Health Care Reform at-a-Glance - Xerox€¦ · Health Care Reform at-a-Glance August 2015 . 2 Table...
Transcript of Health Care Reform at-a-Glance - Xerox€¦ · Health Care Reform at-a-Glance August 2015 . 2 Table...
Health Care Reform at-a-Glance August 2015
2
Table of Contents
Employer mandate ................................................................................................................................................................................................................................................................. 3
Individual mandate ................................................................................................................................................................................................................................................................ 3
Health plan provisions applying to both grandfathered and non-grandfathered employer plans .................................................................................................... 4
Health plan provisions applying only to non-grandfathered employer plans ............................................................................................................................................ 7
Retiree health ........................................................................................................................................................................................................................................................................... 8
Insurance market reform for individuals and small groups .............................................................................................................................................................................. 10
Public marketplaces ........................................................................................................................................................................................................................................................... 11
Taxes and fees ...................................................................................................................................................................................................................................................................... 11
3
Provision Effective date Considerations for large employers
Employer mandate
Shared responsibility
assessment for
failing to offer
coverage to at least
95%* of all full-time
employees (FTE)
and children if any
FTE gets subsidy in
marketplace
• $2,000 (indexed) times the number of FTEs (excludes first 30* FTEs).
• FTE defined as working 30 or more hours per week.
• Not required to offer coverage to part-time employees, retirees, or spouses
but must offer to children.
• No minimum employer subsidy required.
Penalties first
imposed in 2016 for
failure to satisfy
mandate in 2015
• Analysis and determination of FTEs
required.
• Complicated “measurement” rules ─
administrative burden of determining
FTE status.
• Adjust eligibility terms of plan.
• *95% threshold lowered to 70% and
first 80 FTEs excluded for 2015 only.
Shared responsibility
assessment for full-
time employees who
are not offered
coverage or opt out
of employer plan and
get subsidy in
marketplace
• $3,000 (indexed) for each FTE who enrolls in marketplace and receives low
income subsidy if: (1) employee’s contribution for single coverage under
employer plan exceeds 9.5% of W-2 income, rate of pay, or the federal
poverty level (FPL) for individuals, or (2) employer plan fails to provide
“minimum value,” i.e., the actuarial value of plan is below 60%.
• See Public marketplaces below for more information on low income subsidy
eligibility.
• Employer not required to offer
coverage that satisfies affordability or
minimum value requirements, but risks
assessment if coverage not offered.
• Analysis of coverage and plan costs
required.
Reporting of
employer-sponsored
coverage
• Under Code Section 6056, employers must report to both IRS and
employees information regarding coverage offered to full-time employees
and dependents. Forms 1094-C/1095-C will be used for this purpose.
Reporting first
required in 2016 for
coverage provided in
2015
• Administrative burden; extensive data
collection and reporting requirements.
Individual mandate
Penalty for failure to
have minimum
essential coverage
• Greater of 1.0% of MAGI or $95/person in 2014, 2.0% or $325/person in
2015, 2.5% or $695/person in 2016; indexed for individuals who fail to
maintain minimum essential coverage.
• Family dollar amount capped at 300% of individual penalty.
Penalties first
imposed in 2015 for
failure to satisfy
mandate in 2014
• Plan cost may increase if more
employees enroll to avoid penalty.
4
Provision Effective date Considerations for large employers
Reporting of
minimum essential
coverage
• Under Code Section 6055, insurers and sponsors of self-funded plans must
report to both IRS and individual that employee, retiree, and dependents had
minimum essential coverage in preceding year. Forms 1094-B/1095-B and
1094-C/1095-C will be used for this purpose.
Reporting first
required in 2016 for
coverage provided in
2015
• Administrative burden, including efforts
to collect dependent tax ID numbers.
Health plan provisions applying to both grandfathered and non-grandfathered employer plans
Annual and lifetime
dollar limits
• No lifetime or annual dollar limits on essential health benefits (EHB).
• Not applicable to most FSAs, HSAs, and integrated HRAs.
• Self-funded and large group plans must use “authorized” definition of
“essential health benefit” (state “benchmark plan”) beginning in 2014.
Lifetime limits
prohibited for plan
years beginning
on/after September
23, 2010; Annual
limits restricted for
plan years beginning
on/after September
23, 2010 and
prohibited for plan
years beginning on/
after January 1, 2014
• Analysis of state benchmark plans
required.
• To maintain dollar limits on benefits,
self-funded plan must select
appropriate benchmark plan.
Extension of child
coverage to age 26
• Up to age 26 for medical coverage regardless of marital or student status,
residence, or support. Excludes stand-alone dental and vision coverage.
