nec affordable care act forum: health care reform...
TRANSCRIPT
NEC Affordable Care Act Forum:
Health Care Reform Overview
Presentation by
Rob Trautlein
Senior Director, Health Care Reform Project Management Office
October 22, 2014
Our vision for a sustainable, affordable Health Care
system
• Health Care Reform impacts
every individual, plan sponsor
and employer
• Aetna remains committed to
helping our customers understand
and navigate the new health care
landscape
• We will continue to advocate for
a marketplace that delivers value
and promotes affordability,
competition, choice, and
flexibility
Health Care Reform Timeline
ACA Provisions Continue to take effect in 2014
and Beyond
Health Insurance Provider Fee
• Public Exchanges
• Product & Plan Impacts and
Other 2014
• Insurance Reforms
• Additional Employer
Reporting Requirements
• Taxes & Fees
• Medicare MLR (first
experience year)
• Medicaid Expansion
• Taxes & Fees
• Employer Mandate /
Minimum Essential
Coverage (MEC) Reporting
• Medicare MLR (reporting
requirement for 2014
experience year)
• HPID /Health Plan
Certification (Small health
plans)
• Public Exchanges
• Taxes & Fees
• Employer Mandate / MEC
Reporting
• HPID /Health Plan
Certification (Large health
plans)
2014 Mid-term Elections Outlook and
Ongoing Impact of Health Care Reform Implementation
2014 Midterm Outlook
• Senate – 19 competitive races means Democratic majority at risk
Republicans need net gain of 6 seats to win control
• House of Representatives – 79 Competitive Races, with Republicans likely to maintain
control
Democrats unlikely to reach net gain of 17 seats needed to win House majority
• Governor Races – 36 seats in play:
6 (of 22) Republican seats are at risk of flipping this cycle
5 (of 14) Democratic seats are at risk of flipping this cycle
2014 Mid-term Elections Outlook and
Ongoing Impact of Health Care Reform Implementation
Midterm Elections Impact on ACA
• Legislative opportunities remain limited
Highly partisan House and Senate continue to make consensus on many issues difficult
• Regulatory environment provides increased potential for
Administration continues to work with insurers to fix ongoing trouble spots on the Federal Exchange
and want to make 2014 open enrollment successful
• Productive ACA changes possible in 2015 for following reasons:
New Members of Congress – potential for fewer incumbents mean there will be less ownership of
2010 law
Debt Limit/SGR Patch Expiration-- Need for a comprehensive deal in March 2015 opens the door for
ACA changes similar to what was achieved in this year’s small group deductible win.
Narrower Majorities (particularly in Senate) – more compromise with the Democratic administration
will be needed if they are to prevent government shutdowns, etc.
State of Implementation-- The law is covering people now and will be very difficult to take away.
Focus will be on fixing problems (which polling overwhelmingly shows people want).
Suggested Areas of Focus in 2015 and Beyond
Summary
• Safe harbor related to out-of-pocket maximum expires upon 2015 plan renewal
• New services will be considered preventive for non-grandfathered plans (or plans that have elected
to conform and be ACA compliant with the preventive care guidelines), with no member cost share
• Prepare for compliance with and enforcement of the Employer Shared Responsibility mandate
including the Employer Reporting Requirements
• Despite extension of safe harbor (pending further regulatory guidance), SBC compliance should be
a continued priority
• Implications of ACA mandated taxes and fees remain:
Health Insurer Fee (HIF)
Patient Centered Outcome Research Fee
Transitional Reinsurance Contribution
Cadillac Tax (2018)
• Benefit Strategies for your long term group benefits plan
Suggested Areas of Focus in 2015 and Beyond
Products & Plans
Taxes and Fees
Administrative and
Reporting
Employer Mandate
Public Exchanges
Suggested Areas of Focus in 2015 and Beyond
Public Exchanges: 2014 at a Glance
From turbulent launch
to huge enrollment
surge
• October 2013 launch was rocky, frustrating consumers who were
attempting to enroll.
