Healthcare Reform Briefing October 22, 2014

Agenda







Miscellaneous Updates Health Plan Identifier (HPID) Transitional Reinsurance Fee Payments (TRF) Employer Mandate 6055/6056 Reporting Q&A

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Reform: Miscellaneous Updates
Marketplace (Healthcare.gov) Open Enrollment Begins November 15 for January 1, 2015 coverage
Plans and prices will be available in early November


IRS Expands Permitted Mid-Year Cafeteria Plan Changes
Revocation of coverage will be permitted due to:
Enrollment in Marketplace Plan
Reduction in work hours for employers using a look-back measurement period


Change is not required, but employers wishing to implement will need to amend their plans by 12/31/15.

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Reform: Health Plan Identifier
HPID
Unique 10-digit health plan identifier requirement
Plans must “certify” compliance with HIPAA’s electronic transaction rules


Who must comply?
Fully-insured plans - Insurers are getting the HPIDs for plans
Self-insured plans – Plan Sponsor (Employer) is responsible
HRA’s


Deadlines
11/5/14 – Large health plans (>$5 million in annual receipts)
11/5/15 – Small health plans (≤$5 million in annual receipts)
11/7/16 – Organizations must use HPID in standard transactions

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Reform: Health Plan Identifier
How to apply?
Online CMS.gov Enterprise Portal
Multiple day application process


Penalties for Not Obtaining HPID
No penalty specified for failure to obtain HPID
HIPAA penalties apply to violations of standard transaction rules
For “willful neglect,” HHS could impose a $50,000 penalty plus an additional $50,000 for each transaction that should, but does not, contain the HPID (up to a maximum of $1.5 million).

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Reform: Reinsurance Fee
Transitional Reinsurance Fee (TRF)







$25 billion tax on TPAs and insurers from 2014 - 2016 Carriers began applying tax on renewals effective February 2013 Applies to fully-insured and self-funded plans Year 1 - $63 per member per year or $5.25 pmpm (2014) Year 2 –$44 per member per year or $3.67 pmpm (2015) Year 3 – TBD


Who pays?
Fully-insured plans - Insurers are responsible
Self-insured plans – Plan / Employer is responsible

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Reform: Reinsurance Fee
What coverage is subject to fee?
Major medical coverage (grandfathered & non-grandfathered)


Exclusions
Excepted benefits, supplemental coverage, secondary coverage and coverage not meeting the minimum value (60% AV)











Accident-only coverage Children’s Health Insurance Program EAP’s or wellness programs that do not provide major medical benefits Expatriate-only plans Flexible Spending Accounts Integrated HRA’s Health Savings Accounts Stop Loss Reinsurance policies Coverage for Tribal members and dependents (not employment-based plans) TRICARE











Medicaid, Medicare, Medicare supplemental plans and Medicare Advantage plans Part D prescription drug benefits Prescription drug benefit plans Retiree-only plans that pay secondary to Medicare Specified diseases or hospital indemnity coverage Stand-alone vision and dental

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Reform: Reinsurance Fee
Timeline & Collection of Fees When

What

November 15, 2014

Membership counts due to HHS

December 15, 2014

Final date for invoice from HHS

January 15, 2015

Final date for 1st payment ($52.50 pmpy) to HHS

4th Quarter of 2015

2nd payment due ($10.50 pmpy) to US Treasury


How to report & make payment
www.pay.gov
Form available on Friday, 10/24
Reporting based on first 3 quarters of enrollment data for each calendar year (not plan year)

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Reform: Reinsurance Fee
Calculation Methods 1. Actual count – total lives (“belly buttons”) covered January through September divided by # of days (273) 2. Snapshot – total lives on one consistent date during each quarter divided by 3 3. 5500 Method - # reported on Form 5500 filed for the plan year
Sum of participants covered at beginning and end of the most recent plan year (may be used even if the plan year is not the calendar year)
Can only be used for plans that actually file Form 5500 Snapshot Example January 1

1,100 members

April 1

1,200 members

July 1

1,150 members 3,450 divided by 3 = 1,150 members 1,150 x $52.50 = $60,375 (1st payment 1/15/15) 1,150 x $10.50 = $12,075 (2nd payment 4th quarter 2015) Total payment

$72,450

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Reform: Reinsurance Fee
Limited Exemption for 2015 and 2016
Self-insured group health plans are excluded from paying reinsurance contributions if they do not use a third-party administrator (TPA) for the “core administrative functions” of claims processing or adjudication, or plan enrollment.
The final regulations modify the proposed rule to apply this exclusion to plans that use TPAs for obtaining provider network and related claim repricing services, for a de minimis percentage (up to 5%) of a plan’s core functions.
Most self-insured health plans rely extensively on a TPA and thus will not be eligible for this exemption.

