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Health Care Reform 2014 - 2015

Health Care Reform 2014 - 2015. Now What?! Strategies for Tomorrow . Paul Catania, CEBS, PHR Andrea Esselstein, J.D. February 2014. WHERE DOES THE LAW STAND TODAY?. 3. IMMEDIATE CONSIDERATIONS. REMINDERS. IMMEDIATE CONSIDERATIONS. REMINDERS.

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Health Care Reform 2014 - 2015

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  1. Health Care Reform2014 - 2015 Now What?! Strategies forTomorrow Paul Catania, CEBS, PHR Andrea Esselstein, J.D February 2014

  2. WHERE DOES THE LAW STAND TODAY? 3

  3. IMMEDIATE CONSIDERATIONS REMINDERS

  4. IMMEDIATE CONSIDERATIONS REMINDERS

  5. Employer Shared Responsibility: NEW EFFECTIVE DATE: 2016 FOR EMPLOYERS W/50-99 FTE; 2015 FOR EMPLOYERS 100+ Does your organization employ > 50 full-time employees (FTE) ?(Controlled Group Rules) Employer NOT subject To PAY-OR-PLAY employer shared responsibility NO PENALTY No Yes Has at least one employee received a federal subsidy to purchase coverage in an exchange? NONDEDUCTIBLE EMPLOYER PENALTY OF Cap = $2,000 x Total FTEsLess 30 Does your organization offer qualified coverage to Substantially All FTEs?30 Hrs/wk; 130 Hrs/Mo? No Yes Yes Does plan cover a minimum value of at least 60% of covered expenses? No Qualifying FTEs may choose to purchase coverage in an exchange by receiving a federal subsidy (if household income < 400% Of FPL) NONDEDUCTIBLE EMPLOYER PENALTY OF $3,000 x Number FTEs Who Purchase Coverage In An Exchange Cap = $2,000 x Total FTEsLess 30 Yes Yes Yes Do any FTEs pay > 9.5% of Household Income* for the lowest cost employee-only coverage? No Employee subsidy eligibility if household income < 400% of FPL and not offered affordable coverage(9.5% or 60% of covered expenses) NO PENALTY * Household Income Affordability Safe Harbor Defined As: Employee Only W-2 Income OR using an IRS-issued Calculation for Hourly Employees; OR FPL

  6. IN THE NEWS • Further delay on “Shared Responsibility” for Employers 50-99 eligible until 2016. • For Groups over 100+, must cover 70% of FTE in 2015. Full-time defined as 30 hrs/wk on average; 130 hrs/mo. • Volunteer Firefighters and others who volunteer not considered employees under the law. • Adjunct Faculty will be considered to have worked 1.5 hours for each classroom hour. (i.e.; 15 classroom hours = 37.5 worked hours) • Dependent eligibility requirement delayed until 2016.

  7. INDIVIDUAL MANDATE IMPLEMENTATION NEW CONSUMER OPTIONS ALL Americans Must have Qualified Coverage, as of March 31, 2014 or Pay Penalties in 2014 Enrollment by December 23, 2013for Coverage on January 1, 2014 ANDMarch 31, 2014 to Avoid the Individual Mandate Penalties in 2014 IMPLICATIONS FOR ALL EMPLOYERS?

  8. IN THE NEWS Delayed from January 1, 2011 Effective Date Unknown (Awaiting Guidance) NONDISCRIMINATION RULES: IRS CODE 105(h)) Consider Plan Design Changes if Offering Richer Benefits to Highly Compensated Employees IRS Code 105 (h) Limitations are Currently Effective for Self Funded Plans $100 Per Day Per Individual Affected (Discriminated Against) Highest Paid 25% of All Employees

  9. STRATEGIC OVERVIEW Key Considerations for Employers “With Change Comes NEW Opportunities…”

  10. “IT’S NOT YOU , IT’S YOUR SPOUSE…”

  11. SPOUSAL BENEFIT STRATEGIES – SPOUSES ARE NOT DEPENDENTS! EMPLOYER OPTIONS Combined, these two practices will increase from 24% in 2013 to 45% in 2014 Numbers will Rise with New Exchange Options “Carving Out” Spouses Not offering coverage to any spouse eligible for his or her own employer coverage “SpousalSurcharge” Disincentive to take up spousal coverage by charging an average of $100/mo extra per spouse (or per spouse not eligible for his or her own coverage) Employers Must Avoid offering a “Magnet” Plan 2013: 20% of Employers 2014: 33% of Employers National Benefits StudyOctober 2013 2013: 4% of Employers 2014: 12% of Employers National Benefits StudyOctober 2013

  12. PREMIUM TAX CREDITS (SUBSIDIES) If an Individual has a Valid Offer of Affordable and Minimum Value Employer-sponsored Coverage…. …the Individual (and Dependents) will NOT Qualify for Federal Subsidies to Begin on January 1, 2014 Subsidized Coverage will Only be Available for Individuals Purchasing through an Exchange, and NOT those in an Employer Group Health Plan

