Donna Lively Director, Insurance Sales Patient Protection and Affordable Care Act (PPACA) Healthcare Reform Overview • • • • Passed March 23, 2010 Supreme Court substantially upheld PPACA Election further solidifies direction Tweaks are expected 3 Key Goals of the Law • Insurance reforms ◦ Eliminate pre-existing condition limitations ◦ Expand dependent coverage to age 26 ◦ Eliminate underwriting barriers ◦ Simplify benefit options ◦ Reduce consumer out-of-pocket exposure ◦ Expand preventive care Four Complex Mechanisms • Individual Mandate • Health insurance exchanges ◦ Government Assistance for Modest Income ◦ Premium Tax Credit • Shared Responsibility (for employers with >50 employees) ◦ “Pay or play” • Expanded Medicaid 2013 Consumer/Employer Impact 2013 Impacts: Consumer/Employer • Contributions to FSAs limited ◦ 2012: No limit ◦ 2013: $2,500 pre-tax (sheltered) per year • Employers required to provide notices of exchange and federal subsidy availability (delayed until late summer) • Summary of Benefits and Coverage (SBC) distribution rules • Expanded coverage for women’s preventive care (at no cost sharing) 2013 Impacts: Insurance and Self-Funded • Increased Taxes ◦ PCORI Fee ◦ Unearned income tax ◦ Medicare tax increase ◦ Increased unreimbursed medical tax 2014 Consumer/Employer Impact 2014 Impacts: Consumer/Employer • Plans must be modified to be considered “Qualified Health Plans” • Minimum Essential Health Benefits Minimum Essential Health Benefits Ambulatory patient services ER services Hospitalization Prescription Maternity and newborn Rehabilitative services Mental health and SA Preventive/wellness Laboratory services Pediatric services Chronic condition Habilitative services and devices 2014 Impacts: Consumer/Employer • Guaranteed issue and renewability for everyone — no one can be denied health insurance coverage • Restrictions on the amount premium — rates can vary due to health status, age, gender, etc. 2014 Impacts: Consumer/Employer • Health plan benefit changes ◦ Creation of standard metallic benefit plans ◦ End of limited benefit plans ◦ TROOP maximums — no deductible or coinsurance level can be greater than the HSA contribution limits for a given tax year (indexed for inflation) ◦ End of very high deductible plans 2014 Impacts: Individual Mandate • Everyone must purchase insurance who: ◦ Has an income above threshold level $9,350 — single $18,700 — married filing jointly • Those who are in the above category and choose not to be insured will pay a penalty (tax): ◦ 2014: $95 or 1.0% of income ◦ 2015: $325 or 2.0% of income ◦ 2016: $695 or 2.5% of income • Family penalty capped at 300% of individual rate Complexity: Individual Access Kaiser Family Foundation 2014 Impacts: Exchanges — Marketplace • Health insurance exchanges open in each state — provide individual and small business coverage • Designed as state run entities • Politics of the states ◦ Governors = stewards of federalism ◦ 30 Republican governors — majority not supporting state exchange ◦ Democratic governor challenged due to Medicaid expansion • Current state of exchange — 2/3 of all states and 2/3 of U.S. population will be covered under a federal exchange State Decisions for Creating Health Marketplaces Kaiser Family Foundation – January 4, 2013 2014 Impacts: Exchanges — Marketplace • Tax credits (premium credits) and cost-sharing reductions (deductible, co-pays and co-insurance credits) are available on the exchanges ◦ Tax credits are offered to Americans (<400% of poverty level) ◦ Tax credits are designed to help people afford the cost of coverage ◦ Cost-sharing reductions are designed to reduce the out-of-pocket exposure for lower-income individuals and families 2014 Impacts: Exchanges — Marketplace • Premium charged in exchange can be limited based on household income — full price expected to be 10–50% greater than today’s premiums • Clergy housing allowance is not included in income calculation • Small Employer Tax Credit only available if employee’s purchase coverage through SHOP exchanges Example of Premium Tax Credit FPL 2014 (estimated) Individual Family of four 100% $11,850 $24,450 400% $47,400 $97,800 PTC’s are not available to employees of plan sponsors adopting exchange plans as employers. Who Qualifies for PTC? Individuals purchasing a Qualified Health Plan on an exchange who are not: • Covered by Medicare or Medicaid • Covered by another government coverage • Offered an affordable employer plan that covers minimum value • Enrolled in an employer plan (even if not affordable) Complexity: Exchange — Marketplaces 2014 Impacts: Large Employer Shared responsibility for employers with >50 • Penalties for providing no coverage, inadequate coverage or unaffordable coverage • A “large employer” is one with 50 or more full-time equivalent employees (FTE). Who is an FTE? ◦ Employee who works 30 or more hours/week ◦ Full-time equivalent employees (total, aggregate monthly part-time hours/120) ◦ Seasonal/temporary employees are not counted • Penalties apply only if at least one full-time employee receives subsidies from an exchange 2014 Impacts: Large Employer Shared responsibility for employers with >50 • Coverage must be “adequate” and “affordable” • If your plan is either of these you pay an “excise tax” which is the lesser of: ◦ $3000 for each FTE who receives a subsidy due to the plan being unaffordable, or ◦ $2000 for each FTE not receiving a subsidy (not including the first 30 employees) ◦ Note: Part time employees are not included in penalty calculation but they are included to determine if you meet the 50 FTEE threshold. 