coverage Not clear when grandfathered plans will no longer be considered exempt from law’s requirements on new plans. For example, change in benefits covered or changes to cost sharing obligations???? Would that trigger “new health plan requirements”?Not clear when grandfathered plans will no longer be considered exempt from law’s requirements on new plans. For example, change in benefits covered or changes to cost sharing obligations???? Would that trigger “new health plan requirements”?
39. Grandfathered Interim Final Reg cont’d Increase a fixed amount co-pay by the greater of $5 plus medical CPI, or total percentage from grandfathered date of medical CPI plus 15%
Impose a new or modified annual limit Decrease employer contribution rate towards the cost of coverage by more than 5 percentage points in any tier of coverage Not clear when grandfathered plans will no longer be considered exempt from law’s requirements on new plans. For example, change in benefits covered or changes to cost sharing obligations???? Would that trigger “new health plan requirements”?Not clear when grandfathered plans will no longer be considered exempt from law’s requirements on new plans. For example, change in benefits covered or changes to cost sharing obligations???? Would that trigger “new health plan requirements”?
40. Essential Health Benefits* *Mandated benefits required to be covered by non-grandfathered plans
Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health and substance use disorder services
Prescription drugs
Rehabilitation and habilitation services
Laboratory services
Prevention and wellness services and chronic disease management
Pediatric services, including oral and vision care
Limits on small –group plan deductibles.
Limit on total out-of-pocket spending for covered benefits to no more than limits for health savings accounts. A minimum health benefits package refers to coverage that provides for 1) essential health benefits; 2) limits the cost sharing for such coverage; limits the deductible for small group plans, and provides benefits that are at least actuarially equivalent to 6% of the full actuarial value of the benefits provided under the plan.
Essential health benefits must be included as part of any qualified health plan offered by an employer or available through an exchange. The scope of the essential health benefits is intended to be equal to the scope of benefits provided under a typical employer plan.
A minimum health benefits package refers to coverage that provides for 1) essential health benefits; 2) limits the cost sharing for such coverage; limits the deductible for small group plans, and provides benefits that are at least actuarially equivalent to 6% of the full actuarial value of the benefits provided under the plan.
Essential health benefits must be included as part of any qualified health plan offered by an employer or available through an exchange. The scope of the essential health benefits is intended to be equal to the scope of benefits provided under a typical employer plan.
41. Individual Mandate (2014) Effective January 1, 2014, with phase-in by 2016
Requires all U.S. citizens and legal residents to have “qualifying coverage” or pay a penalty:
• The greater of $ 95 or 1.0% of household income in 2014.
• The greater of $325 or 2.0% of household income in 2015.
• The greater of $695 or 2.5% of household income in 2016.
• Increased by cost of living thereafter.
New mandated essential benefits.
Subsidies to purchase coverage in an exchange.
Limits on cost sharing.
42. Overview of Impact on Employers Employer “pay or play:”
Requires some employers to provide coverage or pay penalty/fine
Employers with less than 50 employers are not subject to this requirements
Requirement for small group and individual market to cover essential benefits
New small business tax credit to purchase coverage,
New state insurance exchanges for small group and individual markets
Restrictions on Flexible Spending Account (FSA) contributions
Existing plans grandfathered as of date of enactment from some, but not all, of the new plan requirements
Employer-sponsored health insurance is the predominant source of coverage for individuals and families, with more than 160 million people—or 60% of nonelderly Americans, receiving health coverage through their employer.Employer-sponsored health insurance is the predominant source of coverage for individuals and families, with more than 160 million people—or 60% of nonelderly Americans, receiving health coverage through their employer.
43. Small Employer Assistance Begins 2010 Employers with 25 to 50 employees and average wages less than $50,000 are eligible to receive a small business refundable tax credit (subsidy) to purchase insurance for employees. (2010)
Employers with 10 or fewer FTEs and average FT equivalents of less than $25,00 eligible and pay 50% of cost of healthy coverage qualify for full amount of small business refundable tax credit.
Employers with 10 to 25 employees with taxable wages less than $50,000 and paying 50% of the cost of coverage for their workers will receive only a portion of the credit.
Credit is phased out between years 2010-2014.
