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Healthcare Reform Presentation
Transcript of Healthcare Reform Presentation
What Employers Need to Know Welcome to the Auburn Hills Chamber of Commerce 2012 2013 Presented by Corporate Benefit Solutions and Blue Cross Blue Shield Agenda Summary of Benefits and Coverage (SBC's)
Medical loss ratio rebates
Expansion of preventive benefits to include services for women Plans begin paying comparative effectiveness fee
Mandatory W-2 reporting for tax year 2012
-For employers who issue 250 or more W-2 forms
Deduction for expenses allocable to employer Part D retiree drug subsidy eliminated
Medicare payroll tax increased
New tax on unearned income
Cap on salary-reduction contributions to FSA's
Employee Exchange Notification 2014 Exchanges operational
Individual Health Mandate
Premium tax credits for Individuals
Individual market subsidies for low and middle income individuals
Annual dollar limits on essential benefits removed
Optional medicaid eligibility expansions (under 65) 2015 & Beyond Automatic enrollment for large employers
Excise tax on high-cost group health plans (a.k.a. Cadillac Tax, could be "Chevy Tax" by 2018) What is an Exchange? Competitive List of Plans
Provider Directory Who can participate? Individuals and Small businesses with 1-100 employees Purpose and Function Provide information to consumers
Creates an administrative mechanism for enrollment
Moves towards portability of coverages
Reforms the insurance market How will the Exchange work? 1. Insurers must offer Essential Benefits 2. Products will conform to metal tiers 3. Insurers must offer at least one Silver and one Gold Product 4. Restricted rating factors to Age, Tobacco use, Geography, and Family Status 5. Insurers cannot medically underwrite or apply pre-existing condition clauses 6. Price parity required if same product sold on and off exchange 7. Minimum network adequacy requirements 8. Approval and qualification process for plans and prices Tax Credits and Cost-Sharing Subsidies Take credits can pay for a portion of the plan for those who are eligible
Premium tax credits are available depending on income levels
Subsidies cover a portion of out of pocket costs, depending on income levels
The policies of an employer can affect whether an employee can get a subsidy
Subsidies and tax credits are only available on the Exchange What is the Premium Tax Credit? Premium tax credit = Silver plan premium - maximum % of income a consumer must pay Individuals who Purchase on the Exchange may be Eligible for Subsidies Applies to: Cost Sharing Change: Applies to: Limit on Premium: Sliding scale: 100 - 400% FPL Out of Pocket Limit Reduction: 1/3 – 2/3
Actuarial Value Improvement: 3% - 24% Cost Sharing Subsidy “Maximum Premium Payable” (% of income): 2% - 9.5% Subsidy = Silver plan premium – Maximum payable Premium Subsidy Individual market participants:100% and 400% of federal poverty level (FPL)
Single Individual income: $11,170 - $44,680
Family of 4 income: $23,050- $92,200
Not if group coverage is available Who is eligible for a subsidy? Sliding Scale: 100-400% FPL ‘
Sliding Scale: 100-250% FPL What employees would qualify for financial assistance? Employers may elect to not offer coverage
Applicable large employers that do not offer benefits may pay a penalty/tax
The penalty that must be paid depends on whether the employer offers coverage and whether any employees receive subsidies on the individual market exchange
Penalty/tax applies to “applicable large employers.” An applicable large employer is an employer with an average of 50 or more full-time equivalent employees in the preceding calendar year Impact on Employers 75 75 10 10 320 320 25 - 25 - 2010 9.8m Medicaid FFS 5 8 25 Uninsured 17 21 0 7 12 29 4 4 Small group 10.0m Medicare Fee for Service ASO Managed Medicaid 10 Individual 2016 Large group 1 Medicare Advantage/Medigap = 100% 12 12 8 7 10 10 Percent Total growth Percent of lives, 2010 to 2016 reform - and post - Coverage landscape pre SOURCE: BCBSA Strategy Collaborative; Moody’sEconomy.com; Michigan Dynamic Coverage Model; Census; McKinsey analysis; and State Health Facts Database ACA provisions create market shifts and new market realities for all stakeholders There are upcoming ACA requirements that will continue to impact employers and their employees
As preparations for the Exchange continue, future regulations that will provide further details on its implementation are expected
BCBSM and Corporate Benefit Solutions will continue to monitor the federal and state regulations Key Takeaways 2014 (continued) Pre-existing condition & waiting period exclusions prohibited
Limitations on General waiting periods for employees
Coverage for certain clinical trials
Restrictions on out of pocket maximums and deductibles
