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Affordable Care Act: Health Care Changes for Agents and Brokers
Affordable Care Act:Health Care Changes for Agents
and Brokers
Speakers
Ryan YoungSenior DirectorFederal Government AffairsIndependent Insurance Agents & Brokers of America(202) [email protected]
Ashley ArnoldGeneral CounselInsurors of Tennessee(615) [email protected]
Agenda
• ACA Implementation Timeline• Health Insurance Exchanges• Agent/Broker Role in Federal Exchanges• Navigators, Non-Navigator Assisters and CACs• Issues for Agents to Consider
Where To Find ACA Information• Dept. of Health and Human Services:
www.healthcare.gov
• Center for Consumer Information and Insurance Oversight: www.cms.gov/cciio
http://marketplace.cms.gov
• Internal Revenue Service: www.irs.gov
• Dept. of Labor www.dol.gov/ebsa/healthreform
ACA Implementation Timeline
2010
2014
2018
September 23, 2010 Reforms
Young Adults: Insurers required to allow young adults to stay on their parents’ health plans until they turn 26 years old.
Pre-existing Conditions: Insurance companies will no longer be able to deny coverage to children with pre-existing conditions.
Prohibition on Lifetime and Annual Limits: Insurers prohibited from imposing lifetime limits on essential benefits. In addition, annual limits on essential benefits may only be imposed as determined by the Secretary of Health and Human Services (HHS), until 2014 when this practice will be completely prohibited.
September 23, 2010 Reforms Appeals Process: Plans required to implement a consumer appeals process
for coverage determinations, claims and rescissions. Rescissions: Insurers barred from rescinding policies to avoid paying
medical bills when a person becomes ill.
• Preventative Services: For plans beginning on or after Sept 23, 2010 (and all plans by 2018), regulations will require coverage of recommended preventive services (routine immunizations, preventive care for infants, children and adolescents, cancer screenings, etc) without co-pays, co-insurance or deductibles.
Temporary Small Business Tax Credits• Phase I: Small businesses with less than 25 employees
and average annual wages of less than $50k are eligible for tax credits of up to 35% of the employer’s contribution. Employers must subsidize at least 50% of their employees’ premiums in order to be eligible (Available now through 2013).
• Phase II: Beginning on January 1, 2014, tax credit is increased to 50% of employer’s contribution, with the same eligibility parameters. The credit will be available to each small business for two years only. Only available through SHOP exchanges.
2011January 1, 2011• Medical Loss Ratios: Insurers must comply with new caps on “administrative
expenses” of 20% for individual and small group plans and 15% for large group. Rebates must be disbursed to consumers if these ratios are breached.
• FSA Restrictions: Over the counter drugs not prescribed by a doctor may not be reimbursed through FSAs or on a tax free basis through HSAs.
• Doughnut Hole Closing: As of January 1, 2011 Medicare Part D beneficiaries that fall into the “donut hole” will receive a 50% discount on covered brand-name prescriptions. This will grow to a 75% discount by 2020.
• Rate Review: Federal government (or states in 2012) have the power to force insurers to justify any rate increase over 10%. Does not give states or feds the power to block rate increase.
2012• MLR Rebates: Beginning in 2012, on August 1st of each year rebates are due to
consumers if their insurer did not meet the requisite MLR ratio for the previous year. For 2012 only, insurers had to send notices to all customers regarding MLRs and rebates, whether they are due to receive a rebate or not.
• W-2 Reporting: Employers required to report cost of employer sponsored group health coverage on employee W-2s for 2012 tax year. This value is not taxable. Employers issuing less than 250 W-2s exempt until further notice.
• Summary of Benefits and Coverages: Beginning September 23, 2012 health plans must provide a standardized and easy to understand summary of benefits and coverages as well as a glossary of commonly used insurance terms developed by HHS.
Tax Increases in 2013
• Increase in Medicare tax rate on wages by 0.9% (from 1.45% to 2.35%) on earnings over $200k ($250k family) for individual taxpayers– not indexed for inflation.
• New 3.8% tax on unearned (investment) income with $200k ($250 family) individual threshold– not indexed for inflation.
