The Affordable Care Act is Here! Are You Ready? expertise. Presented by: Lisa Wilcox, SPHR, CEBS, CCP, THRP Principal, REDW LLC Corrine Wilson, CPA Principal, REDW LLC The information provided herein is for informational purposes only and should not be construed as financial, investment, tax, accounting or legal advice. The information provided herein is for informational purposes only and should not be construed as financial, investment, tax, accounting or legal advice. disclaimer. • The materials contained within are current as of the date of this presentation; however, new developments and regulations continue to be issued which may later supersede the information presented. • REDW is unaffiliated with any political party. The purpose of this presentation is solely to provide factual, useful information. No part of this presentation is intended to express any political views. major areas of PPACA. • Insurance Reform Measures • Cost Sharing Payments and Penalties • “Pay-or-Play” Provisions Qualifying Coverage Mandates Employer and Individual Mandates Revenue Generating Rules / Regulations Reporting Requirements • Reporting ACA timeline. 2014 • Individual mandate – individuals required to have health coverage • Health insurance premium credit and cost sharing subsidies available on new public exchanges (for individuals below specified income levels) • Health Insurance Exchanges up and running 2015 • Large employer mandate – those who fail to offer affordable, minimum value coverage are subject to penalty (large employers with more than 50 FTEs, but those with fewer than 100 have until 2016) • Auto enrollment for eligible employees (employers with more than 200 FTEs that offer health coverage) • Large employer reporting (expected to be an annual report due by January 31 each year) individual mandate. • Most individuals are required to have qualifying health coverage. If you don’t, you may be subject to a penalty. • No penalty if: – AI/ANs who are eligible for services from IHS (must complete form to apply for exemption) – Individuals/families who do not have access to coverage that costs less than 8% of household income (must complete form to apply for exemption) – Individuals who are uninsured for less than 3 months during the year – Individuals who do not have to file an income tax return because of income level – Certain other exemptions (religious orders, incarcerated, etc.) individual mandate. • Individual mandate begins in 2014. • Annual penalty is imposed on certain uninsured individuals (calculated on a monthly basis). Tribal members may be exempt from the penalty. • Penalty is the greater of a fixed amount or percentage of household income. Greater of... 2014 2015 2016... Fixed amount $95/adult $47.50/child $285 family cap $325/adult $162.50/child $975 family cap $695/adult $347.50/child $2,085 family cap 1% 2% 2.5% --- OR --% of household income options available to individuals. • Individuals have four options: – Take insurance offered by employer – Participate in a government program (Medicaid, Tricare, CHIP, Veterans Health, etc.) – Purchase insurance on the Exchange (also known as Health Insurance Marketplace) – Choose not to have health insurance coverage (and be subject to penalty, if not exempt) health insurance exchange. • Health Insurance Exchange (a.k.a. Health Insurance Marketplace) opened for business October 1, 2013. – Who can use the Exchange? • Qualified individuals: – must be a US citizen – in the country as a legal immigrant – cannot be incarcerated. • Small Business Health Options Program (SHOP) exchanges are available for small businesses with up to 50 full-time employees. Beginning in 2016, businesses with up to 100 employees will be allowed to use the SHOP Exchange. Note: Some states allowing access to employers with 100 FTEs now. who must receive notice and when? • All employees must receive the Exchange notice – Including those not eligible to participate in your plan – Including those eligible but not participating in your health plan – Including part time employees • Separate notices are not required to be sent to spouses or dependents • All employees should have received notice by October 1, 2013 • New employees hired after October 1, 2013 should receive notice within 14 days of date of hire exchange notice. • Informs employees of existence of marketplace, provides description of its services, and who they can contact for assistance. • Informs employees that they may be able to receive a premium tax credit if they purchase a qualified plan in the marketplace. • If an employee purchases a qualified plan in the marketplace, they may lose their employer contribution (if any) to a health benefit plan offered by employer. applicable ACA provisions. Number of FTEs ACA Provisions 1 to 24 Small Business Health Care Tax Credit Small •Business Health Options Program (SHOP) 25 to 49 50 to 99 X X 100 to 200 More than 200 X X Note: limited to employers with 50 FTEs; limit increased to 100 FTEs in 2016 Automatic enrollment of FTEs in employer health plan Employer Mandate X X (extension until 2016) X X large employer. • The ‘employer mandate’ is the requirement that large