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Association Insurance Cooperative
PPACA 2013 – 2014 Summary
Handouts: Click Here
Minimum Essential CoverageMinimum ValueHealth Insurance Premium Tax CreditEmployer Shared Responsibility PaymentEssential Health BenefitsCompliance With Cost-Sharing LimitsAffordable PremiumsDisclosure of Return Information
Qualified Health Plans (QHPs)
State Essential Benefits Package Option
PPACA Topology
Large/Small Employer
Employer Penalty Flow Chart
Pay or Play
Strategies by Employer Size
Minimum Essential CoverageMinimum ValueHealth Insurance Premium Tax CreditEmployer Shared Responsibility Payment
Essential Health BenefitsCompliance With Cost-Sharing LimitsAffordable PremiumsDisclosure of Return Information
Qualified Health Plans (QHPs)
State Essential Benefits Package Option
PPACA Topology
Large/Small Employer
Employer Penalty Flow Chart
Pay or Play
Strategies by Employer Size
Essential Health BenefitsTo be defined by regulations, but they include minimum benefits in ten general categories and the items and services covered within those categories: Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health and substance use disorder services, including behavioral health treatment Prescription drugs Rehabilitative and habilitative services and devices Laboratory services Preventive and wellness services and chronic disease management Pediatric services, including oral and vision care.
Employer Must Comply With Cost-Sharing LimitsThe four prescribed coverage levels vary based on the percentage of full actuarial value of benefits the plan is designed to provide, as follows: Bronze: designed to provide benefits actuarially equivalent to 60% of full value; Silver: designed to provide benefits actuarially equivalent to 70% of full value; Gold: designed to provide benefits actuarially equivalent to 80% of full value; Platinum: designed to provide benefits actuarially equivalent to 90% of full value.
The Kaiser Foundation estimates that the annual deductible for a bronze plan could range from $2,750 to $6,350
Affordable PremiumsIndividuals who get insurance through their employer can get subsidized coverage in an Exchange if their premiums are unaffordable (more than 9.5 percent of their household income) or the plan is inadequate (pays less than 60 percent of the cost of covered benefits).
Health Insurance Exchanges
Qualified Health Plans (QHPs):An Exchange will be required to make qualified health plans (QHPs) available to qualified individuals and qualified employers. An Exchange cannot make available any health plan that is not a QHP.
A qualified health plan (QHP) is an Exchange-certified “health plan” that offers an “essential health benefits package.” To provide the essential health benefits package, a plan must provide: essential health benefits; limit cost-sharing; provide either bronze, silver, gold, or platinum level coverage (that is, benefits that are
actuarially equivalent to 60%, 70%, 80%, or 90% (respectively) of the full actuarial benefits provided under the plan
State Essential Benefits Package Option One of the three largest products in the small group market in the state
◦ New Mexico: Lovelace One of the three largest health plans offered to federal or state employees The Health Maintenance Organization (HMO) with the largest commercial enrollment in the state
Minimum Essential CoverageMinimum ValueHealth Insurance Premium Tax CreditEmployer Shared Responsibility Payment
Essential Health BenefitsCompliance With Cost-Sharing LimitsAffordable PremiumsDisclosure of Return Information
Qualified Health Plans (QHPs)
State Essential Benefits Package Option
PPACA Topology
Large/Small Employer
Employer Penalty Flow Chart
Pay or Play
Strategies by Employer Size
Minimum Essential CoverageMinimum ValueHealth Insurance Premium Tax CreditEmployer Shared Responsibility PaymentEssential Health BenefitsCompliance With Cost-Sharing LimitsAffordable PremiumsDisclosure of Return Information
Qualified Health Plans (QHPs)
State Essential Benefits Package Option
PPACA Topology
Large/Small Employer
Employer Penalty Flow Chart
Pay or Play
Strategies by Employer Size
Putting the Numbers Together
Example A: Employee earns $35,000 per year as reported on W-2
Penalty Flow Chart Question: Do any employees have to pay more than 9.5% of family income (regulation revised to use W-2 wages) for the employer coverage?
1. In this example: Average Full-Time eligible employee earns $35,000.00 (as reported on W-2). 2. Affordable Insurance for the employee is 9.5% = $3,335.00. 3. $3,335÷12 = $277.00 is the maximum monthly portion of W-2 that the employee should pay for
insurance and not trigger a penalty based on affordability.
What is the minimum monthly insurance premium that the employer must pay and avoid the penalty based on affordability and the employer mandate?
1. The actuarial value of a Bronze Plan based on an employee share of .40% and an employer share of 60%. Taking the $277.00 monthly maximum employee premium share ÷ .40% will equal $692.50 per month.
What is the employer cost sharing/month using a Bronze Plan as the baseline?