• Cannot charge more than for other similarly situated individuals.
Plan years beginning
on/after September
23, 2010
• Plan costs may increase if more
dependents are covered.
Income tax exclusion
for child coverage to
age 26
• Exclusion through end of calendar year in which child reaches age 26.
• Includes dental, vision, health FSA, and HRA (different rule for HSA).
March 30, 2010 • Simplifies payroll administration.
• Plan may terminate coverage when the
child turns 26, prior to the end of the
tax year.
Pre-existing condition
exclusion
• No pre-existing condition exclusions for enrollees. Plan years beginning
on/after January 1,
2014
• Limited impact on large employer
plans.
• Will reduce job lock.
5
Provision Effective date Considerations for large employers
Waiting periods • Waiting periods over 90 days prohibited.
• A one-month orientation period that begins on the employee’s start date is
permitted (before the waiting period).
Plan years beginning
on/after January 1,
2014
• Most cost implications for organizations
with high turnover.
Treatment of OTC
drugs as medical
expense
• Health FSAs, HRAs, and HSAs prohibited from reimbursing cost of OTC
drugs (other than insulin) unless prescribed by a physician.
January 1, 2011
• OTC medical items (other than
medicines and drugs) still eligible for
reimbursement.
• Administrative costs may increase.
Health FSA cap • Salary reductions capped at $2,500; indexed. In 2014, indexed cap
remained $2,500 and is $2,550 for 2015.
Plan years beginning
on/after January 1,
2013
• Cafeteria plan document must be
amended by December 31, 2014, but
plan compliance required starting
January 1, 2013.
• Carryover amount of up to $500
permitted if health FSA does not have a
grace period.
HIPAA wellness
incentives
• No discrimination regarding eligibility or coverage on the basis of a health
status-related factor. Incentives increased to 30% (and additional 20% - up
to 50% - for tobacco use) of cost of coverage.
Plan years beginning
on/after January 1,
2014
• Incentives (other than tobacco use)
may affect affordability and minimum
value determinations for purpose of
employer penalty.
• Employers must review programs to
ensure compliance.
• Increased costs.
Automatic enrollment • Auto-enrollment required for employee with option to opt out of coverage.
• Not enforced until regulations are issued.
After regulations are
issued. No effective
date in the law.
• May result in increased costs due to
higher enrollment and more complex
administration.
6
Provision Effective date Considerations for large employers
Marketplace notice • Notice to employees concerning availability of health insurance marketplace.
• Model notices include one for employers that offer coverage to some or all
employees and one for employers that do not offer coverage.
October 1, 2013 • Must be provided to all employees
regardless of benefit eligibility.
• Provided to new employees within 14
days of start date.
• Statutory requirement, but no penalty if
notice is not provided.
Summary of benefits
and coverage (SBC)
• Brief summary of benefits with a prescribed format, content, language, and
timing must be provided to new enrollees and at open enrollment.
Open enrollment
periods beginning
on/after September
23, 2012
• “Good faith” compliance; departments’
approach is to assist plan sponsors
with compliance rather than impose
penalties.
• Greater coordination among vendors
required.
Reporting plan value
on Form W-2
• Total value of medical coverage on an employee-specific basis reported on
Form W-2 issued in January for preceding calendar year.
• Some exemptions, such as coverage provided under certain church or
multiemployer plans.
Reporting first
required in 2013 for
coverage provided in
2012
• Informational only; value of coverage
not subject to tax.
Medical loss ratio
(MLR) reporting and
rebates
• Insurers to submit MLR reports to HHS and issue rebates to employers with
insured plans in large group market (more than 50 employees) where loss
ratio (ratio of claims to premium) is less than 85%. For contributory plans,
employer must share rebate with enrollees.
• Rebates payable by August 1. Starting with 2014 reporting year, reporting
due date is July 31, and rebates are payable by September 30.
January 1, 2011 • Applies only to insured plans.
• Plans must apply portion of rebate
attributable to employee contributions
appropriately.
• Determination of rebates under ERISA
may be required
7
Provision Effective date Considerations for large employers
Health plan provisions applying only to non-grandfathered employer plans
Preventive care • Preventive care services must be covered at 100% when provided in-
network.
Plan years beginning
on/after September
23, 2010
• Increased coverage may cause plan
costs to change.
• Plan sponsor may delegate IRO
contracting to claims administrator. Insured plan
nondiscrimination
• Insured plans prohibited from discriminating in favor of highly compensated.
Enforcement delayed until guidance released.
OB/GYN,
pediatrician,
ER services
• Preauthorization or referral requirements prohibited.
