UNC Benefits UpdatePresented by Brian Usischon

May 2013

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Topics for Discussion

• Legislative Updates

• Health Care Reform

• Benefit Focus Enrollment Platform

• State Health Plan

• Retirement System Updates

UNC Budget & Legislative Policy Priority

• UNC Optional Retirement Program– Increase the EMPLOYER contribution rate from

6.84% to 8.00% over the next two fiscal years (increase to 7.42 effective 7/1/2013 and to 8.00 effective 7/1/2014)

– Expand eligibility to SPA employees hired between August 1, 2011 and December 31, 2012

 

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UNC Legislative Policy Proposals

• Teachers’ and State Employees’ Ret. System– Remove language that prohibits volunteers during a retirees’ first

six months of retirement

• Tuition Waivers– Increase the tuition waiver program for faculty and staff back to

three waivers per academic year

• Personnel Authority for SPA Employees– Move SPA employees from OSP to BOG authority

 

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Retirement System Legislation

• HB 357 – Retirement Governance Act of 2013– An act to increase citizen oversight and to make other

consolidations and improvements in the governance of the State Retirement Systems.

• HB 358 Retirement Technical Corrections– Updates the definition of retirement as a “termination of

employment and complete separation from active service.”

– Allows ORP forms to be filed with RSD electronically

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Retirement System Legislation

• HB 359 – Retirement Administrative Changes of 2013– Makes changes to administration of the State Retirement

Systems that will extend the transfer benefit option to participants in the 403(b) supplemental plan; clarify the timing of social security offset for LTD benefits; establish a 415(m) arrangement.

• H 381 – Retirement Fiscal Integrity Act of 2013– Provides for the fiscal integrity of TSERS, LGERS, and

the CJS. Directs the Department of State Treasurer to propose a Teachers’ and State Employees’ Optional Retirement System---as the sole alternative plan available to employees.

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State Health Plan Legislation

• HB 232 – State Health Plan Statutory Changes– To make technical and other changes to the state

health plan for teachers and state employees statutes, as requested by the state health plan

– This bill seeks to make adjustments to the eligibility requirements for SHP enrollment with the apparent goal of facilitating compliance with the ACA

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Other Legislation

• S 395 – Tricare Supplement for Flex Accounts– An act to allow a tricare supplement for flexible

compensation plans offered by the state.

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Health Care Reform

Health Care Reform - Why It Matters10

• Health Care Reform - ACA, PPACA, Obamacare ACA is an acronym for the "Affordable Care Act", a set of laws passed

in 2010. ACA is the shortened name for the PPACA, the Patient Protection and Affordable Care Act.

The ACA is a very extensive set of laws which sets out to reform the U.S. healthcare system. The goal of the ACA is to expand coverage to all Americans and to help control healthcare costs overall.

• Uncertainties now largely gone Survived court challenges. The US Supreme Court ruled that the law’s

individual mandate is a constitutional exercise of Congress’s power to impose tax.

Survived the 2012 Presidential election.

Coverage Requirement & Expansion11

• Phase I: 2010 – 2013 Beginning in 2010 the ACA required existing and new individual

markets and group health plans to satisfy certain requirement (i.e. coverage of dependents to age 26, no pre-existing condition limitations, no annual or lifetime limits).

• Phase II: 2014 and Beyond Individual Mandate: mandates that all Americans, with some very

limited exceptions, maintain a minimum level of health insurance or face a tax

Insurance Exchanges: creates state-based health insurance exchanges and provides premium tax credits to assist eligible individuals with the purchase of coverage

Medicaid Expansion: allows states to expand Medicaid up to 133% of federal poverty level

Employer Mandate: requires all employers, with 50 or more full-time equivalents, to offer health benefits that meet a defined standard, and pay a set portion of the cost of those benefits on behalf of their employees

Health Care Reform – Timeline12

Employer Healthcare Mandate 13

• Coverage Requirements

• Must meet actuarial threshold

• Must cover 95% of eligible employees

• Mandatory health care coverage of full-time employees (FTE) who work 30 or more hours per week for 3 or more months

• Affordability Requirements

• Premiums for individual coverage can’t exceed 9.5% of household income

Employer Mandate – “Pay or Play”14

• Penalty assessment of up to $2,000 annually for employers that do not provide coverage if at least one full-time employee receives a premium tax credit or cost sharing reduction.

