ACA|Readiness A Guide for California Employers Broker Name Agency Contact Information ACA|Readiness The Patient Protection and Affordable Care Act (ACA) was signed into law on March 23, 2010, with the aim to improve the quality of health care in America and increase access to care for individuals and businesses. ACA|Readiness – Budget Considerations New 2014 Small Group Insurance Rating Structure Beginning in 2014, the ACA only allows for rate variance by four factors: age, family composition, geographic location, and tobacco use (California AB 1083 prohibits tobacco use as a rating factor). • California’s current 9 Geographic Rating Regions expanded to 19 • Member Level Rating • Each individual will be rated (cap of 3 on children under 21) • 3:1 ratio will limit rates charged to 64 year-old to 3x those charged to 21 year-olds • Risk Adjustment Factors (RAF) are no longer used • Single-year age bands: no rate increases on birthday months, only policy anniversaries ACA|Readiness – Budget Considerations Small Employer Health Care Tax Credit Beginning in 2010, ACA provides tax credits to eligible small businesses with no more than 25 employees and average annual wages of less than $50,000, offsetting the employer cost of providing health insurance to employees. • 2010 to 2013: A tax credit up to 35% of employer costs. • 2014 to 2016: A tax credit up to 50% of employer costs for those businesses that qualify and purchase coverage from the Covered California Small Business Health Options Program (SHOP). ACA|Readiness – Budget Considerations Early Renewal Options With uncertainty in how 2014 Member Level Rating will affect group premium, carriers have begun offering the ability to “Early Renew”an existing policy, so application of the new structure will not take effect until December 2014. Carrier Basic Guidelines Deadline Aetna Submit a request for early renewal. 10/15/2013 Anthem Blue Cross Submit an Early Renewal Request Form. 11/15/2013 Blue Shield Submit Early Renewal Option Form. 10/14/2013 CaliforniaChoice Fax Early Renewal Form. 10/14/2013 Health Net Prequalified groups, submit response. 12/31/2013 SeeChange Prequalified groups, submit Early Renewal Election Form. 11/1/2013 (for pre-approved groups) UnitedHealthcare Submit Notice of Termination and Employer Certification of Plan Year Change. 11/30/2013 Sharp Submit Intent to Renew Early Request Form 10/15/2013 Note: Only programs still open for submission at the time this document was created have been included. ACA|Readiness – Budget Considerations Taxes & Fees The following fees, mandated by the ACA, will be assessed on health insurance carriers. These are being integrated into the rates charged for coverage in 2014. • PCORI – Patient Centered Outcomes Research Institute Goal: Explore the effectiveness of medical treatment • Reinsurance Tax Goal: To help reinsure the individual market insurers who cover people with expensive claims • Health Insurer Tax Goal: To help fund premium tax credits and cost-sharing subsidies for lower income individuals and families ACA|Readiness – Plan Administration 60-day Waiting Period Maximum California AB 1083 sets a strict 60-day waiting period from the date of hire to when coverage must be provided to an employee. Insurance carriers are accommodating this requirement differently. Common Waiting Periods: • 1st of the month following the date of hire • 1st of the month following 30 days after the date of hire • The 60th day following the date of hire (not all carriers will accommodate this!) ACA|Readiness – Plan Administration Spouse-Only (2-person) groups Groups of two married individuals may be excluded from Small Group insurance beginning in 2014. • Beware: Carriers may begin to automatically transition these 2person groups into individual coverage, and many carriers will only be offering limited networks on IFP products. ACA|Readiness – Plan Administration Flexible Spending Account (FSA) Limits In 2014, FSA contributions will be limited to $2,500. • FSA documents must reflect this change. • If a group is Early Renewed, the FSA must reflect the plan-year change. ACA|Readiness – Plan Administration Participation Requirements Carriers are finalizing Underwriting requirements, including participation guidelines. • IFP policies purchased through Covered California (or elsewhere) will continue to be counted against participation; they are not eligible waivers. • Annual Open Enrollment (11/15 to 12/15 each year) will allow an employer that cannot qualify due to participation or contribution to enroll without meeting these requirements. • Whether the Open Enrollment begins with 2013 or 2014 is still being debated. ACA|Readiness – Plan Administration Full-Time Employee Definition Small Group: Full-Time Employees are defined by California AB 1083 as those who work an average of 30 hours per week. • This will be applied to all new policies purchased 1/1/14 and beyond. • This will be applied to all current policies renewed in 2014. Large Group: ACA defines