More Tax Increases…• 2012: $2.6 billion tax on insured and self insured plans to fund
comparative effectiveness research.
• 2013: Excise tax of 2.3% on the sale of any taxable medical device.
• 2013: Contributions to FSAs limited to $2,500 per year.
• 2014: $8 billion annual tax on health insurance companies. The tax will increase each year until reaching $14.3 billion in 2018. For subsequent years the fee will increase based on the previous year’s premium growth.
2013 Employer Notice Requirement• Employers must provide a written notice to all employees with
information on the following:
– (1) the existence of exchanges and contact information for assistance (can just be HHS website)
– (2) the availability of premium subsidies through exchanges, and – (3) that if the employee purchases health insurance through an
exchange, they will lose any employer contribution and that all or a portion of any contribution may be excludable from income for tax purposes.
Employer Notice Requirement(cont’d)• Employer must provide notice to existing employees no later than
Oct. 1, 2013.– New employees must be provided notice within 14 days of start
date.
• Dept. of Labor has published draft model notices, which can be used by employers (available on DOL website).
http://www.dol.gov/ebsa/newsroom/tr13-02.html
http://www.dol.gov/ebsa/healthreform/index.html
2013 (cont’d)• Agent training/registration to sell through the Federal
exchanges will begin in “late summer”.
• Open enrollment in all exchanges plans begins October 1, 2013, with coverage effective for January 1, 2014.
• FSA Limits: Contributions to FSAs limited to $2,500 per year.
2014• Exchanges: Federal exchanges, state-federal partnerships
(also technically FFEs), and state based exchanges all go online. Government subsidies available for purchase of private insurance up to 400% FPL.
• Guaranteed Issue/Renewal: Coverage must be offered to anyone -- insurers are barred from considering pre-existing conditions.
• Community Rating: Insurers may only vary rates due to certain factors (age, tobacco, geography and family size), and only within certain rating bands.
• Medicaid Expansion: Tennessee has not opted to participate in the Medicaid Expansion.
2014 (cont’d)• Small group fully-insured plan deductibles capped
at $2,000 for singles and $4,000 for families.– Prevents the sale of higher deductible health plans
combined with either HSA or HRAs to small businesses• Exception for plans with higher deductibles if
combined with FSA that reimburses the difference between the higher deductible and $2,000 /$4000.
2014: Individual Mandate
• Beginning Jan. 1, 2014 virtually every U.S. citizen and legal resident will be required to purchase health insurance or face a tax penalty.
• Exceptions exist for those who choose not to buy a policy for religious reasons, undocumented immigrants, incarcerated citizens, members of Native American tribes, and those with family income below the threshold requiring a tax return.
• To satisfy the mandate, individuals must obtain health insurance for the entire year through one of the following sources: Medicare, Medicaid, CHIP, veteran’s health programs, a plan offered by an employer, or private insurance that is at least at the Bronze level (60% actuarial value).
• Penalty for non-compliance will be phased-in according to the following schedule: – $95 (or 1% of income, whichever is higher) per person in 2014, – $325 (or 2% of income) per person in 2015, and – $695 (or 2.5% of income) in 2016. – After 2016, the penalty will be increased annually by the cost-of-living adjustment.
2014: Employer Mandate...Delayed!
Play or Pay
• Must provide full-time employees (and
dependents) with minimum essential coverage• Must be affordable (employee
contribution must NOT exceed 9.5% of employee’s household income); and• Provide minimum actuarial value (plan pays more than 60% of covered plan expenses)
• Pay a tax penalty (i.e., shared
responsibility payment)OR
2014: Employer Mandate...Delayed!
Impact on Employers
Seasonal employees count towards the total for determining Employer applicability unless:
• The group’s workforce exceeds 50 full-time employees for 120 days
or fewer during a calendar year, and those seasonal employees are what put the employer over the threshold
The employer shared responsibility requirements apply in a calendar year if the company averages at least 50 employees, including full-time or full-time equivalents during the prior calendar year.
