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MARCH 7, 2014

POLITICAL LANDSCAPE

President Obama speaks about the Affordable Care Act at the White House on May 10.

UNDERSTANDING: CURRENT MINDSET & LANDSCAPE

Know very little. Those most likely to benefit know even less. Negative experiences frame expectations. Very high levels of skepticism. Most have been uninsured for two years or more. There is interest in exchanges, but interest is soft. Vast majority have low education and literacy levels.

Testing on Perceptions of Affordability – Testing using the KFF calculator

53% feel premium amount is in the unaffordable range – 59% of uninsured

$210 for individual or $412 for family of four

Source : Enroll America webinar 2-14-03

If you had to look for health insurance now, what feelings do you think you would feel???

.

How is health reform going to impact premium rates and the amount people actually pay for coverage? Right now with coverage extensions, exchange enrollment unknowns and the huge number of employers who took a December 1, 2013 renewal option, we will not know the true impact until this time next year

MARKETPLACE OPEN ENROLLMENT:THE VISION

MARKETPLACE OPEN ENROLLMENT: THE REALITY

UNDERSTANDING: LIMITED PUBLIC AWARENESS

78%83%

UNDERSTANDING: LIMITED PUBLIC AWARENESS

78%83%

UNDERSTANDING: LIMITED PUBLIC AWARENESS

78%83%

MARKETPLACE OPTIONS

MEDICAID EXPANSION

Individuals must meet certain conditions to be eligible for subsidies in the exchanges.

Individuals eligible for Medicaid, Medicare, TriCare, or CHIP programs are not eligible for subsidies in the exchanges.

Employees offered coverage from their employers cannot receive federally subsidized coverage (even if they are between 100% and 400% of FPL) if:

Employer offers “acceptable” minimum essential coverage with at least 60% value, and

Employer meets the “affordability” standards – employee contribution for self-only coverage is not greater than 9.5% of household MAGI – employer can use three safe harbors.

FEDERAL SUBSIDY IN EXCHANGES

Source: EBIA webinar March 21, 2013

Employed?Employed?

Access to “acceptable” coverage?

Access to “acceptable” coverage?

Access to “affordable coverage?

Access to “affordable coverage?

NotEligible

NotEligible

Eligible for Individual T

ax Credit

Eligible for Individual T

ax Credit

YES

YES

YES

No

No

No

MARKETPLACE SPECIAL ENROLLMENTS

DELAYS, BLACK CLOUDS AND UNKNOWNS

Employer Mandate Enforcement

Status of Employer Mandate Transitional Relief

Additional guidance on Staffing, commission employees, educational organizations

Employer Reporting Requirements

Group Size Changes

Large group in Exchanges after 2016

Cadillac Tax in 2018

FINAL EMPLOYER MANDATE RULES (4980H) • On February 10, 2014, the federal Department of

Treasury released the final rules on compliance with the employer shared responsibility requirements under the health reform law, which often referred to as the law’s employer mandate provisions. https://s3.amazonaws.com/public-inspection.federalregister.gov/2014-03082.pdf

• The rules will generally take effect on January 1, 2015. • The Department of Treasury also has a web page

available offering more guidance on the rules and determining employer eligibility. http://www.irs.gov/uac/Newsroom/Questions-and-Answers-on-Employer-Shared-Responsibility-Provisions-Under-the-Affordable-Care-Act

4980H MAJOR CHANGES WE WILL DISCUSS

Enforcement delay for most groups with 50-99 full-time equivalents

Obligation clarity for employers with employees in a multiemployer plan

Guidance on how to treat employees of staffing firms, PEOs, school faculty, student workers, people with on-call and layover hours, volunteers, clergy and other employees with tricky hourly calculations.

Transition relief for:Establishing a compliant

plan by 2015Non-calendar year plansCovering 95% of your

workforceCoverage of Dependents

Changes to the “rehire” calculation

Changes to monthly measurement period options

ENFORCEMENT IS DELAYED FOR MOST MID-SIZED GROUPS• The final rules phase in the employer requirements for smaller

employers, giving employers with less than 100 full-time equivalent employees (FTEs) but more than 50 FTEs until January 1, 2016, to comply.

