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Health Care Reform Town Hall Update What Does It Mean For You As An Employer? Thursday, May 20 2:00 – 3:00 p.m. ET PowerPoint Presentation
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Health Care Reform Town Hall Update What Does It Mean For You As An Employer? Thursday, May 20 2:00 – 3:00 p.m. ET - PowerPoint PPT Presentation


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Health Care Reform Town Hall Update What Does It Mean For You As An Employer? Thursday, May 20 2:00 – 3:00 p.m. ET. Speakers. Barbara Gay, Director of Advocacy Information, AAHSA Dave Sanders, National Tax & Erisa Practice, Aon Consulting

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Health Care Reform Town Hall Update

What Does It Mean For You As An Employer?

Thursday, May 202:00 – 3:00 p.m. ET

speakers
Speakers

Barbara Gay, Director of Advocacy Information, AAHSA

Dave Sanders, National Tax & Erisa Practice, Aon Consulting

Thora Johnson, Partner, Employee Benefits and Executive Compensation, Venable, LLP

structure of today s program
Structure of Today’s Program

Introduction: Barbara Gay

Key Employer Provisions Overview: Dave Sanders

Timeline Implementation: Thora Johnson

Questions and Closing: Barbara Gay

implementation of health reform
Implementation of Health Reform

Implementation Challenges

  • Complex and challenging law to implement
  • 2,400 pages plus 153 page reconciliation bill
  • HHS (Health and Human Services) on point for implementation
  • Date of enactment was 3/23/10, with 6 month effective date for some provisions (9/23/2010)
  • Plans in existence on 3/23/10 are exempt from many rules, if remain unchanged ("grandfathered" plan)
key employer issues market reforms
Key Employer Issues – Market Reforms

Annual and Lifetime Maximums

Dependent Coverage

  • No lifetime maximums permitted for overall benefits (annual/ lifetime limits on specific benefits permitted)
    • Effective 6 months after enactment (1/1/11 for CY plans)
  • Complete elimination of annual limits beginning January 1, 2014
  • Restrictions on annual limits prior to 2014 TBD by regulation
    • Effective 6 months after enactment (1/1/11 for CY plans)
  • Coverage of adult children up to age 26, regardless of marital or student status
    • If not eligible for other group plan (this condition expires 12/31/13)
    • Applies even if the child is not a tax dependent
  • Effective 6 months after enactment (1/1/11 for CY plans)
key employer issues market reforms6
Key Employer Issues – Market Reforms

Pre-existing Conditions Exclusions

  • Waiting periods greater than 90 days are not permitted
  • Effective 1/1/2014
  • Must provide first dollar coverage for evidence based preventative care
  • Effective 6 months after enactment (1/1/11 for CY plans)
  • Grandfathered plans exempt

Waiting Periods

  • Not permitted for children under age 19
    • Effective 6 months after enactment (1/1/11 for CY plans)
  • Not permitted for all plan enrollees
    • Effective 1/1/2014

Preventive Benefits

key employer issues impactful provisions
Key Employer Issues – Impactful Provisions

Free Rider Provision

  • Applies to employees working 30+ hours per week
  • Employers would convert health coverage subsidy to cash for any employees who would pay between 8% and 9.8% of their household income for health coverage and opts out of employer sponsored coverage for coverage in an Exchange based plan
  • Effective 1/1/2014

Employee Voucher

  • Applies to employees working 30+ hours/week
  • Employer pays $3,000 for each EE with coverage <60% of allowed costs or if EE pays >9.5% of their household income for health coverage
  • Employers not offering health coverage pay $2,000 per EE
  • First 30 employees not included in calculation of assessment
  • Effective 1/1/2014
key employer issues
Key Employer Issues

Auto Enrollment

Health Accounts

  • OTC drugs no longer reimbursable under FSA, HRA or HSA, unless prescribed by physician
    • Effective 1/1/2011
  • Penalty on withdrawal of HSA funds for non-medical expenses increased to 20%
    • Effective 1/1/2011
  • Annual contributions to health FSAs limited to $2,500 annually
    • Effective 1/1/2013
    • Indexed to CPI as of 1/1/2014
  • Applies to new hires
  • Employees can opt-out
  • Employer can choose plan for auto enrollment
  • Effective 1/1/11 or issuance of regulations by DOL, if later
  • Employers must notify employees at time of hire of the availability of Exchanges and their potential eligibility for a subsidy
    • Effective 3/1/2013
  • No requirement to offer same coverage as Exchange plans

