Summary of Health Care Reform 04-2013

7/28/2019 Summary of Health Care Reform 04-2013

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The Fedeli Group April 2013 1

Summary of Health Care Reform SeminarApri l 2013

Andre J. Lukez, CEBS, Chief Operating Officer, The Fedeli Group

1. Health Care Reform in Perspective

Government role in health care has increasedsubstantially since 1965, from approximately 20%to 50%

Health care costs were considered a crisis in the1990s, consuming 13.6% of GDP. Today, health

care costs are 17.59% of GDP

Demographics continue to work against reiningin health care costs

Median age has increased from 32.9 in1990 to 37.2 in 2010

Over the same time period, the obesityrate has increased from 15.0% to 35.7%

2. Access to Health Insurance Today

3. Timeline


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4. Essence of the Law: Participate or be Taxed

Individual Mandate

Maintain a Bronze Level PlanOR

Pay an Annual Tax (greater of): 2014:$95 per uninsured person or 1% of

household income above the applicable

filing threshold ($10,000 for an individual

and $20,000 for a family in 2013)

2016: $695 per uninsured person or 2.5%of household income above the applicable

filing threshold

Employer Requirements

Offer a Plan with Minimum Value andAffordable Coverage

OR

Pay an Annual Tax per FT Employee $2,000-3,000 depending on situation

5. Where Do You Fit as an Employer?

Automatic Enrollment Provisions - Delayed until 2015- DOL Technical Release 2012-01

6. Affordable Coverage

The Law: Premiums not to exceed 9.5% offamily income

Regulatory Response: IRS Notice 2012-58employee portion of the self only premium

for the employers lowest cost coverage that

provide minimum value (the employee

contribution) must not exceed 9.5% of the

employees W-2 wages.

7. Minimum Value

The Law: The health plans share of the totalcost must be 60% or greater of total costs

Regulatory Response:IRS Notice 2012-31 followed by Federal

Register Vol. 78, No. 37

this notice seeks comment on the following

three potential approaches that could be used

to determine whether an employer-sponsored

plan provides minimum value.

1) AV and MV calculators

2) Design Based Safe Harbor

3) Actuarial Certification

Status:

Minimum Value Calculator - released (betaversion)

Design Based Safe Harbors - not yet released Small group insurance minimum value

regulations - released


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8. The Employer, Health Exchanges, and Medicaid 9. Health Insurance Exchanges A Conduit for

Subsidies

The Affordable Care Act stipulates that those with

incomes from 100% to 400% of the Federal Poverty

Level are eligible for subsidies (premium credits) to

help pay for insurance

Massachusetts was the model for the AffordableCare Act

Ohio joins 26 other states in opting for a federallyfacilitated exchange

Ohio is expected to expand Medicaid, joining 25other states. Ten states remain undecided

Subsidies are only available for individuals andfamilies through public exchanges

There has been limited participation to date in private

exchanges

10. Premium Credits


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11. Part Time and Seasonal Employees

The Law: A full time employee works on average at least 30 hours per week The Problem: The hours worked by part time and seasonal workers fluctuate and may average more

than 30 hours per week

Regulatory Response: IRS Notice 2012-58safe harbor methods that employers may use to determine which employees are treated as full

time employees for purposes of the shared responsibility provision of section 4980H

for ongoing employees, an employer will be permitted to use measurement and stability periods of

up to 12 months

For new employees employers are permitted to determine whether the new employee is a full time

employee using an initial measurement period of between 3 and 12 months

Guidance good through 2014

12. Ongoing Employees 13. New Employees


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14. Labor Agreements

Collectively Bargained Plans: No delayed compliance

provisions. However, many of these plans are

grandfathered

Multiple Employer Plans: Contributions fulfill the

employer shared responsibility requirement if:

Coverage is offered to eligible employees It is affordable, provides minimum value, and

has no more than a 90 day waiting period

Internal Revenue Service 26 CFR Parts 1 and 54: Shared Responsibility for

Employers Regarding Health Coverage; Correction

15. Employment Relationships - Unique Situations

How is full time status determined for salaried

workers with variable work schedules, like teachers,

pilots, or commissioned salespeople?