• Full Time employee: Work at least 30 hours per week on monthly average
• Part Time employee: Count toward the total on an equivalent basis:
• Divide the total hours of service of all employees who are not FT for the
month by 120 to determine the FT
equivalent.
2014: Employer Mandate...Delayed!
Example
Full-Time Equivalent Employee (FTE)
Applicable Large Employer
÷ 120Full-Time
Employees(by month)
Total Hours(non-full-time employees) ÷ 12+
FTEEquivalent(by month)
30 Hours/Week OR 130 Hours/Month
2014: Employer Mandate...Delayed!
Penalties
Employer Coverage not Offered
Coverage Offered not Affordable or Offer Minimum Value
Penalty : $2,000per full-time employee
(first 30 employees do not count)
Penalty : $3,000per full-time employee
(that obtains subsidized coverage on the exchange)
2017/20182017:
States are permitted to allow businesses with more than 100 employees to purchase coverage in SHOP Exchanges.
2018: “Cadillac Tax” takes effect. A 40% excise tax is levied on employer-sponsored health plans with aggregate values that exceed $10,200 for individual and $27,500 for family. The tax is applied to the amounts that exceed the threshold and it will be indexed for inflation.
Health Insurance Exchanges
Purpose of Exchanges• ACA establishes the Health Insurance Exchanges (also known as
Marketplaces) to help facilitate the purchase of health coverage for both individuals and small businesses (SHOP).
• The law provides for subsidies to help eligible low-income and middle-come individuals (100% to 400% FPL) to purchase private coverage through an exchange.
• Exchanges also allow for enrollment in Medicaid and CHIP.
State vs. Federal Exchange (FFE)
Exchange Metal Levels
Metal Level Required Actuarial Value
Bronze 58-62%
Silver 68-72%
Gold 78-82%
Platinum 88-92%
Essential Health Benefits (EHBs)Required benefit categories:
• Ambulatory patient services • Emergency services• Hospitalization• Maternity and newborn care• Mental health and substance
use disorder services• Prescription drugs• Rehabilitative and habilitative
services & devices• Laboratory services • Preventive and wellness
services and chronic disease management
• Pediatric services including oral and vision care
Benefit Changes for Small Groups
Rates Not Based On:•Gender•Health Status•Previous Claims•Medical Underwriting•Number of Employees•Type of Business
Factors for Small Group Rates:•Age (3:1)•Tobacco Use (1.5:1)•Geographic Area•Family Size
New Rating FactorsAll Market and Group Segments
• Guaranteed Issue and Renewability• No Pre-Existing Waiting Period
Advanced Premium Tax Credits• Lower the monthly premium amount paid throughout the
year. • Available on a sliding scale to eligible individuals with
households:(1) with incomes between 100% and 400% of the FPL ($94,200 for a family of 4 in 2013), and (2) who don’t have access to minimum essential coverage, the equivalent of Bronze level plan and premiums cost no more than 9.5% of income.
• Paid each month by the federal government to the insurer.
Cost-Sharing Reductions• Reduces out-of-pocket expenses, deductibles,
copayments and coinsurance.
• Available on a sliding scale to enrollees in Silver level plans with income between 100% ($23,550 for a family of 4 in 2013) and 250% FPL ($58,875 for a family of 4 in 2013).
Tax Credit Eligibility by Income Level
Federal Poverty Level
100% 200% 300% 400%
Individual $11,490 $22,980 $34,470 $45,960
Family of 4 $23,550 $47,100 $70,650 $94,200
Carriers on Federal Exchanges• HHS has not distributed state-by-state information on insurer
interest in offering plans on federal exchanges.• Final plan agreements will be signed by insurers by
September– rates will be made public then.
Carriers that have applied in Tennessee:BC/BS of TN
HumanaCigna
CoventryCommunity Health Alliance
Enrollment Periods for Individuals• First Open Enrollment will be October 1, 2013 through
March 31, 2014 – Coverage starts January 1, 2014 for plan selections
made by December 15, 2013
• Annual Open Enrollment (after first year): – October 15th - December 7th – Coverage begins January 1 of the next year
SHOP Enrollments• October 1, 2013: Plans available for review and
enrollment for coverage starting as soon as January 1, 2014.