• Technical issues create compressed timeframe for members to enroll
in January 1, 2014 plans, this enrollment extension granted
• Huge surge of enrollments in mid March – mid April; almost half of
the total national marketplace enrollments came in during this period.
• Marketplace exceeds enrollment expectations by 1 million members.
Challenging regulatory
environment
• Deadline extensions and evolving eligibility guidelines
complicated the member experience, delaying bills and ID cards.
• “Keep What You Have” changed risk pool dynamics.
Consumers struggle
with new marketplace
rules, insurance basics
• Exchange plans require binder payment before coverage becomes
active; billing becomes top call driver for this membership.
• Consumers didn’t always realize exchange plans often have unique
networks.
• Many members struggled with insurance basics, including concepts
like deductibles or step therapy for medications.
Suggested Areas of Focus in 2015 and Beyond
Public Exchange: On the horizon for 2015
2015 premium
increases
• Across carriers, 2015 premiums for exchange plans are expected
to increase an average of 7.5%.
• Increases vary widely across the country. They also vary within
states based on plan, age and location.
• “Keep What You Have” extension viewed as driving some of the
rate increases. Medical costs and operational investments
associated with implementing support for exchanges also cited as
contributing factors.
Technical gaps remain
• Key technology gaps need to be resolved to ensure marketplace is
ready to support both new and renewing consumers.
• Carriers continue to advocate for more automated solutions for
key functionality, such as member change and termination
transactions.
• Marketplace must be able to act as reliable “source of truth” for
all member data.
Suggested Areas of Focus in 2015 and Beyond
Public Exchange: On the horizon for 2015
Renewing exchange
plans for 2015
• Recent guidance supports ability for most consumers to
automatically renew their current plan (or a similar plan) for 2015.
• Tax credits will be automatically renew based on the information the
federal government has on file. Members will be encouraged to
update their information to ensure they receive the right tax credit
amount.
• Members still have the option to shop for a different plan on the
exchanges.
• Renewing members will receive information from the carrier about
their 2015 benefits, including new rate and any major benefit
changes.
Suggested Areas of Focus in 2015 and Beyond
Public Exchanges: Models by State for 2015
Health Care Reform Tools and Resources
Aetna has several tools and resources to help our customers understand the
anticipated impacts of ACA and prepare for 2014 and beyond
www.HealthReformConnection.com
Aetna has invested significantly in freely available online
resources to provide customers with the latest legislative
updates, analysis and impacts of Health Care Reform.
Health Care Reform Videos
Quick and easy-to-understand overview
of exchanges and Health Care Reform. Available on
Health Reform Connection, Facebook, YouTube.
Broker, Consultant, & Customer Webinars
Aetna continues to provide educational and training sessions for our
customers to ensure they are armed with the most current
information on Health Care Reform.
Take Home Messages
• Aetna remains focused on participating in the transformation of the
health care delivery system such that all Americans have a choice of
affordable, simple health care options
• Aetna remains committed to fostering compliance with the ACA
and helping our customers achieve the same
• As constructive advocates for the people who use our services, we
continue to work with HHS, NAIC and other agencies to shape
regulations and avoid unintended consequences
• We all have a role to play; get and stay informed
NEC Affordable Care Act Forum:
Preparing for the Employer Mandate
Presentation by
Walter M. Foster
October 22, 2014
Patient Protection and Affordable Care Act (“PPACA”, the “ACA”, or “ObamaCare”)
Main Goal: get more people covered by health insurance Small Business Health Options Program (“SHOP”)
Small Bus. Tax Credit
Employer Mandate
Individual Mandate
Overview of PPACA
Law being phased in over several years (2010 through 2018)
Insurance Reforms (eliminating lifetime caps, coverage of children to age 26, MLR rebates, etc.)
