WHAT YOU NEED TO KNOW

BRAIDEN DARLEY, RHU

An Employer’s Guide to HEALTH CARE REFORM

Employers Across America Want to Know…

What are the effects on me as an employer?

What are the effects on my employees?

How much is this going to cost me? What do I have to do?

On The Horizon

Guarantee issue with no pre-existing limitationsIndividual coverage mandate Insurance exchanges & subsidies Employer “Pay or Play”Required expanded benefitsTaxes, fees and penaltiesNew rating rulesNew employer obligations & reporting requirements

Beginning January 1, 2014 New plan designs and rating guidelines

All policies will be guarantee issue regardless of medical conditions

Pre-Existing condition limitations will no longer apply

Obtaining insurance through Exchanges will be available for individuals and small groups <49

Large/Small Groups Waiting Periods: Max 90 Days Full –time employees working at least 30 hours/week Break time and room for nursing mothers

EVERY AMERICAN WILL HAVE THREE CHOICES IN 2014:

Individual Mandate

1. Qualify for an exemption based on income, religion or status (native American, undocumented immigrant, or incarceration)

2. Obtain coverage through government program/Exchange, employer or individual insurance

3. Go uninsured and pay a penalty

Subsidies & Penalties for Individuals

Individual Exchange subsidies are available if no other available coverage is affordable or meets minimum value requirement

Penalties phase in beginning in 2014 as part of tax return:

2014: Greater of $95 (adult)/$47.50 (child) or 1% of taxable income

2015: Greater of $325 (adult)/$162.50 (child) or 2% of taxable income

2016: Greater of $695 (adult)/$347.50 (child) or 2.5% of taxable income

2017 and beyond: Annual adjustments

Large Employer Responsibilities

1. Offering Minimum Essential Coverage to at least 95% of all full-time employees and their dependent children

Minimum Essential Coverage is defined as providing value of at least 60%of the total allowed costs of benefits expected to be incurred under the plan.

2. Coverage must be affordable. Employee’s share of the premium costs (for employee only

coverage) is no more than 9.5% of that employee’s annual household income.

SAFE HARBOR – Affordability in 2014 (longer?) can be measured by the wages the employer pays the employee for that year, as reported in Box 1 of Form W-2. If an employer offers multiple coverage options, the lowest-cost MEC option available to the employee will apply.

Minimum Essential Coverage (MEC)Not Affordable Coverage

Employer doesn’t provide MEC OR MEC is offered to less than 95% of the full-time employees and their dependent children

Penalty =Total number of FTEs employed for the year (minus 30) x $2,000 as long as at least one full-time employee receives the premium tax credit

MEC offered to at least 95% of full-time employees and their dependent children. BUT one or more full-time employees receives a premium tax credit.

Penalty is $3,000 per employee receiving a subsidy in Exchange. (Monthly Calculation)

Penalties for Large Employers

Plan Design Requirements In/Out of Exchange

New Plan Designs sold/renewed Limited to “Metallic” coverage levels

Essential Health Benefits 10 required coverage categories-pediatric dental/vision

Out of Pocket Maximum (all) $6,350 single/$12,700 family Rx may have a separate out of pocket max for 2014

if separate contract

For INDIVIDUAL exchange plans only

To be eligible, individuals must: Have incomes between133%

and 400% of federal poverty level (FPL)

Not have access to minimum essential coverage through their employer or have access to coverage, but it is not affordable

Premium credits – for any level plan

Cost-sharing subsidies – silver plan only

• Income ranges for 133% to 400% FPL

Individual: $14,856 to $44,680

Family of four: $30,656 to $92,200

Subsidies for Individuals

Keep In Mind…

•Exchanges will not replace the private health insurance market.

They’re simply another channel for qualified individuals

and groups to obtain coverage

Taxes & Fees (FOR ALL)

Tax/Fee Effective Date Responsible Party Annual Tax/Fee AmountPlan fees for comparative effectiveness research (PCORI)

Plan/policy years that end after 9/30/2012 and begin before 10/1/2019

Issuers of fully insured plans

Sponsors/administrators of self-insured plans

$1 or $2 a year per person (adjusted annually for inflation), based on average number of covered lives

Tax on high earners and unearned income

Tax years beginning 1/1/2013 and later Individual taxpayers

0.9% Medicare surtax on wages in excess of $200,000 single / $250,000 married couples

3.8% tax on unearned income for taxpayers with modified adjusted gross income in excess of $200,000 single / $250,000 married couples

Insurer fees Tax years beginning 1/1/2014 and later Issuers of fully insured plans

Based on net health insurance premiums written in the preceding calendar year as a percentage of all health insurance premiums written in the preceding calendar year

Reinsurance assessments

Plan/policy years beginning in the 3-year period starting 1/1/2014

Issuers of fully insured plans

Sponsors/administrators of self-insured plans

TBD – may be based on percentage of revenue of each issuer and total costs of providing benefits to enrollees in self-insured plans or on a specified amount per enrollee

High-cost insurance tax

Tax years beginning 1/1/2018 and later

Issuers of fully insured plans

Sponsors/administrators of self-insured plans

Annual excise tax of 40% on health plan costs that exceed “Cadillac” plan thresholds

Important reasons to offer benefits

Critical Piece of employee compensation

Attract & retain quality employees Employee Loyalty Employee attitude Employee performance Employee health & higher absenteeism

THANK YOU.