• To be eligible, an employer will have to go through a certification process to demonstrate that during the period beginning on February 9, 2014, and ending on December 31, 2014, the employer does not reduce the size of its workforce or the overall hours of service of its employees in order to satisfy the workforce size condition.

• Employers will have to count full-time equivalent employees using the already established method of counting part-time employees in their employee total on a pro-rata basis, even though part-time employees do not have be offered coverage if they work an average of less than 30 hours a week.

• Employers may establish a six-month period to count employees to determine if the mandate applies at all for the subsequent year.

• If the employer uses the last few months of the year as its measurement period for applicability, there is a one-time exception for employers who do not already have a compliant plan in place for the very first year of mandate applicability. These employers will not have to have a compliant plan in place for all employees by January 1. The employer will not be subject to penalties for the first three months of the year if such an employer establishes a compliant plan and offers it to all eligible employees by April 1.

NON-CALENDAR YEAR PLANS• Employers who offer non-calendar year plans and who have met certain requirements are not required to comply with section 4980H until the start of their ERISA plan years in 2015, rather than on January 1, 2015.

• The rules for eligible plans very similar to the conditions for transition relief in the proposed rule and begin on page 107 in the final rule.

MAJOR CONDITIONS• Maintained non-calendar year plan before December 27, 2012

• Did not modify plan year after December 27, 2012

• Did not change eligibility rules after February 9, 2014

IMPORTANT NOTE: This provision applies to the ERISA plan year stipulated in the group’s plan documents, not their plan contract renewal date ,and these dates may differ.! If a group doesn’t have legal ERISA plan documents, the contract renewal date is the default date, but you need to create plan documents for DOL enforcement! If a group has appropriate plan documents, they may want to modify their ERISA plan year to conform with the plan renewal date for ease of administration, but they can only do that if the ERISA renewal date is later in the year than the plan contract renewal. If the ERISA date comes first, the plan needs to have all changes in effect on the date of the ERISA plan anniversary!

WHO HAS TO BE OFFERED COVERAGE?Full Time Employees (30 hours or more a week)Dependents who are defined as employee’s children under age 26 (IRC §152(f)(1) Final rule excludes step-children.

•Employers will not face tax penalties for electing not to offer coverage to spouses. If a spouse has no other source of affordable employer-sponsored coverage, he/she could get an exchange subsidy.

Full Time Employees (30 hours or more a week)Dependents who are defined as employee’s children under age 26 (IRC §152(f)(1) Final rule excludes step-children.

•Employers will not face tax penalties for electing not to offer coverage to spouses. If a spouse has no other source of affordable employer-sponsored coverage, he/she could get an exchange subsidy.

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Key Points About The Coverage Offer Requirement

•A large employer will be considered as offering coverage to full-time employees and can avoid the “A” penalty if they offer minimum essential coverage to 70% of the FT employees and dependents in 2015.•All eligible employers will need to offer coverage to 95% of eligible employees and their dependents in 2016 to avoid potential tax penalties under section 4980H(a) •The choice to exclude certain classes of workers (such as variable hour employees) in order to fall under the 70 percent coverage standard may be deliberate for 2015, as this transition relief was intended to make the transition to the 30 hour/week standard of offering coverage easier for employers.•If any of the 30% of full-time employees and dependents (and in later years the 5%) who are not offered coverage receive premium tax credits from an Exchange, the employer will be required to pay the “B” penalty--an annual penalty of $3,000 for each of those employees that gets subsidized coverage.