employers offer health insurance to their employees. – A large employer is an employer who has 50 or more fulltime equivalent employees (FTEEs). – Large employers are required to offer health insurance to FTEEs beginning in 2015. • However, large employers who have 50 – 99 FTEEs have been given an additional year to comply. Therefore, they are required to offer coverage beginning in 2016. who is a “large employer”? • You are a large employer if you have, on average, 50 or more full time employees (FTEs) during the prior calendar year. – Step #1 – calculate who is an FTE (“full time employee”) – an employee who works 30+ hours per week – Step #2 – calculate FTEE (“full time employee equivalent”) – Special calculation for part time employees who work more than 120 days per year • Take # of part time employees X total hours per month worked by all of those employees / 120. • Result is the number of FTEEs. – Add Step #1 and #2 to get total. If there are 50 or more, you are a large employer calculating FTEs and FTEEs. (A) (B) Full Time Employees Part Time Employees (A) + (B) = Avg. 30+ hrs./week or 130+ hrs./month Total combined monthly hrs./120 = Full Time Equivalent Employees (FTEEs) measurement periods. Standard Measurement Period • 3 to 12 months • Must be same for all EEs in same category • New period begins immediately following last Administration Period Stability Period • Immediately follows Standard Measurement Period • Immediately precedes Stability Period • Allows time to determine FTEs, notify employees of eligibility, enroll/dis-enroll employees, etc. • This period will typically coincide with open enrollment • Cannot exceed 90 days • This period will overlap prior stability period to prevent gaps in coverage • Immediately follows Standard Measurement Period and Administration Period (if any) • Full time or part time status is locked in based on hours worked during Standard Measurement Period. • Change in employment status during Stability Period has no impact on FT status. Current hours worked will not impact status until next measurement period. who is a “large employer”? • Tribes must look at all enterprises and divisions to determine large employer status. – Determine size by adding up all employees from all enterprises, divisions, etc. – Rare that a Tribe would not be considered a large employer. – Once you determine the status, that status applies to all enterprises regardless of the number of employees at that particular enterprise. – Although clarification of this ruling is pending, it is important to note that Tribes and their enterprises are NOT exempt from the employer mandate. small employer vs. large employer. Small Employer Large Employer Tax credits available for health insurance premiums paid for employee coverage Yes No Employer Mandate – penalties for not offering affordable essential coverage No Yes • Can purchase insurance on SHOP Yes No Health plans offered must have essential health benefits (EHB) Yes Health plans offered must cover spouses No No Health plans offered must cover dependents No Yes Employer must pay portion of premiums for dependents No No Yes (grandfathered plans and self-insured plans are exempt) what is the employer mandate? • The ‘employer mandate’ is the requirement that employers with more than 50 full-time equivalent employees offer health insurance to their employees. – Those who do not offer insurance coverage, and have at least one full-time employee (FTE) that receives a premium tax credit or costsharing subsidy would be subject to a penalty of $2,000 times the number of FTEs. (Note: For 2015 only, you can exclude the first 80 FTEs do not count. Beginning in 2016, you can exclude the first 30 FTEs.) – Those who do offer coverage but have at least one FTE that enrolls in the Exchange and receives a premium tax credit will pay a penalty of $3,000 per employee receiving a premium tax credit. large employer mandate #1. • The “A” Penalty [Section 4980H(a)] - Employers will offer 95% of FTEs and their dependents minimum essential coverage. Or, if no coverage offered: – Penalty = $2K/year per full time employee – Penalty applied on monthly basis ($167/month) – Exemption for first 30 employees = All FTEs (less 30) x $166.67 per month ($2,000 annually) • Note: for 2015 only, you can exclude the first 80 FTEs large employer mandate #2. • The “B” Penalty [Section 4980H(b)] – If offering coverage, plan must be considered a “minimum value plan” that is “affordable.” Employer must offer coverage that is: – Affordable – Employee premium for the lowest-cost plan for self-only coverage cannot exceed 9.5% of the employee’s household income for the year. Can use employee W-2 income as safe harbor for calculation; and – Provides minimum value – must cover at least 60% of plan’s entire cost, leaving 40% to be paid by the employee. large employer mandate #2 (continued). • The “B” Penalty (continued): If plan is not affordable and/or does not provide minimum value, Employer may be subject to a penalty: Penalty = $3K/year per FTE receiving premium assistance credit/subsidy (penalty applied on monthly basis $250/month) – No penalty if that FTE makes more than 