• Penalty assessment of up to $3,000 for employers that provide coverage but employee opts out of the plan and receives a premium tax credit or cost share reduction because employer coverage for EMPLOYEE only coverage is unaffordable.

• Exchange subsidies are premium tax credits or cost share reductions that are available to employees whose coverage is unaffordable.

Definition of Full-time Employee15

• A full-time employee is a common law employee who is employed:

on average at least 30 hours of service per week; or

130 hours of service in a month

• Hours of service means:. Each hour for which an employee is paid or entitled to payment for

the performance of duties for the employer; and

Each hour for which an employee is paid, or entitled to be payment, for the period of time where no duties are performed due to vacation, holidays, illness, layoff, jury duty, incapacity (disability), military duty or leave of absence

Methods of Counting16

• The proposed regulations require an employer to count actual hours of service for employees paid on an hourly basis. For employees not paid hourly, an employer may use one of the following three methods to determine hours:

Actual hours of work

A days worked equivalency, with eight hours of service credited for each day worked

A weeks-worked equivalency, with 40 hours or service credited for each week worked.

• An employer can use different methods for different classification of non-hourly employees, as long as the classifications are reasonable and consistently applied.

Full-time Employee @ UNC 17

• The proposed regulations will require UNC to cover employees not otherwise eligible for health care coverage including:

Student employees that work 30 or more hours per week

Temporary employees (non-student employees) that work 30 or more hours per week

Post-docs, Graduate RA/TAs

Adjunct faculty

Impact of “Full-time” on UNC18

• IRS acknowledges higher ed has unique employment characteristics

• IRS issued preliminary rules but not responsive to higher ed

• Until further guidance is provided, must use a “reasonable” criteria to determine eligibility

Student Healthcare19

• College and Universities not required to provide Student Health Insurance.

• Student Plans can be “self-insured” or “fully insured plans. Only about 30 colleges offer self-funded plans.

• Self-insured student plans are exempt from ACA

• Fully-insured “Student” plans resemble employer-sponsored plan requirements

• Fully-insured plans can be “experience” rated rather than “community” rated.

Student Healthcare20

• Student workers may be considered “employees” if they ‘work’ 30 hrs/wk or more

• Coverage as “student” or “employee”?

• Consider:• Student Insurance – They pay• Employee Insurance – You pay

What is a Measurement Period?

• Employer may use an initial “standard measurement period” of between 3 and 12 consecutive months to determine whether or not an employee averaged at least 30 hours of service per week.

• If an employee is determined to be “eligible for coverage” during a “defined” standard measurement period (a.k.a look back period), then the employee would be eligible for coverage during an associated “stability period.” This period must be equal to or greater than the measurement period. The stability period can be no less than six months.

• Can have different measurement/stability periods for different categories of employees (i.e. salaried employees, hourly employees, collective bargained employees)

What is an Ongoing Employee?

• An “ongoing employee” is an employee who has been employed at least one full standard measurement period.

• An employer may determine each ongoing employee's full-time status by “looking back” at a measurement period of not less than three but not more than 12 consecutive months.

After Measurement, then Stability

• If employee was employed on average at least 30 hours of service per week during the standard measurement period, then the employer treats the employee as a full-time employee during the subsequent stability period.

• If not, the employer would be permitted to treat the employee as not a full-time employee during the immediately following stability period.

What about New Employees?

• A “new employee” is an employee who has been employed for less than one complete standard measurement period.

• If a new employee is reasonably expected to work on average at least 30 hours per week for three of more months the employer must offer coverage no later than three months after hire date to avoid penalties.