44. Beginning January 1, 2014: Coverage Exemption for employers with 50 or fewer employees from penalties/assessments.
Employers with an average of 50 plus full-time employees during the previous calendar year must offer health coverage that meets minimum benefit standards or pay a penalty/fine.
For employers with more than 50+ employees that offer coverage and even one employee assesses a tax subsidy or cost-reduction benefit for health insurance, penalties are $3,000 per employee who receives the tax credit.
Employers with more than 50 employees that do not offer coverage and have one employee accessing the tax credit in an exchange, the employer must pay $2,000 per FTE after exempting the first 30 FT equivalents.
Employers with more than 200 employees must automatically enroll employees into health insurance plans offered by the employer. Precludes waiting periods longer than 90 days. Employees may opt out of coverage and take their employer contribution to join health exchange.
45. Beginning January 1, 2014: Penalties Unaffordable employer sponsored plan is defined as one in which the employee’s share of the premium exceeds 9.5% of the employee’s total household income.
Applicable employers (more than 50) that offer employer coverage to full-time employees (and their dependents???) for any month but have one or more employees that enroll in exchange and receives a premium tax credit or cost-sharing reduction because the employer coverage is unaffordable or fails to pay at least 60% of covered health care expenses, that employer is subject to a nondeductible penalty.
Penalty Employee Threshold: The nondeductible fee applies to number of FT employees over a 30-employee threshold during the month. Note: For purposes of determining penalties, PT employees are not included in calculation (PT employees are included only for purpose of determining applicable large employer).
46. Beginning January 1, 2014: Penalties Cont’d Penalty: Assessment/tax on employer that equals 1/12 of $3,000 for each FT employee who receives a tax credit or cost-sharing subsidy through the exchange—calculated on a monthly basis.
Capped Penalty: Total assessment is capped at the maximum penalty amount an employer would face if the employer did not offer any coverage at all (the number of FT employees over a 30-employee threshold during the applicable month multiplied by 1/12 of $2,000.
47. Example of Employer Penalty Jim’s agency offers health coverage and has 100 FT employees, 20 of whom receive a tax credit for the year for enrolling in the exchange offered plan.
For each employee receiving the credit, the employer owes $3,000—for a total penalty of $60,000 (20 times $3,000)
The maximum penalty for the agency is capped at the amount of the penalty that it would have been assessed for a failure to provide coverage, or $140,000 ($2,000 multiplied by 70 employees –100 employees less the first 30 employees).
Since the calculated penalty of $60,000 is less than the maximum amount, Jim’s agency pays the $60,000 calculated penalty. The penalty is assessed on a monthly basis and equals $5,000.
Presents an Economic Choice. Some employers may weigh the costs of providing coverage against the penalty obligation.
48. Beginning January 1, 2014: Free Choice Vouchers An employer that offers health coverage to its employees must provide free choice vouchers to each qualified employee.
Qualified employee for this program are employees
who do not participate in a health plan offered by their employer;
whose share of the premium costs required under employer plan exceeds 8% but is less than 9.8% of their household income; and
whose household income is less than 400% of the federal poverty level.
Amount of voucher is equal to the largest portion of what employer would have paid.
Employers that provide voucher are not subject to penalties for employees who receive premium tax credits or cost-sharing reductions for coverage in an exchange.
NOTE: Employees may keep difference between voucher and cost of coverage.
49. Other Employer Requirements Larger Employer Reporting Requirements: Applicable large employers are subject to new IRS reporting requirements no later than January 31st of the following year that include:
Details about the employer (employer name and identification number);
Whether FT equivalents are offered coverage through employer-sponsored plan;
Details regarding employer plan (waiting period, availability, premium costs, employer’s share of costs of benefits);
Number of FT employees for each month during the year; and
Name, address, and tax identification number of each FT employee during the year, and the month during which the employee was covered under employer plan.
Employer Statement: Provide statement showing information reported to the IRS regarding particular employee.
W-2: Employers required to report cost of employer coverage on their employees’ Form W-2
50. Other Employer Requirements Room for Breast Feeding Mothers (immediately)
Report on W 1099 vendor non-credit card spending of $500 or more
Auto enrollment & Notice for Employers with 200: Employers with more than 200 FT equivalents that offer enrollment in one or more plans are required to automatically enroll new FT employees in plan. The automatic enrollment must include adequate notice to the employee of the right to opt out of coverage. Unclear when requirement will go into effect—await regulation.