• Rolling monthly enrollments for employers after January 1st.
• Once a group is enrolled, its rate is guaranteed for 12 months.
FFE SHOP Plan Selection
• “Employee choice” delayed until 2015 in FFEs• In 2014, employers in FFE states will:
– Choose one QHP to offer– Decide the percentage of premium to contribute
• In 2015 and beyond, employer will choose single metal level (gold, silver, etc.)– Employee will choose plan from the specified metal
level.
Small Group Business
Benefit Changes for Small Groups
Essential Health Benefits
Ten required coverage categories
Out of Pocket Maximums
New accumulation rules and ceiling
DeductibleMaximums*
$2,000 single$4,000 family
Metal LevelCoverageRequirements
BronzeSilverGoldPlatinum
Small Group Business
Benefit Limits and Out-of-Pocket Costs
Limits
No annual limit
No lifetime limit
Small Group Deductible Ceiling
Single $2,000
Family $4,000
Out-of-PocketMaximums
Single $6,350
Family $12,700
Small Group Business
•Determine group size•Review SHOP plan options after October 1•Discuss Private Exchange options•Review existing policy for comparison
Document, Document, Document
Agent and Broker Role in FFEs
Agents In Federal Exchanges• In Tennessee’s exchange (run by HHS), agents will be able to help
clients apply for coverage, select a health plan and be compensated directly by the carrier.
• For the individual market, producers will be able to enroll consumers in either of two ways: – Through issuer websites – Work with the consumer using the exchange website
• In the SHOP, agents and brokers will work with consumers using the exchange website to complete the employer and employee applications.
http://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/agent-broker-5-1-2013.pdf
Producer Compensation in FFEs• Compensation determined through direct negotiation between the
agent/broker and carrier.
• The producer paid directly by the carrier; the exchange will not be involved in collecting or remitting compensation.
• The only requirement by the federal government is that producers be paid the same inside and outside of exchanges for “similar health plans.”
• In order to receive payment, during enrollment an agent will need to enter both his/her NPN number and an exchange ID number (received after completion of training/registration).
Agent Training and Registration• Training and registration to begin in “late summer.”
• To participate in placing business through the federal exchanges, agents/brokers must: – Follow all state licensing, appointment, and market conduct
requirements– Complete on-line exchange training modules
• FFE and ACA basics training, Individual Market, SHOP– Complete identity authentication steps– Sign the agent/broker agreement
• CMS estimates the entire process will take 4.75 hours to finish, and must be completed annually.
Draft Agent Registration Document
Publishing of Producer Contact Info• FFE will list agent/brokers who have successfully registered with the
FFE will be made available on the exchange website.
• This information will be available on an ongoing basis, and will include the name and contact information for the agent/broker. – Name, address, telephone numbers, and email address
provided during the registration process.
• Initial publication of this material is expected to be available for open enrollment.
Navigators, Non-Navigator Assisters
and CACs
Available
Assistance
Navigators
Brokers
Certified Applicati
on Counsel
ors
In-Person
Assistance
• Navigator programs empower certain groups (such as unions and non-profits) to raise public awareness regarding the existence of exchanges, as well as providing referrals for enrollees and to “facilitate enrollment” in qualified health plans.
• Big “I” has viewed this as a consumer protection issue, and has pressed the Administration to ensure that navigators or similar entities will be properly licensed, trained and certified.
• HHS regulations create a training and certification process for navigators at the federal level, and also allowing states broad authority to require further licensing and training.
Navigators
• Administration has also established new programs for “non-navigator assistance personnel” such as in-person assisters and application filers.
• These entities are similar in function to navigators, except they can be funded by grants from the federal government.
In-Person Assistance
• All exchanges (state, partnership or federal) must have CAC program.
• Again, similar to navigators and non-navigator assisters in function.
• The Federal Exchange will designate organizations to be CACs.
• Examples of groups to be CACs are community health centers, hospitals or social service agencies.