• A new variable hour employee or a seasonal employee may be evaluated during an initial measurement period.

Variable/Seasonal Employees

• Don’t know if they’ll work 30 hours

• If an employer uses the look-back measurement method to determine the full-time status of its ongoing employees, the employer may also use a similar process with a measurement period, a stability period and an optional administrative period for its new variable hour and seasonal employees.

If full time…

• If an employee is determined to be a full-time employee during the initial measurement period, then the new employee must be offered coverage during the new employee stability period or else the employer could be liable for a penalty.

• The new employee's stability period must be the same length as the stability period for ongoing employees.

If not full time…

• If a new employee found not to be a full-time employee, employer can treat the employee as not a full-time employee during the new employee stability period.

• This stability period must not be more than one month longer than the initial measurement period.

• Must not exceed the remainder of the standard measurement period (plus any associated administrative period).

New employee to ongoing employee

• Once new employee has been employed for an entire standard measurement period, the employer must test the employee for full-time employee status, beginning with that standard measurement period, at the same time and under the same conditions as apply to other ongoing employees.

The safe harbor means….

• If an employer complies with these rules and the employee's position is not materially changed during the initial measurement period, then no penalty will be assessed with respect to the new employee during the initial measurement period or the administrative period.

Taxes and Fees30

New Medicare Tax Imposes an additional “employee” Medicare Tax. There is no

“employer match” on this additional Medicare Tax.

Adds a 0.9% additional Medicare Tax on wages over the following thresholds:

$250,000 for joint return

$125,000 married filing separately

$200,00 in all other cases (i.e. head of household)

Requires employers to withhold the additional tax on wages or compensation it pays to employees in excess of $200,000 in a calendar year.

Employer only required to start withholding the additional Medicare Tax once an employees wages or compensation exceed $200,000

Taxes and Fees31

Patient Centered Outcomes Research Inst. (PCORI) Fees Establishes a private non-profit whose mission is to “research” the

outcomes and clinical effectiveness, risk and benefits of medical treatments to help with informed health decisions. In the first year (2012) the fee is $1 times the number of plan participants (employees and dependents). For the plan year starting July 1, 2013 the fee will increase to $2 and will be indexed in future years. This fee is charged directly to insured and self-insured health plans.

Temporary Reinsurance Program This three-year transitional reinsurance program was established to

help stabilize premiums in the individual health insurance market from 2014 to 2016. This program is funded by contributions from insurers in the individual, small group and large group markets, and self-insured group health plans. Fee expected to be $63 per participant (employee and dependents).

Health Insurance Industry Tax In 2014 the tax will add an estimated 2.0-3.0% in cost to insured plans.

Health Care Reform – Things to Consider32

• Move more employees to regular, fulltime status (cost of healthcare + other benefits)

• Limit number of ‘temporary’ employees including contingent faculty

• Strictly limit ‘hours worked’

• Create separate health care plan for these types of employees?

• Turnover / Unemployment costs if layoff or reduce hours

Benefit Focus Enrollment Platform

Benefit Focus34

• Ancillary Enrollment Options• NC Flex Plans – no charge

• Data Capture Enrollment – no charge

• Data Transmission Plans (not NCFlex) - $750 set up fee and $750 per month per product, per agency

• Payroll Integration• For existing campuses with Payroll Connect – no charge

• For new integrations with Payroll Connect– $1,950 set up fee

• Single Sign On (SS)• For existing campuses with SSO– no charge

• For campuses electing SSO – $10,000 set up fee

Benefit Focus – Phase I (Spring 2013)35

• Conversion from Aon Hewitt to Benefit Focus scheduled for completion in May 2013

• All NCFlex plans expected to be up and running on Benefit Focus by June 1, 2013

• Aon Hewitt and Benefit Focus will be running concurrent platforms during June 2013

Benefit Focus – Phase II (Spring 2014)36

• Plans to be included for all Campuses & Affiliates• Teachers’ and State Employees’ Retirement System

