Welcome Vince DeSilva Sr. V.P., Membership ServicesGwinnett Chamber
Introduction of Speakers Raymer Sale PresidentE2E Resources, Inc.
Healthcare Perspective Morgan Kendrick PresidentBlue Cross Blue Shield of Georgia
Health Care ReformWhat now? What next? Morgan Kendrick President Blue Cross and Blue Shield of Georgia
Where we started… The backdrop for federal health care reform.
U.S. Health Care Spending $2.5 Trillion
Increased Employee Share of Premiums:2005-2010 Source: Kaiser/HRET Survey of Employer‐Sponsored Health Benefits, 1999‐2010
Federal health care reform Expanding access
High-Level Overview: Federal Health Care Reform Dependent Age 26 No Lifetime Max Minimum Loss Ratios Individual Mandate Guaranteed Issue Community Rating Exchanges Rate Review
Financing Health Care Reform Source: Kaiser Family Foundation summary document, as of April 15, 2011
What now? Changes and considerations for employers
2014 IS NEARLY HERE 2014
Exchange: A New Marketplace for Health Insurance Exchange Individuals Subsidy 133-400% FPL Small Groups Employer tax credits ? Federally-Run Active Purchaser State-Run Facilitator
Exchange: A New Marketplace for Health Insurance COMPANY CONFIDENTIAL | FOR INTERNAL USE ONLY | DO NOT COPY Source: Kaiser Family Foundation, 1/16/13 - 16 -
Exchange: A New Marketplace for Health Insurance • Modified community rates will be based on only: • Family tier • Age • Geography • Tobacco use
So what’s next? Building a sustainable health care system
What are we doing? • Working to implement provisions of the ACA • Reviewing and analyzing regulations and regulatory guidance as soon as it is published. • Ensuring that we are a trusted resource to our customers with regard to the ACA. • Developing products and services that continue to meet our customers’ needs in the changing environment. • www.makinghealthcarereformwork.com
Why is this important? • Ensure quality • Achieve better outcomes • Help save money • Increase worker productivity • Keep people healthy
Care Delivery Continuum Global Payments Fee-for-Value ACOs Bundled /Episodic Value-Based Reimbursement PCMH Enhanced FFS / P4P Fee-for- Service Partially Integrated Integration of Care Delivery Fully Integrated
State Perspective Sam Olens Attorney GeneralState of Georgia
State Perspective Ralph Hudgens Georgia Insurance and Safety Fire CommissionerState of Georgia
Legal/Business Perspective Warren Kingsley & Douglas Smith Arnall Golden Gregory LLP
Gwinnett Chamber of Commerce Seminar March 20, 2013 The Affordable Care Act (“ACA”) Shared Responsibility and Employer Health Care (“Pay or Play”) Mandate Presented by: Warren E. Kingsley, Esq. Arnall Golden Gregory LLP 404.873.8636 firstname.lastname@example.org Douglas A. Smith, Esq. Arnall Golden Gregory LLP 404.873.8796 email@example.com
Affordable Care Act (“ACA”) • ACA Signed into law on March 23, 2010. • On June 28, 2012, the U.S. Supreme Court upheld the constitutionality of ACA by a narrow 5-4 margin. • On January 2, 2013, the Internal Revenue Service (the “IRS”) issued proposed regulations providing updated guidance on the employer (“pay or play”) mandate.
Individual Mandate Overview • EFFECTIVE JANUARY 1, 2014 • All U.S. residents are required to maintain “minimum essential coverage” unless the individual falls within an exception. • Exceptions: • Individuals with a religious conscience exemption. • Incarcerated individuals. • Undocumented aliens. • Individuals in a hardship situation (to be determined by the U.S. Dept. of Health and Human Services (“HHS”)).