A method of crediting hours would not be

reasonable if it took into account only some of an

employees hours of service with the effect of

recharacterizing, as non-full time, an employee in a

position that traditionally involves more than 30

hours a week. IRS Reg-138006-12

Are independent contractors considered employees

under ACA?

Common law employee definition is used to

determine employment status

What aboutleased employees?

Leased employees are considered employees of theleasing company -shared responsibility

requirements fall on the leasing company.

16. Health Coverage Underwriting 17. Small Group Considerations

Essential Health Benefits

10 categories of coverage Includes maternity, newborn care,

prescription drugs, etc.

Does not directly apply for large employersDeductible Limits

$2,000 single / $4,000 family Employer FSA contributions do not increase

deductible limits

Employer HSA contributions could increasedeductible limits


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18.Plan Designs and ACA 19. Wellness

A health contingent wellness program is based on

an individual satisfying a standard that is related to a

health factor. Acceptable health contingent programs

include:

1. A program charges a premium surcharge based ontobacco use.

2. A program uses biometric screening or a healthrisk assessment to identify employees with a

specified risk factor such as cholesterol, high

blood pressure, unhealthy body mass, or high

glucose level and provides a reward to employees

identified within a normal range while requiring

employees outside the normal range to take

additional steps (health coach, fitness course,

health improvement action plan, etc) to obtainthe same reward [summarized from Department

of Treasury Regulation 122707-12; released

11/2/2012

20. HSAs, HRAs, FSAs, and Fixed Dollar Indemnity

Plans

HSAs: Employer HSA contributions can be included

as part of the Actuarial Value calculation*

HRAs: Employer HRA contributions can be included


Integrated with the health plan is allowed** Standalone generally prohibited

FSAs: Employer FSA contributions cannot be included


Fixed Dollar Indemnity (FDI) Plans: Plans that pay on

a per service basis, as opposed to a per period basis,

are in conflict with the ACA**

Self-Funding: The ACA creates an incentive for small

employers to explore self-funding

*IRS Notice 2013-04084

****Department of Labor; FAQs About Affordable Care Act Implementation(Part XI) 1/24/2013

21. Voluntary Benefits


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22. Other Reporting and Compliance Requirements

W-2 Reporting

Required if sending 250 or more W-2s, no further

guidance for smaller firms

SBC - Summary of Benefits and Coverage

Notice of Coverage Options in Exchanges

Original March due date delayed to late summer or

fall 2013

Non-discrimination provisions

Now apply to insured plans under 105(h) self-insured

rules

Additional IRS Reporting for Employers

Information requested by the IRS to determine

subsidy eligibility specifics unclear

Grandfathered Plan Notice

Provide annually as long as plan is grandfathered

23. Assessing Impact

Be wary of avoidance schemes such as

1. Shifting workers to independent contractor status2.

Moving workers to temporary staffing agencies3. Splitting company less than 50 EEs each

4. Enter into affiliated service group agreements5. Change plan year to 12/2013 to delay mandate

24. More Than $400 Billion in Taxes and Fees by

2019

Medicare Unearned Income Tax Medicare Payroll Tax Excise Tax on Health Insurers Fees on Drug and Medical Device Companies Modifications to Tax Advantage Accounts Fees on High Cost PlansFees Specific to Health Plans

Reinsurance Assessment Fee $63 annual fee per participant (scheduled to

decline in years 2 and 3)

3 years starting January 1, 2014 Comparative Effectiveness Research Fee: Funds

Patient-Centered Outcomes Research Institute

(PCORI)

$1 annual fee per participant, $2 annual feebeginning 10/1/2012. Increases with inflation

afterwards

Funding through 9/30/2019

25. Health Care Ecosystem


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1. Conduct a health care reform situational assessment

2. Develop a strategic benefits plan

3. Implement your strategic benefits plan

The health care reform situational assessment includes an analysis of:

Affordability

Minimum Value

Part Time and Seasonal

Plan Fees

Auto Enrollment Provision Impact

Self-Funding Feasibility

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Summary of Health Care Reform 04-2013