University of University of Hartford - Hartford - EmeritiEmeriti

Health Care Health Care Reform: Reform: Health Plan Health Plan OverviewOverview

Presented by Presented by Christopher MonroeChristopher MonroeConstitution Advisory GroupConstitution Advisory Group

Agenda

• Reforms currently in place

• 2012-2013 compliance deadlines

• Future compliance deadlines

• Retiree Plans – “University of Hartford and Future Impact”

• Questions

Reforms Currently in Place

Provisions Already Effective

• Small employer tax credit• Dependent coverage up to age 26• No lifetime limits/restrictions on annual limits• No rescissions • No pre-existing condition exclusions for children• No cost-sharing for preventive care services• Appeals process changes – “user friendly”• No reimbursement for OTC medicine or drugs (without a prescription)

• Medical loss ratio rules – “fully insured groups only”• Part D Discount Expansion - “Donut Hole”

2012-2013 Compliance Deadlines

W-2 Reporting

• Employers must report aggregate cost of group health plan coverage on each employee’s Form W-2

• Does not change the tax rules for health coverage – coverage is still not taxable

Effective Date for W-2 Reporting

• Reporting optional for all employers in 2011

• Mandatory for 2012 tax year (W-2 Forms provided in January 2013)

• For small employers (filed fewer than 250 W-2 Forms last year), reporting requirement is delayed until further guidance issued

• Covered employers need to be compiling data

Summary of Benefits and Coverage

• Simple and concise explanation of benefits− Applies to GF and non-GF plans

• Final guidance specifies compliance deadlines− Original deadline was March 23, 2012− Revised deadline of September 23, 2012.

• Carrier support in place and functional.

Providing the SBC to Enrollees

• Plans must provide SBC to enrollees:− For each benefit package offered or which they are eligible

− Annually at renewal (or 30 days before new plan year if automatic renewal)

− With enrollment application materials

− If no written enrollment materials, when the participant is first eligible to enroll

− Before the first day of coverage (if there have been changes to the SBC)

− Upon request

SBC Standards

• Appearance− Cannot be longer than 4 double-sided pages− 12-point or larger font− May be color or black and white− Paper or electronic form− Template available

• Language:− Easily understood language− “Culturally and linguistically appropriate manner” – interpretive

services and written translations upon request− Translations are available

SBC Content

• Uniform definitions of standard terms

• Description of plan’s coverage

• Exceptions and limitations

• Cost-sharing provisions

• Renewability and continuation

• Coverage examples

• Required statements and contact information

• Internet address for obtaining the uniform glossary of terms

60-Day Notice Rule

• Material modifications not in connection with renewal must be described in a summary of material modifications (SMM) or an updated SBC

• Material modification:−Enhancement of covered benefits or services−Material reduction in covered benefits or services−More stringent requirements for receipt of benefits

• Must be provided at least 60 days BEFORE modification becomes effective

Preventive Care for Women

• New guidelines for preventive care for women

• Must provide coverage for women’s preventive health services without any cost-sharing

− Applies to non-GF plans− No deductible, copayment or coinsurance

• Effective for plan years beginning on or after Aug. 1, 2012

Preventive Care for WomenCovered Health Services

• Well-women visits

• Gestational diabetes screening

• HPV DNA testing

• Sexually transmitted infection counseling

• HIV screening and counseling

• Breastfeeding support, supplies and counseling

• Domestic violence screening and counseling

• Contraceptives and contraceptive counseling

Increased Medicare Tax

• Medicare tax rate to increase for high-earners−0.9 percent increase (from 1.45 percent to 2.35 percent)

• High-earner threshold −Single: $200,000−Married : $250,000

• Employer responsibilities−Withhold additional amounts from wages in excess of

$200,000−No requirement to match additional tax−No requirement to notify employees

Health FSA Limits

• Current limits−No limit on salary reductions−Many employers impose limit

• Beginning in 2013, limit is $2500/year−Limit is indexed for CPI for later years

• Applies to plan years beginning on or after 1/1/13−This is a change from initial effective date

• Does not apply to dependent care FSAs

Comparative Effectiveness Research Fees – July, 2013 & Beyond

• Patient-Centered Outcomes Research Institute − Created to improve informed health decisions− Research funded by a fee paid by insurers and plan sponsors of

self-funded plans

• Effective date− Plan years ending after Sept. 30, 2012 − Do not apply for plan years ending after Sept. 30, 2019− For calendar year plans – apply for 2012-2018 plan years

• Amount of fee:− $1 per covered life− Increases to $2− Indexed for CPI

Notice of Exchange

• Employers must notify new and current employees of exchange information

− Originally effective March 1, 2013− Delayed until October 1, 2013.− No Penalty if Employers elect not to Distribute Notice

• Notice must include information about 2014 changes:

− Existence of health benefit exchange and services provided− Potential eligibility for subsidy under exchange− Risk of losing employer contribution if employee buys coverage

through an exchange

• More guidance and model notice expected

2014 Compliance Deadlines

Individual Mandate

• Individual mandate is a “tax” and thus constitutional per Supreme Court.