Individual Mandate INDIVIDUAL MANDATE EXCEPTIONS (cont’d) • Exceptions (cont’d): • Individuals with a coverage gap of less than 3 months. • If coverage gap is greater than 3 months, each month in the gap is subject to penalty. • Individuals with income below the federal income tax filing threshold. • The filing threshold generally is the sum of a taxpayer’s applicable exemption amount and applicable standard deduction amount. • E.g., income tax filing threshold for a single taxpayer for 2013 is $10,000 ($3,900 personal exemption + standard deduction of $6,100). • Individuals who cannot afford coverage because their “required contribution” exceeds 8% (indexed after 2014) of the individual’s household income for the year. • Members of Indian tribes.
Individual MandateCoverage Requirements What is “Minimum Essential Coverage”? Government-sponsored Program. Medicaid. Medicare. Children’s Health Insurance Program coverage (“CHIP”). TRICARE (i.e., U.S. Military health care coverage). Veterans Affairs coverage. Peace Corps volunteers coverage. Employer-sponsored Plans. Governmental plans. Grandfathered plans Other plans offered in small or large group market. Health plans offered in the individual market. Other coverage (must be considered minimum essential coverage by HHS and IRS).
Individual Mandate Penalties • “Monthly penalty amount” for not having minimum essential coverage is 1/12 of greater of (i) the sum of an applicable dollar amount per individual taxpayer (and spouse on joint return) and each claimed dependent (or, if less, 300% of the applicable dollar amount)or (ii) a percentage of the taxpayer’s household income for the year. • Applicable dollar amount is $95 in 2014, $325 in 2015, $695 in 2016, and after 2016, $695, as indexed for inflation. (Applicable dollar amountis halved for dependents under age 18.) • Percentage of the taxpayer’s household income is an amount equal to a percentage of the household income in excess of the tax filing threshold for the year (which percentage is phased in at 1% in 2014, 2% in 2015, and 2.5% after 2015).
Individual MandatePenalties • ANNUALpenalty (i.e., the sum of the “monthly penalty amounts”) will be capped at an amount equal to the national average premium for qualified health plans that have a bronze level of coverage (for the applicable family size) available through the state exchanges.
Individual Mandate Penalties • Example: A single taxpayer does not have minimum essential coverage for 6 months in 2014. The individual’s household income for 2014 is $50,000. • Taxpayer’s “monthly penalty amount” is 1/12 of greaterof (i) $95 or (ii) 1% of the excess of $50,000 over his or her tax filing threshold. • If we assume tax filing threshold for 2014 is $10,000, taxpayer’s “monthly penalty amount” is 1/12 of greater of (i) $95 or (ii) $400 (i.e., 1% x [$50,000 - $10,000]). • 1/12 of $400 equals $33.34. 6 months x $33.34 = $200. So the taxpayer’s penalty for 2014 (subject to cap in previously slide) is $200.
Individual MandateEnforcement • Penalty will be paid like a federal income tax penalty and will be enforced by the IRS. • Refunds and credits may be used by the IRS to collect the penalty. • Individuals who fail to pay the penalty will not, however, be subject to criminal penalties, liens or levies.
Individual MandateEligibility for Premium Tax Credit Eligibility for Premium Tax Credit: • Individual taxpayers with household income of from 100% (138% if state opts to expand Medicaid) to 400% of the federal poverty level. • Married couples must file a joint return. • No credit is allowed to an individual claimed as a dependent by another. • An individual eligible for minimum essential coverage other than on the individual market--i.e., through (i) a government-sponsored program (e.g., Medicaid, Medicare, and TRICARE) or (ii) an employer-sponsored plan that is affordable and provides minimum value--is NOTeligible for the tax credit.
Individual MandateEligibility for Premium Tax Credit Eligibility for Premium Tax Credit: • Exception: Employees eligible for (but not covered by) employer-sponsored coverage that is not affordable or does not provide minimum value are eligible for the tax credit. • Not Affordable: Self-only coverage costs employee more than 9.5% of household income. • Not Minimum Value: Plan’s share of the “total allowed costs of benefits provided under the Plan” is less than 60% of such costs. (Basically, an actuarial value determination.)
