Jim Hill and Ken Jim Hill and Ken McGeeMcGee

Affordable Care Affordable Care Act : Act : Are you prepared?Are you prepared?

• Will I have to buy it

• Can I still get it though my Employer

• I own a small business. Will I have to buy health insurance for my workers?

The Affordable Care Act is back on a fast track.

DOL Starts Auditing ACA Compliance

•The DOL has begun using its investigative authority to enforce compliance with the health care reform law. DOL audit letters have been requesting that health plan sponsors provide documents demonstrating compliance with ACA’s mandates.

•The DOL’s audit requests related to ACA compliance have been divided into three categories:

(1) requests for grandfathered plans (2) requests for non-grandfathered plans(3) requests for all health plans

Inadequate responses to the DOL could trigger additional document requests, interviews, on-site visits and even DOL enforcement actions.

DOL Starts Auditing ACA Compliance

COMPLIANCE STEPS

In light of these risks, employers should be prepared to demonstrate their compliance with ACA by producing documents.

Employers should maintain and be able to produce:

•Records of the steps they have taken to comply with ACA’s requirements, including plan participation information and communications with participants

•Plan amendments or procedures that were adopted to comply with ACA, as well as contracts or agreements with service providers, such as IROs and TPAs

•Notices that were provided under ACA, such as the notice of grandfathered status and notice of enrollment for children up to age 26.

What is the ACA:Promoting Health Coverage

Medicaid Coverage

(up to 133% FPL)

Employer-Sponsored Coverage

Exchanges(subsidies 133-

400% FPL)

IndividualMandate

Health Insurance

Market Reforms

Universal Coverage

Reforms Currently in Place

Summary of Benefits and Coverage

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

• Model template and guidance available− Instructions−Sample language−Uniform glossary of terms

• Final guidance specifies compliance deadlines−Original deadline was March 23, 2012

SBC Compliance Deadlines

• Issuers to health plans: Sept. 23, 2012

• Health plans:−Open enrollment: 1st day of the 1st open enrollment

period that begins on or after Sept. 23, 2012 or−Other enrollment: 1st day of the 1st plan year that

begins on or after Sept. 23, 2012

• Special rules specify when SBC must be provided

• No duplication required: if issuer provides to enrollees, plan doesn’t have to

Providing the SBC to Health Plans

• Issuers must provide SBC to health plans:

−Upon application

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

−When a policy is renewed or reissued

−Upon request

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)

−To special enrollees within SPD timeframe

−Upon request

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

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

New Notice Requirement

• Employers must notify new employees regarding health care coverage−At time of hiring

• Notice must include information about 2014 changes:−Existence of health benefit exchange−Potential eligibility for subsidy under exchange if

employer’s share of benefit cost is less than 60 percent−Risk of losing employer contribution if employee buys

coverage through an exchange

2014 Compliance Deadlines

Individual Mandate

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

• Penalty amount: Greater of a flat dollar amount or a percent of income− 2014 = $95 or 1%− 2015 = $325 or 2%− 2016 = $695 or 2.5%

• Family penalty capped at 300% of the adult flat dollar penalty or “bronze” level Exchange premium

• Some exceptions apply

Penalties for individualsOutside

exchange – Fully insured Large Group

and self-insured

Outside exchange – Fully

insured Small Group and Individual

2014:Greater of $95 or 1% of taxable income

2015:Greater of $325 or 2% of taxable income

2016:Greater of $695 or 2.5% of taxable income

2017 and beyond:Annual adjustments

The big picture for individualsAmericans not covered under a government plan will have three options for health insurance in 2014:

1. Get coverage through their employer if available

2. Buy an individual market plan through either:

• The individual market exchange – Purchaser may be eligible for subsidy

• The off-exchange market

3. Go uninsured (will pay penalty unless they qualify for anindividual exemption)

Health Insurance Exchanges

Health Insurance Exchanges

• What do they look like

• How many options will we have

• Actual Value out of Pocket levels− Platinum− Gold− Silver− Bronze

Health Insurance Exchanges

• Health insurance Exchanges will be established in each state (by the state or the federal government)

• State action:−17 (and D.C.) declared state-based Exchange−7 planning Partnership Exchange−26 default to federal Exchange

• Deadlines −Fully operational: 1/1/14

NH Exchange

• New Hampshire: 16,863 Granite Staters had selected an Exchange plan as of 2/1/14. 

