health reform strategic considerations for employers

Copyright © 2013 Holy Family Memorial. All rights reserved.

April 8, 2023 hfmhealth.orghfmhealth.org

The PPACA: Thinking Strategically

Shawn Daughenbaugh, MHA

Society for Human Resources Society for Human Resources Management: Lakeshore Management: Lakeshore ChapterChapter

hfmhealth.orghfmhealth.orgShawn Daughenbaugh, MHAShawn Daughenbaugh, MHAHealth Reform “Enthusiast”

• Fellow: Holy Family Memorial– Prior

• Wellness Coach, CoxHealth• Project Manager, CoxHealth

• Education: Master of Health Administration– Research focused extensively on health insurance

marketplace (“exchanges” back then)

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hfmhealth.orghfmhealth.org 3

~ Donald Rumsfeld

“There are known knowns.

These are things we know that we know.

There are known unknowns.

That is to say, there are things that we know we don't know.

But there are also unknown unknowns.

There are things we don't know we don't know.”

Words of Wisdom Words of Wisdom

hfmhealth.orghfmhealth.orgMarch 23, 2010March 23, 2010PPACA signed into law

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hfmhealth.orghfmhealth.orgIn WisconsinIn Wisconsin

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• Federally Facilitated Marketplace (FFM)– For individuals and small business

• 13 companies in individual, 5 in Small business Health Options Program (SHOP)

• Affects BadgerCare+, uninsured, individuals without employer sponsored care

hfmhealth.orghfmhealth.orgWho is affected?Who is affected?

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hfmhealth.orghfmhealth.org

Qualified Health Plans Qualified Health Plans (QHPs)(QHPs)“Metal Plans”

• Each metal indicates the actuarial value

9Source:HealthPocket


Premiums Premiums ExamplesExamplesManitowoc, Wisconsin: Zip Code 54220

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hfmhealth.orghfmhealth.orgStarting NowStarting NowShifting gears

• Recognize many provisions begin 1-1-2014

• Model potential employer penalty• Identify “Safe Harbor” methods and

measurement period• Strategic Considerations of ACA

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Delayed until 2015

• ACA “shared responsibility” provision requires Large Employers to provide coverage or face penalty– No coverage fine– Tax subsidy or affordability fine

• Small Employers Exempt– Option for Small Business Health Option

Program or SHOP Exchange

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(Large) (Large) Employer Employer MandateMandate


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Mandate Delay


No Coverage PenaltyNo Coverage Penalty

Employers not offering coverage

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• Dependents only means children, not spouse

hfmhealth.orghfmhealth.orgAffordable PenaltyAffordable PenaltyEmployers offering coverage

• Note this penalty is not all employees, only those receiving subsidy and pay more than 9.5%

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hfmhealth.orghfmhealth.orgClarification pointClarification pointFoundational to employer penalties

• Tax Credit– Available to individuals between 100%-

400% of Federal Poverty Level (FPL)– Can be used on any plan

• Cost-sharing subsidy– Available to individuals between 100%-

250% FPL– Can only be used on silver “benchmark”

plan16


Strategic ConsiderationStrategic Consideration

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Will you, as an organization, pay or play?

hfmhealth.orghfmhealth.orgFTE Safe Harbor MethodsFTE Safe Harbor MethodsDetermining who to count

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Associated and Non-regular Associated and Non-regular FTEFTEConsidering Organizational Charts

• Aggregated businesses counts– “Controlled” organizations that have

common owners are counted as one business

• Seasonal Employees• Temp or Contract Employees

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hfmhealth.orghfmhealth.orgAffordability Safe HarborAffordability Safe HarborPlans cannot exceed 9.5%

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21SOURCE: Washington Council Ernst & Young; Ernst & Young LLP http://www.nahu.org/meetings/capitol/2013/attendees/jumpdrive/WCEY_AffordabilityNumbers_021313.pdf



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Which Safe Harbors should you chooseDo you start to cut employee hours?

hfmhealth.orghfmhealth.orgOld BadgerCare+ Eligibility Old BadgerCare+ Eligibility

23Source: WHA


New effective date 3/31/13

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New BadgerCare+ New BadgerCare+ Eligibility Eligibility

70,000 5,000

Source: WHA



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If workforce has members formerly on BadgerCare+, can they afford your

insurance?


Future Benefit Future Benefit PackagePackageHow does your design change?

• Changes to future plans– Minimal Value– Children on plan until age 26– Essential Benefits

• New fees– Reinsurance fee– PCOI fee

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ACA directs company benefit plans to pay at least 60% of employee

healthcare costs– How rich is your plan?


Final ThoughtsFinal Thoughts

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Employer Sponsored Insurance

• Large Employers– Does a private marketplace offer better

rates and less risk? Sears and Walgreens think so

• Small Employers– By attempting to offer coverage, are you

in fact hurting your employees?

hfmhealth.orghfmhealth.orgPPACA: More than a webpagePPACA: More than a webpage

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Copyright © 2013 Holy Family Memorial. All rights reserved.

April 8, 2023 hfmhealth.orghfmhealth.org

Thank you. Questions?Thank you. Questions?


