Presentation - Huck Bouma PC

Report
Frankfort Educational Networking Symposium
Health Care Reform Explained
May 15, 2013
presented by:
presented by:
Steve Hogan
Brian J. Stumm
Aaron Ruswick
Whitney Schmidt
Welcome
Presenters
Stumm Insurance, LLC
Steve Hogan [email protected] 773.862.7761 x109
Brian Stumm [email protected] 773.862.7761 x102
Huck Bouma PC
Whitney Schmidt [email protected] 630.221.1755 x1193
Aaron Ruswick [email protected] 630.221.1755 x 1254
Objective
To understand the past and future impact the Affordable Care Act will have on the
American public, including both individuals and employers.
Synonyms for Today
Health Care Reform
Obamacare
Patient Protection and Affordable Care Act (PPACA)
Affordable Care Act (ACA)
2
Agenda
Timeline of Events
2010
2011-12
2013
2014
2017-18
Closer Looks
Subsidy (Tax Credit) Examples
Marketplace
Large Employer Calculation
Large Employer Roadmap
Bottom Line
Question & Answer Session
Collect Question Cards
3
2010
Lifetime Maximums
Insurance plans prohibited from imposing
lifetime benefit limits and restricted
annual limits.
Dependent Age Limit
Insurance plans required to carry
dependents up to the age of 26.
Preventative Services
Insurance plans required to cover
preventive services without cost sharing.
Pre-Existing Exclusions for Children
Insurance plans prohibited from denying
coverage to individuals under the age of
19 based on pre-existing conditions.
High Risk Pools
Temporary (until 2014) high risk pools
established for individuals (older than
19) who are denied coverage based on
pre-existing conditions.
Renewability
Insurance plans prohibited from
rescinding coverage except in cases of
fraud or lack of payment.
State Carrier Reviews
States begin reviewing premium trends
and companies must justify increases
over certain thresholds. There is no new
power to block rate increases but plans
may be excluded from exchanges.
Small Business Tax Credit (Phase I)
Small businesses with less than 25
employees and average annual wages of
less than $50,000 are eligible for tax
credits of up to 35% of the employer’s
contribution toward the employee’s
health insurance premium. Employers
must subsidize at least 50% of their
employees’ premiums in order to be
eligible for the tax credit. Available
through 2013 only.
Co-Ops Created
Create the Consumer Operated and
Oriented Plan (Co-Op) program to foster
the creation of non-profit, member-run
health insurance companies in all 50
states. $6 billion is appropriated to
finance the program and award loans and
grants to establish Co-Ops by July 1,
2013. Illinois creating Co-Op named Land
of Lincoln.
4
2011
Medical Loss Ratio
Insurance plans required to comply with
new medical loss ratios (MLR):
80% - Individual Plans
80% - Small Groups
85% - Large Groups
Companies required to provide rebates
to consumers if they fail to comply with
the MLRs.
Exchange Funding
Funding available for states to begin
establishing Exchanges until January 1,
2015.
Part D Assistance
Medicare Part D beneficiaries that fall
into the “donut hole” will receive a 50%
discount on covered brand-name
prescriptions. This will grow to a 75%
discount by 2020.
OTC Medications
Over-the-counter drugs not prescribed by
a doctor may not be reimbursed through
an FSA or HRA, nor on a tax free basis
through an Archer MSA or HSA.
2012
W2 Reporting
Employers with 250+ employees are
required to report cost of employer
sponsored group health coverage on
employee W2s for 2012 tax year. This
value is not taxable.
SBCs
Summary of Benefits and Coverages:
Beginning with renewals after September
23, 2012, health plans must provide a
standardized and easy to understand
summary of benefits and coverages as
well as a glossary of commonly used
insurance terms developed by HHS.
5
2013
Medicare Tax Increase
Increase in the Medicare tax rate on
wages by 0.9% (from 1.45% to 2.35%) on
earnings over $200,000 for individual
taxpayers ($250,000 for joint filers).
Investment Income Tax Increase
3.8% tax increase on investment income
for taxpayers making $200,000 per year
($250,000 for joint filers); however in
real estate transactions there is an
exemption in current law for $250,000
on the sale of a principal residence
($500,000 for joint filers).
FSA Limits
Pre-tax contributions to FSAs limited to
$2,500 per year.
Marketplace Notices
Employers required to provide notice to
employees of marketplace availability by
October 1, 2013.
National Long Term Care**
A national long term care
assistance/disability insurance plan
(CLASS) is established. The benefit is
tied to one’s inability to perform two or
three Activities of Daily Living (ADLs) and
the benefit amount is varied based on
the “scale of functional ability” with a
$50-7/day cash benefit. All working
adults will be automatically enrolled in
the program unless they choose to optout.