Appeals process • Mandatory internal and external claims and appeals process.
• Self-funded plans must contract with at least three independent review
organizations (IROs).
Women’s preventive
services
• Additional preventive services for women covered at 100%. Plan years beginning
on/after August 1,
2012
• Increased costs due to removal of cost-
sharing and requirement to cover items
not generally covered before.
8
Provision Effective date Considerations for large employers
Clinical trials • Must cover routine patient costs in connection with participation in approved
trials.
Plan years beginning
on/after January 1,
2014
• Some increased claims costs.
Out-of-pocket (OOP)
limits
• In-network OOP maximum for EHB $6,600/$13,200 for 2015 and
$6,850/$13,700 for 2016 (indexed annually).
• Plan’s maximum OOP limit can be divided among different coverage
categories or benefits so long as the combined amounts don’t exceed the
annual OOP limit.
• Must apply an embedded self-only OOP maximum to each individual
enrolled in family coverage if the plan’s family OOP maximum exceeds the
ACA’s OOP limit for self-only coverage (also applies to deductible).
• Emphasis on EHB and benchmark
plan.
• OOP maximum must take into account
deductibles, coinsurance, and
copayments.
• Requires coordination with “carve-out”
vendors.
• TPAs and insurers may have system or
technical limitations.
Provider
nondiscrimination
• No discrimination against provider acting within the scope of license. • May vary rates based on quality or
performance measures; good faith
compliance until regulations issued.
Plan quality of care
reporting
• Group health plans and health insurance issuers required to submit an
annual report to HHS addressing plan or coverage benefits and provider
reimbursement structures regarding the cost and quality of care.
After guidance issued • Guidance yet to be issued.
Retiree health
Reinsurance
program for early
retirees (age 55-64)
and dependents
• A temporary program – employers accepted into the program receive
reinsurance reimbursement for medical claims for retirees.
• $5B to subsidize 80% of costs between $15K and $90K (indexed).
• Terminates December 31, 2013 or when funds exhausted, if earlier.
June 1, 2010 • Funds exhausted in 2012; plan
sponsors must use ERRP funds
promptly, but no later than
December 31, 2014.
9
Provision Effective date Considerations for large employers
Phase-out of donut
hole
• $250 rebate in 2010 for beneficiaries who reach donut hole.
• Phases out donut hole by 2020 in combination with brand drug discount.
2010 • EGWP employer-sponsored plan can
provide equivalent benefits at
significant savings.
Brand drug coverage
in
Medicare Part D
donut hole
• Drug manufacturers required to discount brand drugs in donut hole by 50%. 2011
Loss of deduction for
expenses related to
RDS payments
• Deduction of expenses for which RDS payment received eliminated in 2013. 2013 • EGWP plans more attractive.
10
Provision Effective date Considerations for large employers
Insurance market reform for individuals and small groups
Minimum benefit
package
• Bronze, Silver, Gold and Platinum with actuarial values of 60% to 90%.
• Catastrophic plan for individuals under age 30, individuals exempt from
individual mandate because affordable coverage is not available, or
individuals who satisfy hardship exemptions.
• Plans must cover EHB.
2014 • Marketplace plans could become
available to large employers in 2017.
Guaranteed issue
and renewability
• Health insurance issuers offering coverage in individual or group markets
must accept every employer and individual in the state that applies for such
coverage and must renew coverage at the option of the plan sponsor.
• More robust individual market for
former employees and retirees.
OOP limits • In-network maximum for EHB $6,600/$13,200 for 2015 and $6,850/$13,700
for 2016 (indexed annually).
• Plan’s maximum OOP limit can be divided among different coverage
categories of benefits so long as the combined amounts don’t exceed the
annual OOP limit.
• Must apply an embedded self-only OOP maximum to each individual
enrolled in family coverage if the plan’s family OOP maximum exceeds the
ACA’s OOP limit for self-only coverage (also applies to deductible).
• Applies to individual and small group
plans offered both in and out of
marketplace.
• OOP maximum must take into account
deductibles, coinsurance and
copayments.
Fair health insurance
premiums
• Health insurance issuers may vary the premium rate charged to non-
grandfathered individual or small group from the rate established for that
particular plan based only on the following factors: family size (individual or
family), geography (rating area), age (within a ratio of 3:1 for adults), and
tobacco use (within a ratio of 1.5:1).
• Reduces the need for COBRA and
employer-sponsored early retiree
coverage.
Medical loss ratios -
minimum standards
for insured plans
• Insurers to submit MLR reports to HHS and issue rebates to employers with
insured plans in the individual and small group market where loss ratio (ratio
of claims to premium) is less than 80%. For contributory plans employer
must share rebate with enrollees.
