Health Care Reform - Carolinas Payroll Conference

Report
November 7, 2014
Health Care Reform
2
Background of US Health Care Delivery
• U.S. Health System – employment based since World
War II
• Entire voluntary
• Competitiveness/Recruitment and Retention
• Largely funded by employers and employees
• Medicare/Medicaid
• Group Health Plan
3
Health Care Reform – Why it Matters
• Health Care Reform - ACA, PPACA, Obamacare
 ACA is an acronym for the "Affordable Care Act", a set of laws passed in 2010. ACA
is the shortened name for the PPACA, the Patient Protection and Affordable Care
Act.
 The ACA is a very extensive set of laws which sets out to reform the U.S.
healthcare system. The goal of the ACA is to expand coverage to all Americans and
to help control healthcare costs overall.
• Uncertainties now largely gone
 Survived the 2012 Presidential election.
 Survived court challenges. The US Supreme Court ruled that the law’s individual
mandate is a constitutional exercise of Congress’s power to impose tax; however
new court challenges continue to arise.
4
Affordability and the ACA
• Has insurance under the law been affordable?
• Though many people have found policies with affordable
premiums, high deductibles and other out-of-pocket costs
have discouraged some people from using their
insurance. Of the 7.3 million people who signed up for
private insurance through online exchanges during the
first enrollment period, 85 percent qualified for federal
subsidies that decreased the cost of their premiums.
5
Coverage Requirements & Expansion
• Individual Mandate: mandates that all Americans, with some very
limited exceptions, maintain a minimum level of health insurance or
face a tax
• Insurance Exchanges: creates state-based health insurance
exchanges and provides premium tax credits to assist eligible
individuals with the purchase of coverage
• Medicaid Expansion: allows states to expand Medicaid up to 133%
of federal poverty level – not expanded in NC
• Employer Mandate: requires all employers, with 50 or more full-time
equivalents, to offer health benefits that meet a defined standard, and
pay a set portion of the cost of those benefits on behalf of their
employees (Effective January 1, 2015)
6
Market Place Exchanges
• ACA creates state-based exchanges though which
individuals and small employers can purchase coverage.
• Presumption under ACA that each State will run the
exchange in its State - not so in North Carolina and South
Carolina
• States can choose NOT to run the exchange
• Federal Government has also proposed a “Federal
Partnership” model where the federal government runs
the exchange, but with State involvement in certain areas.
7
State Insurance Market Place
8
Congress and the ACA
• How many times has the House of Representatives
voted to repeal, revamp or tweak the ACA?
• While Democrats are struggling with whether to embrace
the law or push for changes, Republicans are reminding
voters that since they took control of the House in 2011,
they've voted 54 times to undo, revamp or tweak the law.
To date – no legislation to change the Affordable Care Act
has been approved by either the House of senate
9
Example of Individual Penalties
$40,000 Income
$200,000 Income
2014
2016
2014
2016
Dad
$95.00
$695.00
$95.00
$695.00
Mom
$95.00
$695.00
$95.00
$695.00
Child age 14
$47.50
$347.50
$47.50
$347.50
Child age 16
$47.50
$347.50
$47.50
$347.50
Child age 19
$95.00
$695.00
$95.00
$695.00
Total
$380.00
$2,780.00
$380.00
$2,780.00
Individual Cap
$285.00
$2,085.00
$285.00
$2,085.00
Income Cap
$103.50
$207.50
$1,683.00
$4,207.50
Penalty
$285.00
$2,085.00
$1,683.00
$4,207.00
10
Employer Mandate
• Coverage Requirements
 Meet actuarial threshold of 60% of health care
expenses paid by the employer plan
 Must cover 95% of eligible employees
 Full-time employees who work 30 or more hours per
week for 3
• Affordability Requirements
 Premiums for individual coverage can’t exceed 9.5%
of household income
11
Control Group Rules
• Employer – all entities in the controlled group
• Aggregate employees of controlled group entities to count
employees (50+)
• Governmental entities should use reasonable good faith
method
• Penalties assessed by unit with controlled group
12
Transition Relief for Employers
• Employers with 100 or more employees - 2015
 Cover 70% of workforce in 2015 and 95% in 2016
• Employers with 50-99 employees - 2016
• Must meet three conditions:
• Limited workforce size
• Maintenance of workforce and aggregate hours of
service
• Maintenance of previously offered health coverage
13
Employer Mandate – Pay or Play”
• Penalty assessment of up to $2,000 annually per full-time employee
for employers that do not provide coverage if at least one full-time
employee receives a premium tax credit or cost sharing reduction.
• Penalty assessment of up to $3,000 for employers that provide
coverage but employee opts out of the plan and receives a
premium tax credit or cost share reduction because employer
coverage for EMPLOYEE only coverage is unaffordable.
• Exchange subsidies are premium tax credits or cost share reductions
that are available to employees whose coverage is unaffordable.
