Helping employers meet the challenges of healthcare reform and delays
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Helping Employers Meet the Challenges of HealthCare Reform and Delays:. Tax-Planning Sensitive Benefit Portfolio. Definitions. Minimum Essential Coverage (MEC) MEC must cover 100% of the CMS listed Preventive Services

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Helping employers meet the challenges of healthcare reform and delays

Helping Employers Meet the Challenges of HealthCare Reform and Delays:

Tax-Planning Sensitive Benefit Portfolio


Definitions

Definitions

  • Minimum Essential Coverage (MEC)

    • MEC must cover 100% of the CMS listed Preventive Services

    • An employer that employs 50 or more FT employees (FT plus full-time equivalents) can prevent being taxed the $2,000 per full time employee, less 30 employees, penalty by only offering the Minimum Essential Coverage.

    • All employees can prevent being taxed the greater of 1% of adjusted household income or the $95 plus penalty by being covered by the Minimal Essential Coverage, the 60% Minimum Value Plan, or other qualified buy-up plan if offered.

    • Employers can charge employees any reasonable amount for this benefit option.


Definitions1

Definitions

  • Minimum Value Plan (MVP)

    • A 60% Minimum Value Plan which meets the government’s 60% average of “allowed costs” in order to avoid the $3,000 penalty per employee who is eligible for subsidies on the Exchange, who waives off the employer plan, and who purchases coverage on the Exchange.

    • The employer can’t charge an employee who would otherwise be eligible for a subsidy on the Exchange more than 9.5% of that employee’s W2, Box 1 income for single coverage under the Minimum Value Plan. (Safe Harbor)


What industry does this plan target

What Industry does this plan target?

  • In general all industries will benefit from this program.

  • In particular, the ones listed below could benefit the most:

    • Restaurants

    • Staffing Companies

    • Nursing Homes

    • Home Health Care

    • Hotels and Resorts/Casinos

    • Security Companies

    • Convenient Stores

    • Oil and Gas


Health plan designs of the future

Health Plan Designs of the Future

  • Minimum Essential Coverage would be self funded with an Aggregate only policy with a monthly Aggregate Accommodation provision.

  • Minimum Essential Coverage will cover 100% of the CMS listed Preventive Services.

  • An employer that employs 50 or more FT employees (FT plus full-time equivalents) can prevent being taxed the $2,000 per full time employee, less 30 employees, penalty by only offering the Minimum Essential Coverage.

  • All employees can prevent being taxed the $95 penalty by being covered by the Minimal Essential Coverage, the 60% Minimum Value Plan, or other qualified buy-up plan if offered.


Preventive services under the affordable care act

Preventive Services under the Affordable Care Act


15 covered preventive services for adults

15 Covered Preventive Services for Adults

  • Abdominal Aortic Aneurysm one-time screening for men of specified ages who have ever smoked

  • Alcohol Misuse screening and counseling

  • Aspirin use for men and women of certain ages

  • Blood Pressure screening for all adults

  • Cholesterol screening for adults of certain ages or at higher risk

  • Colorectal Cancer screening for adults over 50

  • Depression screening for adults

  • Type 2 Diabetes screening for adults with high blood pressure

  • Diet counseling for adults at higher risk for chronic disease

  • HIV screening for all adults at higher risk

  • Immunization vaccines for adults--doses, recommended ages, and recommended populations vary:

    • Hepatitis A

    • Hepatitis B

    • Herpes Zoster

    • Human Papillomavirus

    • Influenza (Flu Shot)

    • Measles, Mumps, Rubella

    • Meningococcal

    • Pneumococcal

    • Tetanus, Diphtheria, Pertussis

    • Varicella

  • Obesity screening and counseling for all adults

  • Sexually Transmitted Infection (STI) prevention counseling for adults at higher risk

  • Tobacco Use screening for all adults and cessation interventions for tobacco users

  • Syphilis screening for all adults at higher risk


  • 22 covered preventive services for women including pregnant women

    22 Covered Preventive Services for Women, Including Pregnant Women

    The eight new prevention-related health services marked with an asterisk ( * ) must be covered with no cost-sharing in plan years starting on or after August 1, 2012.