400% of FPL – No penalty if that FTE did not purchase insurance through the Exchange and receive a premium tax credit large employer reporting. • Beginning in 2015 (2016 if you have 50 – 99 FTEEs), Large Employers will be required to file report that includes: – Name, address, EIN of Employer – Whether employer offers health coverage to FTEs and dependents. – Number of FTEs for each month and for each FTE the number of months for which coverage was available – Length of any waiting period – Monthly premium for lowest cost option in each enrollment category – Employer’s share of the “employee-only” premium for the minimum value plan offered, by month – Names and contact info of employees and months covered by employer’s health plan large employer action items. • Make sure your benefit plans and payroll processes clearly segregate: – Tribal government employees, and – Commercial enterprise employees • If your system can accommodate it, include a flag for Tribal members. • Begin analyzing employee census data and tracking hours to determine who must be offered coverage. • Determine what measurement period you will use. • Make sure your benefit plans do not have a waiting period longer than 90 days. Can no longer use first day of month following ... if it means waiting period is longer than 90 days from date of hire. large employer – action items. • Identify full time employees – even if you are not “playing” • Provide Exchange Notice to new hires • Become familiar with Employer Coverage Tool • Determine if health coverage will be offered. Do financial analysis. If offering coverage, determine type of plan. • Develop communication strategy “pay or play” – know the numbers. • Important to understand financial implications of ACA alternatives • Consider performing a customized financial analysis assessing the: – Cost of providing health coverage under the ACA – The cost of not offering coverage and paying penalties – The cost of modifying your plan, and offering a 60% value plan (meeting minimum essential coverage requirements) provisions impacting tribal members. • No out of pocket costs if a member of a federally recognized tribe chooses Indian Health Services as their provider in an insurance marketplace network. • Break on Costs for Certain Income Levels: federally recognized tribal members earning less than 300% of federal poverty level will not pay any out of pocket costs for health services anywhere. • Special Monthly Enrollment: Members of federally recognized tribes can change their enrollment status in any plan through the marketplace once a month (vs. annual enrollment). • No Requirement to have Insurance: Exempt AI/ANs who are eligible for IHS are exempt from the requirement to have coverage (individual mandate). implementation for tribal members. • Through 2014 – Enrollment in Exchanges and Medicaid Expanded Program – Health Insurance Exchanges (CMS) – Ensure Tribal Health/Indian Health facility is recognized as Provider in the Federal Marketplace as a Qualified Health Plan (QHP) for revenue reimbursements • CMS Model QHP Addendum for Indian Health Care – Analyze if right for Tribal facilities implementation for tribal members. • Through 2014 – Enrollment in Exchanges and Medicaid Expanded Program (continued) – Exchanges – Insurance Affordability Programs to enroll in 4 different programs: • AHCCCS • Kids Care • QHP with Tax Credits • QHP with Cost Reductions – American Indians with income between 100% and 300% of FPL are eligible for cost sharing reductions. implementation for tribal members. • Through 2014 – Enrollment in Exchanges and Medicaid Expanded Program (continued) – Medicaid – Expanded to cover all individuals with incomes up to 133% of FPL—$15,415 for individual and $26,344 for a family of 3—and will now also include childless adults. – 5% of income is disregarded, therefore it is effectively 138% of FPL. medicaid & HIS. • Indian Country Effects – Today, the median income of American Indian and Alaska Native households is $35,000 compared with $50,000 for the nation as a whole (US Census 2012). • Starting in 2014, more AI/ANs will qualify for Medicaid based on income alone, including childless adults. • No premiums or deductibles for AI/ANs who are eligible to receive IHS or tribal 638 services, and no copays for services received from an Indian health care provider or through referral under contract health services. implementation for tribal members. • 1/1/2015 – Employer Mandated Programs to Be Implemented – Planning with Tribal employers, government and enterprises (required coverage for Tribe as a whole, total employees greater than 50 FTEs). – Preventative services now covered by employers, prior ineligible persons that had pre-existing conditions, etc. – Tribal option of acquiring coverage through Federal Employee Health Benefit (FEHB) Plan (option is available now). tribal employer FEHB option. • Who Can Access FEHB? – Indian Tribes, tribal organizations, and urban Indian organizations that decide to purchase health insurance for their employees – Participation—must be “all in”—the total Tribal organization, government, all enterprises, etc. – Access to large health