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Health Care Reform: What Does It Mean For The HR t Professional
Presented By: Presented by: SUNSHINE STATE HEALTH REFORM ADVISORS ODALYS AREVALO Community Outreach Director Miami, FL 305 -989 -2929 [email protected] com www. sshra. com Stay Informed! Be Prepared! • The information contained herein and on handouts are issued for informational purposes only and has been collected from regulations, statutes, laws and administrative rulings and should not be viewed as interpretation or relied upon as legal, financial or tax advice. HOB is not associated with or endorsed by any governmental agency and information obtained from governmental agencies is subject to change. This information is known to be current as of June 2012. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation.
Overview- HR in the Spotlight Since the Supreme Court decision on the Patient Protection and Affordable Care Act (PPACA) and even most recently, the Presidential election outcome, for companies and Human Resource Professionals, the message is very clear. That message: move forward with implementing and complying with PPACA. Many of the regulations have taken effect and many are set to begin in 2013 and even more in 2014. Today’s discussion will review the role of HR as we move towards Reform head-on and what changes need to take place. We will also review key steps that HR Professionals may want to take to plan for 2014. Just as important, however, before strategies can be formulated, is an overview of the regulations, as they are written now.
Agenda • HR’s role with Reform • The rules of and complying with PPACA − PPACA rules currently in place − Future compliance deadlines • Key steps HR can take now to plan for 2014 • Ideas to consider • Questions
HR’s Role With Reform
In The Spotlight Reform is difficult, changing and confusing. But, it is an opportunity to change the HR role within a company. Reform has opened up a path for new choices. This is a chance for HR to lead the path with thoughtful and insightful contributions on : • Benefits Strategy-Pay or Play, future vision of the total reward package, types of benefits offered, vendors and delivery of benefits • Compliance-penalties, manuals, notifications, filings, reporting • Finance-closing the gap with CFO’s, broader workforce discussions vs. spreadsheet driven • Workforce Design-classifications of employees, full- time vs. part-time • Purchasing Strategy- Direct contract with ACO, imaging providers, Rx through Drugstore direct vs. through insurance
PPACA Rules and Compliance-Which Plans Must Comply
Plans Subject to Health Care Reform • Health care reform’s health plan rules generally apply to group health plan coverage • Exceptions − Excepted benefits − Retiree-only plans − Group health plans covering fewer than 2 employees • Excepted Benefits − − Accident or disability income coverage Separate dental and vision plans Liability insurance Some FSAs
Grandfathered Plans • Grandfathered plan: group health plan or health insurance coverage in which an individual was enrolled on March 23, 2010 • Certain health care reform provisions don’t apply to grandfathered plans, even if coverage is later renewed • A plan can lose grandfathered status by making too many changes to benefits or costs − Plans will have to analyze status and changes at each renewal
What is the Benefit of Being a Grandfathered Plan? The following provisions will NOT APPLY to grandfathered plans: • Patient Protections • Rating limitations, essential benefits • Nondiscrimination rules for fully-insured plans • New appeals process • Quality of care reporting • Insurance premium restrictions • Guaranteed issue and renewal of coverage • Nondiscrimination based on health status/in health care • Comprehensive health insurance coverage • Limits on cost-sharing • Coverage for clinical trials
Plans will lose Grandfathered status if: • Obtain new policy, certificate or contract of insurance • Eliminate benefits for a particular condition • Add or decrease overall annual dollar limit • Increase coinsurance percentage • Increase deductible or out-of-pocket max by more than 15% • Increase co-payment by more than greater of: $5 or 15% • Decrease employer contribution rate by more than 5%
Mandates Currently in Place
Provisions Already Effective (pre 2012) • • Small employer tax credit Dependent coverage up to age 26 No lifetime limits/restrictions on annual limits No rescissions –Carriers can’t drop a persons coverage No pre-existing condition exclusions for children No cost-sharing for preventive care services (non-GF plans) Appeals process changes (non-GF plans) No reimbursement for OTC medicine or drugs (without a prescription)
2012 -2013 Compliance Deadlines
W-2 Reporting • Employers must report aggregate cost of group health plan coverage on each employee’s Form W-2 • Does not change the tax rules for health coverage – coverage is still not taxable