Individual MandateAmount of Premium Tax Credit • Amount of the premium tax credit that a taxpayer can receive is based on the premium for the second lowest cost silver plan in the exchange area where the taxpayer is eligible to purchase coverage. • A silver plan is a plan that provides coverage for benefits actuarially equivalent to 70% of the full actuarial value of benefits. • The amount of the premium tax credit varies with a taxpayer’s household income, such that as a result of the premium tax credit, the net premium for the individual for coverage at the second lowest cost silver plan will not exceed a specified applicable percentage of household income.
Individual MandateAmount of Premium Tax Credit • The premium tax credit for an applicable coverage month in a taxable year is the lesser of: • The monthly premium for the month for one or more qualified health plans offered in the individual market that cover the individual taxpayer (and spouse and dependents, if applicable) and that he or she enrolled in through a state exchange, and • The excess ofthe monthly premium for the second lowest cost silver plan over 1/12 of (i) the applicable percentage (from the table on the following slide) multiplied by (ii) the taxpayer’s household income for the taxable year.
Individual MandatePremium Tax Credit • Premium tax credits generally will be advanced by the IRS to the insurance plan in which the taxpayer enrolls, with the taxpayer paying the remaining portion of the premium charged by the plan. • Reconciliation of the advance credit with the actual year-end calculated tax credit will occur on the taxpayer’s income tax return. • ACA requires the state exchanges to report to the IRS and provide to the taxpayer enrollee certain specific information in connection with the taxpayer’s premium tax credit.
Individual MandateCost-Sharing Subsidy • The cost-sharing subsidy reduces the maximum out-of-pocket limit of an eligible insured. • Reduction cannot result in increase in the health plan’s share of the cost of benefits beyond certain limits, however. • An eligible insured is an individual who enrolls in a silver plan through a state exchange and whose household income is from 100% to 400% of the federal poverty level. • The amount of the cost-sharing subsidy depends on the eligible insured’s household income:
Medicaid Expansion • Medicaid is part of the ACA spectrum of individual health insurance coverage and is considered a qualifying health plan for purposes of the employer and individual coverage requirements. • Before the ACA, Medicaid generally has covered working age (under 65) adults only when they (i) have children enrolled in CHIP and Medicaid, (ii) have a permanent disability, or (iii) have been unemployed for a specified period of time. • Medicaid expansion will significantly expand the coverage of working age adults. • The federal government matches state dollars to fund Medicaid. • Enhanced federal matching for the expansion population.
Medicaid Expansion • The U.S. Supreme Court decision on June 28, 2012 made state Medicaid expansion optional for the states. • The state exchanges, however, still will process and enroll an applicable individual in the appropriate program--exchange coverage, Medicaid or CHIP--regardless of the program for which the individual applies. • Medicaid will be integrated with the state exchanges. • In states that do not expand, more individuals (i) will be eligible for, and may choose to purchase coverage under, the state exchange, and (ii) will be eligible for a premium tax credit and cost-sharing subsidy through the exchange.
Medicaid Expansion Where states currently stand on state Medicaid expansion: • 14 states not participating (including Georgia, Alabama, South Carolina and North Carolina); • 3 states are leaning towards not participating; • 4 states are leaning towards participating; • 24 states plus Washington, D.C. participating (including Florida); and • 5 states are undecided (including Tennessee).
Health Insurance Exchanges State-based health insurance exchanges created under the ACA will be a key part of expanding health insurance coverage under the ACA. • The health insurance exchange will be a marketplace where individuals and small businesses and their employees can compare and purchase insurance coverage. • Eligible consumers will be able to access the exchanges through websites. • Eligible individuals also will be entitled to subsidies in the form of premium tax credits and reductions in cost sharing.