**Implementation of this program halted
indefinitely by Department of Health &
Human Services
6
2014
New Rules
Insurance plans required to abide by guaranteed
issue, minimum benefit standards, revised rate
bands (age-based and community-rated) for
individual and small group market (2-100
employees).
Individual Mandate
Individuals required to purchase health
insurance or face a tax penalty:
2014 – up to $95 per year (or 1.0% of
income, whichever is greater)
2015 - $325 per adult (or 2.0%)
2016 - $695/year (or of 2.5%)
2017 and beyond - indexed to inflation.
Subsidies for Individuals
Premium tax credits (subsidies for purchase of
health insurance) available via exchanges for
individuals/families with incomes between 100%
and 400% of federal poverty level, who do not
receive employer based coverage.
Marketplaces (Exchanges)
Exchanges are created and open to individuals
and small businesses (2-50 employees).
Exchanges will include four tiers of private
plans:
Platinum – 90% actuarial value
Gold – 80%
Silver – 70%
Bronze - 60%
(and Catastrophic coverage).
Federal Poverty
Guidelines*
Family
Size
100%
200%
300%
400%
1
$11,490
$22,980
$34,470
$45,960
2
$15,510
$31,020
$46,530
$62,040
3
$19,530
$39,060
$58,590
$78,120
4
$23,550
$47,100
$70,650
$94,200
5
$27,570
$55,140
$82,710 $110,280
6
$31,590
$63,180
$94,770 $126,360
7
$35,610
$71,220 $106,830 $142,440
8
$39,630
$79,260 $118,890 $158,520
9…
$43,650
$87,300 $130,950 $174,600
* These figures are
approximate
7
Subsidy (Tax Credit) Examples
Individual
Family
Status
Income
Percentage of
income that may
be spent on
health insurance
Estimated value of the employee’s annual tax credit in 2014
30 year-old
with qualified
employer coverage
Any
$35,000
9.5% of household
income
$0 - No one in the family qualified to buy coverage in the
exchange or get a subsidy
30 year-old
with no employer
coverage
Single
$35,000
9.5% of household
income
$155 (based on Kaiser Family Foundation’s projection of a $3440
annual single premium in 2014)
Individual’s annual premium costs would be $3325
30 year-old
with no employer
coverage
Married,
2 children
$35,000
3.97% of
household income
$8,720 (based on Kaiser Family Foundation’s projection of a
$10,108 annual family premium in 2014)
Family’s annual premium costs would be $1,388
45 year-old
with qualified
employer coverage
Any
$55,000
9.5% of household
income
$0 - No one in the family is qualified to buy coverage in the
exchange or get a subsidy
45 year-old
with no employer
coverage
Single
$55,000
N/A
$0 – Individual may buy coverage in the exchange but would not
qualify for subsidy
Individual’s annual premium payments would be $5,609
based on Kaiser Family Foundation’s projection of 2014 single
premium
45 year-old
with no employer
coverage
Married,
2 children
$55,000
7.52% of
household income
$10, 100 (based on Kaiser Family Foundation’s projection of a
$14, 250 annual family premium in 2014) Family’s annual
premium costs would be $4,135
8
Marketplace (Exchange)
Platform
Government-created platform for the
sale of health insurance, intended to
bring all “qualified” plans into one forum
by establishing common rules regarding
the offering and pricing of insurance,
and providing information to consumers.
Products
Private carriers, State co-ops and
government programs such as Medicaid
and Children’s Health Insurance Program
(CHIP).
Pricing**
Community-rated based on age,
geography and tobacco status. Qualified
consumers (up to 400% of the poverty
level) will receive government assistance
to purchase private insurance through
the use of premium tax credits.
Congressional Budget Office (CBO) makes
clear average premiums could be 27-30%
higher because the law demands greater
insurance coverage.
**Products and pricing are to be available
for viewing in July-August 2013, but
coverage is not effective until January 1,
2014.
9
2014 cont.
Large Employer Mandate (Pay or Play)
Employers with more than 50 full-time
equivalent employees who do not offer
their employees health insurance will be
subject to a $2,000 tax penalty/full-time
employee/year (first 30 employees
exempted from calculation) OR they
must offer “affordable” insurance
coverage meeting minimum coverage
requirements.
Waiting Periods
Waiting periods for coverage cannot
exceed 90 days.
Health Insurance Tax
New tax is levied on insurance companies
based on net premiums written on fullyinsured plans. This tax will raise an
estimated $8 billion in 2014, reaching
$14.3 billion by 2018. The tax does not
sunset and is indexed thereafter.
Expected to be ~2.3% of premium.
Reinsurance Tax
New tax is levied on all policies for the
next 3 years. Expected to be ~$5.25 per
month of premium for every
individual/employee.