    • Anemia screening on a routine basis for pregnant women

    • Bacteriuria urinary tract or other infection screening for pregnant women

    • BRCA counseling about genetic testing for women at higher risk

    • Breast Cancer Mammography screenings every 1 to 2 years for women over 40

    • Breast Cancer Chemoprevention counseling for women at higher risk

    • Breastfeeding comprehensive support and counseling from trained providers, as well as access to breastfeeding supplies, for pregnant and nursing women*

    • Cervical Cancer screening for sexually active women

    • Chlamydia Infection screening for younger women and other women at higher risk

    • Contraception: Food and Drug Administration-approved contraceptive methods, sterilization procedures, and patient education and counseling, not including abortifacient drugs*

    • Domestic and interpersonal violence screening and counseling for all women*

    • Folic Acid supplements for women who may become pregnant

    • Gestational diabetes screening for women 24 to 28 weeks pregnant and those at high risk of developing gestational diabetes*

    • Gonorrhea screening for all women at higher risk

    • Hepatitis B screening for pregnant women at their first prenatal visit


    22 covered preventive services for women including pregnant women continued

    22 Covered Preventive Services for Women, Including Pregnant Women (continued)

    • Human Immunodeficiency Virus (HIV) screening and counseling for sexually active women*

    • Human Papillomavirus (HPV) DNA Test: high risk HPV DNA testing every three years for women with normal cytology results who are 30 or older*

    • Osteoporosis screening for women over age 60 depending on risk factors

    • Rh Incompatibility screening for all pregnant women and follow-up testing for women at higher risk

    • Tobacco Use screening and interventions for all women, and expanded counseling for pregnant tobacco users

    • Sexually Transmitted Infections (STI) counseling for sexually active women*

    • Syphilis screening for all pregnant women or other women at increased risk

    • Well-woman visits to obtain recommended preventive services*


    26 covered preventive services for children

    26 Covered Preventive Services for Children

    • Alcohol and Drug Useassessments for adolescents

    • Autismscreening for children at 18 and 24 months

    • Behavioral assessments for children of all ages Ages: 0 to 11 months, 1 to 4 years, 5 to 10 years, 11 to 14 years, 15 to 17 years.

    • Blood Pressure screening for children Ages: 0 to 11 months, 1 to 4 years, 5 to 10 years, 11 to 14 years, 15 to 17 years.

    • Cervical Dysplasiascreening for sexually active females

    • Congenital Hypothyroidismscreening for newborns

    • Depression screening for adolescents

    • Developmental screening for children under age 3, and surveillance throughout childhood

    • Dyslipidemia screening for children at higher risk of lipid disordersAges: 1 to 4 years, 5 to 10 years, 11 to 14 years, 15 to 17 years.

    • Fluoride Chemopreventionsupplements for children without fluoride in their water source

    • Gonorrhea preventive medication for the eyes of all newborns

    • Hearing screening for all newborns

    • Height, Weight and Body Mass Index measurements for childrenAges: 0 to 11 months, 1 to 4 years, 5 to 10 years, 11 to 14 years, 15 to 17 years.

    • Hematocrit or Hemoglobinscreening for children

    • Hemoglobinopathies or sickle cell screening for newborns

    • HIV screening for adolescents at higher risk

    • Immunization vaccines for children from birth to age 18 —doses, recommended ages, and recommended populations vary:

      • Diphtheria, Tetanus, Pertussis

      • Haemophilusinfluenzae type b

      • Hepatitis A


    26 covered preventive services for children continued

    26 Covered Preventive Services for Children (continued)

    • Hepatitis B

    • Human Papillomavirus

    • Inactivated Poliovirus

    • Influenza (Flu Shot)

    • Measles, Mumps, Rubella

    • Meningococcal

    • Pneumococcal

    • Rotavirus

    • Varicella

  • Iron supplements for children ages 6 to 12 months at risk for anemia

  • Lead screening for children at risk of exposure

  • Medical History for all children throughout developmentAges: 0 to 11 months, 1 to 4 years, 5 to 10 years, 11 to 14 years, 15 to 17 years.

  • Obesity screening and counseling

  • Oral Health risk assessment for young childrenAges: 0 to 11 months, 1 to 4 years, 5 to 10 years.

  • Phenylketonuria (PKU) screening for this genetic disorder in newborns

  • Sexually Transmitted Infection (STI) prevention counseling and screening for adolescents at higher risk

  • Tuberculin testing for children at higher risk of tuberculosisAges: 0 to 11 months, 1 to 4 years, 5 to 10 years, 11 to 14 years, 15 to 17 years.

  • Vision screening for all children


  • Health plan designs of the future1

    Health Plan Designs of the Future

    • Plan A Minimum Essential Coverage Plan

    • Plus a fully insured Limited Medical Benefit plan for additional coverage.


    Health plan designs of the future2

    Health Plan Designs of the Future

    • Plan A Self Funded Minimum Essential Coverage Plan

    • Plus an improved fully insured limited Medical Benefit plan


    Health plan designs of the future3

    Health Plan Designs of the Future

    • Plan A Self Funded Minimum Essential Coverage Plan

    • Plus 60% Minimum Value Plan, with Specific and Aggregate Coverage, that meets the government’s 60% average of “allowed costs” in order to avoid the $3,000 penalty per employee who is eligible for subsidies on the Exchange, who waives off the employer plan, and who purchases coverage on the Exchange.

