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A PowerPoint presentation produced by the Detroit Regional Chamber and Blue Cross Blue Shield of Michigan.
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Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 1Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association.
What’s Next for Small Employers?
A Health Care Reform Webinar
September 20, 2012
This material is for general information and educational purposes only. The information is based on our current understanding of the national health reform provisions referenced. However, interpretations of applicable statutes and regulations vary. The federal government continues to issue guidance on how the provisions of national health reform should be interpreted and applied. While some of the information deals with federal law, it does not constitute legal or compliance advice. Applicability and interpretation of the law depends on the specific facts and circumstances of each individual’s situation. If you have specific questions about application of the law to your situation, you are encouraged to consult an attorney for advice. As required by IRS Circular 230, unless expressly stated otherwise, if this message contains any tax information concerning one or more Federal tax issues, it is not a formal legal opinion and cannot be used by any person to avoid Federal tax penalties, and cannot be quoted or referenced to promote or market to another party any transaction or matter addressed in this communication
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 2
Small employer considerations
• Health care reform timeline• New taxes and fees• Definition of “small group”• Where to SHOP• Small business tax credit• Plan year, benefit year,
renewal date• Rating factor changes• Plan design changes
• Group to individual transition
• Employer penalties*• Individual mandate• Advanced premium tax
credits• Cost-sharing subsidies
*The employer excise tax or penalty does not apply to certain groups who meet the government’s definition of small group.
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 3
2012
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 4
Women’s Preventive Services– Services for women must be covered with no cost sharing
beginning on plan years on or after August 1, 2012; including:
Screening for gestational diabetes Human papillomavirus, or HPV, testing Screening and counseling for interpersonal and domestic violence Contraceptive counseling and methods Breastfeeding supplies
– Those employers that meet the tax code's narrow definition of religious employer will be allowed an exemption from the contraceptive mandate
– Several documents related to drug coverage and religious status must be maintained on an annual basis to ensure benefits are applied appropriately for each group type
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 5
Women’s Preventive Services
The following employer groups may require special handling and important documentation:
• Grandfathered groups• Groups with no prescription drug coverage• Prescription drug coverage with carve-out arrangement• Religious groups • Religious-based employers (temporary safe harbor)
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 6
Summary of Benefits and Coverage (SBC) Required Capabilities
• Effective Sept 23, 2012 group health plans and health insurance issuers offering group or individual coverage are required to provide an SBC, coverage examples and a uniform glossary of health insurance terms to enrolled and prospective members
• Employers offering fully insured coverage are jointly responsible for distribution• The SBC includes:
– Summary of Benefits and Coverage – Coverage Examples– Uniform Glossary
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 7
Summary of Benefits and Coverage (SBC) Required Capabilities
*Written Renewals require SBC the date that the application materials are delivered.**SBC Distribution only required if changes happen between application and enrollment.***Material modifications denote mid-plan year changes and require either an SBC or a notification of the benefits change.
For each triggering event:
Upon request Application Renewal(Automatic)*
SBC Changes Between
Application and
Enrollment**
Special Enrollees
Material Modification***
Issuer to Group Health Plan
Within 7 business days
of request
7 business days of receipt of
application
30 days before plan year
(If 30 days is not given, 7 days after
intent to renew)
Before 1st day of coverage
NA 60 calendar days prior to the effective date of
change
Issuer/ Group to Participant
Same Include with written app materials or if none then1st day eligible to enroll
Same Same 90 days from
enrollment
Same
Issuer to Individual Customer
Same 7 business days of receipt of
application
Same Same NA Same
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 8
2013
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 9
Summary of NHR taxes and feesInitial Focus
Line of sight:
– Medical device tax: Effective for sales made after Dec. 31, 2012, this tax is assessed on the manufacturer, producer or importer of any taxable medical device. The tax is a 2.3 percent of the value of the sold item.
– Pharmaceutical tax: In 2011, manufacturers of brand-name pharmaceutical drugs were taxed based on the total amount of their drug sales compared to overall national drug sales.
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 10
Timing of ACA taxes and fees
Market Share TaxMarket Share Tax
Exchange User FeeExchange User Fee
Excise TaxExcise TaxReinsurance FeeReinsurance Fee
Comparative Effectiveness Research FeeComparative Effectiveness Research Fee
Initial Payment Dates
• Comparative Effectiveness – July 31, 2013• Reinsurance – January 15, 2014• Market Share - September 30, 2014
2012 2013 2014 2015 2016 2017 2018 2019
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 11
2014
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 12
The employee share of premium cost cannot exceed 9.5 percent of the employee’s household income
The employer-sponsored coverage must have at least a 60 percent actuarial value and provide essential health benefits
Employers have three key decisions:
Employer offers coverage
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 13
Definition of Small Group
• For many health insurance provisions, the federal small group definition effective Jan 1, 2014 will be 1- 50 employees.
• This definition will include full-time, part-time and seasonal employees unlike prior years
• It is important to note variations in the government’s definition of small group by provision.