Medicaid Expansion**
States must expand Medicaid to 133% of
federal poverty level. States will receive
100% federal financing from 2014-2016,
95% financing in 2017, 94% financing in
2018, 93% financing in 2019, and 90%
financing in 2020 and beyond.
**The Supreme Court struck down the
ability of the federal government to
withhold their portion of current
Medicaid funds to force states to comply
with this expansion.**
Women’s Health
Insured plans required to expand benefits
for Women’s Preventive Health Services
Mandatory Enrollment
Employers with more than 200 employees
would be required to automatically enroll
employees into health insurance plans
offered by employer (employees may optout).
Small Business Tax Credit (Phase II)
Credit extended for two years, but only
available in the SHOP.
10
Large Employer Calculation
11
Large Employer Roadmap
Does the employer have
at least 50 full-time
equivalent employees?
Start
No
Did at least one full-time
employee receive a
premium tax credit or
cost-sharing subsidy
through a Marketplace?
Yes
Yes
Affordability Test
Is the employee’s
required premium
contribution for
single coverage for
the employer’s
lowest cost plan
9.5% or less of the
employee’s gross
annual income?
No
No Penalty Applies
No
Yes
Does the employer
offer coverage to
all full-time
employees?
No
Marketplace Subsidy
Do any employees
purchase coverage in a
Marketplace and receive a
premium tax credit or costsharing subsidy?
Yes
No
A Penalty Applies
The penalty is $2,000
annually times the
number of full-time
employees minus 30.
A Penalty Applies
The penalty is the lesser
of $3,000 times the
number of full-time
employees receiving
premium tax credits, or
$2,000 times the number
of full-time employees
minus 30.
No
Yes
Minimum Value Test
Does the employer
sponsored plan provide
minimum value?
Yes
No Penalty Applies
12
Small vs. Large Employers
Plan Consideration
Small Employer (under 50)
Large Employer (over 50)
Eligibility Hours
Requirement
(depends on carrier)
30+
Eligibility
(depends on carrier)
95% of employees and dependent
children
Waivers
n/a
Required (or auto-enroll for over 200)
90-Day Waiting Period
Applies
Applies
Rates
Age-rated, community-rated
Company specific, based on actuarial
factors
Minimum Deductible
$2,000
No restriction?
Plan Design
(depends on carrier)
Bronze Minimum (60% actuarial value)
Affordability
No limit
Can not exceed 9.5% of gross wages
SHOP
2014 – only one carrier to choose
from
2015 – all carriers
50-100 – not until 2015?
100+ - n/a
Tax Credit
Available in SHOP only
Not available
Participation Requirement
(depends on carrier) – Gone??
No change
13
2017
SHOP Expansion
States are permitted to allow businesses
with more than 100 employees to
purchase coverage in SHOP Marketplaces.
2018
Cadillac Tax
A 40% excise tax is levied on insurers of
employer-sponsored health plans with
aggregate values that exceed $10,200 for
individual and $27,500 for family. The
tax is applied to the amounts that
exceed the threshold and it will be
indexed for inflation.
14
Bottom Line
Employer Considerations
Does my plan meet minimum requirements?
Is my plan grand-fathered?
Is my plan affordable?
What are my net costs today?
Is the penalty cheaper?
How will employees react?
Will my employees be eligible for subsidies?
What are the tax advantages to my business?
Are benefits important for talent acquisition?
How are we managing plan costs?
Employee Considerations
Is coverage cheaper on Marketplace?
Is cost of insurance tax deductible?
Does my spouse have access to insurance?
Am I prepared to pay a penalty?
How important is my doctor?
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What should I do if…
I am a non-working individual?
Go to healthcare.gov or seek advice from a Navigator.
I am a full-time employee?
Contact your HR Representative to help you understand and evaluate your options at
work.
I am a part-time employee?
Contact your HR Representative to help you understand where the eligibility cut-off is for
benefits, go to healthcare.gov or seek advice from a Navigator.
I am a business owner?
Consult with your professional team (attorney, accountant and insurance broker) to
ensure you are properly positioned for the changes ahead. Compliance will be
paramount; make certain your documents are in order (i.e. Ownership documents, ERISA,
Business Associates Agreement, Employee Manual, etc.).
I am a Human Resources Professional?
Consult with your insurance professional to help stay informed of changes and understand
compliance requirements for your business.
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Questions and Answers
17
Thank You
Stumm Insurance, LLC
Steve Hogan [email protected] 773.862.7761 x109
Brian Stumm [email protected] 773.862.7761 x102
Huck Bouma PC
Whitney Schmidt [email protected] 630.221.1755 x1193
Aaron Ruswick [email protected] 630.221.1755 x 1254
18

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