• UNC Optional Retirement Program

• UNC 403(b) Plan

• State 401(k) Plan

• State 457(b) Plan

• UNC Supplemental Disability – The Standard

• UNC Supplemental Disability – Liberty Mutual

• Other campus plans (i.e. Group Life Insurance)

• Benefit Statements

State Health Plan

State Health Plan Changes

• North Carolina State Health Plan’s Board of Trustees approved proposals to change the plan year and offer new health plan options for teachers and state employees

– Plan Year changes to calendar year effective January 1, 2014

– Short Plan Year to run from July 1 through December 31, 2013

– New consumer driven plan option (high deductible plan with a health reimbursement account) available effective January 1, 2014

– There will be three surcharges applicable to active and non-Medicare retirees who enroll in the buy-up 80/20 plan or the Consumer Driven Health Plan

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Annual Enrollment – Effective July 1, 2013

• Annual Enrollment for July 1, 2013 effective date runs from May 20 through May 31

• Shortened benefit year from July 1, 2013 through December 31, 2013

• Deductibles and coinsurance maximums will be cut in half as a result of the short benefit year. Otherwise most copayments will remain the same for the PPO plan options

• This is a “negative enrollment”—employees DO NOT need to take any action during this enrollment unless they want to make a change

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Annual Enrollment – Effective July 1, 2013

• Online Enrollment for COBRA

• Telephonic Enrollment

• Uniform Coverage Document

• PCP Functionality Available

• Employer Portal/Electronic Billing

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Annual Enrollment - Eff. January 1, 2014

• Healthy Incentives - the PPO 80/20 and the Consumer Driven plans will cover preventive services at 100 percent. If you select a primary care physician during enrollment you will receive a $15 copay reduction for any office visit to that designated physician.

• There are also copay reductions available for providers in the Blue Select Network. More detailed information about these incentives will be available prior to the October enrollment period.

• Premiums for members and dependents are projected to increase by 4.7%

• Annual Enrollment to be held in October. Dates to be determined.

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Summary of Plan Options – 1/1/2014

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Other Items for Discussion

• SHP “Paid as Billed” effective July 1, 2013

• Verifying Dependent Eligibility

• Exception Requests from campuses

• Maintaining Terminations in Benefit Focus (under ACA terminations cannot be processed retroactively)

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Review from December

• Long Term Care Insurance – General Assembly repealed LTC as offering from

the State Health Plan effective January 1, 2013. Prudential to send existing participants with payroll deductions notification to continue coverage via bank draft.

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Retirement System Updates

Retirement System and FY13 Leave

• Retirement System and FY 13 Leave Payouts– Special leave balances shall not be paid out upon

termination of employment except in the case of separation due to immediate retirement from a State-supported retirement system.

– The retirement separation effective date must occur between July 1, 2012 and June 30, 2013 and the retirement effective date must occur immediately upon termination of employment. Immediate is defined as the first day of the month following the effective date of the separation.

– For example, if an employee separates due to retirement on August 10, 2012, the effective date of the retirement shall be September 1, 2012.

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RSD Updates

• Reemployment Earnable Allowance Limits Increased for 2013. The allowance is the greater of:

– 50 percent of the member’s compensation during the 12 months of service before retirement, excluding any termination payments, as increased by 1.7% or

– $30,680

• Teachers’ and State Employees’ Handbook updated for 2013

• 2010 Annual Benefit Statements for active employees available until March 31, 2013

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Return to Work Penalty Assessment

• Phase 1 – Violation Review

• Phase 2 – Penalty Assessment and Appeals Process

• Phase 3 – Reducing the Penalty if the agency meets criteria

• Timely Self-reporting Incentives– Active Reporting (letter or email to RSD)– Passive Reporting (ORBIT)– Anonymous Reporting – (RSD determines non-reporting or

receives notice from an outside source)

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Outstanding Issues with RSD

• UNC campuses found in violation of the return to work laws according to RSD

• UNC Health Care employees who enrolled in the ORP and cannot withdraw or transfer their employees funds

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Questions50