Health Care Reform: Facts about ACA – Three Primary Elements of the Affordable Care Act
First - Individual Mandate Individual Shared Responsibility (Individual Mandate) Individual Shared Responsibility: Provision in the law that requires all Americans to have health coverage or pay a tax.
Individuals must decide: Get minimum essential coverage; or Pay a tax • 2014 – Pay $95 or 1% household income* • 2015 – Pay $325 or 2% household income* • 2016 – Pay $695 or 2.5% household income* Individual Shared Responsibility - Mandate Consult your tax advisor. * The amount due is determined by the amount which is greater, the flat fee or the percent of household income.
What Health Coverage Qualifies? • Minimum Essential Coverage Requirements • EXCEPTIONS TO MANDATE REQUIREMENT • Financial Hardships • American Indians • Undocumented Immigrants • IncarceratedIndividuals • Religious Objections • Three Months or Less of coverage within an annual period before tax • Individual Grandfathered & Non-Grandfathered Plans • State & Federal Government Plans • Employer Group Plans EXCEPTED BENEFITS: Plans that are not within scope of most provisions of the ACA, like dental or vision, long-term care and other supplemental coverage offered as a separate insurance policy and do not qualify as minimum essential coverage.
Where Can An Individual Purchase Health Coverage? All the traditional places individuals and groups have purchased health insurance in the past will not change. What is new is the introduction to the public health insurance exchange. • Direct • Broker • Employers • Public Exchange - NEW Distribution Channels • TERMS TO KNOW • Health Insurance Exchange (HIX): An online marketplace for individuals and small businesses to shop for and compare health plans. • Also known as: • The Public Exchange • The Amercian Health Benefits Exchange (AHBE) • The Small Business Health Options Program (SHOP) • The Exchange • The Marketplace
New Players On The New Public Exchange • New Players in the Market • Multi-state plans • Single carrier • Similar plan in30 states in 2014 • Similar plan in all 50 states by 2018 • CO-OPs • Consumer Operated and Oriented Plans • Private, nonprofit entity • At least one per exchange • Basic Health Plan • State plan • Optional • 133% to 200% of Federal Poverty Level • Delayed till 2015 • Medicaid expansion • State plan • Optional • Up to 133% of Federal Poverty Level
. • Online market place • Easy to compare • Two types of exchanges • American Health Benefit Exchange • Small Business Health Options Program (SHOP) • Initial Open Enrollment from Oct 1 – March 31 for individuals • Optional Large Group Exchange in 2017-state-by-state determined Something New: The Public Exchange Onlineshopping sites
Public Exchange Types Types of Public Exchanges State-basedexchanges Partnership betweenstate and federal Federally facilitatedexchange • State provides plan shopping & comparison • State provides core plan management exchange functions • States can use federal services for premium tax credit and cost-sharing reduction determination • Federal exchange provides shopping & comparison • Federal exchange provides core exchange functions • State makes final Medicaid determination • States can choose to oversee plan management and/or consumer assistance • Federal exchange provides plan shopping & comparison • Federal exchange provides core exchange functions • Federal exchange handles eligibility functions
February 15, 2013, Each State Had To Notify HHS Of Their Decision Of Operating Their Health Exchange. State Decisions For Health Care Exchange Federally Facilitated Exchange Partnership Exchange State-based Exchange As of February 15, 2013 Not for distribution. Proprietary – Wellmark Blue Cross and Blue Shield
More Choice + More Regulations = More Confusion Health Plans Made Simple
Second – Market Place Change Plan design Essential Health Benefits Premium rating changes Risk assessment Market Place Change To Health Plans
ACA Mandated Standardized Plan Designs’ And Cost Through The Metallic Tiers And Defined What Portion Of Claims Must Be Paid By An Insurer. 10% member • Standardized Plans: Metallic Tiers 20% member 30% member 40% member 90% plan 80% plan 70% plan 60% plan Bronze Silver Gold Platinum • TERMS TO KNOW • Actuarial Value: The portion of the covered or allowable claims paid by the insurer. • Catastrophic Plan: A health plan that does not provide a bronze, silver, gold or platinum level of coverage for individuals under the age of 30 or who qualify for hardship. This is not allowed in the group market.
