Health Care Reform

1. Health Care Reform 2012, 2013, and 2014 Requirements for Employers

2. Overview • Introduction • Supreme Court decision • Election’s Potential Impacts • Employer Concerns for 2012 • Employer Concerns for 2013 • Employer Concerns for 2014 • Questions This is not intended to be legal advice.

3. Supreme Court Decision • “Every reasonable construction must be resorted to in order to save a statute from unconstitutionality.” • Taxing power? • Paid to treasury • Doesn’t apply to non-taxpayers • Collection requirements in IRS code • Produces revenue • Commerce Clause? • “non-activity” • Medicaid expansion? This is not intended to be legal advice.

4. Presidential Politics • Obama wins, Democrats keep Senate • Reform survives intact • Obama wins, Republicans take Senate • >50 seats, potential for ‘reconciliation’ • >59 seats, could be overturned entirely • Romney wins, Democrats keep Senate or take House • Potential regulatory changes from HHS • Executive order? This is not intended to be legal advice.

5. 2012 Employer Requirements • Medical Loss Ratio rebates for 2011 • Distribute uniform summary of benefits and coverage to all participants • Advance notice for material modifications • W-2 tracking • Coverage for women’s preventative care This is not intended to be legal advice.

6. MLR Rebates • Fully insured plans only • Intended to limit amount of premiums spent on administrative costs • Large group insurer must spend 85% of premiums on coverage. 80% for small group (<100 employees in prior year). • States may define small group as <50 until 2016 • Rebates provided by August 1st This is not intended to be legal advice.

7. Who Gets the Money? • If plan documents detail how to handle rebates, follow them. • If the policyholder or plan is a trust, rebate is a plan asset. • Must be used for benefit of participants. • Most common: Rebates apportioned to employer/employee based on contribution ratio. 80/20. 75/25. • Cut a check • Apply to future premium payments (w/in 3 mos) • Benefit enhancements • What about employees who leave mid-year? This is not intended to be legal advice.

8. MLR Rebate Example • Acme, Inc. has an insurance policy that spent less than the required % of their premiums on coverage. They have 500 employees on the plan and another 600 are on a self insured plan. • The 500 are covered at 80/20. • 20 former employees paid into the plan but have since left. • They receive a rebate of $20k. • Options for rebates? This is not intended to be legal advice.

9. Summary of Benefits and Coverage • Effective 9/23/12 • Four double sided pages • Short summary of benefits and coverage • Fully and self insured plans that provide medical benefits • HSAs and most FSAs are exempt • Dental and vision exempt if through separate policy OR if optional AND additional premium • Intended to facilitate comparison shopping • Fully insured plans – provider should prepare • Self insured plans – work with TPAs to prepare This is not intended to be legal advice.

10. More SBCs • Provided to new hires • Upon renewal, SBC only has to be provided for benefit option in which a participant is currently enrolled unless others are requested. • “Culturally and linguistically appropriate.” • In addition to SPDs. • Penalties? • $1,000 per offense This is not intended to be legal advice.

11. Material Modifications • Impacts mid-year changes • Not required for renewals or reissues • Notice sent 60 days before change is effective This is not intended to be legal advice.

12. Who Gets the SBC and Material Mod? • Must be sent to an enrolled employee and spouse known to reside at same address. • For enrollees: • Printed notice or • Emailed to employees who use a computer every day as part of their job • Consent from employees who don’t • Eligible but not enrolled: • Printed available on request or • Posted on internet where plan notifies individual in paper format or by email that documents are available on internet and where to find them This is not intended to be legal advice.

13. W-2 Tracking • Must report employer sponsored coverage from 2012 on W-2 forms issued in 2013 • Optional this year for employers w <250 W-2s • Report entire cost of coverage • Exceptions • COBRA coverage • Dental or vision provided under separate policy • Flex spending accounts funded by salary contributions This is not intended to be legal advice.

14. Women’s Preventative Care • Non-grandfathered plans must cover entire cost of women’s preventative services • Plan years starting on or after 8/1/2012 • Includes all FDA approved contraceptive methods, sterilization procedures, counseling • Lactation support and counseling • HPV and HIV testing • Domestic violence screening, counseling • Counseling on sexually transmitted infections • Screenings for gestational diabetes This is not intended to be legal advice.

15. 2013 Employer Requirements • Flex spending changes • Notice of exchanges • PCORI • Medicare payroll tax increase This is not intended to be legal advice.

16. Flex Limits • Plan years beginning on or after 1/1/13 • Lower health FSA limit to $2,500 per year • Indexed to CPI starting in 2014 This is not intended to be legal advice.