Reforms aimed at improving healthcare outcomes, improving efficiency, and reducing cost of healthcare
Overview (cont.)
Employee Choice Program
Employer selects coverage level and employee selects health plan through SHOP marketplace.
Goal is to improve health insurance for small business employees.
Concern is increased premiums caused by adverse selection.
Federally-facilitated SHOP marketplaces (Maine and New Hampshire) offer less choice and have been delayed.
State-based SHOP marketplaces (Connecticut, Massachusetts, Rhode Island, and Vermont) offer more choice and have been implemented.
Recent Court Decisions and Challenges to the ACA
Nat’l Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566 (2012) Upheld the Individual Mandate in the Patient Protection and
Affordable Care Act (the “ACA”). Struck down the Medicaid expansion in the ACA.
Burwell v. Hobby Lobby, decided June 30, 2014
Exemption for “closely held” for-profit companies from the ACA birth control requirement due to religious freedom protections.
Recent Court Decisions and Challenges to the ACA
Four lawsuits challenging the IRS’s attempt to offer subsidies and impose employer penalties through federally operated Exchanges are pending, with substantive steps and rulings in 2014.
Health and Human Services delays until 2016 the “employee choice” or SHOP provision for small business for 18 states.
Small Business Health Insurance Tax Credit
To Qualify, the business:
Must have < 25 FTEs
Must pay an avg wage of < $50,000/yr
Must pay at least ½ of health insurance premiums
2014 Max credit 50% of health ins costs
W2 Reporting under the ACA
Employers who issue more than 250 W2’s must report cost of health coverage on employees’ W2 forms.
What - extent of coverage under an employer- sponsored group health plan.
Where - Wage and Tax Statement, in Box 12, using Code DD.
Does it affect tax liability? NO
Automatic Enrollment in Health Plan
New Section 18A of FLSA. Requires ERs subject to FLSA with >200 Ees to automatically enroll new FT Ees in health plan
FAQs issued on 12/22/2010 indicate DOL will not have regulations in place to take effect by 2014
DOL Tech. Rel. issued Feb. 9, 2012 indicated Auto Enrollment will not be enforced until regulations are issued in 2014
Health Exchange Overview
ACA requires each state to create a “health exchange” Massachusetts = www.mahealthconnector.org Maine = federally exchange Rhode Island = www.healthsourceri.com New Hampshire = Partnership exchange conditionally
approved Connecticut = www.ct.gov/hix Vermont = www.healthconnect.vermont.gov (single payer
system)
Creates a “One Stop Shopping” experience to compare benefits, costs and quality of service.
Employer Shared Responsibility (the “Employer Mandate”)
IRS Issued Rules on Jan 2, 2013 (78 Fed Reg 218 et seq)
Employer Mandate Eff. Jan 1, 2015 for Employers with 100 or more Ees.
Applies to Employers with > 50 to 99 FTEs one year later Jan. 1, 2016
Employer Shared Responsibility Must Be Paid If:
ER does not offer health coverage and at least one FT Ee receives a premium tax credit to help pay for coverage on an Exchange
OR ER offers coverage to FT Ees, but at least one FT Ee
receives a premium tax credit to help pay for coverage on an Exchange (either b/c not offered to that Ee, or b/c coverage offered was “unaffordable” or did not provide “minimum value”)
Determining “Applicable Large Employer Status”
Aggregation rules (“Controlled Group” and “Affiliated Service Group”) apply
Calculation for 2015 based on 2014 employee census
Total # of Full-time employees, including seasonal employees for each month in the previous year divided by 12; PLUS
Total # of FTEs, including seasonal employees for each month in the previous year divided by 12
Determining “Applicable Large Employer Status” (cont.)