This Means That Carriers Must Sell Plans That Meet the ACA’s Standards = Qualified Health Plans • Certified by the Exchange • Offer Essential Health Benefits Package • Essential Health Benefits • Based on Metallic Tiers • Meet Cost Sharing Requirements • Quality Accreditation • Available ON and OFF the Exchange Qualified Health Plans (QHP) TERMS TO KNOW Essential Health Benefits (EHB): A bundle of certain medical services as defined by each state. Minimum Essential Coverage (MEC): Government-sponsored plans, employer-sponsored plans, individual grandfathered and non-grandfathered plans, and other coverage.
A Qualified Health Plan (QHP) Must Cover Essential Health Benefits As Defined By ACA. • BENEFIT CATEGORIES • Ambulatory Patient Services • Lab Services • Prescriptions • Chronic Disease Management • Maternity and Newborn Care • Preventive Care • Emergency Services • Mental Health and Substance Abuse Treatment • Rehabilitative and Habilitative Services/Devices • Hospitalization • Pediatric Services, including oral and vision care • A bundle of basic medical services • Applies to Non-Grandfathered Plans • Individual Plans • Small Group Plans • Large groups may not impose annual dollar limits on EHBs in 2014 • Essential Health Benefits (EHB)
Qualified Health Plans(QHP) Must Limit Cost Sharing Cost-sharing out-of-pocket (OPM) maximum limits $6,250 for individuals (2013) $12,500 for families (2013) Small Group Plan Deductibles $2,000 single $4,000 family Cost-sharing Limits TERMS TO KNOW Out-of-pocket cost sharing (OPM) can not exceed the HSA limits. Note: Effective 2015 drug co-pays will be included in the OPM.
ACA Requires Health Insurance Carriers To Calculate Premium Much Differently Than In The Past. • New rules for premium calculations 2014 Premiumcalculations Premiums willfluctuate widely Health and genderno longer a factor TERMS TO KNOW Community Rating: A method of setting health insurance premiums that spreads costs evenly across the entire community.
Sample Premium Comparison 1 Prior to consideration for trend and other health care reform changes. For illustrative purposes only
Because Of Cost, ACA Provides Tax Credits To Reduce The Cost For Persons Between 100% And 400% Of Federal Poverty Level (FPL). Financial Help for those between 100% and 400% of the federal poverty level ($44,680 single/$92,200 family 2012). • SUBSIDY QUALIFICATION NOTIFICATION • Exchange must notify employer of: • Employee Name • Qualification Status • Employer Liability • Employers can appeal to avoid the penalty. Individuals with access to affordable coverage at a minimum value can’t get financial help. If group coverage isdeemed unaffordable,the group may be penalized. Consult your tax advisor. TERMS TO KNOW Tax Credit: Small groups with 1-25 employees may qualify for a tax credit up to 50 percent in 2014. But it will go away in 2016.
Who Will Market Health Insurance On The Public Exchange? Navigators(NEW) Brokers Group Administrator Help Navigating Reform TERMS TO KNOW Navigators: A newly defined non-profit entity that will provide consumer education and advice, outreach to the underserved, and help with enrollment on the exchange.
Third – Accessto Coverage Employer Responsibility Mandate Medical Loss Ratio Flexible Spending Accounts Transparency and Administrative Compliance Employer Role has changed
To avoid penalties, employers with 50 or more full-time equivalent employees (FTEs) must: • Offer affordable coverage (9.5% of employees annual household income) • Maintain a minimum value of 60% Safe Harbors issued by IRS(9.5% of employee’s annual salary) Cannot discriminate in favor of the highly compensated -105(H) rules Employer Coverage Requirements – Employer Responsibility Mandate • TERMS TO KNOW • Affordable Coverage: An employee’s cost of coverage cannot exceed 9.5 percent of theirannual household income, for their lowest cost plan. • Minimum Actuarial Value: The portion of the covered or allowable claims paid by the insurer cannot be less than 60 percent. Consult your tax advisor.