14
Sample ACA “Metallic” Design Levels
Provision
Platinum
Gold
Silver
Bronze
Individual Deductible
$200
$600
$2,000
$4,500
Coinsurance after
Deductible
80%
80%
80%
80%
Out-of-pocket Limit
$1,500
$5,000
$5,000
$6,400
PCP Office Visit
$10
$25
80%
80%
Specialist
$10
$50
80%
80%
Generic Rx
$10
$15
80%
80%
Formulary Brand
$20
$30
80%
80%
Non-form. Brand
$20
$50
80%
80%
90.0%
80.0%
70.0%
60.0%
Actuarial Value
30 is the New 40: The New Full-time
Employee
16
Identifying Full-time Employees
• Full-time Employee – is a common law employee who is
employed on average:
• at least 30 hours of service per week; or
• 130 hours of service in a month
• Variable Hour Employee – an employee, who at the start of
employment, the employer cannot in good faith determine
whether the individual is expected to work on average 30 hours
of service per week
• Seasonal Employee – an employee hired into a position for
which the customary annual employment is six months or less.
Employment should begin each year in approximately the same
part of the year, such as summer or winter
• Student Workers – does NOT include any hour of service
performed by a student as part of the Federal (or equivalent
State) Work-Study Program
17
Health Care Reform 101
18
Hours of Service
• Hour of service - each hour for which an employee is
paid or entitled to payment for the performance of
duties for the employer; and each hour for which an
employee is paid, or entitled to be payment, for the
period of time where no duties are performed due to
vacation, holidays, illness, layoff, jury duty, incapacity
(disability), military duty or leave of absence.
• If an employee is paid on an hourly basis, then the
employer must use actual hours from records of hours
worked to determine the employee’s status.
19
Exclusion – Hours of Service Rules
• Bona-fide volunteers
• Student Employees – can exclude hours for student
workers for any hour of service performed by a
student as part of the Federal Work Study Program (or
equivalent State Program)
• Members of religious orders – vow of poverty
• Service outside the United States
20
Non-Hourly Employees
• The proposed regulations require an employer to count actual
hours of service for employees paid on an hourly basis. For
employees not paid hourly, an employer may use one of the
following three methods to determine hours:
i.
Actual hours of work
ii.
A days worked equivalency, with eight hours of service credited for
each day worked
iii. A weeks-worked equivalency, with 40 hours or service credited for
each week worked.
• An employer can use different methods for different classification
of non-hourly employees, as long as the classifications are
reasonable and consistently applied.
To Measure or Not to Measure that is
the Question
22
Determining Full-time Employees
• Two measurements methods
• Look-back measurement method
o Largely unchanged from prior guidance
o Similar break in service/unpaid leave treatment
 Break in service reduced to 13 weeks for noneducation organizations
 26 weeks for education organizations
• Monthly measurement method
• Approach used can vary by:
• Certain employee categories
• Employer member
23
Measuring and Covering Employees
• Measurement Period – (a.k.a – look back period) - time frame
used to identify full-time employees on a month-by-month basis
• Coverage Period (a.k.a. – Stability Period) - period during which
health coverage may have to be provided, depending on full-time
status during a measurement period.
• Administrative Period – period that allows time for enrollment
and disenrollment of employees between the “measurement” and
“coverage” periods.
• Enrollment Period – period of time that allows time for the
employee to enroll.
24
UNC Measuring and Coverage Periods
• Measurement Period - 12 month period
• Coverage Period - 12 month period
• Administrative Period - 90 days
• Enrollment Period - 30 days
Measurement Period – How it Works
12 month measurement and stability period for 2015 plan year
Administrative Period
October 3, 2014 to
December 31, 2014
Standard Measurement Period
Coverage (Stability) Period
October 3, 2013 to
October 2, 2014
January 1, 2015 to
December 31, 2015
Measurement Period – How it Works
October 2014 Action
• Initial Measurement Period,” you will measure
employees hired prior to October 1, 2013
• Measurement Period: Measure hours worked from
October 3, 2013 through October 2, 2014 (12 month
measurement period)
• Coverage Period (Stability Period): January 1, 2015 –
December 31, 2015
• Enrollment Period: November 1 - November 30, 2014
Measurement Period – How it Works
November 2014 Action
• Measurement Period - you will roll forward your hire
dates and now measure employees hired from October 1
through October 31, 2013 (these are your newly eligible
employees)
• Measure hours worked from November 1, 2013 through
October 31, 2014 (12 month measurement period)
• Coverage Period (Stability Period): January 1, 2015 –
December 31, 2015
• Enrollment Period: November 1 - November 30, 2014
Measurement Period – How it Works
December 2014 Action
• Measurement Period – Continue to roll forward your hire
dates and now measure employees hired from November
1 through November 30, 2013 (these are your newly
eligible employees)
• Measure hours worked from December 1, 2013 through
November 30, 2014 (12 month measurement period)
• Coverage Period (Stability Period): January 1, 2015 –
December 31, 2015
• Enrollment Period: December 1 – December 30, 2014
29
Breaks in Service
• If an employee has a break for 13 or more weeks (26
for educational institutions), can use “rehired date” for
measuring the employee as “new.”
