HEALTHCARE REFORM The enclosed material is CONFIDENTIAL and PROPRIETARY to Human Technologies, Inc.
CONTENTS 1 GOALS 2 TERMS 3 AVAILABLE OPTIONS 4 ADVANTAGES/DISADVANTAGES 5 THE FINAL DECISION
goals
EDUCATE
What does “healthcare reform” really mean? What is the PPACA?
EVALUATE Let’s weigh the options.
CALCULATE What is the best solution for our employees and our customers?
TERMS
PPACPA: Patient Protection and Affordable Care Act (Affordable Care Act) Aimed at increasing the rate of health insurance coverage through mandates, subsidies, and tax credits to employers and individuals. Represents the most significant government expansion and regulatory overhaul of the US healthcare system since the passage of Medicare and Medicaid in 1965. Shared Responsibility A shared responsibility requirement, commonly called an individual mandate, requires that all individuals not covered by an employer sponsored health plan, Medicaid, Medicare, or other public insurance programs, must obtain an approved private insurance policy through a federal or state approved exchange, or pay a penalty. Exceptions - Applicable individual is a member of a recognized religious sect exempted by the Internal Revenue Service or waived in cases of financial hardship. Large Employer A “large employer” is an employer with more than 50 full-time equivalent employees during the preceding calendar year. Both full-time and part-time employees are included in this calculation. Employer Mandate: Play or Pay Applicable to large employers (employers with 50+ full-time equivalent employees). Must decide whether they will “play” by continuing or beginning to offer affordable health benefits to employees working an average of 30 hours or more per week in a month, or “pay” the penalties for not offering affordable benefits. Effective January 1, 2015. Individual Mandate Effective January 1, 2014 all individuals must have health coverage. There is an increasing tax penalty of $95 in 2014, $325 in 2015, $695 in 2016, and $695+ in 2017 to ensure individuals comply with the mandate.
Exchanges Private and non-profit insurers offer small employers (up to 100 employees) and individuals the ability to purchase health insurance. Coverage was available for purchase through exchanges beginning in 2014. Each exchange will offers four categories of plans in addition to a catastrophic plan. Platinum - Health benefits covering 90% of the benefit costs of the plan. Gold - Health benefits covering 80% of the benefit costs of the plan. Silver - Health benefits covering 70% of the benefit costs of the plan. Bronze - Essential health benefits covering 60% of the benefit costs of the plan. Catastrophic - Available to individuals up to age 30 or to those who are exempt from the mandate to purchase coverage. Catastrophic coverage only. Subsidy (Premium Tax Credits) Stipends are available to help pay for coverage for employees who are between 100% and 400% of the federal poverty level and enroll in coverage through an affordable insurance exchange, are not eligible for coverage through a government-sponsored program like Medicaid or CHIP, and are not eligible for coverage offered by an employer. Additionally, an employee may qualify for a subsidy if coverage offered by the employee is not “affordable” and meet “minimum essential value” specifications. Full-time Employees Averages 30 or more hours per week. Works up to 130 hours a month (including PTO, sick time, etc.). Affordable Coverage Plans cost employees (on average) less than 9.5% of their household income (in the single-person tier only, not dependents).
Minimum Essential Value Minimum 60% actuarial value target. Sledge Hammer Penalty A $2,000 penalty per full-time employee for not offering minimum essential coverage. Tack Hammer Penalty Under the “weaker” penalty, an employer that offers employees any health insurance plan legally available within the state risks a penalty of $3,000 for each full-time employee that purchases coverage through a public exchange AND qualifies for a premium tax credit or subsidy because their employer-sponsored plan is not deemed “affordable”. Applies only to employees - an employee’s receipt of a premium tax credit or cost-sharing reduction with respect to coverage for a dependent will not result in a liability. Administrative Period For ongoing employees, can build in an “administrative period” after the measurement period ends and before the associated stability period begins. Cannot reduce or lengthen the measurement period or the stability period. Cannot be longer than 90 days. Must overlap with the prior stability period so that during the administrative period, you continue to offer coverage to ongoing employees until the new stability period begins. “Skinny Plan” - Minimum Essential Coverage (MEC) This term refers to a plan that provides the absolute lowest level of health benefits needed to meet the individual mandate and relieve the employer from being able to penalized by the Sledge Hammer Penalty.
available OPTIONS
1
Accept Penalties
2
Offer Coverage
3
Diverse Workforce Strategies
4
Offer Affordable Coverage
and do not offer health care coverage
that is not affordable and/or does not meet minimum essential value
that eliminate or minimize eligibility
that meets minimum essential value to all qualified full-time employees
ADVANTAGES disadvantages
1
Accept Penalties
and do not offer health care coverage
Pay Sledge Hammer Penalty $2,000 per full-time employee Penalties extend to all employees, including turnover Could extend to customer via shared responsibility Unknown cost per hour Risk too high
2
Offer Coverage
that is not affordable and/or does not meet minimum essential value
Pursue low cost “Skinny Plan� Pay Tack Hammer Penalty $3,000 per employee participating in the exchange and receiving a subsidy Not competitive insurance in the market Potential issues attacting/retaining the best employees Increasing individual mandate penalty increases risk
3
Alternate Workforce Strategies that eliminate or minimize eligibility
New shift models Seasonal/variable hour workers Short-term assignments (less than 90 days) Have all employees work 29 hours per week or less Will hurt retention of best employees High IRS scrutiny for these situations One employee violating guidelines incurs Sledge Hammer Penalty
4
Offer Affordable Coverage that meets minimum essential value to all qualified full-time employees
Utilize 90 day administrative period offered to all of eligible employees Full compliance with afforability and MEV Plan Partner with major carrier Utilize safe harbor costing for affordability Responsible cost-sharing with employee Attracts and retains benefit-conscious employees
THE FINAL decision
4 Offer Affordable Coverage that meets minimum essential value to all qualified full time employees
WHY option 4? Provides the most predictable cost year-over-year Most legally safe option (unlikely to receive IRS scrutiny because it meets the standards)
Provides new true benefits to attract and retain better employees Takes Sledge Hammer and Tack Hammer Penalties out of play
Applicant attends pre-hire screening
Offer of employment is made and applicant accepts
During orientation, applicant/employee is notified that he/she will be automatically enrolled in single, lowest cost plan unless he/she opts out
ENROLLMENT OPTIONS
Employee enrolled
Employee completes application to enroll self and dependents
Employee is automatically enrolled in single, lowest cost coverage
Applicant completes opt-out form
Opt-out form is sent to benefits department within 3 days of hire date (1st date on assignment)
At 45th day, employee is notified that deductions will begin in first payroll period after 60th day of employment unless he/she opts out
Employee completes opt-out form
Opt-out form is entered into system
Human Technologies, Inc. Corporate Office 105 N Spring Street Suite 200 Greenville, SC 29601
CONTACT US
(864) 467-0330 [phone] (864) 467-0326 [fax]
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