2014 Impacts: Large Employer Shared responsibility for employers with >50 • Minimum value requirement: ◦ Employer plan must pay 60% of total costs of plan (actuarial determination) ◦ Employees whose employer plan does not cover minimum value can opt-out and seek PTC’s for exchange coverage • Penalty if large employer coverage does not include “minimum value coverage” ◦ Must pay excise tax for each FTE (after subtracting the first 30 FTEs) ◦ Excise tax = 1/12 of $2000 for each month in which at least on FTE receives subsidy from the exchange 2014 Impacts: Large Employer Shared responsibility for employers with >50 • “Affordable coverage” for employer plan ◦ Employee’s required contribution for participant only coverage can not exceed 9.5% of household income ◦ Safe Harbor (proposed): employer may use employees W-2 compensation ◦ Employer can charge more for dependent coverage — dependent coverage seems to be excluded from affordability parameters; however, still unclear 2014 Impacts: Small Employer Small employers do not have to offer insurance but only qualify for the small business tax credit if they offer coverage purchased through the exchanges 2014 Impacts: Insurer New Taxes • $8 billion in 2014 increasing to $14.3 billion in 2018 to pay for cost of health reform ◦ For every dollar in tax, $1.50 will be added to premium ◦ Will increase fully-insured cost by 2.2% in 2014 ◦ Tax assessed according to insurer’s market share ◦ Tax does not apply to self-insured plans 2014 Impacts: Insurer New Taxes • Tax on insurers and TPAs to cover cost of individual high risk coverage ◦ 2014: $12 billion ◦ 2015: $8 billion ◦ 2016: $5 billion ◦ Note: Will increase cost $10-$15 per employee per month 2015–2020 Impacts • 2015: Large employer (200+) automatic enrollment • 2017: Exchanges for large employers (100+) • 2018: 40% tax to employer offering “cadillac” plans. “cadillac” plan — cost of benefits plan is greater than $27,500 annually for family coverage and $10,200 annually for single coverage • 2020: Medicare Part D coverage gap for prescription drugs will be closed Women’s Expanded Preventive Health and the Contraception Discussion Contraceptive Coverage • For non-grandfathered plans only • Eight new women’s preventative benefits are mandated effective the first day of plan years beginning on or after August 1, 2012 • The services must be provided at no cost • Insurance company can decide how to cover contraceptives ◦ Can choose to offer coverage for in-network services only ◦ Can choose to only allow generic prescription drugs at no cost Women’s Preventive Regulations The effect on GuideStone and its employers Exempted: Accommodated: No Resolution: Churches and denominational organizations Religious non-profits Non-religious non-profits and for-profits Non-church Religious Employers For non-church religious employers (university, etc.) • Recently proposed rules expand and provide direction to non-steeple entities • Must self-certify: ◦ A classified non-profit ◦ Considered religious ◦ Holding concerns with some or all of the mandated contraceptives Accommodated Organizations • Can offer some but not all contraceptive options • Offer plans in alignment with Biblical convictions • Process: • Organization self-certifies to third party administrator or insurance company • Third party administrator or insurance company notifies employees of available no cost contraceptive coverage through separate arrangement Reporting and Regulations New Reporting Requirements • W-2 reporting of employer-sponsored medical coverage • Employer reporting ◦ Exchange ◦ Large group • Medical loss ratio reporting Looking Forward Potential Changes • Repeal of limits on OTC drugs being covered by • • • • HSA/FSA monies Delay in effective date of exchanges Delay in effective date of federal assistance Reduction in federal control over certain state mandates Incentives for states to expand Medicaid General Market Predictions • HC Reform will spawn more HDHP Plans • Plan offerings will be different in each state • Large employers will seek administration efficiencies through private exchanges 39 Employer Checklist for 2013 Notification of $2500 FSA limit (for off cycle plans) Notification of Exchanges (further guidance coming in summer 2013) Plan for increased rates on top of trend 0.2-1% for benefit mandates 0-3% for cost shifting from providers 2-4% related to new fees and taxes Employer Checklist for 2013 Determine if you have 50+ FTEs Begin high level analysis to determine for which employees you will be required to provide coverage Review contribution strategy Defined benefit Defined contribution Encourage healthy lifestyles through the implementation of a wellness program Stay informed www.GuideStone.org/HealthReform Questions and Answers The preceding information is general in nature and is intended to keep you apprised of certain important developments. This information may be subject to interpretation or clarification over time, so we cannot guarantee its accuracy or how it might be determined to apply in certain situations. However, we hope it will provide you a useful frame of reference as you endeavor to carry out your responsibilities and serve your employees.