Essential benefits and actuarial value metal tiers
Wellness discounts expanded
Additional protections for employees
IRS reporting of health coverage How is the Employer Penalty Calculated? 2nd Example Employers that do not offer minimum essential coverage, and have at least one full-time employee that received a premium tax credit on the exchange: Excise tax =
$2,000 X (# of full-time employees - 30 employees) 1st Example Employers that offer minimum essential coverage and have at least one full time employee that receives a premium tax credit on the exchange. The Excise Tax will be the lesser of: $3,000 for each full time employee receiving a tax credit $2,000 for each full-time employee - 30 employees OR Example 1 Example 2 ACA provisions create market shifts and new market realities for all stakeholders (continued) Group sponsor challenges and decline in group coverage
Individual and consumer market growth
Financial challenges for provider community
Price sensitivity and potential commoditization
Administrative complexity and compliance risks
New category of disruptive competitors Question & Answer Session Background and Looking Forward
Tax Credits and Subsidies
Employer Penalty Calculation
Impact on Employers
Key takeaways Summary of Employer Mandate Thank You for Attending! What are the Metal Tiers? The ACA is introducing a new system of classifying individual and small group health plans
The new labels are called "metal tiers," and they correspond to the actuarial value of the plan What are the Metal Tiers? An example of actuarial value: A plan with an actuarial value of 70% means that for a standard population, the plan will pay 70% of their essential health care benefit expenses, while the enrollees themselves will pay 30% through some combination of deductibles, copays, and coinsurance. Exchange Background The National Healthcare Reform legislation provides funding for the states to establish Health Benefit Exchanges that “facilitates the purchase of qualified plans” (Sec. 1311). The scope of the Health Benefit Exchanges include, combined or separately, an individual Exchange and a SHOP (Small Business Health Options Program) Exchange
The State of Michigan received a planning grant and a “level 1” grant from HHS for Exchange development, but the state legislature did not authorize the use of the level 1 grant at this time Exchange Background BCBSM is working toward the assumption that the State of Michigan will participate in 2014 on the State/Federal Partnership model
BCBSM will transition to the State exchange if one is established What BCBSM is doing: Exchange Background The state has announced that it will not have a state-based Exchange in 2014. Rather, it is preparing for a federal exchange or a state-federal partnership. In either model, we expect that the state will manage QHP (product) certification for an exchange that operates on the federal technology solution. The state could elect to stand up a state-based Exchange in 2015 or a subsequent year Before we Begin... Before we Begin... It is easy to get caught up in the frenzy of Health Care Reform and PPACA
Ask yourself the following questions:
What do you want to take away from today's presentation?
What key questions do you have that you would like to get answered?
What feedback or questions are you getting from your employees?
Is your company going to continue offering health benefits to its employees? Before we Begin... The ACA does not change our most fundamental questions about employer sponsored coverage which are:
What coverage do I want to offer?
How much do I want to contribute?
Do I have to offer coverage at all? However, there are potential penalties.
Failure to offer coverage to everyone
Failure to meet minimum standards
Failure to offer affordable coverage Before we Begin... Full Time Equivalent Employee For companies whose workforce levels vary over time, it will take some on-going monitoring to ensure proper compliance Only a large employer may be subject to penalties regarding employer-sponsored health
A “large employer” is an employer with more than 50 full-time equivalent employees during the preceding calendar year.
In order to determine whether an employer is a “large employer,” both full-time and part-time employees are included in the calculation. A firm has 35 full-time employees (30+ hours). In addition, the firm has 20 part-time employees who all work 24 hours per week (96 hours per month). These part-time employees’ hours would be treated as equivalent to 16 full-time employees, based on the following calculation:
Thus, in this example, the firm would be considered a “large employer,” based on a total full time equivalent count of 51 (35 FT + 16 FTE's) Full Time Equivalent Employee - Example 20 employees x 96 hours / 120
= 1920 / 120
= 16 FTE's