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© Ceridian Corporation. All rights reserved.
Health Care Reform
Brian Wright, Brian Durkin, Ken Kunsman
© Ceridian Corporation. All rights reserved.
Why Health Care Reform?
2
SOURCE: Centers for Medicare and Medicaid Services, Office of the Actuary, National
Health Statistics Group; and U.S. Department of Commerce, Bureau of Economic
Analysis and U.S. Bureau of the Census.
National Health Expenditures as % of GDP
% of GDP
COST COVERAGE
47 Millionwithout coverage
© Ceridian Corporation. All rights reserved.
US Health Care Reform: Significant Changes
• Signed into law on March 23, 2010
Patient Protection & Affordable Care Act (PPACA)
• Signed into law on March 30, 2010
Health Care & Education
Reconciliation Act (H.R.
4872)
2,900 pages will be
followed by thousands of
pages of regulations,
and expanding
requirements
“Affordability and Accessibility” 3/1/2009 President Obama
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Changes to the Health Care Industry
Exchanges
Federal Subsidies
Insurance Reform
Employer Responsibility
Individual Mandate
Delivery Reform
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Employer Health Plan Mandates
4
Prohibit lifetime and annual limits
Require coverage of
adult children
Ban pre-existing
condition exclusions
Prohibit rescissions of
coverage
Mandate automatic enrollment
with opt-out
Limit waiting periods before
eligibility
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Grandfathered Plans: What Changes Are OK?
5
Compared to their policies on March 23, grandfathered plans cannot:
Significantly cut or reduce benefits (e.g.,
no longer cover diabetes)
Raise co-insurance
percentages by any amount
Raise co-payments greater than
medical inflation plus 15% —cumulative!
Raise deductibles greater than
medical inflation plus 15% —cumulative!
Lower employer
contributions by more than 5%
(e.g., increase workers’ share of premium from 15% to 25%)
(e.g., plan can raise deductible 23%-25% between 2010 and 2012)
(e.g., increase co-payment from $30 to $50 over the next
two years)
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Timeline
6
2011 2013 2014 2018
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Timeline
7
2011 2013 2014 2018
2011• Medical Loss Ratio Rebate Program begins
• Dependents eligible until age 26
• Lifetime limits & pre-existing conditions prohibited
• Businesses with fewer than 25 employees may be eligible for tax credits covering up to 35% of their health care premiums on their 2010 return
• Additional documentation requirements for OTC reimbursement in FSA/HSA/HRA accounts
• Health plan employer W-2 reporting requirements
© Ceridian Corporation. All rights reserved.
Timeline
8
2011 2013 2014 2018
2013• Standardized insurance company paperwork
• Contributions to FSA limited to $2,500
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Timeline
9
2011 2013 2014 2018
2014• States create health insurance
exchanges
• Penalties for employers who do not offer health insurance coverage
• Penalties for citizens who do not have acceptable coverage
• Income based tax credits for consumers
© Ceridian Corporation. All rights reserved.
Timeline
10
2011 2013 2014 2018
2018• Excise tax on “Cadillac” plans
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The Impact of Health Care Reform
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GovernmentRegulation and taxation
• Create exchanges that meet Federal Law
• Administer exchanges
• Operate within budget guidelines
• Audit to compliance requirements
• Lower cost of health care (healthy citizens)
Insurance IndustryCompetition based on volume and innovation
• Revenue: individual member retention
• Control administrative costs: efficiency (claims, premium billing, taxes)
• Medical loss ratio
• Compliance
IndividualsIncreased responsibility with the power of knowledge
• Individual mandates
• Education
• Understanding accessibility
• Cost vs. lifestyle
EmployersRefine and redefine commitments with narrower focus
• Understand costs (compliance, taxes, benefit plans)
• Understand plan design (penalties)
• Lower costs (healthy employees)
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Survey Says…
12
Where do you stand?
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Employer Views on PPACA—May 2010
13
Goal is absolutely essential/high priority to organization
Importance and Impact of Health Reform Goals
Reforms are expected to have a positive impact on goal
%
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Employer Views on PPACA—May 2010
14
Likely Actions If Reform Increases Organization’s Health Care Benefit Costs (multiple responses allowed)
%
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Your Involvement in Health Care
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Building a healthy workplace
Paying for health care benefits
Delivering health care benefits
Encouraging health
2010
2017
High
Low High
Low
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What Steps Can You Take to Minimize Cost of Reform?
16
Quick Hits Mid-Term
On average, an employer saves $3000 dollars annually for every ineligible dependent that is removed. Ceridian offers this service
on a contingency fee basis. Audits should be performed every 2 years
Dependent Eligibility Audits:
Significant increase in Gov’tRegs will create additional administrative burden, increasing costs and compliance risks. Outsourcing to an established provider will mitigate risk of non-compliance and reduce administrative costs
Consider Outsourcing HR Payroll, Tax and Benefit
Administration
Longer Term
Evaluate your Healthcare Benefit Options
Exit: Eliminate health coverage for some or all groups. Pay $2000 penalty per employee plus additional wagesStatus Quo: Continue to sponsor and subsidize employer group health planDefined Contribution:Shift subsidy to a defined contribution and mirror state exchange plan designs (bronze, silver, gold).
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Employee Education: Fight Confusion with Communication
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Condition/Plan Notify
Assess Org Readiness Important Notifications
Educate
Build Education Mindset
Much misinformation, misunderstanding and opposition to PPACA; Let employees know healthcare reform is on your radar.
Prepare for open enrollment and to implement requirements that take effect in your next plan year; Open enrollment is a communications opportunity!
Notify employee-parents of under age-19 children whose pre-existing conditions were previously excluded from coverage that PEC now eligible.
Notify employee-parents of under age-26 adult children previously ineligible that they may now be eligible for coverage—and extend the tax exclusion for health benefits!
Notify those who were subject to previous lifetime limits that they may now be eligible to enroll in coverage—see Interim Final Rule June 22, 2010.
Caution: Healthcare reform is a “hot” issue (political and polarizing, stay objective)
Urgent need for employee education; what do new laws mean to me and my family and our health care coverage? Change is to be expected.
Be proactive. Be honest.Be as specific as possible.
© Ceridian Corporation. All rights reserved.
Resources
www.ceridian.com/healthcarereform
www.ceridian.com/connection
www.healthcare.gov
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© Ceridian Corporation. All rights reserved.
About Ceridian
19
Health & Productivity Solutions
EAP & Work-Life Services
Health Management Programs
Productivity Management
Benefits Administration
Health & Welfare
Dependent Verification Services
Reimbursement Services (FSA/HSA/HRA)
Benefits Continuation Services (COBRA/HIPAA)
Talent Acquisition & Management
Human Capital Management
Rewards & Recognition
Employment Screening
Recruiting Automation
Introducing a whole new concept for
business: Thinking inside
the box.
HR/Payroll Management
HR, Payroll and Self-Service
Time & Labor Management
Tax Services & Payment Solutions
HR Compliance
From payment solutions to HR, benefits and health and productivity services, you can count on Ceridian KnowHow to take the guesswork out of choosing proven solutions that assure your company will thrive, and enable you to make smart decisions for your bottom line.
We help organizations control costs, save time, optimize their workforce and mitigate risk.
© Ceridian Corporation. All rights reserved.
Summary
Health care reform affects your benefit plans. Ceridian is taking steps to ensure our clients have the information and support they need to prepare for the changes ahead.
If you have any further questions…
Brian Durkin, District Vice President
212.887.1049
www.ceridian.com/healthcarereform
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