Effective Date • Then: − Originally effective for the 2011 tax year (W-2 Forms provided in Jan. 2012) − IRS later made 2011 reporting optional for all employers • Now: − Mandatory for 2012 tax year (W-2 Forms provided in Jan. 2013) for employers issuing more than 250 W-2 Forms. − For small employers (those that file fewer than 250 W-2 Forms), reporting requirement is delayed until further guidance issued − Covered employers need to be compiling data
Reporting • Report coverage under employer-sponsored group health plans − Not plans that don’t provide health coverage/excepted benefits • Aggregate cost must be reported − Include both employer- and employee- paid portions − Determined under rules similar for determining “applicable premium” under COBRA • Not required for: − Employees who terminate during the year and request a W-2 before the end of the year − Employees who would not otherwise receive a W-2
Summary of Benefits and Coverage • Non-compliance with regulations could result in a civil penalty of up to $100 per day per affected individual; an excise tax of $100 per day per affected individual; and fines of up to $1, 000 per affected individual for willful violations. • 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 • Compliance Deadline: Sept. 23, 2012 but special rules specify when SBC must be provided • Health plans: − Open enrollment: 1 st day of the 1 st open enrollment period that begins on or after Sept. 23, 2012 or − Other enrollment: 1 st day of the 1 st plan year that begins on or after Sept. 23, 2012 • 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 − Electronic Delivery acceptable see http: //www. ecfr. gov/cgi- bin/ECFR? page=browse − Upon request
What Plans Must Distribute a SBC? • The obligation to furnish an SBC applies to a group health plan (whether insured or self-insured) and a health insurance issuer offering group health coverage. • A plan that offers “excepted benefits” is not required to distribute an SBC. This would generally include a standalone dental or vision plan and most health flexible spending arrangements (health FSAs). • Disclosures for a health FSA that is not an excepted benefit depend on whether it is integrated with other major medical coverage. If the health FSA is integrated with other major medical coverage, features of the health FSA can be included in the SBC for the major medical coverage. If the health FSA is not integrated with major medical coverage, then it is required to furnish an SBC. • A health reimbursement account (HRA) is a group health plan and must furnish an SBC. • A health savings account (HSA) is not a group health plan and is not required to furnish an SBC. However, an SBC for a high deductible health plan can mention the effects of any employer contributions to an HSA that can be used for deductibles, copayments, coinsurance or other services not covered by the high deductible health plan.
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
Preventive Care for Women • New guidelines for preventive care for women on Aug. 1, 2011 • Must provide coverage for women’s preventive health services without any cost-sharing − Applies to non-GF plans − No deductible, copayment or coinsurance • Effective for plan years beginning on or after 1, 2012 Aug.
Covered Health Services • Well-women visits • Gestational diabetes screening • HPV DNA testing • Sexually transmitted infection counseling • HIV screening and counseling • Breastfeeding support, supplies and counseling • Domestic violence screening and counseling • Contraceptives and contraceptive counseling
Medical Loss Ratio Rebates • Issuers must provide rebates if MLR does not meet requirements • Rebates due Aug. 1 after reporting year − First rebates to be paid by Aug. 1, 2012 • Rebates will go directly to policyholder (plan sponsor) • Rebates may be plan assets for ERISA plans − If employees contribute to cost of coverage − Must use rebates for the benefit of enrollees − Example: lower premiums
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
Comparative Effectiveness Research Fees • Patient-Centered Outcomes Research Institute − Created to improve informed health decisions − Research funded by a fee paid by insurers and plan sponsors of self- funded plans-HRA’s considered self-funded health plans • Effective date • Who Pays and on What • Amount of fee: − Plan years ending after Sept. 30, 2012 − Do not apply for plan years ending after Sept. 30, 2019 − For calendar year plans – apply for 2012 -2018 plan years − − On fully insured plans, carrier Self-insured plans, plan sponsor HRA’s are subject to fee, considered self-insured health plan IRS Form for Excise Tax − $1 per covered life-2013 − Increases to $2 − Indexed for CPI
New Notice Requirement – Exchanges and Minimum Essential Coverage • 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 • More guidance and model notice expected • Penalties apply for non compliance of $50/missed statement; max $100 k
