Operations 103Insurance for Employees,

Class 9

Today’s Topic

Few line items have a single higher dollar amount for a church than employee insurance.  Medical benefits are in massive restructuring in light of the Affordable Care Act.  While costs appear to be stable, there are also dental and life insurance issues to be considered.  This class will examine insurance for employees and how to receive and evaluate bids.  Changing carriers has an emotional price as well as a dollar consideration.  Privacy issues will be examined with regard to HIPAA regulations.

Donna Lively

Donna is the Director of Insurance Marketing with GuideStone Financial Resources. She brings thirty years experience in health and welfare benefit sales and sales leadership to her role and has held sales leadership positions at Aetna, CIGNA, and Humana, as well as several years spent as an employee benefits insurance broker/consultant. GuideStone serves 200,000 individuals and reports $11.8 billion in assets as of March 31, 2013. Donna has a wide understanding of the church insurance market, including PPACA, Health Reimbursement Accounts (HRA), Health Savings Accounts (HSA), and multiple funding options.

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Topics• State of health care and PPACA• Immediate Employer Impact

◦ Individual Mandate◦ Marketplace Exchanges◦ Small Group◦ Large Group◦ Taxes and Fees

• Strategy for 2014• Looking Forward

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PPACA Public PerceptionKaiser Family Foundation report (April 2013):

• Four in 10 Americans are unaware that PPACA is the law of the land

• Unfavorable 43% to 35% favorable opinion of PPACA

• Favorable ratings are the lowest since Kaiser tracking poll began in April 2010

NBC News/Wall Street Journal poll:• 49% of Americans say PPACA is a bad idea (highest

% recorded on this question since poll began in 2009)• 37% percent say PPACA is a good idea

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PPACA:Repeal, Replace, Defund

• Much political maneuvering• July 1, 2013 — administration delays Employer

Shared Responsibility penalty and reporting• In response:

◦ House votes 251–174 to delay Individual Shared Responsibility penalty and reporting

◦ Doesn’t make it out of Senate

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PPACA:Repeal, Replace, Defund

• July 5, 2013 — administration allows self-certification of salary and employer-provided coverage as initial attestation for subsidy

• In response:◦ House votes to repeal PPACA◦ Fortieth time the House has tried to eliminate,

defund or scale back PPACA◦ Didn’t make it out of the Senate

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PPACA:Repeal, Replace, Defund

• Government Shut-down◦ Sought delay◦ Sought fixes to some of the issues◦ None given

• Exchanges open◦ Online system doesn’t work well◦ Glitches◦ Expanded enrollment period◦ Penalty delayed 6 weeks

How much will PPACA help the uninsured?

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NOTE: This assumes that all states choose to expand Medicaid eligibility up to 138% FPL by January 2014.SOURCE: Congressional Budget Office, February 2013. Total may not equal 100% due to rounding.

2014 ImmediateEmployer Impact

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2014 Impact:How to purchase coverage

• Exchange or Marketplace will provide coverage for some people

• Individual coverage will still exist through insurance carriers.

• Small group employer sponsored coverage will still be purchased through insurance carriers, church plans or the new SHOP exchanges.

• Large group employer sponsored coverage will still be purchased through insurance carriers and church plans.

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Helpful Explanations

Essential Benefits Minimum Value Plan Minimum Essential Coverage (MEC)

Qualified Health Plans (Exchanges) Employer Provided Plans Individual Mandate

• Ambulatory services• Emergency services• Hospitalization• Maternity/newborn care• Mental health and substance

abuse services• Prescription drugs• Rehabilitative/habilitative

services/devices• Laboratory services• Preventive and wellness

services and chronic disease management

• Pediatric services, including oral and vision care

• The employer plan’s share of the total allowed cost of benefits provided under the plan must be greater than 60% of such costs.

• Employer penalty for not offering affordable minimal essential coverage of minimum value delayed until 2015.

• An individual must maintain MEC or face a penalty.

Individual Shared Responsibility — Individual Mandate

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2014 Impact: Individuals and Families

• Individual Shared Responsibility provision begins January 1, 2014.

• Everyone must purchase insurance:◦ Income above threshold level:

$9,350 — single $18,700 — married filing jointly

◦ Children◦ People waiving employer coverage◦ Senior citizens

• Note: Some exemptions do apply.