  13. Federal Poverty Level Scale Premium Tax Credit Eligibility: 2014

  14. Minimum Essential Coverage • Employer-Sponsored Plan Coverage • Qualified Individual Market Coverage • Grandfathered Health Plan Coverage • Government Sponsored Programs (Medicare, Medicaid, CHIP & TRICARE) 15

  15. INDIVIDUAL HEALTH INSURANCE COVERAGE MANDATE MINIMUM ESSENTIAL COVERAGE 16

  16. UNDERSTAND ALL OPTIONS & IMPLICATIONS TRACKING HOURS IFEmploying “Variable Hour” Employees in 2014 IDENTIFY “Variable Hour” Employees Typically Working Overtime CONSIDERATIONS ACA Definition of Full-time is using “Hours of Service” Employers CANNOT Rely on “Regularly Scheduled” Hours, as Documented in HR Manuals Revisions to Employment Manuals, Plan Documents, Training Manuals, Hiring Posters, etc. Training of Supervisors & Communication Steps with Employees

  17. KEY CONSIDERATIONS FOR EMPLOYERS INITIATE A COMPREHENSIVE DEMOGRAPHIC ANALYSIS TO EXPLORE ALL NEW OPPORTUNITIES EVALUATE ALL PLAN DESIGNS, CONTRIBUTION STRUCTURES & FUNDING OPTIONS LEVERAGE DATA INTEGRATION TOOLS IN KEY DECISION MAKING MAXIMIZE (AND REITERATE) THE VALUE OF YOUR PLAN Invest in Employee Education & Engagement Consider Defined Contribution Options Complete a Revised Compliance Checklist Benchmark Plans to Avoid Becoming a “Magnet Plan” Track Hours of Service for Full-time Employees

  18. 2014 Exchange Models & Second-Lowest-Cost Silver Plan Premium (for a Single 40-Year-Old) Rates were pulled from the rating area of the largest city in each of these states or Washington, DC (please note that rates may vary substantially across rating areas). $413 $283 $295 $258 $154 $201 $390 $293 $264 $328 $271 $285 $295 $228 $253 $250 $255 $242 D.C. $212 State-based Exchange (14 states & DC) Supported State-based Exchange (1 state - Idaho) Partnership Exchange (7 states) Bifurcated SG/Indv. Exchange (2 states) Federally-facilitated Exchange w/ Plan Mgmt (7 states) FFE [By declaration or default] (19 states)

  19. THE CONGRESSIONAL BUDGET OFFICE The Congressional Budget Office Estimates that Individual Market Premiums will Increase by 27-30% in 2014

  20. NEW TAXES & FEES

  21. NEW TAXES & FEES

  22. COMMUNITY RATING: JANUARY 2, 2014 (SMALL GROUP MARKET)

  23. Health Care ReformKEY 2014 CONSIDERATIONSNEW RISKS NEW OPPORTUNITIES

  24. Survey of Employees Says… 42% Unaware that PPACA is the Law 12% Believe it was Repealed 7% Overturned by the Supreme Court 23% Don’t Know the Status 49% Don’t have Enough Information to Understand the Impact to Families (Household Impact: Financial and Medical Circumstances) Where do you get your information? 40% - Friends and Family 36% - Newspapers, Radio or Online 30% - Cable News 11% - My Employer Also at 11%: “My doctor” and “health insurer” Kaiser Family Foundation Poll [Summer 2013]

  25. Employer Shift to Defined Contribution Will Drive Growth in Private Exchanges

  26. Defined Contribution Value Prop

  27. Defined Contribution:Design Decisions • Amount of employer contribution • Benefits which can be selected with the contribution • Medical • Dental • Vision • Supplemental Life • Disability • FSA or HSA account contribution • Other? • Rules for unused contributions

  28. Private Exchange Benefits • For Employers • Packaged approach to offering benefits • Administrative efficiency, simplicity • Option to offer Defined Contribution Health Plan • For Employees • Select benefits package that meets their needs • Enrollment efficiency & simplicity 31

  29. Private Exchanges by Size of Employer • Coverage choices, scope of services, and the opportunity to create customized solutions vary by employer size. • Specifics are evolving rapidly. Largest National Accounts Small Under 100 EE’s Mid to Large 100 to 1,000 EE’s Limited Options Fully-Insured Single Carrier Customized Options Fully-Insured or Self-Insured Multi-Carrier for Largest Expanded Options Fully-Insured or Self-Insured Single Carrier Multi-Carrier Uncertain • The <50 segment competes with Public Exchanges in 2014 • and for 2016 that expands to <100 segment 32

  30. TAKEAWAYS INITIATE A COMPREHENSIVE DEMOGRAPHIC ANALYSIS TO EXPLORE ALL NEW OPPORTUNITIES DISCUSSION OVERVIEW EVALUATE ALL PLAN DESIGNS, CONTRIBUTION STRUCTURES & FUNDING OPTIONS LEVERAGE DATA INTEGRATION TOOLS IN KEY DECISION MAKING MAXIMIZE (AND REITERATE) THE VALUE OF YOUR PLAN

  31. CONTACTS Paul Catania, CEBS, PHRpcatania@oswaldcompanies.com 330-252-2430 Andrea Esselstein, J.D.aesselstein@oswaldcompanies.com

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