Key Points About The Coverage Offer Requirement

•A large employer will be considered as offering coverage to full-time employees and can avoid the “A” penalty if they offer minimum essential coverage to 70% of the FT employees and dependents in 2015.•All eligible employers will need to offer coverage to 95% of eligible employees and their dependents in 2016 to avoid potential tax penalties under section 4980H(a) •The choice to exclude certain classes of workers (such as variable hour employees) in order to fall under the 70 percent coverage standard may be deliberate for 2015, as this transition relief was intended to make the transition to the 30 hour/week standard of offering coverage easier for employers.•If any of the 30% of full-time employees and dependents (and in later years the 5%) who are not offered coverage receive premium tax credits from an Exchange, the employer will be required to pay the “B” penalty--an annual penalty of $3,000 for each of those employees that gets subsidized coverage.

Q & A

DELAYED until 2015

PLANNING AHEAD

Preparation

AssessCosts

Count

Decisions

Implement

Reporting

Current requirements for compliance: SBC distribution, new notices, W2, fees – PCORI fee, HIT tax, Reinsurance fee, determine affordability and MV.

Forecast Pay or Play options – use the BB&T tools and Predictive Modeling to help in the assessment – including contribution and plan offerings. Tax implication and workforce restructuring.

Consider control group rules, current full-time eligibility, safe harbor measurement periods, newly eligible under HCR, understand shared responsibility counting.

What is best for your culture? Consider talent recruitment and operations.

Implementation: Plan design changes, new offerings, CDHPs, contributions.

IRS reporting and internal measurements.

WHICH PROVISIONS APPLY?

23

Provision Group Size

•Employer Mandate•(Must offer FT

employees affordable and minimum value

coverage)

• 50+ FT Equivalents • Uses a new definition of FT employee of 30 hours/week• PT employees count on a pro-rata basis to determine applicability but do not need to be offered coverage

• Controlled Group Rules Apply

•W2 Reporting•(Must report value of health benefits—just reporting, no

taxation)

• Mandatory for groups that issue 250 or more W2s. Currently optional for other groups for but will eventually apply to all.

• Applicability "based upon the rule in § 6011(e) that exempts employers from filing returns electronically if they file fewer than

250 returns." • Groups should verify with CPA but generally can apply on a separate employer basis unless the group uses a common

paymaster.

•Cadillac Tax (begins in 2018)

• All group health plans

•Auto-Enrollment (effective date

unclear but at least 2015)

• All groups of 200 or more employees

WHICH PROVISIONS APPLY?

24

Provision Group Size Applicability

Market Reforms(Required to buy a

qualified health plan, EHBs, metal levels,

MCR, etc.)

•State definition of small group until December 31, 2015 •Effective January 1, 2016 small group definition becomes 1-100 for all

states•If a state allows large groups in the exchange after 2017, then market

rules apply to them too•Grandfathered plans exempt

Small Group Deductible Cap

•State definition of small group until December 31, 2015•Effective January 1, 2016 small group definition becomes 1-100 for all

states•Grandfathered plans exempt

•Impact currently mitigated by temporary HHS relief that expires in 2016b

Maximum Out-of-Pocket Limits

•Tied to annual HSA limits and includes deductibles and other costs sharing

•Applies to all non-grandfathered plans, including large group and self-funded plans

•Stacked limits allowed in 2014 for separate vendors, but aggregated limit by 2015

Exchanges •Individual plans (only policies that are eligible for premium subsidy)•State definition of small group for SHOP exchange until 2016

•Effective January 1, 2016 small group definition becomes 1-100 for all states

•Sole proprietors currently not SHOP eligible•Post January 1, 2017 a state may elect to allow larger groups into the

SHOP exchange•Grandfathered plans exempt

WHICH PROVISIONS APPLY?