    • The employer can’t charge an employee who would otherwise be eligible for a subsidy on the Exchange more than 9.5% of that employee’s W2, Box 1 income for single coverage under the Minimum Value Plan. (Safe Harbor)

    • 12/18 contract, Aggregate Accommodation to give monthly and annual caps, No New Laser contracts.


    Health plan designs of the future4

    Health Plan Designs of the Future

    • Plan A Self Funded Minimum Essential Coverage Plan

    • Plus Traditional Self Funded Major Medical with specific and aggregate stop loss.

    • 12/18 contract, Aggregate Accommodation to give monthly and annual caps, No New Laser contracts.

    • Employers can charge employees any amount for this benefit option.


    Aca timeline

    ACA Timeline


    Aca timeline1

    ACA Timeline

    • 2013

    • Significant time and money have been spent on consulting and actuarial services to evaluate the new law and employer and employee mandates and options.

    • Many hours have been spent on compiling data and producing reports which set out financial scenarios based upon “best guess planning” procedures preparing for the ACA implementation.

    • Hypothetical participation scenarios have been completed many different ways anticipating who would have to be covered in 2014.

    • Full time and part time employee status has been examined to determine the best scenario for each employer.

    • Over 25,000 pages of new regulations have been issued by the Federal Government and digested by U.S. businesses.


    Aca timeline2

    ACA Timeline

    • July 5, 2013

    • Announcement of the “Delay” of Employer Penalties until 2015

      • $2,000 penalty due to not offering the required “Minimum Essential Coverage” (MEC)

      • $3,000 penalty due to not offering an affordable “Minimum Value Plan” (MVP) that meets the 60% minimum value and affordability tests set out by the government


    Aca timeline3

    ACA Timeline

    • October 2013

    • Enrollment through federally approved Exchanges begins where employees who do not have an affordable Minimum Value Plan (MVP) “offered” to them through their employer will be eligible for subsidies.


    Aca timeline4

    ACA Timeline

    • January 2014

    • Implementation of ACA

    • Individuals who do not have at least Minimum Essential Coverage (MEC) will be subject to individual tax penalties:

      • 2014, the greater of 1% of adjusted household income or $95 per adult plus $47.50 per child

      • 2015, the greater of 2% of household income or $325 per adult plus $162.50 per child

      • 2016, the greater of 2.5% of household income or $695 per adult plus $347.50 per child


    Aca timeline5

    ACA Timeline

    • January 2015

      • Employer Tax Penalties Begin

        • $2,000 penalty due to not offering the required “Minimum Essential Coverage” (MEC)

        • $3,000 penalty due to not offering an affordable “Minimum Value Plan” (MVP) that meets the 60% minimum value and affordability tests set out by the government


    Delay now what

    DELAY…Now What?

    DO I PROCEED OR…

    DO I WAIT….


    If employers do nothing and wait

    If employers do nothing and wait….

    • Employers will not be in compliance with the federal guidelines in offering a Minimum Value Plan in 2014/15.

    • Employers will still be in the dark with unknown risk.

    • Many of the employees that will be considered eligible in 2014/2015 could possibly apply for the exchange where they will be given a subsidy because of NO Minimum Value Plan being offered.

    • Many of these employees who have never had insurance before will get a taste of Major Medical Insurance for the first time on the exchanges.


    If employers do nothing and wait continued

    If employers do nothing and wait continued….

    • A bigger potential for adverse selection in the MVP due to the young and healthy population enrolling in exchanges in 2014.

    • In 2015, when MEC and MVP’s are offered, employees and their families will NO LONGER be eligible for the subsidy they are receiving in 2014. The employer could possibly be looking at employees that are very upset because they will no longer be eligible for a subsidy for themselves or their family which could possibly hurt retention.

    • The employer could be looking at employees that will be buying their MVP plan at no more than 9.5% of their W2 Box 1 income, which could increase budgets dramatically in 2015 verses what they had been advised and budgeted in 2014 .

    • Many of the employees without insurance that will be eligible would not have considered the MVP if a possible MEC option or Limited Medical Plan was offered to them in 2014.


    Potential costs for employers doing nothing and wait

    Potential Costs for employers doing nothing and wait….

    • Example: Potential Cost to Employer in 2015 for MVP plan

      • Assume average cost of MVP plan in 2015 is approximately $650/month for single coverage

      • Assume use of Safe Harbor model for employee contribution at 9.5% of W2 box 1 income-employee cost share would be approximately $110/month

        -------------------------------------------------------------------------------------------------------------

      • Employers cost share would be approximately $540/month or $6,480/year.