Full-Time status Federally as employees who work an average of 30 hours per week (130 hours per month) ACA|Readiness – Plan Administration Group Size Determination - The Large Employer Mandate (it’s still coming!) Though delayed, the Large Employer Mandate will require employers to determine group size to ensure coverage is offered as mandated, and in 2014 to prepare for compliance with the mandate effective in 2015. • Large Employer = 50+ Full-Time Equivalent Employees (FTE) • In 2015 Large Employers must offer “affordable” coverage or face penalties. • The Standard Measurement Period will begin in 2014; employers should begin tracking employee hours and group size now. • The Standard Measurement Period used will determine the Stability Period and review cycle needed to maintain compliance. • Small Employers = no penalty and no mandate ACA|Readiness – Plan Administration Controlled Group / Common Ownership & Group Size Two or more companies that have a common owner are combined for the purpose of calculating group size. The combined FTE calculation will render mandated responsibility or not on each individual organization regardless of the individual organization’s group size. • Beginning 1/1/15, employers not offering “affordable” coverage with minimum value will be assessed a $2,000 annual fine multiplied by the number of full-time employees (minus the first 30), if at least one employee receives subsidized coverage on a State (or a Federally Facilitated) Exchange. ACA|Readiness – Plan Administration Common Law Employee Under common law rules, anyone who performs services for you is your employee if you control what will be done and how it will be done. • Changing an employee’s status to 1099 from W-2 will not change the IRS’consideration of the employee’s status when this principle is applied. ACA|Readiness – Plan Administration Employee Notices & Documents All employers subject to the Fair Labor Standards Act (FLSA) should provide notice to current employees and new hires regarding the Health Insurance Marketplace (Covered California) and its offer of subsidized coverage. • Though there is no penalty for non-compliance, delivery of these notices by 10/1/13 and then within 14 days of hire is law. • Some small employers may not be subject to FLSA if they are not involved in interstate commerce, but these businesses are a minority. ACA|Readiness – Plan Administration Summary of Benefits & Coverage (SBC) ACA requires individual and group health plans to provide a uniform Summary of Benefits & Coverage (SBC) to all applicants and enrollees. • The SBC is not the same as the carrier’s Summary of Benefits. • The SBC must be provided in threshold languages in areas where a minority group has attained a sufficient percentage of the populace. • Carriers offer SBCs in all required languages on their websites. ACA|Readiness – Plan Administration 60-Day Notice of Modification ACA requires an employer offering group health coverage to provide a notice of plan modification to enrollees at least 60 days prior to the effective date of any modification • This requirement does not pertain to carrier-issued renewal modifications. ACA|Readiness – Plan Design Changes Metal Level Plans (Bronze, Silver, Gold & Platinum) Beginning in 2014, all individual and small group health plans must designate their actuarial value (percent of cost paid by the plan for covered benefits innetwork) by Metal Tier. Bronze Plan pays 60% of the costs for covered benefits in-network Silver Plan pays 70% of the costs for covered benefits in-network Gold Plan pays 80% of the costs for covered benefits in-network Platinum Plan pays 90% of the costs for covered benefits in-network ACA|Readiness – Plan Design Changes Essential Health Benefits (EHB) Individual and small group insurers must offer plans in 2014 and beyond that deliver minimum EHB. There are 10 categories: • Ambulatory Services • Emergency Services • Hospitalization • Maternity & Newborn Care • Mental Health & Substance Abuse Services • Prescription Drugs • Rehabilitative and Habilitative Services and Devices • Laboratory Services • Preventative and Wellness Services • Pediatric Dental & Vision ACA|Readiness – Plan Design Changes Deductible Maximums Deductible maximums were also introduced as a part of ACA; plans will now be limited to $2,000 single and $4,000 family deductibles (with exceptions). • Higher deductible health plans will no longer be available. • Deductible maximums do not apply to middle-market and largegroup carrier products. ACA|Readiness – General Compliance Non-discrimination The ACA prohibits fully-insured employer groups from offering discriminatory coverage to their employees, officers, and shareholders. • Highly-compensated employees cannot be offered coverage options that are not offered to all employees. • This mandate does not apply to self-funded employer groups. • Although this mandate went into effect on 9/23/2010, federal regulators have suspended enforcement until final guidelines are provided.