Affordable Coverage and Minimum Value requirements apply toGroups 50+ • Group size equals number of full-time equivalent employees • Seasonal workers are not considered part of group size • Full-Time Equivalent Employees DETERMINING YOUR GROUP SIZE: TERMS TO KNOW Full-time Equivalent Employees: total number of hours of service for which wages were paid to part-time employees during the taxable year divided by 2,080. Then add that number to the total number of full-time employees. Consult your tax advisor.
Medical Loss Ratio (MLR) Medical Loss Ratio Does Not Apply to the Iowa Bankers Benefit Plan How much of a premium dollar must be spent on medical care and quality improvement? TERMS TO KNOW Medical Loss Ratio*: The ratio between how much of your premium dollar is spent on administrative expense compared to medical care and quality improvements. Quality Improvement: Expenses to reduce hospital re-admissions, improve patient safety, reduce medical errors, and health information technology investments. Overhead Expenses: Expenses like administration, marketing, profits, salaries and broker-directed feesare paid from the remaining 15 percent. Large group: 85% Small group: 80% Individual: 80% Wellmark already metthis requirement *The calculation is based on a carriers total book of business and is not measured on an individual plan basis. .
EXCEPTIONS TO THE RULE • Premium Only Plans (POPs) • Cafeteria plans such as dependent care and adoption assistance • Non-elective contributions or Reimbursement Programs • Flex Credits • Salary reduction contributions • An employees’ share of health coverage • Dependent care • Adoption assistance Flexible Spending Accounts (FSA) Caps Changing • Effective in 2013 • $2,500 limit on salary reductions • Spouses can have separate FSAs
Summary of Benefits and Coverage • Standardized in plain English • Explains coverage and gives definitions • Groups will play a role in distributionor may pay a penalty • IBBP provides SBC for the Plan • IBIS provides SBC for the partially self-funded IBIS 105 plan • Summary Of Benefits And Coverage (SBC) SBC RULES When new employee enrolls During open enrollment Upon group renewal Within seven days of request Within 60 days of any material benefit change
Exchange Notification Regulations • NOTICE CHECKLIST • Include Exchange contact information • Exchange services • Actuarial Value Status • Subsidy options • Employer contribution guidelines • Employer groups required to notify employees of their rights • Written notice • Notice must be distributed by October 1, 2013
REPORTING RULES • (Begin collecting Jan. 1, 2014) • Group name and EIN • Filing date • Certify employer-sponsored coverage requirements • Duration of waiting period • Months of availability • Lowest cost option (monthly) • Total allowed costs • Number of full-time employees, name, address, TIN and dependents New IRS Reporting Rules Employer Reporting • Coverage for full-time employees • Certify minimum essential coverage • Required in 2015 for 2014 tax year • Same information must be provided to employees • We do not know the form or format yet. • Note: Please contact you tax advisor for specific details.
EXCEPTION TO THE RULE • Self-insured group health plan that is not subject to any federal continuation coverage requirements. • Employers that are tribally chartered corporations wholly owned by federally recognized Indian tribal governments. • This excludes beneficiaries and dependents. Form W2 Reporting • Groups that offer minimum essential coverage • Employers who filed 250 or more W2 Forms annually • Aggregate costs of employer-sponsored health coverage • Required in 2013 for the 2012 tax year • In box 12, using code DD(DD indicates non-taxable income) • New IRS Reporting Rules • . • Note: Please contact you tax advisor for specific details.
More Reporting For Health Plans Quality of Care Reporting • Effective Date: • Regulations were to be issued no later than March 23,2012. • Waiting on guidance for Health and Human Services (HHS) as of today. • What we do know: • Submit annual reports to HHS and enrollees during open enrollment on whether the plan fulfills certain quality of care measures developed by HHS. • HHS to develop appropriate penalties. • Does appear to apply to IBBP employers. We are waiting for further guidance. • New Health and Human Services (HHS) Reporting Rules(Pending)
Iowa Bankers Benefit Plan Is A Non-Grandfathered Plan • Why we did not GRANDFATHER • Could not change certain benefits • Could not increase costs to members too much • No employer participating in IBBP could make a change • Grandfathered Plans IBBP announced our decision not to grandfather September of 2010. TERMS TO KNOW Grandfathered: An individual or group health plan that existed on or before the date the ACA was signed into law — March 23, 2010.
