Agenda ACA Timeline
• Willis Health Care Reform Survey Results Guidance on Health Care Reform Strategies for Consideration Leveraging your ALFA Membership
• Opportunities for Group Leveraging and Purchasing • Benefit Administration • Record Keeping
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ACA: Timeline • • • • •
SBC Coverage Summary W-2 Cost Reporting PCORI Fee MLR Payouts Women’s Preventive Services • Internal and External Review
Entire Law Upheld
• • • • • • • • • • • • •
Individual Mandate Employer Mandate – Essential, Affordable State Exchanges – Taxpayer – paid Credits Annual Dollar Limit on EHB Lift 90 Day Wait Maximum Adult Child Grandfather Ends Cafeteria Plans Permitted for Exchange Coverage Pre-ex Ends For All Medicaid Expansion New Tax on Health Insurers Reinsurance Fee Enhanced Wellness Financial Incentives OOPM Limit = HSA Limit • All State Exchanges Open to <100
2010
2011
2012
2013
2014
2015
2016
• Delayed Provisions • Auto Enrollment (> 200) • Insured Non Discrimination Testing • • • • • • •
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FSA $2,500 Limit 2.3% Medical Device Tax .9% FICA – Med Surtax on High Earners Itemize Medical at 10@ AGI (up from 7.5%) PCORI fee Increase Notice of State Exchanges and Subsidies Elimination of Medicare Part D Tax Deduction
2017
2018
2019
2020
• “Cadillac Excise Tax”
• State Exchanges – Potential Expansion to Large Employers
• Part D “Donut Hole” Phase Out Complete
Willis National Health Care Reform Survey – What We Have Learned Employers will continue many existing strategies
• Expansion of Wellness Offering • Redesign of benefit options and eligibility provisions Most employers plan to “play” under the “play or pay” mandate
• Continuation of the “compliance as we go” approach as opposed to adopting a Total Rewards strategy Employers are concerned with cost, but underestimate the cost of
compliance • 60% of employers say that avoiding cost increases is the most important consideration for their businesses • Over half of surveyed employers have not determined the cost of Health Care Reform compliance 3
Federal Healthcare Reform Public Exchanges Federal exchange for 32 states o Initial open enrollment to start 10/1/13 19 states/DC establish exchanges 7 partnership exchanges 25 states default to federal exchange Question about tax credits and penalties for coverage on federal exchange
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Guidance on Health Reform Pay or Play” rules - Large employers must offer affordable health
coverage (meeting MEC rules) to substantially all FTEs Case study
• Happy Village – 1000 employees (930 salaried; 70 hourly) • Health coverage offered only to salaried employees Issue 1 – Offering coverage to substantially all FTEs
• • • •
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Regulations provide a 5% allowance for offering coverage Happy Village fails the 95% test Penalty is $2,000 for each FTE (less 30) prorated monthly Happy Village penalty is $1,940,000 annually
Guidance on Health Reform Issue 2 - Determining FTEs
• Ongoing Employees vs. New Hires ‒ Standard Measurement Period ‒ Stability Period ‒ Administrative Period • Nuanced rules for ‒ Different categories of employees ‒ Seasonal employees ‒ Mid year employment status changes ‒ Rehires
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Guidance on Health Reform
Managing the Variable Hourly EE Eligibility Requirements Case Study for Ongoing FTE Calculation 1/1/2014
4/1/13
10/1/13
1/1/2015
10/1/14
Transition Year SMP “Lookback Period” 6 months
AP
2014 Stability Period = Calendar Year
SMP “Lookback Period” 12 months
SMP – Standard Measurement Period AP – Administration Period SP – Stability Period
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AP
2015 Stability Period
SMP “Look Back” Period 12 Months
Guidance on Health Reform
Managing the Variable Hour EE Eligibility Requirements – New Hires
1/1/2014
1/1/2015
1/1/2016
10/1/14
10/1/15 2015 Stability Period = Calendar Year
6/1/14
6/1/15
New Hire “Initial Lookback Period” 12 months
Initial Stability Period
SMP “Lookback Period” 12 months
10/1/14
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2016 Stability Period
AP
9/30/15
2016 Stability Period SMP “Look Back” Period 12 Months
Federal Healthcare Reform Public Exchanges
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Guidance on Health Reform Pay or Play” rules - Large employers must offer affordable health
coverage (meeting MEC rules) to substantially all FTEs Issue 3 - Affordable health coverage – cost of single coverage is not
more than 9.5% of household income • Safe harbor rule – single coverage cost not more than 9.5% of employee pay (Box 1 of W-2) • Penalty - $3,000 for each employee who obtains coverage and premium assistance through a state exchange (prorated monthly)
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Strategies for Consideration Option 1
Option 2
Option 3
Maintain Status Quo
Mostly Play
Compliant Creative Strategy
Meet all PPACA requirements Continue employer sponsored healthcare model Plan remains affordable for all employees Tweak/Adjust existing coverage, contributions, reporting, etc.