• Employers can also use the “rule of parity” that says
an employee may be treated as a new employee if the
period of non-employment is shorter than 13 weeks
(26 for educational institutions) but is at least four
weeks long ---and is longer than the employee’s
period of employment immediately preceding the
period of non-employment.
30
Breaks in Service
Break in Service Example - Rule of Parity
If an employee works six weeks, terminates employment, and
is rehired ten weeks later, that rehired employee is treated as a
new employee because the ten-week period of nonemployment is longer than the immediately preceding six-week
period of employment.
31
Notice and Disclosure Requirements
Provision
Summary of Requirement
Implications
Action Steps
Form W-2 Reporting
•
Employers are required to report the value of
employer-provided health care coverage
starting with the 2012 plan year.
•
Each employer will need to calculate
this amount.
•
Verify that each employer has a system in
place to report information in the W-2s.
Exchange Notice
•
Notice to employees explaining the
Exchanges. Was required for current
employees by October 1, 2013, and all new
hires after that date.
•
This requirement amended the
FLSA, and, as such, it most likely is
the responsibility at the University
level; GA could draft and distribute or
distribute at the campus level.
•
This notice must continue to be provided to
new employees within 14 days of start date.
The DOL recently published an updated notice
for use through 2017.
Reporting of medical coverage to the IRS
and participants and beneficiaries is required
for coverage starting in 2015. The reporting
for 2015 is required in early 2016. Proposed
regulations have been issued.
•
Employers and insurers (for insured
plans) have significant new reporting
obligations.
•
IRS/Participant Reporting
•
•
Verify with your insurer what role they may
plan in complying with this reporting
requirement and monitor future guidance.
32
Reporting Requirement
• Calendar year reporting for 2014 W-2s – must include the “cost of
coverage” on the W-2—this includes reporting for nonpermanent employees.
• New Reporting Requirement s- large employer reporting – IRC
Section 6055 and 6056 reporting.
• Mandatory reporting for 2015 calendar year reported in 2016.
• Will report on new Form 1095-C to employees by January 31
and on new Form 1094-C to IRS by February 28
• Will need to report SSNs for dependents covered under
any of the State Health Plan programs.
33
Taxes and Fees
New Medicare Tax
 Imposes an additional “employee” Medicare Tax. There is no
“employer match” on this additional Medicare Tax.
 Adds a 0.9% additional Medicare Tax on wages over the
following thresholds:
 $250,000 for joint return
 $125,000 married filing separately
 $200,00 in all other cases (i.e. head of household)
 Requires employers to withhold the additional tax on wages or
compensation it pays to employees in excess of $200,000 in a
calendar year.
 Employer only required to start withholding the additional
Medicare Tax once an employees wages or compensation
exceed $200,000
34
Taxes and Fees
Patient Centered Outcomes Research Inst. (PCORI) Fees

Establishes a private non-profit whose mission is to “research” the
outcomes and clinical effectiveness, risk and benefits of medical
treatments to help with informed health decisions. In the first year
(2012) the fee is $1 times the number of plan participants
(employees and dependents). For the plan year starting July 1, 2013
the fee will increase to $2 and will be indexed in future years. This
fee is charged directly to insured and self-insured health plans.
Temporary Reinsurance Program

This three-year transitional reinsurance program was established to
help stabilize premiums in the individual health insurance market
from 2014 to 2016. This program is funded by contributions from
insurers in the individual, small group and large group markets, and
self-insured group health plans. Fee expected to be $63 per
participant (employee and dependents).
Health Insurance Industry Tax
 In 2014 the tax will add an estimated 2.0-3.0% in cost to insured plans.
35
Health Care Reform – Things to Consider
•
Move more employees to regular, fulltime status
(cost of healthcare + other benefits)
•
Limit number of ‘temporary’ employees including
contingent faculty
•
Strictly limit ‘hours worked’
•
Create separate health care plan for these types
of employees?
•
Turnover / Unemployment costs if layoff or
reduce hours
36
Health Care Reform – Things to Consider
•
Auto enrollment into health care plans has been
delayed
•
Anti-retaliation provisions of the Fair Labor
Standard Act
37
Possible Consequences
•
•
•
•
Competitive market for talent
Loss of efficiency and effectiveness
Long standing practice of offering benefits
Possible claims of discrimination in health
benefits
38
What Now
•
•
•
Communicate with employees about what the
ACA provides
Determine which employees should be offered
coverage because they are “full-time”
Offer coverage as required by the ACA
39
Questions

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