networks – Tribes pay the employer portion of premiums, including an administrative fee to cover operating expenses – Tribes assist with employee premium collection (payroll deductions) tribal employer plans. • 10 Essential Health Benefits Required – – – – – – – – – – Ambulatory Patient Services Emergency Services Hospitalization Maternity and Newborn Care Mental Health and Substance Abuse Disorder Services, including Behavioral Health Treatment Prescription Drugs Rehabilitative and Habilitative Services and Devices Laboratory Services Preventative and Wellness Services and Chronic Disease Management Pediatric Services, including Oral and Vision Care tribal employer plans. • Tribal Health Management Considerations – Tribal employer plans should include Tribal/IHS facility as part of provider network. – Consideration of health services to tribal employees, including non-Indians, on a fee for service basis. – Consideration of services now to be covered by plans, such as preventative services, mental and behavioral health, etc. planning. • Federal Financial Picture – IHS Appropriations • FY2013 – $4.1 billion, down from $4.3 billion in FY2012 • FY2014 – $4.5 billion, about half for contract support – Tribal and IHS facilities rely on third party resources, Medicare, Medicaid and private insurance to meet federal funding shortfalls. – Nationally, CHS non-Priority 1 costs are at or below 50%. planning. • Indian Health Financial Resources – Nationally, about 25-30% of Indian population served at Tribal/IHS facilities have no insurance/resource coverage. – Many of those may likely qualify for expanded Medicaid, or QHPs. – For all Medicaid reimbursements made for AI in Albuquerque Area IHS ($107M), about 25% ($27M) went to Tribal/IHS facilities (2004 statistics). planning. • Financial Planning – CHS – Project the costs of covering those patients who are CHS eligible through QHPs. – Project Revenues for those now covered (average patient visits per year X average reimbursement for visit), which could offset the costs. – Compare to total CHS costs. – Analyze if any of those services could be provided by your facility with projected revenues from covered patients. planning. • Financial Planning Revenues – Project revenues for the 25-30% of service population that will likely obtain coverage per expanded Medicaid or exchange QHPs for current direct services. – Project revenues and costs for expanded services that will now be covered, e.g., preventative services. planning. • Financial Planning Services – Consider what other services are paid by Medicaid to nonIndian providers for AI’s that your facility might be able to offer; project potential revenues & project costs. – Federal regulations require M&M reimbursements to be used for facility improvements, accreditation, and to meet the health needs of the service population. planning. • Revenue Cycle Considerations – Prepare to bill the insurances on the Exchange. – Meet with insurance carriers that may participate in the Exchange and Tribe’s insurer. – Dialogue about contracts with potential qualified health plans: • Sovereign language • Contracting terms • Covered benefits • Network providers • Reimbursement cost structure implementation tasks. – Tribal leaders, Tribal management and HR benefits staff • Understand new requirements • Consider optional coverage of FEHB • Effects to Tribal Health Centers – Tribal Health management and patient benefit staff continue to understand • Expanded benefits available to Tribal members/patient population • Eligibility and various coverage of ACA plans • Revenue compliance – Strategic Planning for changes • Revenue effect of previously uninsured individuals • CHS affects and options to pay insurance premiums • Effects and costs for Tribal employers resources. • Assistance for Tribes – State Medicaid Expansion Plan should include provisions for AI/Tribes in state. – CMS has a Tribal Advisory Group: http://www.cms.gov/Outreach-and-Education/American-Indian-AlaskaNative/AIAN/index.html Report: Health Care Reform, Tracking Tribal, Federal and State Implementation, 5.20.2011 by Tribal Advisory Group, CMS – NCAI/NIHB has a Tribal Health Organization Group: http://tribalhealthcare.org/blog/new-informational-psa-available-for-your-waitingroom-or-office/ – FEHB has a Tribal Technical Work Group: http://www.opm.gov/healthcare-insurance/indian-tribes/health-insurance/ questions? contacts. Lisa Wilcox, SPHR, CEBS, CCP, THRP Principal [email protected] 505.998.3296 Lisa has 30+ years experience in benefits and compensation planning, and is a Certified Tribal Human Resources Professional (THRP), having received special training from the National Native American Human Resources Association in HR topics, issues, laws and regulations unique to tribal organizations and enterprises. Corrine Wilson, CPA Principal [email protected] 602.730.3609 Corrine provides a wide range of financial consulting and training services to tribes, having served 14 years as a tribal CFO and over 15 years as a CPA providing audit and consulting services to tribes and their enterprises. She is a member of the Ft. McDermitt Paiute-Shoshone Tribe of Nevada.