Certified Application Counselors
Consumer Assistance in Exchanges
How to Count Employees
Step 1 (full time employee count):• For each month, separately, determine how many employees worked 130 hours or more.• This will be the number of full-time employees you had during each month.
Step 2 (part time employee count):• For each month, separately, add the hours of all other employees together, but do not count
more than 120 hours for any one employee.•Then, divide that number by 120.•This will be the number of full-time equivalent employees you had during each month
Step 3: •For each month, separately, add the number of full-time employees to the number of full-time
equivalent employees.•This will be the total number of employees you need to count each month.
Step 4:•Add each of the 12 monthly employee numbers (from Step 3) together.•Divide that number by 12.•This will be your average number of full-time employees.
Conclusion:If your average number of full-time employees is 50 or higher, you would be an Applicable Large Employer and thus subject to the employer shared responsibility requirement. (Penalties delayed until 2015) ** In 2013, may use any consecutive 6 month period.
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Step 1: Full Time
32 34 34 33 31 31 31 35 35 34 33 33
Step 2: Part Time
10 15 11 10 14 12 17 12 13 17 17 17
Step 3:Total
42 49 45 43 45 43 48 47 48 51 50 50
Step 4:Average
Concl.Jan-Dec total employees: 561 Average monthly employee count: 47
This employer would be deemed a small business employer and not subject to penalties.
Example A
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Step 1: Full Time
32 34 36 38 40 41 41 45 45 44 43 44
Step 2: Part Time
16 14 15 11 10 7 9 7 9 11 8 8
Step 3:Total
48 48 51 49 50 48 50 52 54 55 51 52
Step 4:Average
Concl.Jan-Dec total employees: 608 Average monthly employee count: 51
•For the first 6 months of the year, the employer would be deemed a small business employer because the average monthly employee count is 49.•For the last 6 months of the year the employer would be deemed an applicable large group employer and subject to “play or pay” because the average employee count is 52.
Example B
E&O Considerations
Swiss Re Policyholder Notice The Patient Protection and Affordable Care Act (PPACA) commonly referred to as the Affordable Care Act will impact employers and individuals in 2014 and beyond. Likewise, it will impact the agents who assist the public in accessing health insurance.
The Affordable Care Act is still morphing with regard to the structure and processes resulting from the Act. Its impact on the professional responsibility of agents is still unclear and will continue to develop over the course of the next few years. The IIABA and Swiss Re Corporate Solutions wanted to provide you with details on how the PPACA could impact your E&O coverage.
Currently the Westport *policy provides coverage for insurance agents as follows:
We will pay on behalf of the INSURED all sums in excess of the DEDUCTIBLE that the INSURED becomes legally obligated to pay as DAMAGES caused by WRONGFUL ACTS resulting in any CLAIM first made against the INSURED during the POLICY PERIOD and reported in writing to us or the producing agent as soon as practicable.
*Policy forms SP 4 584 editions 0510, 0211, OB 0211, 0313; W 1004B NY 0201, W 1004C NY 0201
As risk management information becomes available on this topic, you can access it through the E&O Happens website (www.iiaba.net/eohappens).
A WRONGFUL ACTS is defined as:
any negligent act, error, or omission of an INSURED in rendering PROFESSIONAL SERVICES or OTHER RELATED SERVICES for others;
Our Westport policy form defines PROFESSIONAL SERVICES as:
1. services rendered as a managing general insurance agent, general insurance agent, insurance agent, or insurance broker;
2. services rendered as an insurance consultant, including, but not limited to, insurance consulting connected with employee benefit plans.
The policy form provides coverage for the sale of accident and health insurance, stop-loss coverage, and for insurance consulting. Consulting can be provided not only to employee benefit plans, but also to individuals. Thus, a P&C agent who retains a Navigator, as defined by the PPACA, to work for the agency would be covered for the consultation provided by the Navigator. Likewise, insurance consulting with a customer (employer) about coverage needs and options would fall within the parameters of coverage provided by the policy. (Of course, any claim made against an agency will be evaluated based on the specific allegations made and circumstances of the complaint. Depending on the allegations, some exclusions may apply.)
Q&A