• Jan. 1, 2014: Individuals must enroll in coverage or pay a penalty

• Penalty amount: Greater of $ amount or a % of income

− 2014 = $95 or 1%− 2015 = $325 or 2%− 2016 = $695 or 2.5%

Health Insurance Exchanges

• Health insurance exchanges will be established in each state – October 1st “Working out the Kinks”

• Individuals and small employers can purchase coverage through an exchange

− In 2017, states can allow employers of any size to purchase coverage through exchange

• Individuals may be eligible for federal subsidy− Limits on income and government program eligibility− Employer plan is unaffordable or not of minimum value

Employer Responsibility“Pay or Play”

• Large employers subject to “Pay or Play” rule− Offer coverage of a certain quality or possibly pay a penalty

• Applies to employers with 50 or more full-time equivalent employees in prior calendar year

− FT employee: employed for an average of at least 30 hours of service per week

• Penalties apply if:− Employer does not provide coverage to all FT employees –

Access

− Plan Design is not of a Minimum Value – 60% actuarial value

− Cost of single coverage is not deemed Affordable – 9.5% “Safe Harbor”

Employer Penalty Amounts“Pay or Play”

• Employers that do not offer coverage to all full-time employees:

− $2,000 penalty per full-time employee

− Excludes first 30 employees

• Employers that offer coverage:− $3,000 for each employee that receives subsidized coverage

through an exchange

− Capped at $2,000 per full-time employee (excluding first 30 employees)

− Penalties do not apply if your plan satisfies the minimum value (60%) or 9.5% Safe Harbor test.

Employer Reporting

• Employers will have to report certain information about health coverage to the government.

• Information geared towards:−Access – “must offer to all FT employees working over 30

hrs”.−Coverage Levels – “must cover 60% of plan expenses”−Affordability – “can’t exceed 9.5% of gross income”

• Applies to coverage offered after Jan. 1, 2014 Originally. Later postponed until 2015.

• First returns to be filed in 2016

Transitional Reinsurance Fee

• Three (3) year program – “Support high dollar claims within an exchange structure”

• Aim is to raise $25 billion to fund this initiative.− 2014 – Fee set at $5.25 per member per month or $63.00

annually.− Member is defined as employee, spouse, dependent children.− Fee reduces each year and “sunsets” in 2017.

• Applies to fully insured and self insured employer groups.

• Estimated impact to the University in 2014 - $110,000

Future Compliance Deadlines

2018 – Cadillac Plan Tax

• 40 percent excise tax on high-cost health plans

• Based on value of employer-provided health coverage over certain limits

− $10,200 for single coverage− $27,500 for family coverage

• To be paid by coverage providers− Fully insured plans = health insurer− HSA/Archer MSA = employer− Self-insured plans/FSAs = plan administrator/employer

• More guidance expected

Automatic Enrollment Rules

• Will apply to large employers that offer health benefits

− Applies to GF and non-GF plans− Large employer = more than 200 employees

• Must automatically enroll new employees and re-enroll current participants

• Adequate notice and opt-out option required

• DOL: − Regulations will not be ready to take effect by 2014− Employers not required to comply until regulations issued and

applicable

University of HartfordPPACA and Retiree Coverage

PPACA & Retiree Coverage

• Uncertainly Still Abounds – “Same for Active Plans”.

• Financial Constraints – “Will there be Belt Tightening”

• Part D changes have been Positive:− $250 Part D Refund (2010) for those within “Donut Hole”

− Discounts continue to grow within the “Donut Hole” – generic/brand

− Shrinking of the “Donut Hole” by 2020.

• University’s Cost Basis has improved.− Cost reductions since 2010 - $450 to $390.

− Integrity of the current plan has been maintained for the most part.

PPACA & Retiree Coverage

• 2014 Individual Mandate – Questions Linger− Will the “Exchange” roll out impact my current plan?

− Will I be pushed to secure coverage via the “Exchange”?

− Will the Patient Centered Research Organization address issues relative to Medicare coverage limits?

− If the University drops its plan how will I secure coverage?

− Will my plan change in 2014 and what will it cost me as a retiree of the University?

− Will my doctor continue to accept Medicare reimbursement?

− Will it be difficult to schedule appointments with my provider?

− Will funding be shifted from Medicare to support PPACA?

Questions?

Thank you!

This presentation is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Please contact legal counsel for legal advice on specific situations. This presentation may not be duplicated or redistributed without permission. © 2012 Zywave, Inc. All rights reserved.