• Rebates payable by August 1. Starting with 2014 reporting year, rebates are
payable by September 30.
January 1, 2011
• More robust individual market is
especially valuable to former
employees, particularly early retirees.
11
Provision Effective date Considerations for large employers
Small employer
subsidies
• Tax credits of up to 50% available to certain small employers (up to 25
employees) that offer health insurance coverage to their employees through
the SHOP marketplace.
• Credit may be claimed only for two consecutive years.
2010 • Only available if employer’s FTEs
average annual wages are no more
than $50,800 (for 2014) and employer
pays at least 50% of self-only cost.
Public marketplaces
Marketplaces • State- or federally-run marketplaces available for individuals and small
employers
(defined as at least 2 employees and up to 100 employees, but most states
have defined as under 51 employees).
• In 2016, must be available to small employers (up to 100 employees).
• In 2017, states can make available to large employers (over 100
employees).
2014 • Availability of subsidies and community
rating may reduce need for pre-65
retiree programs.
Low-income
subsidies for
coverage in the
marketplace
• Subsidies available to individuals between 138% and 400% of FPL in states
that have adopted the ACA’s Medicaid expansion.
• Employees eligible for employer coverage may receive subsidies only if
employer coverage fails to provide minimum value or if employee
contributions for self-only coverage exceed 9.5% of household modified
adjusted gross income. Retirees eligible for subsidies as long as not enrolled
in employer coverage regardless of minimum value or affordability.
• Consider availability of subsidies in
designing strategy for 2014 and
beyond.
Taxes and fees
HSA nonqualified
withdrawals
• Penalty tax increased from 10% to 20%. January 1, 2011 • Communicate to employees.
Pharmacy
manufacturer tax
• Annual fee on manufacturers of branded prescription drugs based on market
share.
2011 • Cost likely will be shifted to employers.
12
Provision Effective date Considerations for large employers
Comparative
effectiveness
research (PCORI)
fee
• Fee on insured and self-funded plans to fund clinical effectiveness research.
• For plan years ending on or after October 1, 2013 through September 30,
2014, fee is $2/covered life/year; for plan years ending on or after October 1,
2014 through December 31, 2014, fee is $2.08/covered life/year (indexed
thereafter).
• Payment due by July 31 of following year.
Plan years ending
after September 30,
2012 and before
October 1, 2019
• Affects cost of providing group health
plan coverage.
• Determine which prescribed counting
method results in lowest number of
covered lives.
Itemized medical
deduction
• Itemized medical deduction threshold increased from 7.5% to 10%. 2013 • Individual income tax provisions that
could increase pressure for employers
to offer tax-advantaged benefits.
• Additional Medicare tax increases
administrative burden for employers.
Medicare hospital
insurance tax
• Tax rate increased from 1.45% to 2.35% for income in excess of $200K
(single or head of household) /$250K (joint filers).
• 3.8% unearned income tax on net investment income in excess of $200K
(single or head of household)/$250K (joint filers).
• Employer required to collect tax only for employees earning $200K or more
from employer.
Medical device
excise tax
• 2.3% excise tax on the manufacturer or importer for the sale of certain
medical devices.
• Cost will likely be passed on to health
plans.
Health insurance
providers fee
• Annual fee on entities that provide health insurance (self-insured employers
specifically excluded).
2014 • In addition to medical, fee also applies
to insured dental, vision, EGWP, and
MAPD plans.
• Estimated 2014 increase in premiums
of 1.7% to 3.0%.
Transitional
reinsurance fee
• Fee paid by insurers and self-funded plans (major medical coverage) from
2014 to 2016 to help fund transitional reinsurance program (designed to
provide temporary funding to insurers that incur high claims costs for
enrollees).
• For 2014, contribution rate is $63 per covered life per year ($5.25 per
month); for 2015, $44 per covered life; for 2016, $27/covered life.
• Affects cost of providing health plan
coverage.
13
Provision Effective date Considerations for large employers
"Cadillac plan" excise
tax
• 40% tax on value of coverage above $10,200/individual and $27,500/family
(Indexed at CPI-U+1% for 2019, CPI-U only after 2019). $11,850/$30,950
for pre-Medicare retirees.
• Adjusted for high risk industries, age, and gender.
• Excludes insured dental and vision. For multiemployer plans, all coverage is
considered family coverage.
2018 • Affects cost of providing health plan
coverage.
• May result in the limitation of health
FSAs and executive programs and
reduction in total health benefit
package.
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