Employee Notification

8

key employer issues9
Key Employer Issues

W-2 Reporting

Uniform Explanation of Coverage

  • Annual distribution of summary of benefits and coverage
    • Not to exceed 4 pages
  • Uniform Explanation is in addition to the SPD required by ERISA
  • Effective 3/23/2012
  • Employers with <25 employees earning < $50,000 each are eligible for tax credit
  • Applies to employer contributions toward cost of health insurance
  • Available for 2010-13 tax years
  • Employers required to report the “value” of health benefits provided to each employee
    • Value defined as COBRA cost
  • Effective 1/1/2011
  • Same HHS transparency requirements as Exchange based plans
  • Claims payment policies and data
  • Information on cost sharing and payment for OON
  • Information on rating policies
  • Effective 1/1/2014

Transparency Requirements

Small Employer Tax Credit

key employer issues10
Key Employer Issues

Appeals Process

Wellness Incentives

  • Employer plans must have HHS approved external review process
  • Effective 1/1/2011
  • Grandfathered plans exempt
  • Out of pocket expense cannot exceed HSA related coverage
  • Deductibles cannot exceed $2,000 single & $4,000 family as indexed
  • Effective 1/1/2014
  • Grandfathered plans exempt
  • Employers permitted to increase employee reward for participation in wellness programs to 30% of total plan cost
    • HHS may increase to 50%
  • Effective 1/1/2014
  • Grandfathered plans exempt
  • Insured plans are subject to same nondiscrimination rules as self-funded plans
  • Effective 1/1/2011
  • Grandfathered plans exempt

Cost Sharing Limitations

Nondiscrimination

key employer issues11
Key Employer Issues

CLASS Act

  • Voluntary federal LTC insurance program
  • EEs can purchase via payroll deductions
  • All auto enrolled EEs can opt-out
  • Lifetime benefit payments
  • 5-year vesting period
  • Program details (exact benefits and premium prices) to be set by the Secretary of HHS
  • Rules are due “no later than Oct, 1, 2012”*
  • *Most provisions of the CLASS Act are “effective” January 1, 2011. But before people can begin signing up to participate, the secretary of Health and Human Services must develop the details of the plan and implement it. The law requires the Secretary to release the details of the plan no later than Oct. 1, 2012. So it is likely that people will be able to sign up sometime after that--in 2012 or 2013.
other key provisions13
Other Key Provisions

New Taxes on High Income Individuals

  • Adjusted gross income >$200k for individuals and >$250k for couples
  • Additional Medicare payroll tax on wages of 0.9% (employee-share only)
  • New surtax on investment income of 3.8%
  • New taxes on higher income individuals replaces lost revenue from delayed enactment of high cost plan excise tax (estimated $210 billion)
  • Effective 1/1/2013
impact on post retirement health plans
Impact on Post-Retirement Health Plans
  • Taxation of Medicare Part D retiree drug subsidy
  • Temporary reinsurance program for pre-Medicare retirees (at least age 55)
    • Re-insurance for claims covering 80% of costs between $15,000-$90,000 for pre-65 retirees
    • Only funded up to $5 billion
  • Cutbacks to Medicare FFS providers and Medicare Advantage plan funding
  • Closure of Medicare Part D “donut hole”
questions
Questions?

Questions will be addressed by emailing:

townhall@aahsa.org.

If we cannot get to your question we will respond via email or by providing information on the AAHSA Health Reform Hub located on aahsa.org:

http://www.aahsa.org/healthreformhub.aspx.

resources
Resources

AAHSA Health Reform Information Hubwww.aahsa.org/healthreformhub.aspx

AON Consulting Microsite

www.aon.com/healthcarereform

Venable, LLP

www.venable.com

speaker contact information
Speaker Contact Information

Barbara Gay, Advocacy, AAHSA

(202) 508-9489

bgay@aahsa.org

Dave Sanders, National Tax & Erisa Practice, AON Consulting

(410) 547-5989

dave.sanders@aon.com

Thora Johnson, Employee Benefits and Executive Compensation, Venable, LLP

(410) 244-7747

tajohnson@venable.com