Employee Notification Requirements (March 1, 2013): All employers to provide each employee written notification of existence of health insurance exchanges and subsidies. Notice must include:
existence of exchange;
Description of services provided by exchange;
How employee may contact exchange for assistance;
That employee may be eligible for premium tax credit for plan purchased through exchange if employer plan’s actuarial value is less than 60%; and
That employee will lose employer contribution toward coverage, and that all or a portion of contribution may be excludable from federal income taxes if the employee purchases a plan through exchange.
NOTE: Employees may keep difference between voucher and cost of coverage.
51. Tax Provisions of Note Beginning January 1, 2018, a 40% excise tax is imposed on high-cost plans.
Threshold amounts are $10,200 for singles and $27,500 for non-singles coverage.
Tax is paid by insurance company if the plan is insured and the plan administrator if self-insured.
Beginning January 1, 2013, the medical expense deduction for personal income tax is raised from 7.5% adjusted gross income (AGI) to 10% of AGI.
A minimum health benefits package refers to coverage that provides for 1) essential health benefits; 2) limits the cost sharing for such coverage; limits the deductible for small group plans, and provides benefits that are at least actuarially equivalent to 6% of the full actuarial value of the benefits provided under the plan.
Essential health benefits must be included as part of any qualified health plan offered by an employer or available through an exchange. The scope of the essential health benefits is intended to be equal to the scope of benefits provided under a typical employer plan.
A minimum health benefits package refers to coverage that provides for 1) essential health benefits; 2) limits the cost sharing for such coverage; limits the deductible for small group plans, and provides benefits that are at least actuarially equivalent to 6% of the full actuarial value of the benefits provided under the plan.
Essential health benefits must be included as part of any qualified health plan offered by an employer or available through an exchange. The scope of the essential health benefits is intended to be equal to the scope of benefits provided under a typical employer plan.
52. Calculating Full Time Employees for Purpose of Determining an Employer as Applicable Large Employer Full-time employee is defined as someone who is employed on average at least 30 hours per week.
Part-time employees are taken into account as “full-time equivalents” by dividing the total number of hours worked by non-full-time employees during the month by 120 (based on an average of 30 hours of service per week).
For purposes of determining penalties, part-time employees are not included in the calculation—they are included only in determining “applicable large employer.”
53. Jim’s Agency Example of Calculation of FTE Equivalent in 2014 Jim’s agency has 48 FTEs, 3 PTEs who work 20 hours a week, and 3 PTEs who work 10 hours a week.
The 3 PT 20-hours-a-week employees work for an aggregate of 240 hours per month, and the 3 PT10-hours-a-week employees work for an aggregate of 120 hours per month. The total aggregate hours worked by non-FTE is 360 (240 plus hours).
The total aggregate hours of non FTEs—360—is then divided by 120 to arrive at the number of 3 FT equivalent employees.
Jim’s agency has 3 FT equivalent employees for a total of 51 FT employees (3 plus 48).
Therefore, Jim’s agency is an “applicable large employer” (ALE) subject to the ACA.
54. Jim’s Agency and Penalties/Assessment The penalty for failure to offer coverage is an assessment equal to the number of FTEs over a 30-employee threshold during the month multiplied by ˝ of $2,000 ($166.67).
For the purposes of determining penalties, PTEs are not included in the calculation (they are only included in determining whether an employer is an applicable large employer.
NOTE: Employers are only required to provide coverage to FTEs (defined as employees working an average of 30 hours a week).
55. Some Next Steps As Employers Evaluate the effect of changes on your current group health plan options
Engage in discussions with your insurance carriers
Engage decision makers from finance, legal, tax, and HR to address cost, compliance, tax, and compensation issue
Identify a strategy to address both short-term and medium-term changes
Address cost and compliance issues of keeping "grandfathered“ plans
Determine communications strategy to address employees’ questions
Develop comprehensive strategy for evaluating and resolving issues
Watch for future ANCOR events and information!
Send your questions to Jessica at jsadowsky@ancor.org
