Healthcare Reform
Health Care Reform: Timeline 2014
Individual mandate/Public Exchanges open Premium and cost-sharing subsidies Summary of Benefits (SBC) and uniform glossary Maximum 90 Day Waiting Period Medicaid not expanded in Texas – gaps in coverage No pre-existing condition exclusions Allow $500 carryover for health FSA
2014
Comprehensive Out of Pocket (OOP) Maximum – NG group health plans require unified OOP maximum Transitional Reinsurance Fee - $63 Patient-Centered Outcomes Research (PCORI) fee – the applicable $ amount is adjusted to reflect inflation.
2015
2016
2017
Employer Mandate (50+ EEs) Sale of health insurance across state borders permitted Transitional Reinsurance Fee - $31.50 (est.)
2018
States may open exchanges to large employers
Employer mandate (100+EEs) Auto enrollment? (delayed) Transitional Reinsurance Fee - $44
Excise Tax: 40% tax on amount of benefit exceeding specific threshold - $10,200 EE Only; $27,500 Family
Ongoing guidance, evolving interpretations, additional legislation and enforcement
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Health Care Reform Fees for Employers Transitional Reinsurance
Patient-Centered Outcomes Research (PCORI) Fee
Excise Tax – a.k.a.
“Cadillac Tax”
2014: national per capita contribution rate is $63 per covered life per year (TAC paid $1,752,975 on behalf of pool members.) 2015: $44 per covered life 2016: reduce 2014 rate by about ½ Expected to generate $20-$25 Billion over 3 year period. 2012: $1 per member per year 2013: $2 per member per year 2014: For policy and plan years beginning on or after Oct. 1, 2014, and before Oct. 1, 2019, the applicable dollar amount is further adjusted to reflect inflation in National Health Expenditures, as determined by the Secretary of Health and Human Services. 2018: 40% excise tax on the amount of benefit per employee exceeding a specific threshold – annual cost greater than $10,200 for individuals and $27,500 for families Expected to generate over $80 Billion in first 5 years.
Large Employer Mandate - Employers Must: 2015
2016
Determine whether they employ at least 100 full-time equivalent employees (part-time hours must be included when determining FTEs)
Determine whether they employ at least 50 full-time equivalent employees(part-time hours must be included when determining FTEs)
Classify employees who work on average at least 30 hrs/week as full-time
Classify employees who work on average at least 30 hrs/week as full-time
If 100 + EEs, must offer minimum essential coverage to at least 70% of “full time” employees or risk paying a penalty
If 50 + EEs, must offer minimum essential coverage to at least 95% of “full time” employees or risk paying a penalty
Determine whether the health plan coverage meets the “affordability” standards of Health Care Reform and is of minimum value or risk paying a penalty - EE Only coverage cannot be more than 9.5% of an employee’s total household income - Plan must cover at least 60 percent of the total cost of covered care.
Determine whether the health plan coverage meets the “affordability” standards of Health Care Reform and is of minimum value or risk paying a penalty - EE Only coverage cannot be more than 9.5% of an employee’s total household income - Plan must cover at least 60 percent of the total cost of covered care.
Variable hour/seasonal employees must be tracked: Standard Measurement Period • Look-back at hours worked by variable hour employee to determine eligibility for coverage • Employer choose length from 3 to 12 months
Standard Administrative Period • Count hours, offer & enroll in coverage • Maximum length of 90 days • Cannot reduce or lengthen the measurement or stability period • Overlaps with prior stability period
Standard Stability Period • Coverage remains available regardless of hours worked during stability period • Full time employees • Cannot be shorter than the standard measurement period • Must be at least 6 months
• Non full time employees • Stability period cannot be longer than the standard measurement period
All current and newly hired employees should be tracked if they aren’t on a standard, non-varying schedule of 30 hours or more per week. Seasonal employees who don’t work at least 120 days per year don’t have to be tracked (Election Workers, for example)
The employer pay-or-play decision: No Employer Plan (“Pay”)
Employer Shared Responsibility (ESR) payment of $2,000* x total number of full time employees (2015-First 80 EEs excluded; 2016-First 30 EEs excluded) 2015: Penalty (ESR) is triggered if an employer with 100 or more full time equivalent employees offers coverage to less than 70% of its full-time employees, and any employee receives subsidized coverage through Marketplace 2016: Penalty (ESR) is triggered if an employer with 50 or more full time equivalent employees offers coverage to less than 95% of its full-time employees, and any employee receives subsidized coverage through Marketplace
Full Time employee for penalty calculation is defined as an employee who works 30 or more hours per week on average *ESR amounts will increase annually based on a statutory inflation adjustment
Employer Offers Coverage (“Play”)
Employer plan pays less than 60% of covered costs (“minimum value test”) OR Employee contributions for self-only coverage exceed 9.5% of W-2 Box 1 or household income (“affordability test”) AND Employee household income between 133% and 400% of federal poverty level THEN Pay lesser of
$3,000 for each FTE that receives a premium subsidy for a Marketplace plan, or $2,000 x total number of full time employees
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Excise Tax aka “Cadillac Tax” - 2018
In 2018, if the county medical plan’s total cost for employee or family exceeds a certain cost level as determined by the government…
County will be charged a 40% excise tax on amounts over the designated thresholds
Based on current estimates, many TAC HEBP groups will exceed the cost threshold in 2018 and owe this tax
2018 cost threshold: $10,200 ($850/month) for employee-only coverage, $27,500 ($2,291/month) for family coverage Calculation: $ Amount Over Threshold x 40% x number of full-time employees = $ Excise Tax Amount Thresholds to be adjusted in 2019; indexed at CPI+1% in 2019 and thereafter.
For questions regarding the information provided in this presentation please call your Employee Benefits Consultant at (512)478-8753 ● (800)456-5974 www.county.org Charlotte Collins – Southeast Lisa McCaig- Northeast Ernesto Martinez – Southwest Kimberly Wilder - Northwest
