1

ACA Primer for Employers

Jay McLaren, Director of Government Relations

July 31, 2013

2

Employer Overview of the ACA

Core Issues 2014 Employer Penalties 2014 Employer Rating and Product

Requirements Taxes and Assessments MNsure – Minnesota’s Insurance Exchange ACA Impact on Minnesota What You Need to Know

3

2014 Employer Penalties

4

Employer Play or Pay

Recent Developments One-year delay

- Applies to penalties and affiliated requirements- Applies to reporting requirements applied to

businesses and insurers- Does not apply to other portions of the ACA that

impact group coverage Delay impacts the penalties and affiliated

requirements; examples include: - Coverage for employees working 30 hrs/week or

more- Affordability safe harbors (9.5% of employee

income)- Report that was to begin January, 2015

5

Employer Play or Pay

What Does This Mean? Wait for the release of regulations to learn details

- Full year delay or partial year delay?- How will the delay work?- Which existing requirements will change and how?

Large employers must still implement other portions of the ACA upon renewal in 2014; examples include:- 90-day waiting period maximum- Maximum out-of-pocket requirement- No annual limits on coverage

Employees and their families may still qualify for subsidies through the Exchange

6

Employer Penalties

Penalties apply to large employers (> 50 employees)

Penalty for employers who do not offer coverage- $2,000 penalty per employee- First 30 employees exempt from count

Penalty for employers who do offer coverage but have at least one employee certified to access a subsidy- Employees eligible for subsidy if:

• Plan’s share of the total allowed costs of benefits provided is less than 60 percent of such costs

• Premium > 9.5 percent of the employee’s household income

- $3000 penalty per employee certified to receive a subsidy

7

Employer Penalties

Previously Released Information Employer safe harbor:- Offer coverage to its full-time employees (and

their dependents)- Ensure actuarial value of coverage is at least

60%- Ensure employee portion of the self-only

premium for the lowest cost coverage does not exceed 9.5% of the employee’s income

Three possible safe harbors for determining how to calculate 9.5% of employee’s income- W-2- Rate of Pay- Federal Poverty Line

8

Employer Penalties

Previously Released Information Two different employee calculations

1. Employer size• Full-time employees, part-time employees, and

seasonal employees• Does the employer qualify for a seasonal

employee exception?2. “Full-time employees”

• Generally working more than 30 hours per week• Options for determining variable hour

employees are complicated, but may be beneficial: Look-back periods, administrative periods, and stability periods

9

2014 Market and Product Rules

10

Market and Product Rules

Guarantee Issue• Requires health plans to accept or renew every

employer that applies for coverage- Applies to all groups

• Prohibits any pre-existing condition exclusions or discrimination based on health status- Applies to all groups

• Small Group Coverage• Health plans may apply participation and

contribution requirements throughout the year

11

Market and Product Rules

Rate Variation Premiums for small group and individual health

insurance may vary only by:- Family structure- Rating area- Age (not more than 3 to 1)- Tobacco use (not more than 1.5 to 1)

Applies to 51-100 groups beginning in 2016 Applies to larger groups at the discretion of the

state beginning in 2017 Does not apply to self-insured groups

12

Market and Product Rules

Rate Variation: Tobacco Use of tobacco on average of four or more times

per week within no longer than the last six months Includes all tobacco products Limited to legal use of tobacco (18 years & older) Health plan may retroactively apply the rating

factor if an enrollee reported false or incorrect information

Exemptions:- Religious or ceremonial use- Wellness program participation through

a small group employer

13

Market and Product Rules

Small Group Deductibles Limits Limited to $2000 for individual coverage and

$4000 for family coverage- Exception to meet the metal level coverage- Exception applies at least to the Bronze plan

Remember: “Small Group” expands to include 51-100 groups in 2016 and may include larger groups beginning in 2017

14

Market and Product Rules

Annual Out-of-Pocket Limits In 2014, limited to the thresholds established

by IRS for High Deductible Health Plans Current limits

- Self-only: $ 6,250 ($6,350 in 2014)- Family: $12,500 ($12,700 in 2014)

Applies to all products fully and self-insured Limits adjusted annually by national per capita

premium change

15

Market and Product Rules

Actuarial Value Every individual and small group product must

meet one of the following actuarial values.- 60% - Bronze- 70% - Silver- 80% - Gold- 90% - Platinum

Plans can deviate +/- 2% from these levels

16

Market and Product Rules

Minimum Value (MV) Requirement placed on employers to offer

coverage that meets a minimum value of benefit (60%)