• Employer penalties in the form of an excise tax will not be imposed on employers with fewer than 50 employees who decide not to offer coverage
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 14
Reform impacts on small group
Reform Impact Small and Middle Group
Key ACA Provisions Impacting Products
and Pricing <50EE groups 50-99 EE
100+EE Groups
Deductible and OOP limits 2014 2014 2014
Actuarial value ‘metal” targets 2014 2016 2017*
Essential Health Benefits (EHB) requirements 2014 2016 2017*
Integrated Rx 2014 2016 2017*
Rating changes 2014 2016 N/A
*If state choose to offer large group policies on exchanges in 2017
Small Group
Note: Grandfathered plans are exempt from all above provisions
ACA has defined effective dates for group health insurance reforms based on plan year; Small group will be the most impacted in 2014
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 15
Where to “SHOP”
• Small Business Health Options Program (SHOP)• Purchasing coverage on the Exchange is required to receive the
small business tax credit in 2014 • Open enrollment begins on Oct 1, 2013 for coverage effective on Jan
1, 2014. Rolling enrollment is available through the year to allow an open enrollment period that coincides with the group’s plan year.
• Medicare Advantage and Medicare complementary plans will not be available on the Exchange.
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 16
The Exchange is a new way to shop
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 17
A closer look at the Exchange• Exchange
• Competitive List of Plans• Provider Directory
• Individuals• Ability to compare and select plans• Can receive Advance Premium Tax Credit• Can receive subsidies
• Cost Sharing• 90 day Grace Period
• Individual Enrollment
• Small Group (SHOP) • No premium/cost share subsidies• Ability to compare and select plans• Group Enrollment• Group Member Enrollment• Billing Aggregation
— Consolidates into one payment• Small Business Tax Credit (2 years only)
— Business with approximately 25 or less FTEs/average wage of 50K
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 18
How will the Exchange work?
Insurers must offer at least one Silver and one Gold product
Insurers must offer Essential Benefits
Products should conform to metal tiers (Bronze, Silver, Gold, Platinum)
Insurers cannot medically underwrite or apply pre-existing condition clauses
Restricted rating factors to age, tobacco use, geography and family status
Price parity required if same product sold on and off exchange
Minimum network adequacy requirements
Approval and qualification process for plans and prices
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4
5
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Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 19
What are the metal tiers?
Actuarial value: Example: a plan with an actuarial value of 70% means that for a standard population, the plan will pay 70% of their expense for essential health benefits, while the enrollees will pay 30% through some combination of deductibles, copays, and coinsurance.
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 20
Group to Individual Transition
• After careful consideration some groups may determine that they will no longer offer employer-sponsored coverage to employees
• The Blues have a comprehensive process to assist in transitioning employees to a BCBSM individual plan. This process is available to groups, agents and individuals to support them through this transition.
• Scenario-based decision making is recommended. You may seek:– Tax advisor
– Consultant
– Agent
• Timing is critical because of downstream impacts to your business model and your employees and their families
• Communication should begin soon
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 21
Health care reform will shift definitions and decision timing
• Plan year vs. renewal year – reform provisions are most often effective on plan year while business decisions and rate changes occur at renewal
• Complex and flexible plan designs vs. simplified and standard plan designs– All plans must offer essential health benefits
– Actuarial value requirements limit flexibility to “tweak” cost sharing
• Some rating categories may be eliminated based on the new definition of “small group” in favor of community or experience rating depending on group size.
• Some migration of small group membership to the individual market is expected in 2014-2017
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 22
Principles of BCBSM’s 2014 small group product strategy
BCBSM will provide an array of affordable, easy to understand traditional products and new well-priced innovative options
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 23
Better alignment in small group portfolios
New BCBSM SG products New BCN SG products
Simply Blue &
HSA/HRA
BCN 5
BCN 10
High Deductibles
& Other
Pric
e
Community Blue
New Silver Products
New Platinum Products
New Bronze Products
New Gold ProductsNew Gold Products
New Silver Products
New Platinum Products
New Bronze Products
New Gold ProductsNew Gold Products
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 24
Premium tax credits and cost-sharing subsidies are available, but there are rules
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 25
Premium tax credit = Silver plan premium – maximum % of income a consumer must pay
Federal Poverty Level Percentage of income
100-150%* 2.0 - 4.0%
150-200% 4.0 - 6.3%
200-250% 6.3 - 8.05%
250-300% 8.05 - 9.5%
300-400% 9.5%
What is the premium tax credit?
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 26
What employees would qualify for financial assistance?
FPL: Federal Poverty Level; Medicaid eligibility is generally extended to 133 percent FPL calculated with a 5 percent income disregard. Thus, Medicaid eligibility is effectively up to 138 percent FPL
Employees qualify if they meet the following criteria:
However, they will not qualify if:
Have income 100 to 400 % FPL ▪ Single individual income: $11,170 - $44,680
▪ Family of 4 income: $23,050- $92,200
Employer offers a plan of at least bronze level equivalent (60% actuarial value), AND
Purchase coverage through the Exchange, and
The employee’s contribution to premium would not exceed 9.5% of household income, OR
U.S. citizen or legal immigrant Other coverage (not including
individual market) is available (such as through Medicaid or Medicare)
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 27
How is the penalty for the individual mandate calculated?