17. Notice of Exchanges • Effective 3/23/2013 • Employers must provide notice of • Existence of exchange • Potential eligibility for federal assistance if the employer’s health plan is ‘unaffordable,’ and • Possibility that employer may not contribute to cost of coverage under exchange • New hires and current employees • Awaiting more guidance This is not intended to be legal advice.

18. PCORI • Patient Centered Outcomes Research Institute • Institute to perform and promote research on the effectiveness and outcomes of various medical treatments, services, procedures, and drugs. • Plan years ending on or after 10/1/12 • Fully insured plans will file reports and pay fees, self insured must do it themselves • Average number of covered lives multiplied by $1. Increases to $2 next year. This is not intended to be legal advice.

19. Medicare Payroll Tax Increase • Effective 1/1/13 • Additional .9% FICA and SECA tax on wages over $200k for individuals, $250k for joint filers • Employer expected to withhold on wages over $200k • Still awaiting additional guidance This is not intended to be legal advice.

20. Non Discrimination Rules • Fully insured plans • Effective date delayed pending new regs • Cannot discriminate in favor of highly compensated employees • Eligibility • Benefits • Defined as 5 highest paid officers, more than 10% shareholders, or highest paid 25% of all employees This is not intended to be legal advice.

21. 2014 • Health insurance exchanges • No annual or lifetime limits on essential benefits • Individual mandate • Play or pay • Medicaid expansion • HIPAA wellness limit • Guaranteed issue (non-grandfathered) • No waiting periods over 90 days • Auto-enrollment This is not intended to be legal advice.

22. Health Insurance Exchanges • Started in MA • Available to individuals or employers < 50 ee • Subsidies for individuals from 133-400% of FPL • Subsidies for small employers (under 25 ees) • Bronze  Platinum based on actuarial value • All must offer “Essential Health Benefits” This is not intended to be legal advice.

23. Essential Health Benefits • Ambulatory Services • Emergency Services • Hospitalization • Maternity and Newborn Care • Mental Health and Substance Abuse Treatment • Prescription Drugs • Rehabilitative and Habilitative Services • Laboratory Services • Preventative and Wellness Services • Chronic Disease Management • Pediatric Services This is not intended to be legal advice.

24. Limits on Essential Benefits • Currently  No lifetime limits on EHB • Until 2014  Annual limits on EHB permitted but raised every year • 2014  No annual limits on EHB • Non-essential benefits can have lifetime and annual limits • Rescissions were eliminated in 2010 This is not intended to be legal advice.

25. Individual Mandate • Three legged stool • Guaranteed issue • No rejections based on pre-existing conditions • Individual mandate • Subsidies This is not intended to be legal advice.

26. Individual Mandate • After 2014, all individuals will have to purchase health insurance • Exception for individuals whose income is below FPL and insurance would cost > 8% monthly income. This is not intended to be legal advice.

27. Individual Mandate Fines • Individual, pay greater of • 2014 = $95 or 1% of income • 2015 = $325 or 2% of income • 2016 = $695 or 2.5% of income • Family, pay greater of • 2014 = $285 or 1% • 2015 = $975 or 2% • 2016 = $2,085 or 2.5% • Both capped at 300% of cost of bronze level premium This is not intended to be legal advice.

28. This is not intended to be legal advice.

29. Fulltime Employee • Play or pay impacts employers with 50 FT • Scheduled to work 30 hours or more per week on average • 120 hours per month • Can use 12 month average • Part timers (<30 hours p/w) • Take total # of monthly hours / 120 • Only count toward calc, don’t have to give ins • Seasonal employees • Only if they work > 120 days • Temps from temp agency not counted This is not intended to be legal advice.

30. Part Time Example • Twenty part timers, Thirty seasonal three month season, Fifty temps • Each work 24 hours per week • 20 ptees x 96 hours / 120 = 16 FTE • Again, only count towards calculation for play or pay, don’t have to give ins. This is not intended to be legal advice.

31. Auto Enrollment • Employers with > 200 employees • Must auto enroll • Waiting for additional guidance This is not intended to be legal advice.

32. Wellness Expansion • Plan years beginning on or after 1/1/14 • Increases incentives for wellness participants. • Health screenings, lifestyle assessments, high risk / disease management, health tracking • Remember HIPAA requirements • Currently 20% max incentive • Increased to 30% • Feds could increase to 50% This is not intended to be legal advice.

33. Thank You! • Questions? This is not intended to be legal advice.