2014 Compliance Deadlines
Individual Mandate • Jan. 1, 2014: All American citizens and legal residents must enroll in qualified coverage or pay a penalty • Penalty amount: Greater of $ amount or a % 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 premium • Exceptions: − − − Religious objectors Illegal immigrants Incarcerated individuals Taxpayers with income under 100% of poverty level Members of Indian Tribes Those who were not covered for a period of less than three months during the year
Health Insurance Exchanges • HHS extends Exchange Deadline for States to December 14, 2012. • States will receive funding to establish health insurance exchanges or opt out and Federal Government will take over • Individuals and small employers (under 100) 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
Employer Mandate? Are employer’s required to provide insurance coverage for employees? • No, if you are an employer with fewer than 50 full-time (30 hrs/wk+)employees. • Probably, if you are a large employer (50 or more Full-time employees working 30+hrs/wk) subject to “Pay or Play” rule When determining whether an employer has 50 employees: Full-Time employees (working 30+hrs/week) Full-Time Equivalent employees (FTEE) FTEE=total # of part-time hours for the month/120 • Penalties apply if: − Employer does not provide coverage to all FT employees and any FT employee gets subsidized coverage through exchange OR − Employer does provide coverage and any FT employee still gets subsidized coverage through exchange
Employer Penalty Amounts • Employers that do not offer coverage to all full-time employees: − $2, 000 per full-time, not FTEE, employee − Excludes first 30 employees • Employers that offer coverage, the lesser of: − $3, 000 for each employee that receives subsidized coverage through an exchange or − $2, 000 per full-time employee (excluding first 30 employees)
Employer Reporting • Employers will have to report certain information to the government − Whether employer offers health coverage to full-time employees and dependents − Whether the plan imposes a waiting period − Lowest-cost option in each enrollment category − Employer’s share of cost of benefits − Names and number of employees receiving health coverage
More 2014 Changes • No pre-existing condition exclusions or limitations − Applies to everyone and all plans • Wellness program changes • Limits on out-of-pocket expenses and cost-sharing • No waiting periods over 90 days • Coverage of clinical trial participation • Guaranteed issue and renewal in all markets • Individual and fully insured group policies under 100 lives must abide by strict modified community rating standards: − Premium variations only allowed for age, tobacco use, family composition and geography. − Experience rating would be prohibited.
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
Nondiscrimination Rules Coming for Fully-Insured Plans • Will apply to non-grandfathered plans • Discriminating in favor of highly-compensated employees (HCEs) will be prohibited − Eligibility test − Benefits test • HCEs − 5 highest paid officers − More than 10% shareholder − Highest paid 25% of all employees • Effective date delayed for regulations
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 reenroll 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
Key Steps To Take Now
Planning for 2014 and Beyond • Determine the implications of whether or not to offer a health plan. − Health benefits are only one part of the total rewards strategy − How will offering, or not offering, health benefits impact other talent management and recruitment strategies − Costs • Perform analysis to determine if plan offered should stay Grandfathered, if currently is • If over 50 years, perform a qualitative analysis to determine if existing plans meet the eligibility and affordability standards to avoid penalties. Calculators available • Consider cost and benefits of implementing a wellness program. Federal grants available, possible carrier discounts may apply. • Analyze potential Cadillac Tax implications each year (preparation for 2018)
Planning for 2014 and Beyond • Consider a communication strategy for employees and candidates − Implementation timeline on amending employee manuals, when communication documents should be delivered and how, employee engagement • Consider staffing needs in light of reform and have open discussions with CEO and CFO about direction of company in terms of staffing and the role it plays with rewards package • Create a check-list of the various requirements and their due dates
Thank you! This presentation is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Please contact legal counsel for legal advice on specific situations. This presentation may not be duplicated or redistributed without permission. © 2012 Zywave, Inc. All rights reserved.