      • Employers costs of adding additional employees on a MVP plan:

        • 20 additional employees ≈ $130,000/yr

        • 50 additional employees ≈ $324,000/yr

        • 100 additional employees ≈ $648,000/yr


    New considerations and concerns

    New Considerations and concerns….

    • As an employer, how do I determine my benefits budget with all these unknowns facing us today?

    • Should I proceed with implementing a MEC Plan in 2014?

    • Should I consider offering a MEC only plan and a MEC with a limited medical benefit and a MEC with an enhanced limited medical benefit plan in 2014?

    • Are there any concerns I should be aware of if I delay the implementation of an MVP until 2015?

    • Should I consider offering both a MEC and limited medical benefits options along with an affordable MVP in 2014?

    • Should I be concerned that during 2014 the young and healthy population will decide to enroll in the Exchanges creating adverse selection for my MVP if I delay the MVP implementation until 2015?


    Don t delay do something

    Don’t Delay…Do Something

    3 Year Implementation Strategy


    3 year strategy

    3 Year Strategy


    Year 1 2014

    YEAR 1- 2014

    • Implement a MEC plan and Limited Medical plan. This offering will do the following for the employee and employer:

      • Employee:

        • It will allow them to avoid their individual tax penalty which starts in 2014.

        • Some employees will find that coverage from the Exchanges in 2014 is too expensive for them with or without subsidies.

        • In 2015 when employers make MVP’s available, employees will experience “sticker shock” when they see the premiums and out of pocket expenses attendant to the MVP coverage and elect to stay with the MEC and Limited Medical plan selected in 2014.


    Year 1 20141

    Year 1 2014

    • Employer:

      • Creates an employer strategy which enables employees who do not have coverage today to purchase a low cost plan with meaningful benefits. Some employees will realize that they cannot afford the Exchange coverage premiums and out of pocket exposure.

      • Participation in the low cost plan in 2014 could have the effect of these employees not joining the MVP plan in 2015 which is the largest cost to an employer with ACA.

      • Affords an employer a year to build a MEC SURPLUS which will help offset costs associated with the MVP offered in 2015.

      • Allows an employer to begin gathering data on this previously uninsured population in order to better analyze this population which may join the MVP in 2015. This will give employers a better way to estimate the cost of the 2015 MVP.


    Year 1 2014 employer achievements

    Year 1 2014 Employer Achievements…

    • Understand the data for the past year with the MEC and Limited Medical plan and not be in the “dark”

    • Complete the financial forecast with the data from the current plans, the Surplus that was achieved in Year 1 with the MEC and determine possible expense of offering the Minimum Value Plan.

    • Introduce low cost plans to employees a year in advance to get them comfortable and avoid “sticker shock” in 2015.

    • Ability to have the first phase of ACA implemented and avoid potential chaos from employees losing subsidies in 2015 when MVP plan is implemented.

    • Consider options for your current plan being offered today to your employees (PLAN E) and what is the most advantageous route for you and your employees including potential surveys to see who would purchase the MVP plan.


    3 year strategy1

    3 Year Strategy


    Year 2

    Year 2

    • Continue the MEC and Limited Medical offered in 2014 and add the Minimum Value Plan offering.

    • Continue looking at best practices in communications and enrollment strategies with surveys throughout year.

    • Begin to analyze your data from KBA to understand how to stabilize your medical costs with all of the changes taken place.

    • Begin to look at Population and Risk Management within your benefit plan design to turn data into intelligence and make it actionable.

    • Begin to establish benchmarks within your plans that can be understood by all within the company and make adjustments with the data to stabilize costs within the health plan.


    3 year strategy2

    3 Year Strategy


    Year 3

    Year 3

    • Analyze the MEC, Limited Medical and MVP for adjustments.

    • Continue to work the population management programs to improve the overall health of the covered population.

    • Adjust where necessary to be sure the MEC and MVP plans are coming in on budget.


    What do we accomplish for the employee and employer

    What do we accomplish for the employee and employer?

    • The ability to be in compliance with the new ACA Regulations while avoiding any penalties in 2014/2015.

    • The ability for an employee to avoid being taxed the greater of 1% of adjusted household income or the $95 plus penalty by electing the “Minimum Essential Coverage” plan.

    • The ability to bring an affordable low cost plan with meaningful benefits to employees that will still not be able to afford the Minimum Value Plan.

    • The ability to have a 3 year strategy implemented as discussed and have “real” data and anticipated implication to best position yourself for 2015 and beyond.

    • Allow employees to feel that they have been given the best opportunity that is most affordable to them and their families.


    Helping employers meet the challenges of healthcare reform and delays

    THANK YOU!!!


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