Employee Portion Employer Portion Monthly Premium
Bronze: @40% = $277.00 @60% = 415.50 $692.50
Silver: @30% = $ 207.75 @70% = 484.75 $692.50
Gold: @20% = $138.50 @80% = 554.00 $692.50
Platinum: @10% = $ 69.25 @90% = 623.25 $692.50
Putting the Numbers TogetherExample B: Employee earns $12,000 per year as reported on W-2
Penalty Flow Chart Question: Do any employees have to pay more than 9.5% of family income (regulation revised to use W-2 wages) for the employer coverage?
1. In this example: Average Full-Time eligible employee earns $12,000.00 (as reported on W-2). 2. Affordable Insurance for the employee is 9.5% = $1,140.00. 3. $1,140÷12 = $95.00 is the maximum monthly portion of W-2 that the employee should pay for
insurance and not trigger a penalty based on affordability.
What is the minimum monthly insurance premium that the employer must pay and avoid the penalty based on affordability and the employer mandate?
1. The actuarial value of a Bronze Plan based on an employee share of .40% and an employer share of 60%. Taking the $95.00 monthly maximum employee premium share ÷ .40% will equal $237.5 per month.
What is the employer cost sharing/month using a Bronze Plan as the baseline?
Employee Portion Employer Portion Monthly Premium
Bronze: @40% = $95.00 @60% = 142.00 $237.50
Silver: @30% = $71.10 @70% = 165.90 $237.50
Gold: @20% = $47.40 @80% = 189.60 $237.50
Platinum: @10% = $23.70 @90% = 213.30 $237.50
Minimum Essential CoverageMinimum ValueHealth Insurance Premium Tax CreditEmployer Shared Responsibility PaymentEssential Health BenefitsCompliance With Cost-Sharing LimitsAffordable PremiumsDisclosure of Return Information
Qualified Health Plans (QHPs)
State Essential Benefits Package Option
PPACA Topology
Large/Small Employer
Employer Penalty Flow Chart
Pay or Play
Strategies by Employer Size
Your Company is Grandfathered
Grandfathered Health Plans – ACA Exceptionswww.healthcare.gov/law/features/rights/grandfathered-plans/index.html
Grandfathered Plan: March 23, 2010 and not make any major changes in coverage
Examples of changes in coverage that would cause a plan to lose grandfathering include: • Eliminating benefits to diagnose or treat a particular condition. • Increasing the up-front deductible patients must pay before coverage kicks in by more than the cumulative growth in medical inflation since March 23, 2010 plus 15 percentage points. • Reducing the share of the premium the employer pays by more than five percentage points since March 23, 2010.
Alternatives: Self-Fund; Defined Contribution Arrangement
Your Company Employs Under 50 FTEs
No financial requirements to contribute toward workers’ health care costs
Have most to gain under the ACA Tax credits for some to maintain or begin offering coverage started in 2010
◦ Credit varies with employer size and average wage◦ As of 2014 employer can only get them for 2 consecutive years;
For 25 or fewer workers - max tax credit of 35% of employer contribution now, 50% starting in 2014.
Small group health insurance market already has guaranteed issue http://www.statehealthfacts.org/comparetable.jsp?ind=350&cat=7
2014 – new insurance options through SHOP exchanges
Your Company Employs Under 50 FTEs
Considerations:
Those with Group Coverage – Group Insurance Rates Will Increase Significantly in 2014 10 plus FTEs – Self Fund with a comprehensive insurance carrier Defined Contribution Arrangement
In 2014, employees earning less than 400% of the Federal Poverty Level ($92,000 for a family of four) per year who purchase a personal policy will receive a federal subsidy on their premium if their company doesn’t offer a group plan. o Every employer with less than 50 employees should switch from group coverage to simply giving
employees tax-free allowances via an HRA to purchase their own individual policy.
o Currently, employers and their employees can save up to 50% in 2013 by switching now to individual vs. group health insurance.
o Large employers are already implementing Sears (60K FT/45K PT); Darden (olive Garden, Red Lobster)
Your Company Employs 50 to 100 FTEs Same option as smaller employers to purchase coverage through the exchanges
Considerations:
◦ Play or Pay?
◦ Group Insurance Too Expensive
◦ High Deductible Health Plan + GAP
◦ Self-Fund
◦ Defined Contribution Arrangement
Your Company Employs 101+ FTEs Almost all currently offer health insurance - 90% in 2010 and coverage unlikely to change Same penalties as outlined for mediums No access to Exchange/SHOP options until 2017 Group Insurance Will Cost will Continue to Increase Expense Incurred Mini-Meds Gone 2014
Considerations:
◦ Play or Pay?
◦ High Deductible Health Plan + GAP
◦ Self-Fund
◦ Defined Contribution Arrangement
SELF-INSURED PLANS
DEFINED CONTRIBUTION PLANS
Links and Contact Information
AIC Website: www.AssociationInsurance.us
Handouts: Click Here
Kenneth Lee: Email: [email protected] Phone: 765.352.1776