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2014 Impact: Individuals and Families

• Individuals must have minimum essential coverage (MEC)

• Available through:◦ Employer-sponsored plans◦ Government-sponsored programs◦ Exchanges◦ Grandfathered plans

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2014 Impact: Penalty for Non-coverage

• Greater of a flat dollar amount or a percentage of household income over the income tax filing threshold

For 2014: ◦ $95 per uninsured adult and $47.50 per uninsured

child ($285 cap for a family), or◦ 1% of household income over the income tax filing

threshold (family of two with $85K income = $655 penalty)

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2015 Impact:Penalty for Non-coverage

• Greater of a flat dollar amount or a percentage of household income over the income tax filing threshold

For 2015: ◦ $325 per uninsured adult and $162.50 per

uninsured child ($975 cap for a family), or◦ 2% of household income over the income tax filing

threshold (family of two with $85K income = $1,310 penalty)

Exchange/Marketplace

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2014 Impact:Exchanges/Marketplaces

• Exchanges will be introduced as an alternative for people with:

◦ No other coverage availability◦ Lower income◦ Pre-existing medical condition

• Exchanges open January 1, 2014• Open enrollment period:

◦ October 01, 2013–March 31, 2014 (just extended)◦ Annual time to enroll for coverage◦ Can’t wait until you are sick or injured to join

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2014 Impact:Exchanges/Marketplaces

• Who will be offering coverage in the exchanges?◦ Fully insured, state-regulated insurance companies◦ Participating carriers (varies by state)

• What networks and benefits will be available?◦ Provider networks may be narrow◦ Variety of benefit options◦ Qualified HDHP HSA plans◦ Maximum Out of Pocket in play

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2014 Impact:Exchanges/MarketplacesHow do they work?

• Online shopping malls for medical coverage• Similar to travel shopping sites• Private insurers vying for your business• Process:

◦ Go online◦ Enter demographic data◦ System defines plan options ◦ System defines subsidy amount if eligible◦ Enroll

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2014 Impact:Exchanges/MarketplacesRating rules?

• Guaranteed issue and renewability for everyone • Restrictions on rate flexibility — rates can vary by:

◦ Age — 1:3 slope from young to old◦ Smoking habits — 1:1.5 upcharge◦ Geography ◦ Family size

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2014 Impact:Exchanges/MarketplacesWhat will the plans look like?

• Creation of standard metallic benefit plans ◦ Bronze — 60%◦ Silver — 70%◦ Gold — 80%◦ Platinum — 90%

• Essential health benefits required◦ No coverage dollar limit for the 10 identified

categories of services

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2014 Impact:Exchanges/MarketplacesWhat will the plans look like?

• Maximum Out-of-Pocket Spending (MOOP) limits ◦ MOOP limits cannot EXCEED HSA Out-of-Pocket

Maximums set annually by government $6,350 — Individual (2014) $12,700 — Family (2014)

◦ MOOP is an aggregate of all eligible, in-network medical and RX spending including co-pays, deductibles, co-insurance

◦ Out-of-network and non-eligible charges do not aggregate to the MOOP

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2014 Impact:Exchanges/MarketplacesWould the exchanges save me money?

1. Premium tax credits (subsidy)◦ Tax credits are offered to Americans

who earn less than 400% of poverty level◦ Note: Clergy housing allowance is not included

in household income calculation.2. Cost-sharing reductions

◦ For persons earning less than 250% ofpoverty level

◦ Claims paid at the “Next Higher” level regardless of chosen plan

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Eligibility for PremiumTax Credit

FPL* 2014 (estimated) Individual Family of four

100% $11,850 $24,450

400% $47,400 $97,800

*Federal Poverty Level (FPL)The premium tax credit is not available to employees of employers that adopt the Small Business Health Options Program (SHOP).

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Who does not qualify for the Premium Tax Credit?Individuals who are:

• Offered an affordable employer plan that is of minimum value

◦ Affordable — employee’s contribution to lowest cost, self-only plan cannot exceed 9.5% ofW-2 wages

◦ Minimum value — the plan covers at least 60%of the total allowed cost of medical and prescription services

• Enrolled in an employer plan (even if not affordable)

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Who does not qualify for the Premium Tax Credit?Individuals who are:

• Covered by Medicare or Medicaid• Covered by another government coverage

◦ Tricare◦ Chips

• Have income above 400% of the poverty level

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Complexity:Exchanges/Marketplaces

Source: Computer Sciences Corporation (CSC), Health Benefit Exchanges: Rationalizing and Simplifying Health Coverage, 2011

Small Group Coverage

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Plan Requirements• Small group has no mandate to offer coverage• Benefit requirements:

◦ Essential health benefits if fully insured◦ Maximum out-of-pocket limit for eligible

in-network benefits◦ 1:3 rating ratio based on age◦ No risk adjustment — no underwriting.

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SHOP Exchanges• Small Business Health Options Program (SHOP) —

(1–50 employees)• 2014 — Only one product option will be offered

through Federal SHOP Exchange• Small Employer Tax Credit only available if small

group employer purchases employee coverage through SHOP

• No subsidy for employees who are offered employer-sponsored SHOP coverage

Large Group(at least 50 full-time equivalent employees)

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Plan Requirements• Large group is mandated to offer coverage• Benefit requirements:

◦ Essential health benefits if fully insured◦ Maximum out-of-pocket for eligible,

in-network benefits◦ Broader benefit options◦ No1:3 rate slope based on age◦ Group medical underwriting can continue

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2014 Impact:Large Employer Pay or PlayShared Responsibility for employers with50 or more full-time equivalent employees(FTE employees)

• An “applicable large employer” has 50 ormore FT EQUIVALENT employees

◦ Must count all employees full-time (FT) and part-time (PT)

◦ Include control groups• Applicable large employers must offer:

◦ Coverage to all employees working 30 hrs.◦ Coverage must be affordable and of

minimum value

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2014 Impact:Large EmployerPenalty for non-compliance:

• Only penalized if an employee goes to the exchange and receives a subsidy

• Penalty One: $2,000 penalty assessed for all FT employees if not offering coverage to all 30-hour workers and one receives subsidy

◦ First 30 workers don’t count toward penalty calculation.