Legal residents who don’t purchase minimum essential coverage may have to pay a tax. This tax is the greater of two calculations:
$695 per person per year up to a maximum of $2,085 per family
2.5% of household income (the $2,085 max
does not apply)
OR
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 28
APPENDIX• Background on Exchanges• Overview of Exchanges• Application of the Excise Tax or “Employer Penalty”• Eligibility Chart for Individual Premium Tax Credits and Cost-sharing
subsidies• Illustrative State Implementation Timeline for the Exchanges
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 29
Exchanges
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.
• 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.
What the Blues are doing:
• 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 once it is established
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 30
Overview of the Exchange
• What is an “Exchange”?• An Exchange is a competitive marketplace for individuals and small employers to directly
compare available private health insurance options on the basis of price, quality, and other factors.
• Purpose and Function of an Exchange• Offers consumers a choice of health plans and focuses competition on price.• Provides information to consumers.
• Creates an administrative mechanism for enrollment.
• Moves towards portability of coverage.o “Coverage through an exchange can be de-linked from employment, helping make
health insurance more portable for people moving from job to job”
• Reforms the insurance market.o “Health reform proposals require insures to accept all applications without
consideration of the applicants health and further prohibits or significantly limits premium variation related to health status”
• http://www.kff.org/healthreform/upload/7908.pdf
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 31
How is the excise tax calculated?
Employers that do not offer coverage, and have at least one full-time employee that receives a premium tax credit on the exchange:
Excise tax = $2,000 X (# of full-time employees – 30 employees)
• Excise 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
• The excise tax that must be paid depends on whether the employer offers coverage and whether any employees receive subsidies on the individual market exchange
• While the definition of applicable large employer is determined on an annual basis, the excise tax penalty is assessed on a monthly basis and there are multiple scenarios to calculate the excise tax:
Employers that offer coverage and have at least one full-time employee that receives a premium tax credit on the exchange. The excise tax is the lesser of:
$2,000 for each full-time employee – 30 employees
$3,000 for each full-time employee receiving a tax credit
OR
2
1
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 32
Who is eligible for a subsidy?
Premium Subsidy
Cost Sharing 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
Subsidy = Silver plan premium – Maximum payable
“Maximum Premium Payable” (% of income): 2% - 9.5%
Sliding scale: 100 - 400% FPL
Limit on Premium: Applies to:
▪ Out of Pocket Limit Reduction: 1/3 – 2/3
▪ Actuarial Value Improvement: 3% - 24%
Cost Sharing Change:
▪ Sliding Scale: 100-400% FPL
▪ Sliding Scale: 100-250% FPL
Applies to:
Individuals who purchase on the Exchange may be eligible for subsidies
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 33Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association.
ILLUSTRATIVE State Exchange Implementation Timeline
04/13 All Systems Go
06/12 Most Legislative Sessions End
10/12 Payor Product LoadComplete
• All QHP Shopping Test
03/13 Navigator Training Complete
• Hub EligibilityAnd Enrollmenttesting
• Web Portal• Call Centers• QHP Management• Employer Management• Navigator Management• Outreach & Education• Notice & Appeals• Enrollment (Single Streamline Application)• Reporting • Financial Management• Federal Program Eligibility/ Premium Subsidies• State Program Eligibility Rules• Shopping• QHP Product Comparison• QHP Cost Calculator• SHOP Functionality
01/12 BusinessRequirementsComplete
04/12 DesignComplete12/11 Operational
Leads in place
• Work with selected Vendor(s)
Oct 2011 Jan 2012 Apr 2012 Jul 2012 Oct 2012 Jan 2013 Apr 2013 Jul 2013 Oct 2013
State Exchange Work Integration with Other Parties
System TestSystem Test(10/2012 – 04/2013)(10/2012 – 04/2013)
DevelopmentDevelopment(04/2012 – 10/2012)(04/2012 – 10/2012)
Exchange DesignExchange Design(NOW – 04/2012)(NOW – 04/2012)
Open Open EnrollmentEnrollment10/2013 – 10/2013 – 12/201312/2013
ImpImp09/201309/201310/201310/2013
QAQA08/2013 08/2013 09/201309/2013
State Exchange State Exchange Operational Operational
Readiness TestingReadiness Testing(04/2013 – 08/2013)
Early-Mid 2012 – Final Regulations
LegendBased on Proposed Federal Regulations
Critical State Milestones
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 34
Where does my Insurance Agent fit in?
Knowledgeable on plan options
AND
Federal and State Legislation that could impact your business
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 35
Where does my Insurance Agent fit in?
Employer Requirements under PPACA Exchanges and Employer Sponsored Plans Up-to-date guidance on recent regulations
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 36
To find a knowledgeable insurance agent in your area, go to:
http://www.nahu.org/consumer/findagent.cfm
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 37Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association.
Further Discussion and Questions
Please go on to B4BConnect.com immediately following the webinar.
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. 38Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association.
Updates
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MyChamberAdvantage.com