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
as part of the Actuarial Value calculation*
Integrated with the health plan is allowed** Standalone generally prohibited
FSAs: Employer FSA contributions cannot be included
as part of the Actuarial Value calculation*
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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26. Health Care Ecosystem
28. Health Care Ecosystem
27. Health Care Ecosystem
29. Health Care Ecosystem
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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