25

Provision Group Size Applicability

105 H Non Discrimination Rules

•All fully insured and self-funded group health plans except grandfathered plans

•Currently not enforced for fully insured plans, but rules specially designed for these plans expected to be

promulgated in 2015

Summary of Benefits and Coverage

All individual and group plans

Age 26, Rescissions, Prohibitions on benefit

limits

All individual and group plans

Preventive Care, Claims appeals and provider choice and

out-of-network emergency care

All individual and group plans except grandfathered plans

New National Premium Tax

Individual and fully insured groups

Employer Reporting to Exchanges

All group plans—guidance pending

New National Reinsurance Fee

All individual and group plans

LEGISLATIVE UPDATE

S. 650: Sen. Mary Landrieu (D-LA) 12 official co-sponsors on the bill

H.R. 2328: Rep. Mike Rogers (R-MI), Rep. John Barrow (D-GA)

96 official co-sponsors on the bill, more have committed to sign on Only difference between House and Senate Bill is the Senate bill only carves agent and

broker commissions out of the MLR in the small-group and individual markets whereas the House bill carves agent and broker commissions out of all markets

Update on Broker Bill 2.0

Can’t wait until the next Legislative update to find out how many bill sponsors we have? No problem! Check out http://beta.congress.gov/ to track any bill! Search by bill number or member name.

High Deductible Plans

H.R. 2995: Unnecessary Cap Act of 2013 Rep. Tom Reed (R-NY-23), Rep. Pat Tiberi (R-OH-12) Rep. Mike

Thompson (D-CA) Bill will lift $2,000 deductible cap on small group to allow for

more employer contributions

Employer Issues on the Hill: Keeping Employers in the Game

• PPACA changes the definition of a full time employee

• Employer Relief:•S. 1188 Forty Hours Is Full Time Act of 2013

•Sen. Susan Collins (R-ME), Sen. Joe Donnelley (D-IN)•13 Cosponsors •Send your Senator an operation shout on this issue!

•H.R. 2575 Save American Workers Act of 2013 •Rep. Todd Young (R-IN-9)• Seeks to change the definition of a full time employee to 40 hours and change the employer mandate •209 co-sponsors, almost all Republicans, only 7 Democrats

•H.R. 2988 Forty Hours Is Full Time Act of 2013• Rep. Daniel Lipinski (D-IL)• Mirrors S. 1188 language• 10 co-sponsors, Democrat Bill in House •NAHU supports all three of these bills

Healthcare.gov Improves Local Help Feature

For months, we have been working with HHS to get a “find an agent” type feature on healthcare.gov and it’s finally here

Healthcare,gov’s find an agent is a bit different from NAHU’s. Instead of linking consumers directly to agents and brokers in their areas, the consumer is provided with a list of agent and broker, state and local chapter contact information.

HHS reached out to all agent and broker trade groups in Washington to compile this information.

NAHU reached out to all chapters to get the most accurate data to pass onto HHS. If your chapter did not respond to NAHU’s information requests, or your chapter does not have a website, NAHU created an NAHU email address for your chapter. All inquiries to that address will be sent to the NAHU address, which we will monitor and any inquiries we receive will be passed along to the chapter president.

NAHU’s Find an Agent Media Campaign

NAHU launch a “Find an Agent” media campaign at www.agent-finder.org website that promotes the role of agents/brokers and directs visitors to NAHU’s “Find an Agent” feature.

Want to see it in action? Get googling!

What is NAHU Doing To Address Agent/Broker Exchange Issues?

Routine Meetings with HHS/White HouseChapter Information on Healthcare.GovHotline for Agents in ProcessImprovements to Direct Enrollment/Web Broker AccessLetter by Senator ShaheenLetter to President ObamaHouse LetterMultiple opportunities to Provide Testimony Before the NAICCurrent Legislation to Require All Agent and Broker

Information on the Federal Exchange Site

You can help too! Send this Operation Shout to you member of Congress. Help them help you enroll your clients!

NAHU RESOURCES TO HELP

•Washington Update•Compliance Corner

•Resources and Webinars•Customized Answers to Compliance Questions•FAQs

•PPACA Certification Course•Plan Doc Builder and ACA Dashboard

Q & A

THANK YOU!

Marcy M. Buckner

Senior Director of State Affairs

National Association of Health Underwriters

mbuckner@nahu.org

202-595-7589