• According to reports, more than  22,000 residents received insurance cancellation letters.

Health Insurance Exchanges

• States will receive funding to establish health insurance exchanges

• Individuals and small employers can purchase coverage through an exchange (Qualified Health Plans)− In 2017, states can allow employers of any size to

purchase coverage through exchange

• Individuals can be eligible for tax credits−Limits on income and government program eligibility−Employer plan is unaffordable or not of minimum value

Health plan requirements: Product tiers

All will include Essential Health

Benefits

Platinum 90%

actuarial value

Gold 80%

actuarial value

Bronze60%

actuarial value

Silver70%

actuarial value

Actuarial Value** =

Total Expected Payments by Health Plans for EHBs

Total Costs of EHBs for the Standard Population

•Plus catastrophic plan offering for individuals younger than 30/ financial hardship

Health Insurance Exchanges

• Individuals and small employers can purchase coverage through an Exchange

• Small Business Health Option Program (SHOP)−Small employers = up to 100 employees−Before 2016, states can define small employers as having

up to 50 employees

• In 2017, states can allow employers of any size to purchase coverage through Exchange

• Individuals can be eligible for tax credits−Limits on income and government program eligibility−Employer plan is unaffordable or not of minimum value

Employer Responsibility

• Large employers subject to “Pay or Play” rules− Delayed for one year, until 2015 – these payments will not apply

in 2014− Delayed for an additional year, until 2016, for applicable large

employers with 50-99 full-time employees (including full-time equivalents)

• 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 may apply if the employer:− Fails to offer minimum essential coverage to all FT employees (and

dependents) OR

− Offers coverage that is not affordable or does not provide minimum value

• Penalties triggered if any FT employee gets subsidized coverage through Exchange

Exchange Premium Assistance

• Employee eligibility will trigger employer penalties

• Employees who are not offered employer coverage− Not eligible for government programs (like Medicaid)− Meet income requirements (less than 400% of FPL)

• Employees who are offered employer coverage− Not enrolled in employer’s plan− Not eligible for government programs (like Medicaid)− Meet income requirements (less than 400% of FPL)−Employer’s coverage is unaffordable (greater than

9.5% of income for single coverage) or not of minimum value (covers less than 60% of cost of benefits)

Employer Penalty Amounts

• Employers that fail to offer coverage to all FT employees:

− $2,000 per full-time employee (excludes first 30 employees)

− Transition relief for 2015: employers with 100 or more FT employees can reduce their FT employee count by 80 when calculating the penalty

• Employers that offer coverage to substantially all FT employees (and dependents) but not all FT employees OR coverage is unaffordable or not minimum value:

− $3,000 for each employee who receives subsidized coverage through an Exchange

− Capped at $2,000 per FT employee (excluding first 30 employees, or 80 for 2015)

Employer Reporting

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

• Applies to:−“Applicable large employers” – generally, employers with

at least 50 full-time equivalent employees

• Delayed for one year, until 2015−Treasury issued proposed regulations on Sept. 5, 2013−No additional delay for applicable large employers with

fewer than 100 FT employees

Waiting Period Limitations

• Waiting periods limited to 90 days beginning with 2014 plan year− Proposed rule issued on March 18, 2013 (may rely on

proposed rule through 2014)− First of the month following 90 days not permissible

• Other eligibility conditions are permissible (unless designed to avoid compliance with 90-day limit)− Cumulative hours of service requirement cannot exceed 1200

hours and must be one-time only (not each year)

• Employers can use up to a 12-month measurement period to determine FT status for variable hour employees− Coverage must be effective by 13 months from start date

(plus remaining days in the month)

Plan Changes

• Annual limits eliminated −Prohibited on essential health benefits with 2014 plan year−Essential health benefits to be determined according to

state benchmark plan

• Preexisting condition exclusions prohibited−Currently prohibited for children under age 19−Prohibited for everyone beginning with 2014 plan year

• Small group and individual policies (non-GF plans)−Must provide essential health benefits package−Premium rating restrictions apply

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

• 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

Contact information

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Thank you!