Meet some PPACA requirements Allow low wage workers to qualify for government subsidies/ Medicaid Pay $3,000 penalty for those ee’s who leave plan and receive subsidy Increase cost sharing for dependents, and/or eliminating spouses coverage
Meet all PPACA requirements Offer minimum possible coverage that would avoid penalties 60% plan design with no coverage for spouses Contributions set at 9.5% of wages for selfonly coverage, and 100% cost for child coverage
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Strategies for Consideration: Example of a “Redesign” Offer a multi plan offering to meet minimum compliance guidelines while
offering affordable options to all employees Tradition Plan(s)
Minimum Compliance Plan
Alternative Reimbursement Plans
Plan A
Plan B
Plan C
Current Medical Option(s)
“Bronze Option” for ACA Compliance
Fixed Indemnity, Hospital Confinement, Critical Illness, and Accident
Estimate: $850 PEPM
Estimate: $400 PEPM
Estimate: $250 PEPM
Cost may vary based on plan designs offered
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Strategies for Consideration: “Defined Contribution” Provide all employees
equal amount to spend on healthcare and ancillary benefits with a wide range of choices and allow employees to select coverage based on their risk preferences
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ACA Total Solution Delivery CONSULTING & DESIGN
TECHNOLOGY & SERVICES
Account Management (Define)
Traditional Administration (Define)
• Strategic Planning • Compliance Management • Program Implementation
• Highly Flexible Implementation • Employee Benefit Portal • Call Center
Plan Design Management (Design)
Benefit Exchanges (Design)
• Health & Welfare Plan Design • Financial Budgeting/Underwriting • Employee Communication
• Total Benefit Marketplace • Supports Legacy Plans • Supports Defined Contribution
Vendor Management (Deploy)
Regulatory Compliance (Deploy)
• Contract Management/Renewal • Performance Standards and Audits • Implementation
• Compliance Testing Process • Integration with HRIS • Record Keeping
Integrated Benefit Administrator and ACA Compliance Technology 14
ALFA Solution - Group Leveraging Strategy Preferred Pricing from Carriers -
Solution Spectrum +
+
Cost of Benefit Administration
-
Benefit Administration Only
Maintain Existing “Core Benefits” and offer Alternative Reimbursement Plans
Maintain Existing “Medical Benefits” and offer Ancillary Plans
Adopt Full ALFA Group Purchasing Strategy
Defined Contribution Marketplace
• Employee Benefit Portal • Online Enrollment • Call Center • Improved Employee Communication • Eligibility Management • ACA Record Keeping • Reduce HR Team workload
• Benefit Administration • Continue current Medical, Dental, Life and Disability carriers • Offer Alternative Reimbursement Plans o Fixed Indemnity o Hospital Confinement o Critical Illness o Accident
• Benefit Administration • Continue current Medical and Dental carriers • Offer Ancillary Plans o Life o Disability o Fixed Indemnity o Hospital Confinement o Critical Illness o Accident
• Benefit Administration • Offer Choice of Plans o Medical o Dental o Life o Disability o Fixed Indemnity o Hospital Confinement o Critical Illness o Accident
• Benefit Administration • Provide all employees equal amount to spend on healthcare and ancillary benefits with a wide range of choices and allow employees to select coverage based on their risk preferences
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ALFA Solution â&#x20AC;&#x201C; Preferred Pricing Carriers Medical
Life and Disability
Dental
Voluntary
Vision
Stop Loss (Self Insured Medical)
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Questions?
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