• Penalty Two: $3,000 per employee who receives subsidy because coverage is not affordable and not of minimum value and

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2014 Impact:REWIND

Penalty and Reportingdelayed until 2015

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2014 Impact:REWINDThe law is still on the books!

• Penalties won’t be enforced until 2015 (barring future delays).

• IRS encourages employers with 50 employees or more to provide coverage for full-time (30 hours) workers beginning January 1, 2014.

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2014 Impact:REWINDWhile you are waiting, answer the following:

• Are you a controlled group?• Are you counting your employees?• Do you have 50 or greater employees when you

count all FTE employees?• Do you offer coverage to employees working greater

than 30 hours?• Are your benefits affordable (9.5% W-2 rule for

EE-only premium) and of minimum value (60% rule)?• Have you established measurement periods?

(smartest to start counting employeesJanuary 1, 2014)

Additional Taxes, Rules, Reportingand Regulations 2014

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2014 Impact:All Employers

• October 1st, 2013 – Distribute Notice of Exchange to ALL EMPLOYEES

• January 1, 2014 — 90-day waiting period limitation◦ Eligible employees will wait no more than 90

calendar days for coverage to begin• January 1, 2014 - End of pre-existing coverage

limitations ◦ Certificate of Credible Coverage no

longer required◦ All current pre-existing coverage limitation

periods will end December 31, 2013

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New Fees — TaxesReinsurance Assessment Fee (Transitional Reinsurance Fee - TRF)

• Purpose:Fund three-year reinsurance program to reimburse insurers of high-cost patients in exchange

• What is it?Annual fee assessed 2014–2016

• Who is affected?Fully insured and self-insured

• How much is the fee? 2014: $5.25 per covered person, per month ($63 per year) subject to change thereafter

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New Fees — TaxesPatient Centered Outcomes Research Institute

• Purpose:To fund research to compare medical treatments and interventions to determine treatments most effective

• What is it?Non-profit institute established by PPACA

• Who is affected?Fully insured and self-insured

• How much is the fee?Annual fee assessed 2012–2018

◦ 2013: $1.00 per covered person, per month◦ 2014: $2.00 per covered person, per month◦ 2015 and beyond: fee based on increases in the

projected, per capita amount of the national health expenditures

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2014 Impact: HRAs and Fees• Health Reimbursement Arrangement (HRA) — if you

have a stand-alone, group-sponsored HRA, you may be responsible to pay:

◦ PCORI fee ◦ Transitional Reinsurance FeeNote: This is in addition to the fees paid by your medical carrier.

• Check with your HRA administrator!

Strategy for 2014

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Benefit Modification• Cover your people — or exit the market!• Examine benefit offerings

◦ Examine Qualified High Deductible Health Plan with Health Savings Account

◦ Begin a Health Reimbursement Arrangement◦ Prepare for MOOP

• Rate swings between plans moderate◦ MOOP flattens the savings line when moving to a

higher deductible plan

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Benefit Modification• Consider self-funding to escape rating, benefit and

tax requirements of fully-insured◦ GuideStone, as a self-funded church plan, offers

you all the advantages of self-funding with none of the risk.

• Consider eliminating coverage to spouses◦ Dependent coverage doesn’t have to affordable◦ If you offer dependent coverage and don’t make a

contribution, dependents cannot receive a subsidy if they go to Exchange to get benefits

• Consider offering the bronze plan only to non-covered 30 hour workers

Looking Forward

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Employer Checklistto Prepare for 2014

Distribute Notices of Exchange Coverage and Subsidy Availability to employees.

Distribute Summaries of Benefits and Coverage. Adjust your ministry’s waiting periods. Withhold additional Tax for employees exceeding

threshold. If you have a stand-alone HRA, pay your PCORI fee

and prepare to pay the TRF and PCORI fees in 2014. Determine your ministry’s size in preparation for large

group requirements. Stay informed with email alerts — sign up at

www.GuideStone.org/HealthReform.

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The preceding information is general in nature and is intended to keep you apprised of certain important developments. This information may be subject to interpretation or clarification over time, so we cannot guarantee its accuracy or how it might be determined to apply in certain situations.However, we hope it will provide you a useful frame of reference as you endeavor to carry out your responsibilities and serve your employees.

Questions and Answers