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Reform: Employer Mandate aka—Employer Shared Responsibility, Pay or Play
Summary—Employers with 50 or more fulltime and equivalent employees (FTEs) must offer health coverage to full-time employees and dependents or face potential penalties if any full-time employee purchases coverage through the Marketplace and is eligible for a subsidy 11

Reform: Employer Mandate Penalties


Part (a)--$2,000* for each full-time employee (minus the first 80 in 2015, 30 for each year thereafter) if employer does not offer minimum essential coverage to substantially all full-time employees and their dependents
“Full-Time employee”—common-law employee averaging 30+ hours of service per week
“Minimum essential coverage” (MEC)—basically any employer-sponsored health coverage
“Substantially all” full-time employees—70% in 2015; 95% in 2016 and beyond
“Dependents”—only includes dependent children up to age 26, does not include spouses, step-children or foster children




Part (b)--$3,000* for each full-time employee who gets subsidized coverage through the Marketplace if coverage offered is not affordable or does not meet minimum value standard
Affordable coverage—employee cost for single-only coverage under the lowest cost option offered cannot exceed 9.5% of employee’s household income
Safe harbor options allow employer’s to base affordability calculations on the employee’s W-2 income, hourly wage or the Federal Poverty Level


Minimum Value—plan pays at least 60% of the cost of covered services (considering deductibles, copays and coinsurance) as determined by HHS calculator or actuarial certification *Amounts are indexed for inflation beginning in 2015, so actual penalties will be slightly higher

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Reform: Employer Mandate
Effective January 1, 2015 (Maybe…)
Smaller Employers (50-99 FTEs)—Additional year transition; until beginning of 2016 plan year
From February 9, 2014:
Cannot have reduced size of workforce
No material reduction or elimination of group health coverage
Must file 6056 reporting certifying compliance for 2015 calendar year

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Reform: Employer Mandate
Non-Calendar Year Plans (as of 12/27/2012)
Relief for all full-time employees offered affordable, minimum value coverage as first day of 2015 plan year; if employer
Had at least one quarter of its employees covered under the non-calendar year plans as of any date in the 12 months ending on Feb. 9, 2014; or
Offered coverage under those plans to one third or more of its employees during the open enrollment period that ended most recently before Feb. 9, 2014. Or
Had at least one third of its full-time employees covered under those non-calendar year plans as of any date in the 12 months ending on Feb. 9, 2014; or
Offered coverage under those plans to one half or more of its full-time employees during the open enrollment period that ended most recently before Feb. 9, 2014.

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Reform: 6055 & 6056 Reporting Section 6055 Reporting Health Plan Issuers (carriers & self-insured plans)

Government Employers Multi-Employer Plan Sponsors Self-Insured Health Plans

Section 6056 Reporting “Applicable Large Employers” (ALE) Employer who employed an average of at least 50 full-time, including full-time equivalent, employees on business days during the previous calendar year. Aggregation rules apply.


Forms will due in 2016 for 2015 Calendar Year






If filing electronically due to the IRS by April 1st (of following year); If filing by paper must be postmarked prior to March 1st. Filings are same deadlines for W-2 statements. Those filing 250+ forms must file electronically. Filed on forms 1094 and 1095 (draft versions available currently)

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Reform: 6055 Reporting
Section 6055 (Carrier/Plan Sponsor) Information Required
Information about entity providing coverage, including contact information
Which individuals are enrolled in coverage, with identifying information and the months for which they were covered
Identifying information required will include names, addresses and Social Security Numbers for each covered individual

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Reform: 6056 Reporting
Section 6056 (Employer) Information Required
Information about employer, including contact information
Number of employees--full-time and total, by month
For each full-time employee, information about coverage offered (by month), including lowest employee cost of self-only coverage





Was employee offered minimum essential coverage? Enrolled? Minimum Value? Affordable?

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For More Information…


Health Plan Identifier (HPID)







General information and link to FAQs--http://www.cms.gov/Regulations-and-Guidance/HIPAAAdministrative-Simplification/Affordable-Care-Act/Health-Plan-Identifier.html “Quick guide” to application process--http://www.cms.gov/Regulations-and-Guidance/HIPAAAdministrative-Simplification/Affordable-CareAct/Downloads/HPIDQuickGuideOctober2014508Accessible.pdf YouTube Video-http://www.youtube.com/watch?v=o39nzyOlkpc&source=Blog_Email_%5bDeadline%20Approaching %5d

Transitional Reinsurance Fee


Annual Enrollment and Contributions Submission Form Manual--




Reporting form available 10/24--https://pay.gov/public/form/start/64510311

https://www.regtap.info/reg_library.php


IRS Questions and Answers






Employer Shared Responsibility- http://www.irs.gov/uac/Newsroom/Questions-and-Answers-onEmployer-Shared-Responsibility-Provisions-Under-the-Affordable-Care-Act Section 6056 Reporting- http://www.irs.gov/uac/Questions-and-Answers-on-Reporting-of-Offers-ofHealth-Insurance-Coverage-by-Employers-Section-6056

TerrillConnect


http://blog.jwterrill.com/

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Dawn Kramer [email protected] or 314-594-2624 Or contact any member of your account team!

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