Determined using tools from federal agencies:- MV Calculator available on the IRS or DHHS website- Checklists approved by the IRS- Actuary certification for plans with non-standard

features Any plan in small-group market that meets any of

the metal levels satisfies minimum value An employer’s Summary of Benefits and Coverage

(SBC) will show if the plan meets MV or not

17

Taxes and Assessments

18

Taxes and Assessments

Health Taxes Tax on insurance companies begins in 2014

- 2014: $8 billion nationally- 2015-2016: $11.3 billion per year- 2017: $13.9 billion- 2018-on: $14.3 billion per year

MNSURE – Minnesota’s Exchange- 1.5% premium withhold in 2014- Up to 3.5% in 2015 and beyond

Other Taxes (national)- $10 billion transitional reinsurance program payments - $3 billion tax on medications- $2.7 billion tax on medical devices- $300 million for comparative effectiveness research

19

MNsureMinnesota’s Insurance

Exchange

20

MNsure – Minnesota’s Exchange

What Is It? Intended to be a Travelocity or Expedia for health

insurance; a virtual health insurance marketplace Delivery system for federal health insurance

subsidies in the individual market Option for small businesses to offer coverage

What It Is Not An insurer with its own health insurance products A purchasing pool or “active purchaser” entity that

negotiates with insurers A takeover of the health insurance market

21

MNsure – Minnesota’s Exchange

Two Exchanges Within the Exchange Individual

- Eligibility determination for subsidies, Medicaid, and MinnesotaCare

- Shop for individual coverage- Medica, HP, BCBS, P1, UCare

Small Business Health Options Program (SHOP)- Option for employers to offer coverage to employees- Carrier risk is pooled inside and outside the

exchange- Medica, BCBS, and P1

Minnesota insurance regulators have stated nine insurers have applied to participate in MNsure

22

MNsure – Minnesota’s Exchange

Exchanges and Group Coverage Employer Size

- Enrollment limited to small groups (<50) in year 1&2

- Employers with up to 100 employees may use the exchange beginning in 2016

- States can choose to allow even larger groups into the exchange beginning in 2017

Small Business Health Care Tax Credit- Currently offered to small businesses that qualify- Maximum credit increases to 50% in 2014- Qualifying employers may only receive it by using

the exchange beginning in 2014

23

MNsure – Minnesota’s Exchange

Board of Directors 3 consumers, 3 with specific expertise, DHS

Commissioner Appointed to the Board in early May Prohibited from employment as a health care

provider, in health insurance industry, as insurance agent or broker, or Exchange contractors

Finance 1.5% premium withhold in 2014 Withhold up to 3.5% in 2015 and beyond Cost will be spread inside and outside the exchange

on individual and small group policies

24

MNsure – Minnesota’s Exchange

Plan Participation/Selection Board may apply selection criteria to insurers

and plans in 2015 and beyondAgents/Brokers, Navigators, IPAs, and CACs

Brokers will be available upon completion of MNsure training and certification requirements- Educate on products inside and outside MNsure- May recommend a specific plan

Navigators and others available to educate on offerings inside MNsure

25

ACA Impact on Minnesota

26

ACA Impact on Minnesota

The Basics Relatively low uninsured rate of about 9% Positive indicators

- #4 in % receiving employer-sponsored coverage- Relatively generous coverage through public programs- MinnesotaCare likely to continue into 2014- Some elements of the ACA were already in place

Other indicators- #9 in median income for households of 4- MCHA phase-out plan-19th highest cost of self-only coverage through a small employer

27

ACA Impact on MN Small Group Market

Impact of Community Rating: MN Small Group MarketStudy by the State of Minnesota

Source: “The Impact of the ACA and Exchange on Minnesota,” a study commissioned by the Minnesota Department of Commerce and completed by Dr. Jonathan Gruber and Gorman

Actuarial, LLC.; April, 2012.

28

What You Need to Know

29

What You Need to Know

All Employers Employee notice of Exchanges by 10/1 Federal Department of Labor http://

www.dol.gov/ebsa/healthreformLarge Employers New insurance benefit mandate for fully-insured

groups beginning in 2014- Intensive services for children with autism- Applies only to the fully-insured large group

market Employer “Pay of Play” delayed one year Other ACA requirements go into effect in 2014 Advice is available through benefit professionals

30

What You Need to Know

Small Businesses ACA represents a challenge for relatively

healthy small businesses Key target audience for the SHOP Advice is available through benefit professionals

31

Thank You