MINNESOTA HEALTH ACTION GROUP: 6 TH ANNUAL EMPLOYER LEADERSHIP SUMMIT ON RAMPS OR EXIT RAMPS?...

MINNESOTA HEALTH ACTION GROUP: 6TH ANNUAL EMPLOYER LEADERSHIP SUMMIT

ON RAMPS OR EXIT RAMPS? RAMPING UP FOR YOUR 2014

HEALTH CARE STRATEGIES

February 21, 2013

1

Copyright 2013 National Business Coalition on Health

Federal requirements and compliance issues for employers

The Affordable Care Act


The Affordable Care Act

Five “buckets” of employer requirements 1. Fees2. Shared responsibility3. Market reforms4. Reporting requirements5. Plan design


1. Fees

Transitional Reinsurance Program Health insurance issuers, and TPAs on

behalf of group health plans, must make payments to HHS pool to help stabilize government health insurance exchanges $10 billion in 2014 $6 billion in 2015 $4 billion in 2016

2014 amount: $5.25 per covered life per month ($63 annually)


1. Fees

Patient Centered Outcomes Research Trust Fund Per covered life fee on health insurance carriers

and self-insured health plans to fund the Patient-Centered Outcomes Research Institute (PCORI) New non-profit quasi-governmental entity to conduct

comparative effectiveness research ½ of budget comes from appropriation, other ½ from

trust fund created by employer fee $2 per covered life per plan year through 2019

$1 per covered life only for plan years beginning in 2013


2. Shared responsibility

Responsibility is shared between large employers and individuals Employer responsibility – “Pay or play” Individual responsibility – individual mandate

Large employers = on average 50 or more full-time equivalent employees (FTEs) Full time = on average 30 or more hours per

week Special rules for seasonal and variable hour

employees



Two different penalties for two different situations Large employers that do not offer coverage are

subject to a penalty of $2,000 per employee per year Fee calculated based on number of full time employees,

regardless of who receives a tax credit on the exchange Large employers that offer coverage, but that is not

minimum essential coverage are subject to a penalty of $3,000 per employee per year Fee calculated based on the number of full time

employees that actually receive a tax credit on the exchange

PENALTIES ARE TRIGGERED IF, AND ONLY IF, AN EMPLOYEE SEEKS AND RECEIVES A TAX

CREDIT ON A GOVERNMENT EXCHANGE



Minimum essential coverage is coverage that is affordable and provides minimum actuarial value Affordability test – Cost of self-only policy does not

exceed 9.5% of employee’s annual household income Safe harbors based on employee earnings So-called “family penalty” – employers must offer

coverage to dependents, but affordability based on cost of self-only

Minimum actuarial value – Plan must cover at least 60% of the allowed charges for services covered under the plan NOT the same as essential health benefits (EHB)



ACA requires employers to provide written notice to employees informing them:(1) of the existence of the exchange in their state, including website and contact information(2) whether the current employer-sponsored plan (lowest cost option if more than one) meets the 60% actuarial value test, and(3) that purchasing coverage through an exchange may disqualify the employee from the employer plan

Original effective date was March 1, 2013, but recent guidance indicates late summer or early fall to coincide with exchange open enrollment


3. Market reforms

No lifetime or annual limits on EHB Self-insured plans not required to abide by EHB

requirements, but to the extent EHB are covered, they are subject to this requirement

Limits on cost sharing requirements for EHB $5,000 annually for self-only coverage $10,000 annually for family coverage

No cost-sharing requirements for preventive health services, such as screenings and immunizations

Dependent coverage for adult children of enrollees up to age 26


3. Market reforms

Guaranteed availability and renewal of coverage Prohibition on pre-existing condition exclusions

and other discrimination based on health status Prohibition on enrollment waiting periods longer

than 90 days Automatic enrollment of employees for

employers with more than 200 full-time employees Must provide adequate notice and opportunity to opt-out


4. Reporting requirements

Summary of Benefits and Coverage (SBC) Employers subject to shared responsibility

requirements must make return to IRS describing compliance with mandate

Inclusion of cost of employer-sponsored health coverage on employees’ W-2s

Elimination of employer deduction for Medicare Part D subsidy

Additional 0.9% income tax (1.35% total) on employees earning more than $200,000


5. Plan design

Employer plans may not discriminate in favor of (i.e. offer more generous benefits to) highly-compensated employees One of 5 highest-paid officers, shareholder who

owns more than 10% of stock, or among highest-paid 25% of all employees

Employer plans may not discriminate against any provider acting within the scope of his/her license Plans are allowed to vary reimbursement rates

based on quality measures


5. Plan design

Wellness program incentives Increases maximum premium differential to

30% (from 20%) for employees who successfully complete health-contingent wellness program (50% differential allowed for smoking cessation) Reasonable alternative standard requirements

Limitation on flexible spending accounts Employees may not elect to have salary

reductions for contributions to flexible spending accounts in excess of $2,500 for any year


5. Plan design

Excise tax on high-cost coverage (“Cadillac tax”) Plan sponsors must pay a 40% tax on the

difference between $10,200 (self-only coverage) or $27,500 (family coverage) and the actual cost of any employer-sponsored insurance Dollar amounts increase, indexed to inflation Includes total cost of coverage (both employer AND

employee share of premium) Not in effect until 2018, but many employers

starting to think about and prepare plan design changes now


Conclusion

Questions? Comments?

Colleen Bruce, Esq.Director of Value Based Purchasing and

Public Policy(202) 775-9300 ext. 14

[email protected]

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