Like today’s presentation? Please take a few minutes and recommend me on

LinkedIn: https://www.linkedin.com/in/

sdaughenbaugh

Thank you for your kind attention!Shawn

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Question and Answer SlidesQuestion and Answer Slides

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hfmhealth.orghfmhealth.org““Administrative Fix”Administrative Fix”“We fumbled the rollout”

• November 14th, 2013– President Obama offers “administrative

fix,” allowing non-compliant individual market plans to renew for 2014

• This “fix” does not affect business directly; only individuals buying from the private, individual market– Allows 2013 plans to be renewed without

change in 201433


Affordability Safe Harbors Affordability Safe Harbors ExplainedExplained

• Form W-2 Box 1– Employer is able to judge affordability based

on wages from that employers only;

• Rate of Pay– Hourly rate of pay for each health plan

eligible employee at start of year– Multiply by 130 hours per month

(benchmark of full-time in PPACA)– Make determination of affordability on wages

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Affordability Safe Harbors Affordability Safe Harbors ExplainedExplained

• Federal Poverty Line – Premium for employee self-only coverage

cannot exceed 9.5% of the FPL for single individual

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hfmhealth.orghfmhealth.orgEmployer Size ExceptionsEmployer Size ExceptionsSeasonal Employees

• Seasonal Employee Exception– If an employer is an “applicable Large

Employer” because of seasonal employees, seasonal employees who work less than 120 days are not considered in FTE calculation

– This needs to be kept in mind when hiring summer interns, college students, winter workers, etc.

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Essential BenefitsEssential Benefits

Must be covered in group plans

1. Ambulatory patient services

2. Emergency services3. Hospitalization4. Maternity and newborn

care5. Mental health and

substance use disorder services

6. Prescription drugs

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6. Rehabilitative and habilitative services and

7. Laboratory services; 8. Preventive and

wellness services and chronic disease management

9. Pediatric services, including oral and vision care.

hfmhealth.orghfmhealth.orgFTE CalculationsFTE Calculations

• Calculate number of full-time employees– Total number of employees who work 30

hours/week (130 hours/month)

• Calculate number of full-time equivalents – Aggregate number of hours worked by all

employees who did not work 30 hours/ week divided by 120

– If quotient is fraction, you may round down

• Add total together38


FTE Safe Harbors FTE Safe Harbors ExplainedExplainedOngoing

• Ongoing Employees– An employee who has been employed for at one

standard unit of measurement– Standard unit of measurement is determined by

employer and is flexible: – “Look back period”

• Not shorter than 3 months; no longer than 12 months

• Administrative Period Safe Harbor Extension– No longer than 90 days between measurement

and stability periods

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hfmhealth.orghfmhealth.orgFTE Safe Harbors ExplainedFTE Safe Harbors ExplainedNew Employees

• New Employees: Reasonably expected to work full-time– This allows plans to take additional

“reasonable” periods of time to see if employee meets plan conditions

• Must comply with standard unit of measurement clause

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New Employee: Variable and Seasonal

• Initial measurement period– 30 hours per week expected

• Variable Employee– If at time of hire, it cannot be determined

individual will work 30 hours per week

• Seasonal Employee– If work force exceeds 50 FTE for 120 days

during year, these employees are full-time

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FTE Safe Harbors FTE Safe Harbors ExplainedExplained


Participating Participating insurersinsurersManitowoc County

• FFM– Common Ground Healthcare Coop– WPS Health Plan, Inc. (Arise)– Dean Health Plan, Inc. (Preva 360)– Molina Healthcare of WI, Inc– Compcare Health Services Ins. Corp. (Anthem)

• SHOP– Arise– Common Ground Healthcare Coop

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Tax Credit: Mathematical Tax Credit: Mathematical example example All figures are annual costs

• Smith Family: Married couple with 2 children• Income: $47,100; equals 200% of FPL

– This means the max amount the Smith family is able to be charged is 6.3% of $47,100; equals $2,968 per year max plan charge

• 2nd lowest silver plan premium $10,000/ year• Credit due to Smith Family is $7,032

– $10,000 minus $2,968

43Source: Health Affairs


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ResourcesResources


• MV Calculator – http://cciio.cms.gov/resources/regulations/index.html

• Tax Subsidy Calculator– http://kff.org/interactive/subsidy-calculator/

• New SBC templates– http://www.cms.gov/CCIIO/Resources/Forms-Reports-

and-Other-Resources/index.html#Summary of Benefits and Coverage and Uniform Glossary

• Reinsurance Fee Background– http://www.shrm.org/hrdisciplines/benefits/Articles/

Pages/PCORI-Reinsurance-Fees.aspx45


• Grandfather plans– http://www.shrm.org/hrdisciplines/benefits/Articles/

Pages/FAQs-Grandfathered-Plans.aspx

• Federal Poverty Level chart– http://wccf.org/pdf/poverty_level_tables_2013.pdf

• Employer Penalties – http://www.fas.org/sgp/crs/misc/R41159.pdf

• FTE Safe Harbor Methods– http://www.irs.gov/pub/irs-drop/n-12-58.pdf

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