To calculate FTEs, must use 30 hours per week or 130
hours per month
If result is < 50, NOT a “Large Employer”
If result is > 50, and if seasonal employees are present, must determine if seasonal exception applies
Seasonal Exception to ACA
“Seasonal Exception”: If Er’s workforce exceeds 50 full-time employees for 120 days (or four calendar months) or fewer during a calendar year, and the Ees in excess of 50 who were employed during that period were seasonal workers, the employer is not an applicable large employer
Example 1
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
FT 20 20 20 24 25 25 25 25 23 20 20 20
PT/FTEs 5 5 10 40 40 40 40 40 10 5 5 5
Total 25 25 30 64 65 65 65 65 33 25 25 25
Assuming that the workers who are added in March – September are seasonal workers
12 month total = 512
Monthly Avg 512/12 = 42.66 = 42
Because 42 < 50, the Employer is not an applicable large employer.
Seasonal Exception to ACA
Example 2
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
FT 20 20 20 24 25 25 25 25 23 20 20 20
PT/FTEs 5 5 10 100 100 100 100 100 10 5 5 5
Total 25 25 30 124 125 125 125 125 33 25 25 25
Assuming that the workers who are added in March – September are seasonal workers
12 month total = 812
Monthly Avg 812/12 = 67.66 = 67
Because 67 >50, the Employer is an applicable large employer SUBJECT TO the
seasonal worker exception.
Because the workforce exceeded 50 for more than four months (the number exceeded 50
for five months ), the seasonal worker exception does not apply, and the employer is an
applicable large employer.
Seasonal Exception to ACA
Example 3
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
FT 20 20 20 24 25 25 25 25 23 20 20 20
PT/FTEs 5 5 10 15 35 100 100 100 15 5 5 5
Total 25 25 30 39 60 125 125 125 38 25 25 25
Assuming that the workers who are added in May – September are seasonal workers.
12 month total = 667
Monthly Avg 667/12 = 55.58 = 55
Because 55>50, the Employer is an applicable large employer SUBJECT TO the seasonal
worker exception.
Because the workforce did not exceed 50 for more than four months (the number
exceeded fifty for exactly four months), the seasonal exception applies, and the Employer
is not an applicable large employer.
Minimum Value
Er provided health benefits must provide “minimum
value” and must be “affordable”
“Affordable” means that the Ee’s cost must not exceed more than 9.5% of income
“Minimum Value” -- a plan fails to provide minimum value if the plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs.
Employer Penalties
Ers that do not offer coverage and have at least 1 FT Ee who receives subsidized coverage must pay $2,000 per FT Ee, but the first 30 Ees are excluded in calculating the assessment.
Ersthat offer coverage that is either unaffordable or inadequate and who have at least 1 FT Ee receiving subsidized coverage must pay an annual fee of $3,000 for each FT Ee receiving a premium credit, with a maximum penalty equal to $2,000 for each FT Ee, excluding the first 30 employees
ACA Taxes and Fees
The Congressional Joint Committee on Taxation identified more than 20 new or increased taxes in the ACA, totaling almost $1.1 trillion over the next ten years.
$25 billion in taxes affecting health insurance costs in 2014
It has been estimated that taxes and fees on insurers/health care industry will increase costs for businesses by about 3% per year
Cadillac Tax
Effective January 1, 2018. 40 percent excise tax on “rich” health plans, determined according to annual premiums.
In 2018, the threshold for single coverage is $10,200 and $27,500 for family coverage (with a higher threshold for retirees and those in high-risk professions like law enforcement).
Employers with unionized workforces need to plan now for how this tax might fit into future union contracts.
Resources on the Web
US Dept. of Labor http://www.dol.gov/ebsa/healthreform/ Internal Revenue Service http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions-Home Fed. Gov’t ACA Website https://www.healthcare.gov/ Mass. Connector https://www.mahealthconnector.org
ACA Taxes and Fees
Copyright 2014 Eckert Seamans Cherin & Mellott, LLC, All Rights Reserved. This presentation does not
provide legal advice. We recommend that you consult an attorney for specific guidance on legal questions.