Employer Responsibility Mandate –Pay or Play Employer Big Decision: Pay or Play • DECISION CHECKLIST • Analyze costs • Analyze benefits • Review salaries • Calculate hours worked • Evaluate contracts • Meet with your tax and legal advisor • Make Your Decision • Comply with coverage requirements or be assesseda penalty • Weigh your options • Decide in 2013 for 2014 What about the penalties? There are several penalties employer groups may be assessed if they choose not to comply with the mandate — the no coverage penalty, the unaffordable coverage penalty, and a penalty for non-compliance with SBC distribution.
Employer Responsibility Mandate – Pay or Play • PENALTY ASSESSMENT GUIDELINES • Employer denies employee access to minimum essential coverage • At least one full-time employee receives a premium tax credit through the public exchange • Pro-rated for each month an employer doesn’t offer coverage No Coverage Penalty • No access to minimum essential coverage • $2,000 per full time employee* Terms to know Premium Tax Credit: Reduces premium costs for people below 400 percent of the federal poverty level in one of two ways: A refundable credit conducted with the annual tax return or an advanceable payment made directly to the insurance carrier. The total penalty applies to your total number of full-time employees minus 30, and is accrued on a monthly basis. Consult your tax advisor.
Employer Responsibility Mandate Pay or Play • PREMIUM TAX CREDIT AND COST-SHARING SUBSIDY QUALIFICATIONS • Employer coverage is not affordable • Employer coverage does not meet minimum actuarial value • Employee must purchase coverage from HIX • Note: All IBBP Health Plan Options Meet The Minimum Actuarial Value $3,000 per full-time employee Group coverage is offered One or more full-time employees receive a premium tax credit or cost-sharing subsidy Inadequate Coverage Penalty Employers are responsible for the inadequate coverage penalty only for those employees who receive the premium tax credit or cost-sharing subsidy, but the total employer penalty cannot exceed $2,000 times the total full-time employees minus 30. The penalty is determined on a monthly basis. Consult your tax advisor.
Employer Responsibility Mandate – Pay or Play • Calculating the Annual Penalties
Employer Responsibility – Distribution of Summary of Benefits and Coverage (SBC) SBC Non-compliance • Applies to all markets and plans • $1,000 per occurrence • Penalties are not tax deductible • Note: IBBP prepares the SBC for the Plan. IBIS prepares the SBC for the IBIS 105 plans.
Research to find better medical treatments Financed with Comparative Effectiveness Research fee $1 per member in 2012 – 2013 $2 per member in 2014 Patient-Centered Outcomes Research Trust Fund Although there are no guidelines for 2014 and beyond, employer groups should be prepared to pay annually through 2019. IBIS will pay the PCORI fee for participating IBBP employers. Employers are responsible for the PCORI fee for their partial self-funded 105 plans. Please see your tax advisor!
Projected Cost Per The Congressional Budget Office $60Billion • Projected Total Annual Fees Paid By 2019 $26Billion $20 Billion Medical DeviceManufacturers HealthInsurers DrugManufacturers
IBBP Will Pay Another Fee – The REINSURANCE FEE Estimate $1.59 million • Big Change = Big Risk 1 States that have elected to run a state-based exchange, may also choose to establish a state-based program or defer to the federal Department of Health and Human Services (HHS). 2Although the Reinsurance fee only impacts the individual market, all large groups, including self-funded plans, will have to finance it. The amount of funds over the three-year period is highest in the first year ($10 billion) and then tapers off to $4 billion by 2016.
Iowa Bankers Benefit Plan- We are here to inform, lead and assist as we navigate together through Health Care Reform. Call us at -1-800-258-1415. May 2013 CkWehde, IBIS